Website at center of The Cupcakery legal dispute

By Steve Green (contact)

Tuesday, Jan. 18, 2011 | 11:26 a.m.

Tiffany Brown

Cupcakes from The Cupcakery.

Another legal dispute has erupted involving Southern Nevada cupcake queen Pamela Jenkins and her company The Cupcakery.

Jenkins' uncle, Ricky Perritt, says in a lawsuit filed last week in Texas that he financed Jenkins as she launched and expanded The Cupcakery in Henderson and Las Vegas -- but that Jenkins is now reneging on a deal involving The Cupcakery website.

Perritt, who has four Cupcakery stores in Texas and is considering expanding in Florida and Massachusetts, says the deal involving The Cupcakery website is part of a settlement of a 2009 lawsuit he filed against his niece.

That settlement says disputes between Perritt and Jenkins over who owned what among The Cupcakery assets would be resolved by Perritt receiving 100 percent of the stores in Texas and Jenkins 100 percent of the stores in Nevada; that Jenkins would pay back funds advanced to her by Perritt and that each party would own 50 percent of The Cupcakery trademarks, tradenames and intellectual property.

But now, Perritt says, Jenkins apparently is dissatisfied with the settlement and is threatening to take down The Cupcakery website www.thecupcakery.com.

That would harm Perritt, he says, because the site is crucial to his business and he has been told by Jenkins he needs to create his own website.

"Perritt owns a 50 percent interest in all the intellectual property including the website and to switch websites from the one website that gets the most hits when 'Cupcakery' is entered on any search engine would cause substantial and irreparable harm," Perritt's lawsuit says. "Having the website down for any length of time will cause Perritt to be unable to communicate with potential investors, franchisees or licensees."

"I cannot over emphasize the significance of the website to me and to my businesses," Perritt said in a court affidavit last week urging a federal judge to bar Jenkins from taking down the website.

So far, the court hasn't acted on that request.

"We do not do Yellow Page advertising as we find it expensive and inefficient. We have found that most people today go to the Internet to research and find business. We receive many orders each day at our stores from customers who find us on the Internet and call in an order. Some of these orders are for large parties or catering and represent a significant portion of our revenue," Perritt said in his affidavit.

A message for comment on the lawsuit was left Tuesday with an attorney who has represented Jenkins.

Las Vegas attorney Ryan Gile of the law firm Weide & Miller Ltd., who has a blog about intellectual property matters, commented on the case in his blog: "One wonders if the parties genuinely thought that the co-ownership of the 'The Cupcakery' intellectual property rights, worked out as part of their 2009 settlement agreement, was really going to work in the long term."

Perritt, of Denton, Texas, says in his lawsuit that The Cupcakery LLC was formed in Nevada in July 2005 by Jenkins, Laura Santo Pietro and Dawn Kalman.

Perritt, the brother of Jenkins' mother, says he loaned Jenkins $95,000 to finance her capital contribution to the new business and that $60,000 is still due on that loan. Perritt says that when Jenkins became embroiled in a dispute with Pietro and Kalman in 2007, Perritt bought Pietro and Kalman out for about $225,000.

Later, Perritt says he provided another $187,500 so Jenkins could open another store in Southern Nevada. Of that amount, about $60,000 is still owed, Perritt says.

As part of the 2009 lawsuit settlement, Perritt sold to Jenkins his interest in the Las Vegas-area The Cupcakery stores and she agreed to pay him $100,000 at closing and assign to him a 50 percent interest in The Cupcakery's trademarks and intellectual property, lawsuit records show.

Jenkins also agreed to pay back Perritt funds loaned to her and her company and these loans are secured by Jenkins' interest in The Cupcakery LLC, court records show.

Perritt also received exclusive rights to develop The Cupcakery in all states except Nevada for four years.

The new lawsuit follows settlement of a 2009 suit alleging trademark infringement that The Cupcakery filed against former employee Andrea Ballus, who left and opened cupcake shops in Napa, Cotati and Santa Rosa, Calif., called Sift: A Cupcakery.

That suit was settled under undisclosed terms after a federal judge threw out fraud allegations in the complaint against Ballus.

Ballus' company is now called Sift Cupcake & Dessert Bar.