In a suit between two well-known fashion houses, the US District Court for the Southern District of New York determined that the imitation by Guess?, Inc. and its licensees (collectively “Guess”) of Gucci America Inc.’s (Gucci) marks on certain Guess products constituted trademark infringement and dilution. Three years after filing suit against Guess for trademark infringement, counterfeiting, trade dress infringement, false designation of origin, dilution and unfair competition of its Green-Red-Green Stripe, Repeating GG Pattern, Diamond Motif, Stylized G and Gucci Script marks, Gucci was granted a permanent injunction, but was awarded only $4.6 million of its $120 million damages request.

Gucci’s trademark infringement claim, which was based solely on a theory of post-sale confusion, centered on Guess’ obvious, and in some cases admitted, attempt to imitate Gucci’s marks and products. Since the Copyright Act generally does not protect the design of useful articles such as purses, Gucci did not bring a copyright infringement claim. The court determined that Guess “intended to copy the upscale look of the Repeating GG Pattern and the Diamond Motif Trade Dress,” such that infringement existed, but only with respect to certain products in specific color schemes. Similarly, the court held that Guess’ use of a brown-red-brown stripe and stylized G design infringed Gucci’s Green-Red-Green Stripe and Stylized G marks, on some, but not all, of the alleged products. In contrast, the court found that Guess’ use of a script mark did not infringe the Gucci Script mark.

In examining Gucci’s dilution claim, the court held that Guess’ use of certain designs was likely to dilute the Green-Red-Green Stripe, Repeating GG Pattern and Diamond Motif marks. Use of similar marks in different colors, however, was found not likely to dilute. The court dismissed Gucci’s dilution claim with respect to the Stylized G mark because the mark was not sufficiently famous before Guess used its respective design, and dismissed the dilution claim against the Gucci Script mark due to a lack of similarity.

Although Gucci was ultimately victorious in its suit, the court significantly limited the damages award from $120 million to $4.6 million. Relying on Gucci’s admission that it would never have entered into a licensing arrangement with Guess, the court rejected Gucci’s theory of a “hypothetical royalty.” Accordingly, the court determined that Gucci was entitled to an accounting of Guess’ profits for specific products, but not where Guess had demonstrated the defense of innocent use. The court also granted Gucci a permanent injunction, preventing Guess from using the Green-Red-Green Stripe and the Stylized G mark.

Fashion houses consistently face the problem of imitation and counterfeit products. This decision highlights the fact that while a fashion house may obtain rights in certain designs and logos, the scope of protection in these rights may not be so broad as to prohibit use of similar designs in different color schemes. Moreover, where it is unlikely that the two parties would enter into a license agreement, a plaintiff may not be able to obtain a reasonable royalty award. Arent Fox is monitoring this suit and other fashion and trademark issues. Please contact Anthony V. Lupo or Luna M. Samman with questions.