A partnership is considered to be a legal relationship between two or more persons who carry on a business with the objective of making a profit and sharing it between or among themselves; however, the persons are equally liable for its debts. A Limited Liability Partnership (LLP) is a form of partnership that protects its members from being personally liable for negligent acts conducted by other partners or employees under their supervision. It is a popular business structure given that the partnership is not taxed and the onus is on each partner to file individual tax returns. However, a LLP is primarily designed for professionals for example lawyers, doctors, engineers and accountants.

Based on the definition of a LLP and the information presented in the case, one has to question whether the form of partnership intended among Kobe, Dwayne and Lebron was the most suitable for the manufacturing and marketing of sports merchandise.

Powerade V KDL, LLP

Powerade will indicate that an exclusive agreement to only use and display Powerade products was formed with KDL through their partner Dwayne. Irrespective of KDL’s internal challenges or communication issues, the contract was breached as Kobe on behalf KDL also entered in an exclusive relationship with Gatorade which severed the exclusive arrangement established with Powerade. Given that Gatorade is a competitor, Powerade will be concerned that information regarding their operations could be paased on to Gatorade and may give Gatorade a competitive edge. As such, KDL has constituted a breach and would therefore be liable for breaking the exclusivity clause of Powerade’s contract.

Not only would the partneship be liable but the individuals would also be personally liable for the breach given that their partnership agreement though signed was not filed with the state. If a LLP arrangement is not filed with and approved by a Central State Agency, the partners do not benefit from limited liability protection. A general partnership agreement or partnership by estoppel (a person cannot deny being a partner if he allows the partnership to use his name) will be assumed where all partners are legally bound to the contract and are jointly and severally liable for the debts and obligations of the partnership even if no formally agreement was in effect.

Powerade will also claim that KDL’s partnership agreement was not properly structured to clearly identify the various business-related roles, responsibilities of each partner and the boundaries in which each is to operate in ensuring proper and effective management of KDL. It can be construed that the partnership did not do due diligence in keeping the partners apprised of the upcoming plans and outcomes from meetings held.

Additionally, with the each partner being enlisted as a shareholder, a board of directors should have been established to oversee the day to day operations of KDL instead of the partners managing the activities of the company.
The individual partners may attest that they thought a ligitimate LLP was being operated where they will not be held personally liable for negligence of other partners. Since the law is the law and it is evident that the agreement though signed was not filed with a state agency, they would acknowledge liability to Powerade for breaking the exclusivity clause. However, they may assert that each partner be held liable according to the percentages of ownership instead of being equally liable.

Gatorade V KDL, LLP

The plaintiff claims and defense set forth in the Powerade case above are also applicable to the Gatorade case.

KDL, Inc V KDL, LLP

A trademark is a distinctive sign which identifies certain goods or services as those produced or provided by a specific person or enterprise. When registered, it provides protection to the owner of the mark by ensuring the exclusive right to use it to identify goods or services, or to authorize another to use it in return for payment. Trademark infringement occurs when one party or the "infringer" uses a trademark which is identical or confusingly similar to a trademark owned by another party, in relation to products or services which are identical or similar to the products or services which the registration covers.

As it relates to the case presented, KDL, Inc is a registered trademark that specializes in women’s clothing. It has been in existence prior to KDL, LLP’s interest in launching their website. This is corrobated by the fact that the web page designer whom Lebron met, advised that the domain www.kdl.com was already taken. KDL, Inc will assert that Lebron on behalf of the partnership KDL, LLP, having knowledge of the existence of the domain and the women’s dresses in which they specialized, still proceeded with plans to launch a line of women’s sport merchandise with the intention of forcing KDL, Inc to give up rights to their trademark. Lebron’s actions can be construed as willful infringement where he is determined to deliberately act and disregard another’s property irrespective of the consequences or effects.

Given that KDL, Inc had prior usage of the trademark, there would be a likelihood of confusion in the minds of the purchasers when the partnership launched their women’s sport merchandise apparrel. Even though KDL, Inc’s speciality is dresses, it could be interpreted that the coorporation is being expanded to carry additional items. This has the potential to reduce their market share and profitability since the only distinguishing feature between the two companies would be Inc versus LLP; to which, the customers may not pay such keen attention. Additionally, KDL, LLP though not registered with the state was formed to market men’s sports related apparel and not women’s apparel which can also be considered as an attemp to reduce KDL’s market share as the company is operating outside of what they are so called “licensed” to do. As such, the partnership would be jointly and severally liable for trademark infringement.

KDL Inc may also claim that the other partners of KDL, LLP did not do due diligence in conducting market research and determining their competitors prior to launching their women’s clothing. If proper research was done, critical information would have been unearthed such as the existence of KDL, Inc.

The partnership in their defense could argue that the companies are focusing on separate niche markets where KDL, Inc is focused on dresses for ladies whilst KDL,LLP is focused on women’s sporting apparel. KDL, LLP could also indicate that their clothing line does not include sports dresses for women and therefore, KDL, Inc’s claim of trademark infringement is invalid.

The partners particularly, Dwayne and Kobe could contest that only Lebron should be held liable for the trademark infringement against KDL, Inc given that he did not exercise his fiduciary duty which is an obligation to act in the best interest of his partners and the partnership; such person is held to a high standard of honesty. Lebron therefore, had a fiduciary duty to fully disclose the information that he intentionally omitted in an effort to safeguard his partners against any potential law suit. Dwayne and Kobe were both unaware of KDL. Inc and the fact that they sold dresses. As such the partnership should not be held equally liable for Lebron’s actions.