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Originally published May 23, 2014 at 5:10 PM | Page modified May 24, 2014 at 10:00 AM

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Keurig sues owner of Tully’s shops, ends licensing deal

Coffee roaster Keurig Green Mountain, which owns the rights to the Tully’s brand, has sued the Seattle company that runs the coffee shops and has terminated the licensing deal for the name.


Seattle Times business reporter

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469 k and now a $25 returned check service fee too-- MORE
This won't end well for Tully's. MORE
I am glad I don't have a Keurig machine. No plans to buy one. MORE

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Coffee giant Keurig Green Mountain says in a lawsuit that it has ended the licensing deal that allows Tully’s coffee shops to use the Tully’s brand.

In the lawsuit, filed in federal court in New York, the Vermont-based coffee roaster also says that Global Baristas, the Seattle company that rescued the coffee shops from bankruptcy, violated its licensing agreements by selling coffee from local firm Dillanos without Keurig’s permission.

Moreover, Keurig says that Global Baristas owes it more than $469,000 for supplies it received, and that Global Baristas attempted to pay with a check that bounced.

A spokeswoman for Global Baristas said the company wasn’t aware of the suit.

“We have no idea what you’re talking about or even if this document is legitimate,” she said Friday in an email after being provided a copy of the lawsuit. “We continue to have an excellent relationship” with Keurig.

Keurig says that because Global Baristas failed to address its complaints, its license agreement was terminated April 27.

A Keurig spokeswoman said that means Global Baristas can’t use the Tully’s brand in any way, including on the stores. The effect wouldn’t be immediate, however, because there’s a phaseout period in the licensing deal, spokeswoman Suzanne DuLong said.

Keurig’s complaint also asks the court to order Global Baristas to take down its Tully’s website.

Without a license from Keurig, says the lawsuit, Global Baristas can only use the Tully’s brand in “limited, defined” ways.

Keurig has been roasting Tully’s coffee since 2008, when it bought Tully’s wholesale operations and rights to the brand from the struggling coffee chain then led by Tom O’Keefe. O’Keefe’s company retained the retail operations under license and supply agreements with Keurig.

Tully’s went into bankruptcy proceedings in 2012. In 2013, Global Baristas bought it. Since then new management has sought to reinvigorate the coffee-shop chain.

According to a copy of the lawsuit provided by Keurig, the company argues that Global Baristas broke the rules of their licensing agreement by sourcing coffee from a secondary supplier without authorization from the Vermont roaster.

“We are deeply committed to preserving the quality and the integrity of the Tully’s brand and the taste experience that coffee drinkers in Seattle and across North America have come to expect from Tully’s,” DuLong said.

The company’s suit says new packaging for bagged coffee that was recently rolled out by the coffee-shop chain should have been submitted to Keurig for approval.

Last month The Seattle Times reported Tully’s was replacing the traditional colorful bags of Tully’s Coffee that are roasted by Keurig with artisanal-looking brown paper bags containing blends roasted by Dillanos, a roaster based in Sumner.

At the time, Michael Avenatti, the California lawyer who heads Global Baristas, said the chain was experimenting with various blends to complement its offering of Tully’s “heritage blends.”

He also said the licensing agreement allowed Global Baristas to use other suppliers “from time to time, which has been done by Tully’s for years.” He added that Global Baristas and Keurig were looking for ways to work more closely together.

Keurig’s lawsuit also objected to a deal allegedly made by Avenatti’s company with the International Motor Sports Association to promote Tully’s coffee without its consent.

Ángel González: 206-464-2250 or agonzalez@seattletimes.com. On Twitter: @gonzalezseattle



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