Wednesday, May 18, 2016

Parlux vs. Jay Z: Why does a celebrity stop promoting his own fragrance?

 In January, Parlux Fragrances filed an $18 million lawsuit against Shawn “Jay Z” Carter and his company for allegedly failing to promote the Gold Jay Z fragrance as explicitly set out in the contract. Parlux also claims Carter refused to participate in the development and launch of flanker products, and that as a result sales of the stand-alone fragrance withered. The Parlux complaint asked for Carter to return 300,000 shares of Perfumania stock (Perfumania is the parent company of Parlux) and 800,000 Perfumania stock warrants that he received as part of the licensing agreement. Parlux also demanded $18 million for compensatory and punitive damages as well as legal fees.

Via my reporting on Twitter @scienceofscent, you can see the legal jousting took a while to get going.

Well, Jaz Z’s legal team made good on the extended deadline and filed an “Answer and Counterclaim” on May 6th. That same day I kicked off a long visit to California and a short one to Texas. Only now have I managed to wade through all twenty-two pages of Jay Z’s response.

Here’s the bottom line:

Jay Z denies most of the allegations in the Parlux complaint. In his own defense, he accuses Parlux of unreasonable delay in bringing its claims, of acting unethically or in bad faith, and contends that Parlux has not, in fact, suffered actual (as opposed to speculative) damages.

Besides denying the Parlux charges, Team Jay Z makes several counter-claims of its own, namely that Parlux: failed to make royalty payments to Jay Z as specified by the licensing agreement, failed to pay for advertising and promotion of the Gold Jay Z brand as specified by the licensing agreement, and failed to provide accounting reports as specified by the licensing agreement. Jay Z also has some demands for Parlux:
An award of damages to [Shawn Carter Enterprises] and Shawn Carter [personally] in an amount to be determined at trial, presently including past due royalty payments of at least $1,187,500, past due advertising shortfall of at least $1,528,425, and other damages including, but not limited to, future lost profits, lost goodwill, and lost business opportunities.
So basically, Jay Z is telling Parlux “no I didn’t” and “in fact, you owe ME $2.7 million.”

I think I detect, under this mass of tangled cross-dealings, what may have motivated Jay Z to cease promoting his celebrity fragrance.

Recall that Jay Z originally licensed the commercial use of his name to Shawn Carter Enterprises (SCE) which he owns 100%. SCE then licensed the perfume rights to Artistic Brands Development (ABD) on April 18, 2012 in return for stock, upfront payments, guaranteed future royalties, and guaranteed spend on brand advertising. That same day ABD sub-licensed the perfume rights to Jay Z’s name to Parlux, which assumed all the rights and obligations of ABD under the license agreement. This is the basis on which Jay Z now counterclaims payment from Parlux.

Here’s the weird wrinkle: 40% of ABD was owned by Marcy Fragrance Trading Co. LLC, a company 100% owned by none other than . . . Shawn Carter. So it looks to me like Carter wrote a nice, plump deal with himself, and convinced Parlux to agree to pay for it. Which they apparently did, to their eventual regret. If, as he now claims, Parlux failed to deliver on the minimum guaranteed quarterly royalties that Jay Z had negotiated with himself, the lack of an ongoing income stream could explain why he lost interest in making any active contributions to the promotion and brand extension of Gold Jay Z.

It’s hard to feel much sympathy for either side in this dispute.

The lawsuit discussed here is Parlux Fragrances, LLC et al. - v. - S. Carter Enterprises, LLC et al., Case 650403/2016 - New York County Supreme Court.

Video: AIX Scent Fair Panel at the Hammer Museum

If you couldn’t be there to sniff and see it in person, you still have the chance to watch the May 6, 2016 panel that kicked off the AIX Scent Fair at the Hammer Museum in Los Angeles.

It begins with a welcome by the Hammer’s Darin Klein.

Lizzie “Odette Toilette” Ostrum’s keynote talk begins at 00:07:00.

My presentation begins at 00:29:00

Jacquelyn Ford Morie’s presentation starts at 00:43:00

The presentation by TFFCOTNYT starts at 1:10:00

The panel discussion moderated by the Institute for Art and Olfaction’s Saskia Wilson-Brown begins at 1:25:00.


Saturday, April 16, 2016

A Vertical Chord: Nabokov's Multisensory Evocation of Scent

Vladimir Nabokov is one of those writers I return to again and again. I love his taste, his elegance, and his wry humor. His style, especially in his early stories, uses sights, sounds, and yes, even smells, to give a spontaneous immediacy to scenes from the past that are full of soft sadness, even nostalgia. One could make the case that he is a synesthetic writer; there is no doubt that he is one of the best olfactory writers of all time.

The story Sounds, written in Russian in 1923, was translated into English and published in The New Yorker in 1995 by his son, Dimitri Nabokov, who noted that “the story is, among other things, a transmuted evocation of a youthful love affair” that his father had with a married cousin.

This is one of many olfactory passages in the story. It is a perfect literary example of how to set up and deliver an olfactory image.
I was watching your back, the silk checks of your blouse. From somewhere downstairs, probably the courtyard, came a resonant peasant-woman voice, “Gerosim! Hey, Gerosim!” And suddenly it was supremely clear to me that, for centuries, the world had been blooming, withering, spinning, changing solely in order that now, at this instant, it might combine and fuse into a vertical chord the voice that had resounded downstairs, the motion of your silken shoulder blades, and the scent of pine boards.
in The Stories of Vladimir Nabokov

Monday, March 28, 2016

Jay Z Gets Served

The wheels of justice turn slowly.

According to a new filing in the Parlux Fragrances case against Shawn “Jay Z” Carter, plaintiffs attorneys have finally managed to serve their summons and complaint on a lawyer representing Mr. Carter and his company S. Carter Enterprises, LLC. The firm of Cummings & Lockwood in Stamford, Connecticut will represent Mr. Carter and agreed to accept delivery of the complaint via FedEx on March 21st.

The original complaint was filed in New York Supreme Court on January 25th.


Legal eagles tell FirstNerve that there may well have been extensive contact between the two sides before this formal action. The early take is that Parlux may have a good chance at recovering payments and stock given to Mr. Carter, but that claims of commercial loss due to his alleged non-participation in promoting the Gold (Jay Z) fragrance remain a long-shot.

The lawsuit discussed here is Parlux Fragrances, LLC et al. - v. - S. Carter Enterprises, LLC et al., Case 650403/2016 - New York County Supreme Court.

Friday, January 29, 2016

Going for the Gold (Jay Z)

However, in the fragrance industry, it is virtually impossible to sustain the success of a celebrity fragrance brand without: (i) promotional support from the celebrity in the form of public appearances; and (ii) regularly updating and refreshing the brand with “flanker” launches and new line extensions, which are fragrance launches using new packaging, often new fragrance scents and some variation on the name of the originally launched brand.
[Claim #22 in the complaint filed by Parlux Fragrances, LLC and Perfumania Holdings, Inc. against S. Carter Enterprises, LLC and Shawn Carter, filed January 25, 2016, in the Supreme Court of the State of New York.]
Good morning, class. Let’s review the players:

Jay Z is actually Shawn Carter.

S. Carter Enterprises, LLC belongs 100% to Jay Z. It “owns and controls the rights to market the name and any related trademarks of Jay Z.”

Artistic Brands Development, LLC is a Delaware corporation with offices in Miami.

Marcy Fragrance Trading Co. LLC is a Delaware corporation with offices in New York City.

Shawn Carter is “the Manager and 100% member” of Marcy Fragrance.

Marcy Fragrance “owns a 40% membership interest in Artistic Brands.”

Okay. Now let’s review the relationships:

In April, 2012, Carter Enterprises and Shawn “Jay Z” Carter himself granted Artistic Brands the rights to use Jay Z’s likeness “in the manufacture, distribution, promotion, and sale of fragrances and certain related beauty products.”

Around the same time Parlux Fragrances obtained an exclusive sub-license from Artistic Brands for “the sole and exclusive, worldwide right to manufacture, promote, and distribute Jay Z branded fragrances.”

So, Jay Z and a company fully owned by Jay Z grant perfume licensing rights to a company that is 40% owned by Jay Z through yet another company which is fully owned by Jay Z. Everybody clear?

The Jay Z perfume rights are then sub-licensed to another company in which Jay Z has substantial stock and/or warrants.

If you think sounds complicated, take a look at the dense web of relationships between Parlux Fragrances and Perfumania Holdings, Inc. I wrote about them here.

Parlux has done a lot of celebrity fragrances. They thought, not unreasonably, that a Jay Z line would do big business. In fact, they were counting on projected sales of $15 million in year one, and $35 million in year two. As part of the inducements to Jay Z, they agreed to minimum guaranteed royalties, i.e., they would pay him a pile of money whether or not they sold any Jay Z perfume. This is typical of celebrity name deals and is intended as an incentive to make sure the licensee doesn’t sit on the rights but instead gets a product promptly to market.

Parlux did indeed launch Gold Jay Z in October of 2013 and it sold well initially.

Another part of the deal was that Jay Z would provide promotional support to the brand. This is also a standard part of celebrity licensing deals (for obvious reasons) and the Parlux contract was quite specific about Jay Z’s obligations.

And yet, for reasons known only to himself, Shawn Carter apparently refused to do any of the promotional events arranged for him by Parlux. These included any of the required three public appearances per year (at least one in New York City), as well as an appearance on Good Morning America and in the Sephora store in the same building as the TV studio. He also declined to take part in an interview with Women’s Wear Daily editor Pete Born. He declined to appear at Macy’s, to participate in social media promotions, or to provide a quote for Parlux’s press release about the Gold Jay Z launch. (These are all claims made in the Parlux complaint; we haven’t yet heard Jay Z’s response as to their validity.)

If we take the Parlux account at face value, Shawn Carter has done an impressive job of stiff-arming the company behind his fragrance brand. His actions would appear to work against his own financial self-interest. What on earth could be his motivation?

Jay Z would not be the first celebrity to get cold feet after agreeing to a perfume deal. I covered the bizarre saga of the Prince fragrance a few years back. The Purple One had signed a deal with the rather infamous guy behind the Designer Imposters® line of knockoff fragrances. He then didn’t lift a finger to promote the scent. He also failed to offer a defense when sued for losses by the fragrance company, which led to a $3.9 million judgement against him. Prince finally got his legal act together, appealed the verdict, and eventually settled out of court.

Prince being Prince, we can chalk up his non-compliance to his being a talented musician but a temperamental diva. I can’t speak to Jay Z’s merits as an artist, but he is well known as a mogul with vast business interests. It would seem doubtful that he entered into these highly detailed contracts on impulse, or without benefit of beady-eyed legal advice. So what happened? Did he not like the final product? Did he take a dislike to the people at Parlux? Was there something about the incentives of the deal that gave him a bad feeling? Did he change his mind and figure that perfume promotion was not compatible with his desired media persona? Did he simply lose interest? Or is he just an asshole?

Right now we know nothing and can only wait for his attorneys to response in their own filings with the court. Stay tuned. This should be good.