The recent New York district court judgment in an epic battle between Gucci and Guess ends with the following scathing remark: “Over the past three years, the parties have put in countless hours and spent untold sums of money, all in the service of fashion – what Oscar Wilde aptly called “a form of ugliness so intolerable that we have to alter it every six months.” With the instant disputes now resolved, and with Gucci’s entitlement to the relief noted above, it is my hope that this ugliness will be limited to the runway and shopping floor, rather than spilling over into the courts.”
Clearly, Judge Sheindlin (better known as Judge Judy on TV), who presided over the matter, would have preferred the parties to resolve the matter amicably without taking up her valuable time. However, although the applicable trade mark principles are fairly straightforward, their practical application can be quite tricky in the cut-throat world of fashion, where competitors often take “lawful inspiration” from one another’s designs.
The Gucci/Guess case is but one example of parties failing to agree on where acceptable imitation stops and infringement starts. Given the multimillion industries behind such disputes, it is understandable that a court sometimes has to act as the final adjudicator.
In this case, Gucci claimed that Guess tried to “Gucci-fy” their product line and, as a result, infringed their trade marks, including the famous green-red-green stripe mark, the repeating GG pattern, the stylised G design mark and the Gucci script mark. Guess (and some of its licensees) raised several defences but admitted that it used some of Gucci’s products as “trend inspirations” in their product development process. One manufacturer, for instance, was specifically instructed that the green-red-green striping detail on a Guess shoe should be “like the Gucci”, with a photo of the relevant Gucci shoe included in the design spec.
While considering the facts, the judge made it clear that despite what seems to be an acceptable industry practice in the way of “trend inspiration”, and although the law allows a fair amount of copying to spur competition and benefit consumers, copying that crosses over into customer confusion is prohibited.
An interesting aspect of this case is that Gucci’s infringement claims were based solely on so-called post-sale confusion which occurs when a purchaser buys a lower priced product instead of the genuine item simply to gain the same prestige at a lower price, while knowing that the public is likely to be deceived by the cheaper item, i.e. thinking it is the genuine article.
In analysing post-sale confusion, the US courts in question consider a few factors (also known as the Polaroid factors), including the strength/distinctiveness of the plaintiff’s mark, the similarity of the parties’ respective marks in a post-sale context, whether the parties compete directly in the market, cases of actual confusion, whether the defendant acted intentionally or in bad faith, the quality of the infringing product, and the sophistication of consumers. The list is of course not exhaustive but provides a guide to determine likelihood of confusion.
Guess argued, among other things, that the difference between the target markets, namely mid-high-end (Guess buyers) vs high-end (Gucci buyers) pushed the competitive proximity factor in its favour. The court, however, held that in the post-sale context, the initial target buyer is less important than the confusion that exists with the general viewing public. As mentioned above, the court also heard evidence of Guess’s intentional copying, which favoured Gucci.
In weighing all these factors, the court concluded that there was a likelihood of confusion between certain marks/products, but, interestingly enough, not all, particularly those Guess products that featured “bright and/or neon colours, garish or “bling-y” hardware and generally communicated the “Guess Girl” image”.
The stripe patterns copied on certain Guess shoes also escaped the court’s wrath, on the basis that stripe patterns are basics and that every brand must be able to use them, unless the identical trademarked pattern of a competitor is copied. Accordingly, although Gucci’s green-red-green stripe motive is a “strong” mark, its protection is limited to the prevention of identical copies only. Where Guess used alternative colours, the court found in its favour. The use of the same colours on certain products was, however, held to be an infringement.
In addition, the court also found that Guess’s use of certain marks on its products (for instance the red-green-red stripes) created the impression of an association with Gucci’s famous marks, which is known as dilution by blurring and therefore prohibited.
The court awarded Gucci $4.6 million in damages, which fell far short of the $200 million originally claimed, given that Gucci could not show actual damages in the form of lost sales or harm to its brand. It is doubtful if the award will cover the cost of the trial to Gucci. What is more, the decision will probably not be regarded as a huge win, given that Gucci’s rights were held to be limited, in particular with regard to colour combinations as mentioned.
According to a recent article in The Economist, the owner of Victoria’s Secret makes it his business to travel the world in search of other companies’ ideas to adopt. His philosophy is that business should celebrate imitation, not shun it. The Gucci/Guess judgment is unlikely to have a significant effect on this view, which is shared by many in the fashion industry.