This article was written for and first featured in Fashion Capital.
In a Judgment over three years in the making, the Southern District of New York Court has held that Guess infringed Gucci’s trade marks but the damages award was a lot less than Gucci hoped.
Gucci commenced proceedings in May 2009 against Guess (and various of its licensees) accusing it of seeking to “Gucci-fy” its products by using variations of its interlocking “G” trade marks and stylised “G” marks. Gucci claimed US$120 million in damages due to the exclusivity of its brands being diluted.
Guess denied all Gucci’s claims and also argued that in the event the Court did find infringement, the remedies awarded to Gucci should be limited due to Gucci’s failure to take action earlier.
Having assessed the individual marks and alleged infringements, the Court found that Gucci’s “Repeating GG Pattern”, “GRG Stripe”, “Square G” and “Diamond Motif” marks had been infringed by Guess but rejected claims in relation to other marks. The Court also determined that this conduct in relation to the Repeating GG Pattern and Diamond Motif was the result of deliberate copying and intended to give the customer the feeling of having something “designer-ish” without having to fork out for it.
This may have been seen to back up Gucci’s position that Guess’s business model was to copy it as closely as possible without getting caught. However, although Guess had “lost” the Court only awarded damages equivalent to around 4% of the total amount Gucci had been seeking (US$ 4.66 million). Gucci was granted an injunction against Guess’s future use of the marks, although in some situations Guess had already changed its use. The Court allowed an account of Guess’s profits for its infringing use but considered that Gucci’s claims for loss of sales and brand damage were highly speculative and the evidence it had produced was not sufficient for an award to be made.
Brand dilution, while understandable as a matter of common sense, is notoriously difficult to prove in Court and the overriding lesson from the Gucci case (equally applicable in the UK) is that if a competitor’s actions are likely to damage you, you need to take action sooner rather than later as you may not be able to recover brand damage due to evidential difficulties and the Court’s reluctance.