Most people don't realize that unlike a shareholders lawsuit, a breach of contract and failure to performis not covered by insurance. I personally have been in 3 arbitrations and every one split the award just about down the middle (that's what arbitrators do) so Kraft should get around $1.5 Billion plus costs. That is more than the total net cash that Starbucks has, since they also have $550 million in debt. It means they will have to stop the dividend and all dividend and income funds will bail out immediately. Plus they will have to curtail some operations and sell some stores. The stock will be very bloodied. Don't be caught holding when it comes and despite what anyone says, they and the company have no idea when, since there can be no communication with arbitrator after the hearing (unless parties notify they want to settle before decision issued). My decisions all came earlier than expected and Starbuck's Hearing was over in August of 2012 - so it could come any day. One thing to remember is that Kraft has been through distribution disputes many times before, but for Starbucks this is its first. When the arbitrator looks back on case law which is how he makes his decision, he can't avoid looking at cases where Kraft has won the decision, because case law is full of them. This is why Kraft refused to settle when Starbucks offered $750 million - they know they are going to win because they've been here many times before. Don't be left regreting you could have left with a huge profit but now have a loss. Pigs get slaughtered.
I remember the "Pentium" chip problem for INTC all the nay sayers bankrupting the company, JNJ and the Tylenol scare in 1988, ford Explorer jumping off the road, Firestone ATX tires, fat in hamburgers, on and on, if you are a company, you will have problems, so what else is new. IMHO SBUX will survive and prosper.
Starbucks has experience with suing, but it’s been on the plaintiff side not as a defendant. Here’s an excerpt from the story regarding their suing to stop anything that comes close to looking like their name.
Theire are many reports on this on the web.
By JOHN STOSSEL and ALAN B. GOLDBERG 2005
“When I go into the Starbucks by my office, it's distinctively, well, Starbucks. It's big. There's a certain color scheme that you find at many of their locations and there are lots of tables where people sit and log on to the Internet.
Sambucks doesn't look like a Starbucks. It's only 10 feet wide. It's clearly a small-town business. Sam even delivers coffee to neighboring stores that want it. Starbucks won't do that. And Sambucks sells things like beef jerky. You won't find that at Starbucks.
One Sambucks customer told us, "I just can't imagine anyone could be confused between the two, and I don't see how this possibly could be a threat to a corporation that big."
Good point. Starbucks wouldn't talk to me about this, but before I could say Give Me a Break to them, I went to a trademark lawyer and asked if this is unreasonable on Starbucks part.
"If you look into what is at stake in trademarks, it's actually not unreasonable and it probably was a wise choice for Starbucks to, to sue in this case," said Fordham University law professor Hugh Hansen.
The Sambucks case is not the first time Starbucks has fought to preserve its trademark. In 2003, Starbucks sued Haidabucks coffee in remote Canada. Last year, they sued Starbock beer and got them to limit their sales to one county in Texas. But Sambucks doesn't appear to be a threat to Starbucks. She's got one little 10-foot-wide shop. So why is Starbucks so concerned?
"If you think of a leech on an animal, one leech, if you leave that leech on, the animal won't survive," said Hansen. "If you don't take that off each time they come and you allow them to accumulate on the animal, the animal could actually become very sick or
You're right. It is just a very short time until people here lose everything. Starbucks offered $750 million to settle the lawsuit but Kraft turned them down - that tells you everything you need to know.