NYDJ Apparel LLC v Commissioner of Trade Marks

[2014] NZHC 2678

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2014-485-2508 [2014] NZHC 2678

UNDER

the Trade Marks Act 2002

IN THE MATTER OF

an appeal from the decision of the Assistant Commissioner of Trade Marks dated 31 January 2014 ([2014] NZIPOTM

5)

IN THE MATTER OF

New Zealand trade mark application
844965 XX device

BETWEEN

NYDJ APPAREL, LLC Appellant

AND

THE COMMISSIONER OF TRADE MARKS

Respondent

Hearing:	14 May 2014 (further memorandum on 29 October 2014)
Counsel:	N J Robb for the Appellant No appearance for the Respondent (abides)
Judgment:	30 October 2014

JUDGMENT OF MALLON J

Table of Contents

Introduction ....................................................................................................................................... [1] Background........................................................................................................................................ [3] Inherent distinctiveness .................................................................................................................. [13] Acquired distinctiveness ................................................................................................................. [22]

Result ................................................................................................................................................ [27]

NYDJ APPAREL, LLC v THE COMMISSIONER OF TRADE MARKS [2014] NZHC 2678 [30 October 2014]

Introduction

[1]     The appellant (“NYDJ”) appeals against a decision of the Assistant Commissioner of Trade Marks (the Assistant Commissioner) declining to register a trade mark.1     The Assistant Commissioner determined that the mark was not inherently distinctive2  and that it had not acquired distinctiveness.3    The appellant

says that the Assistant Commissioner erred on both grounds.4

[2]      The details of the mark for which registration was sought are as follows:

Trade mark
Explanation	The mark consists of a crisscross stitching pattern on the inside pocket of a pair of jeans, as shown in the representation attached to the application.   The leg and jeans outline shown in broken lines in the representation forms no part of the mark, but is included to show the location of the mark in use.
Trade mark type	Image
Class	25 [Nice classification Schedule 9]
Goods	Articles of clothing
Applicant	NYDJ Apparel, Inc

1      Re NYDJ Apparel, Inc [2014] NZIPOTM 5.

2      Trade Marks Act 2002, s 18(1)(b).

3      Section 18(2).

4      The approach to be taken on an appeal is set out in Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141. The Assistant Commissioner did not appear and abides the Court’s decision.

Statement of use	The mark is being used or proposed to be used, by the applicant or with his/her consent, in relation to the goods/services
Filed on	1 July 2011

Background5

[3]      The  appellant’s  name  is  an  abbreviation  for  Not Your  Daughter’s  Jeans, which is the trading name of the appellant.   NYDJ began business in the United States in 2003.   The aim was to fill a gap in the market by designing and manufacturing comfortable and stylish jeans for women who were curvy or over 40 years of age.   Jeans are sold under the “Tummy Tuck” and “Not Your Daughter’s Jeans” trade marks.  The feature of these jeans is that they flatten the belly and lower abdomen which can make the wearer look smaller in size.  This is achieved through panels that are sewn on the inside of the front pockets.   These panels create a horizontal band across the front of the jeans which reduces the stretch in that area, and in turn controls the tummy.

[4]      NYDJ wanted customers to easily identify and know that the jeans they were purchasing had these slimming panels.   It adopted a criss-cross stitching pattern applied to the inside of the two front pockets for this purpose.  This stitching does not  perform  any  other  function.    It  does  not  contribute  to  any  structural  or mechanical features of the jeans.   The colour6  and pattern were chosen with the intention of distinguishing the pattern from functional stitching ordinarily present on garments.   The stitching is on the inside of the jeans for two reasons: first, it is thought that consumers may find the stitching visually unattractive; and secondly, it

means that others will not be able to tell that a person is wearing NYDJ jeans so that the wearer gains the full benefit of the slimming effect.  The stitching is, however, visible to the wearer when trying on the jeans and, once purchased, each time they

are worn.

5      The background to the application is set out in a statutory declaration filed by Steven Brink, the executive vice president of the appellant.   Further information is provided in the statutory declaration of Frederick Ball, the director of Ball Agencies Limited.

6      In the examples provided in  the evidence the  stitching is red or purple.   The trade mark application, however, does not specify a colour.

[5]      The following photograph illustrates how the stitching appears on the jeans:7

[6]      The stitching pattern features on numerous styles of jeans in the NYDJ collection.   The stitching pattern was first used in December 2004 in the United States.  NYDJ is now the second largest women’s jeans brand in department stores in that country.   Jeans with this stitching have been sold in 28 countries (including Australia, the United Kingdom and New Zealand).   Worldwide, significant sums have been spent on advertising and marketing and significant sales and revenue have

been achieved.8

[7]      The jeans have been distributed and promoted in New Zealand since 2007 via NYDJ’s partnership arrangement with Ball Agencies Limited.   The jeans are sold both in small boutiques and in department stores (including Smith & Caughey in Auckland and Arthur Barnett in Dunedin.)  The sales figures for New Zealand are not insubstantial and they have been at relatively consistent levels for each year since

2007.9

7      The criss-cross stitching in the photograph is red. The other (functional) stitching on the jeans is yellow.

8      The figures have been provided on a confidential basis.

9      These figures have also been provided on a confidential basis.

[8]      In New Zealand a range of promotional and marketing activities are utilised. Promotional material often includes two red crosses (a stylised version of the criss- cross stitching) under the words “Tummy Tuck”.  An example of the two red crosses as they appear in promotional material is shown as follows:10

[9]     In addition to more traditional marketing activities (such as magazine advertising, point of sale material and newspaper advertising), one of the main ways the jeans with the criss-cross stitching are promoted is through “Fit Days”.   This involves the presence of a “fitting expert” in store to assist customers with the selection and fit of the jeans.   The fitting expert is trained to show customers the stitching on the inside of the jeans and to explain the benefits provided by the slimming panel.

[10]     Ms Chismon, a fashion buyer for Smith & Caughey,11 has declared that they have stocked NYDJ’s clothing since October 2007, the clothing features the criss- cross stitching on the inside, she recognises this as a trade mark belonging to and associated with NYDJ, and the stitching is very easy to see when a NYDJ item of clothing is tried on.   To similar effect are declarations from Mr Livingstone, Mr

Oliver and Ms Billot who are each associated with other clothing stores which have

10     The two crosses are red as is the word “original”. The words and letters are otherwise blue.

11     A leading department store in Auckland founded in 1880.

operated for many years.12    Ms Chismon and Mr Livingstone say that they believe that customers would recognise the criss-cross pattern as belonging to NYDJ.  Mr Livingstone and Ms Billot also say that they have not seen the criss-cross pattern on any clothing apart from NYDJ’s clothing.

[11]     The stitching pattern has been registered in a number of countries (including Australia and the United States).  Applications for registration have been made in a number of other countries.

[12]     NYDJ’s application for registration in New Zealand proceeded in the usual way.  The trade mark examiner considered the mark was not distinctive.  Following the filing of evidence and submissions, a notice of intention to reject the trade mark was issued.  A hearing took place.  The Assistant Commissioner gave her decision

directing that the trade mark not be registered.13

Inherent distinctiveness

[13]     A  mark   cannot   be   registered   if   it   has   “no   distinctive   character.”14

Distinctiveness is required because the applicant for registration intends to use the mark to distinguish its goods from those of other traders. That is problematic if other traders are likely,  in the ordinary course of business and without any improper motive, to wish to use the same mark, or one that nearly resembles the mark, in

connection  with  their  own  goods.15      To  be  distinctive,  the  mark  must  not  be

commonplace and must not be one which other traders are likely to wish to use for competing  goods  or  services.16      The  use  of  a  disclaimer  may  bear  upon  the

12     Status Clothing (a store in Tauranga which has operated for about 22 years); Elizabeth Jane Boutique (an Auckland store which has operated for about 16 years); and Arthur Barnett (a Dunedin department store which has operated for over 100 years).

13     The appellant says that the Assistant Commissioner did not focus on the grounds set out in the notice to reject the trade mark.  However the appellant accepts that this is of no moment in this appeal.

14     Trade Marks Act 2002, s 18(1)(b).

15     Intellectual Reserves Inc v Sintes [2009] NZCA 305, [2014] NZAR 556, approving In the matter of applications by W and G du Cros Ltd for the registration of trade marks (1913) 30 RPC 660 (HL).

16     Intellectual Reserves Inc v Sintes, above n 15, at [35](a). The mark and its specification should be construed realistically. The mark must also not otherwise infringe the statute.

acceptability of a mark.17   The mark must be capable of distinguishing the goods as

those of the applicant’s without first educating the public that it is a trade mark.18

[14]     The Assistant Commissioner considered that NYDJ’s criss-cross mark has a “low level” of inherent distinctiveness and that other traders might wish to use the same or a similar mark on their own clothing, without improper motive.19     She therefore considered that the examiner was correct to object to the registration on the basis that the mark does not have a distinctive character.20

[15]     In reaching this view she considered that:

(a)      Consumers are less likely to appreciate that a stitching design on the inside of a garment, as compared with a label or tag, denotes a particular trader.

(b)It  was  probable,  in  the  absence  of  evidence  otherwise,  that  other traders might wish to incorporate decorative flourishes on parts of their clothing that  are  visible only to the wearer and so  it is not particularly distinctive that the criss-cross stitching is on the inside of the garment.

(c)      The use of the stylised version of the mark in advertising material does not assist because: (1) the explanation of the mark in the application, which will define the scope of rights if the mark is registered, limits the mark to criss-cross stitching on the inside pocket of jeans; and (2) the stylised version is a small criss-cross device that is dwarfed by the more prominent “Tummy Tuck” and “Not Your Daughter’s Jeans” marks.

(d)Because the stitching is plain, it is likely that some consumers will believe that it is intended to strengthen or reinforce the jeans, or is no

17     At [35](d).

18     British Sugar Plc v James Robertson & Sons Ltd [1996] RPC 281 (Ch) at 306.

19     Re NYDJ Apparel, Inc, above n 1, at [49].

20 At [83].

more than a form of very simple decoration, as opposed to a trade mark.    The  simplicity  of  the  mark  weighed  against  a  finding  of inherent distinctiveness.

[16]     NYDJ  takes  issue  with  several  aspects  of  the Assistant  Commissioner’s reasoning.  However the essence of the Assistant Commissioner’s decision was that, because the criss-cross stitching is simple and plain and could be mistaken with having a functional purpose, it is not distinctive.  As to this, NYDJ makes the point that plain and simple marks can nevertheless be distinctive.  A good example of this is the red sole of a Christian Louboutin shoe.21 The red sole is a registered mark in New Zealand.

[17]     NYDJ also makes the point that brands of jeans are commonly distinguished by their stitching and that stitching is commonly simple and plain.22    Examples are the stitching on the pockets of Levis, Wrangler and Lee jeans.   Registered trade marks in the form of stitching include the following:

Registration              Mark  Owner           Description (if included)

104530  Levi Strauss & Co

1. Red Diamond

Holdings Ltd

Orange coloured double arcuate lines applied by stitching to the hip pockets of the goods.

254098  Wrangler Apparel

Corp

21     I think it can be said that high end shoe purchasers have no difficulty in recognising a Christian Louboutin shoe by the red sole.  It may be that the mark was registered on the basis of acquired distinctiveness.  However high end shoes do not usually have red soles.  The red sole is visually striking and sets Christian Louboutin shoes apart from others.

22     In considering distinctiveness, the circumstances of trade in the relevant goods is relevant:

Advantage Group Ltd v Advantage Computers Ltd [2002] 3 NZLR 741 (CA) at [20].

1. The HD Lee

Company Inc

725931  Wrangler Apparel

Corp

Parallel curved lines applied by stitching to the goods in thread of a contrasting colour to the background fabric.

732065

 

ESCADA

Luxembourg          A stylized letter “E”.

780094  Levi Strauss & Co

973883  Flat Head Co Ltd

[18] Stitching on jeans is capable of distinguishing the goods.23 The question is whether the criss-cross stitching here has distinctive character. The type of stitching in the criss-cross mark is not in and of itself distinctive. It appears as ordinary machine stitching. It is an overall assessment, rather than its individual components, that matters.24 The overall mark, as illustrated at [5] above, is ordinary machine stitching in a criss-cross pattern, in a contrasting colour, and on the inside front of the jeans. If that stitching was on the outside of the pockets of the jeans it would have distinctive character.25

[19]     That the stitching is on the inside of the jeans does raise the question as to whether it will be viewed as functional.   However the contrasting colour suggests

that it is not.  Moreover it is readily apparent on inspection that the stitching is not

23     As was said in Levi Strauss & Co v Vivat Holdings Plc (2000) 49 IPR 151 at 155: “I must state now that I have no difficulty with the concept of some stitching on pockets, or in cloth generally, functioning as a trade mark if it is capable of distinguishing the goods”.

24     Easynet  Group  Plc  v  Easygroup  IP  Licensing  Ltd  (1957) 99 CLR 300 at [27], cited in

Intellectual Reserves Inc v Sintes, above n 15, at [44].

25     Any issue about the registration of such a mark would more likely concern whether it was likely to cause confusion with any other marks.

there to hold the pocket together.   If a functional purpose is assumed then that is likely to be related to a “tummy tuck” function.  That would not exclude it from also being a mark to identify the jeans as NYDJ’s goods because a trade mark may be both decorative and functional while also serving to distinguish a trader’s goods from other goods.26

[20]     However, the description in the application does not specify that the criss- cross pattern is in a contrasting colour, although that is in fact how the mark is used.27    The particular contrasting colours in use are red and purple.  Without this contrasting colour the mark is less distinctive and consumers could well regard the stitching as a part of the general, functional stitching of the jeans.  There is also a greater risk that other traders would inadvertently infringe the mark.   It is also important in my view that the mark is used in relation to jeans.  As is illustrated by

the examples at [17] above, stitching on jeans is commonly used as, and understood by consumers to be, a mark identifying the origin of the jeans. Whether the criss- cross stitching would have a distinctive character in relation to other items of goods is not clear. In light of these issues NYDJ has confirmed that it has no objection to the following:

(a)       Amending the “Explanation” of the mark so as to read:

The mark consists of a non-functional crisscross stitching pattern, in a contrasting red or purple colour, on the inside pocket of a pair of jeans, as shown in the representation attached to the application. The leg and jeans outline shown in broken lines in the representation forms no part of the mark, but is included to show the location of the mark in use.

(b)      Amending the Goods and Services Descriptions of the mark from

“Articles of clothing” to “Jeans”.

(c)       The registration being the subject of a disclaimer that “Registration of

this trade mark shall give no right to the exclusive use of stitching in a

26     Coca-Cola Co v Frucor Soft Drinks Ltd [2013] NZHC 3282, (2014) 104 IPR 432 at [133]. And compare with Fredco Trading Ltd v Miller (2004) 65 IPR 653 (HC); (2006) 11 TCLR 751 (CA) where the shape of the horticultural plastic tie for which registration was sought was essentially determined by its function.

27     Trade Marks Act 2002, s 19.

crisscross pattern, except in the form shown and explained in the registration.”

[21]     With these amendments and the disclaimer, my overall assessment is that the mark has a distinctive character.

Acquired distinctiveness

[22]     A trade mark which “has no distinctive character” can still be registered if “as a result of either the use made of it or of any other circumstances, the trade mark has acquired a distinctive character”.28    Acquired distinctiveness arises from consumer education rather than inherent or natural distinctiveness.29    The extent of proof of acquired distinctiveness in any case will depend on the strength of the objection to its inherent distinctiveness.30   Relevant considerations include the market share held by the mark, the extent of its use (intensity, time and geographic spread), the amount invested in promoting the mark, the proportion of the relevant class of persons who

identify the goods as originating from the trader, and statements from industry, trade or professional associations.31

[23]     In  this  case  the  Assistant  Commissioner  considered  that  the  criss-cross stitching was at the lower end of the distinctiveness scale, particularly as it was not limited to a colour and could therefore be the same colour as the garment or its other stitching.32  This was because:33

(a)       the mark is not a highly stylised image or device;

(b)it comprises a criss-cross pattern, which is a less common form of mark and which some consumers may assume is functional or solely

decorative;

28     Section 18(2).

29     Paul Sumpter Trade Marks in Practice (2nd  ed, LexisNexis NZ Ltd, Wellington, 2011) at 68;

British Sugar Plc v James Robertson & Sons Ltd, above n 18, at 306.

30     Advantage Group Ltd v Advantage Computers, above n 22, at [16].

31     Fredco Trading Ltd v Miller (2006) 11 TCLR 751 (CA) at [68].

32     Re NYDJ Apparel, Inc, above n 1, at [56].

33 At [81].

(c)      it  was  selected  to  highlight  a  particular  technical  function  of  the garments,  and  some  consumers  may assume  it  contributes  to  that technical function; and

(d)it  appears  in  a  location  where  consumers  are  less  accustomed  to finding trade mark signifiers.

[24]     She   considered   that   NYDJ   therefore   faced   a   substantial   burden   to demonstrate  that  consumers  recognise  the  stitching  as  a  trade  mark  and  one connected with NYDJ.   She considered that NYDJ had not displaced this burden for the following reasons:

(a)      It  was  only  the  use  of  the  criss-cross  stitching  that  was  to  be considered, not the use of other marks with which it appears (that is “Tummy Tuck” and “Not Your Daughter’s Jeans”).34

(b)Most of the advertising material submitted made no or only slight reference to the criss-cross stitching mark.35

(c)      Sales levels were of greater relevance because each purchaser would at least see the mark.  However it was not clear from the evidence that even  purchasers  of  the  goods  would  see  the  stitching  as  a  trade mark.36

(d)Some of the advertising material gave the impression that the stitching is functional.  Garment pockets normally have some form of stitching as  a  necessary  part  of  their  function.    Unless  stitching  is  highly stylised, consumers may assume that it is functional in nature.37

(e)      It seemed clear that only a small proportion of sales and advertising figures could be attributed to the criss-cross stitching.   Very little

emphasis was put on that mark in the advertising, only those who tried

34 At [57].

35 At [62].

36 At [63].

37     At [65] to [68].

on the jeans would see the mark, and post-purchase customers will not become “walking advertisements” for the mark because it will not be visible to others.38

(f)      There was no evidence from consumers that they associate the mark with NYDJ.   Only two of the declarations from retailers said that customers made this link.39

(g)Overseas registrations did not assist.  The Australian registration was accepted on the basis of evidence of use in that jurisdiction.

[25]     In my view the Assistant Commissioner erred in her assessment that the mark was at the low end of the distinctiveness scale.  Accordingly she erred in the bar she set for the evidence necessary to demonstrate distinctiveness.40     In this  case if, contrary to my view that the mark does not have a distinctive character, in the context of the market for jeans, where stitching is regularly a badge of origin, less compelling evidence of acquired distinctiveness should suffice.

[26]     Here  the  evidence  is  that  NYDJ  promotes  its  jeans  with  the  criss-cross symbol.  Although that symbol is smaller than the other NYDJ marks, it serves to link the criss-cross pattern to NYDJ.   That is likely to serve to reinforce the consumers’ link between the criss-cross stitching and NYDJ.  There is also evidence that at fitting days the criss-cross stitching is pointed out to customers.   There is further  evidence  from  established  and  significant  retailers  that  the  criss-cross stitching on the inside of the jeans is distinctive and that they associate that stitching with NYDJ and not others.  Had it been necessary to decide the appeal on this basis I would have considered this evidence to be sufficient to show that distinctiveness has been acquired, particularly in the context of a market where jeans are commonly

identified by their stitching.

38     At [71] to [73].

39 At [74].

40     This was not like “Treat”, which was the mark at issue in British Sugar Plc V James Robertson

& Sons Ltd, above n 18, and which is a highly descriptive and common word which consumers would not take as a badge of origin and for which compelling evidence of acquired distinctiveness would be needed.

Result

[27]     The appeal is allowed. The mark is to be registered subject to the following:

(a)       The “Explanation” of the mark is amended so as to read:

The mark consists of a non-functional crisscross stitching pattern, in a contrasting red or purple colour, on the inside pocket of a pair of jeans, as shown in the representation attached to the application. The leg and jeans outline shown in broken lines in the representation forms no part of the mark, but is included to show the location of the mark in use.

(b)      The Goods and Services Descriptions of the mark is amended from

“Articles of clothing” to “Jeans”.

(c)      The registration is the subject of a disclaimer that “Registration of this trade mark shall give no right to the exclusive use of stitching in a crisscross pattern, except in the form shown and explained in the registration.”

Mallon J