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GTFM, INC. v. SOLID CLOTHING INC.

July 11, 2002

GTFM, INC. AND GTFM, LLC, PLAINTIFFS,
V.
SOLID CLOTHING INC., D/B/A ZAM, DEFENDANT.



The opinion of the court was delivered by: Cote, District Judge.

      At this non-jury trial, the plaintiffs assert that their two digit number — "05" — functions as a trademark when placed on clothing, principally athletic jerseys, sold to young men. Plaintiffs GTFM, Inc. and GTFM, LLC (collectively, "GTFM") are the owner and master licensee, respectively, of the federally registered trademarks "FUBU," "FUBU 05" and "05" for International Class 25 (Clothing). GTFM designs, manufactures and sells clothing primarily to young males, marketing its products by identification with urban American "hip-hop" culture and celebrities from the sports and music worlds. In less than a decade, its sales have exploded to hundreds of millions of dollars a year. Its designs and success have spawned imitation and this trial is on claims brought against one of its imitators.

GTFM brought this action against defendant Solid Clothing Inc. ("Solid") for Solid's infringement of GTFM's "05" mark. Between 1999 and 2001, Solid used "05" and then "PLAYERS 05" on sports apparel it designed to imitate GTFM's wildly popular garments. GTFM has sued Solid for willful trademark and trade dress infringement, counterfeiting and dilution, and false designation of origin under the Trademark Act of 1946 ("Lanham Act" or the "Act"), 15 U.S.C. § 1051 et seq., common law trademark infringement and unfair competition, and the violation of New York General Business Law Sections 360 — 1 and 349. Solid, which has applied to register its own trademark — "PLAYERS 05" — for the clothing it sells that is based on plaintiffs' designs and trademarks, seeks through a counterclaim to cancel GTFM's registration of the "05" trademark pursuant to Section 37 of the Act, 15 U.S.C. § 1119.

GTFM filed this action on March 28, 2001, and filed an amended complaint on April 2, 2002. A bench trial was held on July 1 and 2, 2002. As noted, the trial principally concerned GTFM's claims that Solid had infringed its "05" trademark, as well as the trade dress of its football and baseball jerseys. Solid relied primarily on its assertions that GTFM's registration of the "05" mark had been obtained through fraud, that the "05" mark is functional, that the "05" mark and trade dress are not distinctive, that there was in any event no confusion because many of Solid's "05" garments also had the word "Players" on the garment along with other distinguishing features, and that it had not engaged in any willful misconduct.

In accordance with the Individual Practices of this Court in civil bench trials, and without objection, the parties submitted the direct testimony of their witnesses by affidavit as well as their documentary evidence in advance of trial. Plaintiffs submitted the affidavits of Daymond John ("John"), GTFM's chief designer and the co-founder and Chief Executive Officer of Fubu The Collection, LLC, which is a shareholder of GTFM, Inc. and a member of GTFM, LLC; Bruce Weisfeld ("Weisfeld"), President of GTFM, Inc. and GTFM, LLC; Norman Weisfeld, Secretary and Treasurer of GTFM, Inc. and GTFM, LLC; Joseph Nadav ("Nadav"), President of City Blue, Inc., a chain of clothing stores; Kris Buckner ("Buckner"), a private investigator; Noe Bermudez ("Bermudez"), a private investigator; Lauren Dienes ("Dienes"), a former associate at Gursky & Ederer, LLP, plaintiffs' counsel; David Jones ("Jones"), a paralegal at Gursky & Ederer; and Ken Weprin ("Weprin"), a sportscaster. Plaintiffs also relied on excerpts from the deposition testimony of Sang P. Park ("Park"), President of Solid; Wha Jung Kim ("Kim"), Secretary of Solid; Diane Choi ("Choi"), an administrative assistant at Solid; and Chong Roh ("Roh"), a paralegal at Park & Sutton, LLP, defendant's trial counsel.

Defendant submitted the affidavits of Park, Kim, Roh, and Marian Golub ("Golub"), a secretary at Silver & Silver, LLP, defendant's local counsel. Defendant also relied on excerpts from the deposition testimony of John, Nadav, and Weisfeld. Weisfeld, Norman Weisfeld, Nadav, Dienes, Jones, Park, Kim, and Roh were cross-examined at trial.

In light of the evidence received at trial, the following constitute this Court's findings of fact and conclusions of law.

Background

In 1995, John placed an advertisement in The New York Times seeking financing for a men's apparel business that he had begun with friends three years earlier in Queens, New York using the trademark "FUBU," which is an acronym for the motto "For Us By Us." John and his friends were young, inner-city African-Americans interested in designing and selling clothing that they themselves would enjoy wearing. They were also interested in making a statement about who should profit from the sale of fashion to African-American youth. "It comes down to ownership," John stated in a magazine interview in 1999; "with us, you actually see African-Americans operating the company. We have a face our customers identify with."

GTFM, LLC was formed in 1998, to act as the master licensee for the "FUBU" brand. GTFM, Inc. granted GTFM, LLC a master license for all "FUBU" trademarks that included the right to enter into sublicenses. GTFM, LLC was also incorporated into the production agreement between Alliance and Samsung.

The "FUBU" brand has grown at an extraordinarily rapid pace over the past decade. In late 1993, John took out a mortgage on his mother's home to cover $60,000 in orders. When John sought financing in 1995, he was struggling to cover $300,000 in orders. GTFM's sales for the year 2001, in contrast, exceeded $350 million worldwide at wholesale. It projects its sales for the year 2002 to exceed $375 million worldwide at wholesale.

GTFM's Use of the "05" Trademark

In 1993, John began to design mens sports jerseys prominently bearing the number "05" (pronounced "oh-five") as well as the "FUBU" trademark. John chose the number "5" to represent the founders of the "FUBU" brand. He placed a "0" before the "5" in an effort to distinguish the number from other numbers used to identify athletes, which typically do not begin with the number "0" except in the combination "00." Indeed, the parties have only been able to identify one professional athlete who ever wore any other number beginning with "0" and not ending in "0," and that was approximately ten years ago when Benito Santiago ("Santiago") of the San Diego Padres wore "09" for a brief time. Santiago currently wears the number "33." Between 1993 and 1997, musicians and celebrities began to wear John's "05" jerseys when they performed and made appearances. During that time, John designed sports jerseys bearing the "05" mark in large bold numerals to circumvent MTV's practice of blurring out trademarks in music videos. The "05" mark has since become so successful that customers will ask for "05" merchandise by name.

Baseball and Football Jerseys

In 1997, John began to design a full line of baseball and football jerseys bearing the "05" mark. These jerseys continue to be GTFM's best-selling garments. GTFM claims trade dress rights in its baseball jerseys and in its football jerseys.

The baseball jerseys typically carry a main applique across the front of the jersey consisting of the "FUBU" trademark and the "05" trademark located below or below and to the right of the "FUBU" mark. The main applique typically consists of fabric overlays of contrasting colors. Some baseball jerseys also carry the word "League" within a flourish below the main "FUBU" mark. Some carry the phrase "FUBU Varsity." Others carry the "05" trademark on the back. The baseball jerseys also commonly carry various smaller patches and embroideries on the sleeves, some with patches on both the right and left sleeves, some with patches only on the left sleeve. These patches typically contain the "FUBU" trademark or the "FUBU" logo, which consists of two rectangular blocks, one standing upright, the other lying on its side, to form an L-like shape. The placement of patches on the sleeves allows consumers to identify the garment as originating with GTFM even when it is hung sideways on a retail sales rack. All of the baseball jerseys also carry a rectangular patch on the lower left front on which is embroidered various phrases such as "Fubu Collection Official Sports Supplier," "Since 1992," "Authentic Circa 1992 Classic Collection," and/or the size of the garment. The fabric for the baseball jerseys is typically 100% polyester and appears in bright solid colors, sometimes with contrasting sleeve colors, or involves horizontal or vertical gradient color fades, sometimes resembling animal stripes. The shirts also commonly make use of neck tape with a black background and red or white lettering featuring the repeated use of the "FUBU" trademark combined with the word "sports." The tag at the back of the neck typically contains the "FUBU" trademark and the "FUBU" logo. The tag also typically carries the phrase "Since 1992." None of the baseball jerseys produced by plaintiffs carries any notification, in the form, for example, of an R in a circle or a "TM," that GTFM claims intellectual property rights in any of its registered or unregistered trademarks or trade dress.

The football jerseys typically feature the "05" mark in a block font with contrasting background shading under the front and back yokes and on the shoulders of the garment. As with the placement of patches on the sleeves of the baseball jerseys, the placement of the "05" on the shoulders of the football jerseys allows the garment to be identified as originating with GTFM when hung sideways on a retail sales rack. The football jerseys also typically feature the "FUBU" mark on the upper left chest of the garment in an italicized font and on the back across the yoke between two stars on a rectangular overlay sewn onto the garment. Like the baseball jerseys, the football jerseys also commonly carry various patches and embroideries incorporating the "FUBU" mark or logo design. Some also carry patches on which are embroidered phrases such as "Official Champion" or "FUBU The Collection." The football jerseys typically carry a large, horizontal rectangular patch on the lower left of the front of the garment consisting of the "FUBU" trademark, the "FUBU" logo, and assorted phrases, such as "Sport Series Collection Limited Edition," as well as the size of the garment. The football jerseys are commonly made of 100% polyester brightly colored fabric, sometimes with contrasting yokes, horizontal or vertical gradient color fades, streaked patterns, or vertical stripes of alternating mesh and solid material fabric. Like the baseball jerseys, the football jerseys also commonly make use of black neck tape featuring the repeated use of the "FUBU" trademark in either red or white and the word "sports." As with the baseball jerseys, none of the football jerseys carries any notification that GTFM claims intellectual property rights in any of its registered or unregistered trademarks or trade dress.

GTFM recently provided the following definitions of its asserted trade dress in response to a discovery request. With regard to its baseball trade dress, GTFM stated:

The Fubu Baseball Jersey Trade Dress consists of a line of baseball-style jerseys that incorporate [sic] the following combination of design elements:
1. The "house" trademark (i.e., "Fubu") depicted in cursive script across the front of the garment underlined with a long flourish.
2. The placement of the "05" trademark below and to the right of the "house" trademark on the front of the garment.
3. The elements described in (1) and (2) above, overlaid upon a contrasting color background;
4. The placement of various patches, embroideries and application [sic] on the garments, including:
a. a rectangular, horizontal embroidered patch on the left sleeve of the garment;
b. a smaller embroidered trademark logo design on the right sleeve of the garment; and
c. a large, horizontal rectangular patch located on the lower left of the front of the garment.
5. The use of unique fabric and color treatments, including:

a. bright colors and color combinations; and

b. gradient color fades, i.e., colors on the garment changing gradually into other colors on the garment, either vertically or horizontally;
6. The use of neck tape with a black background with red and/or white lettering, featuring repeating use of trademarks.

With regard to its football trade dress, GTFM offered a more elaborate definition:

The Fubu Football Jersey Trade Dress consists of a line of football-style jerseys that incorporate [sic] the following combination of design elements:

1. The placement of the "05" trademark:

a. on the front of the garment under the front yoke, mid-chest;
b. on the back of the garment, under the yoke, mid-back; and

c. on the shoulders of the garment.

2. The use of a distinctive font style for the "05" trademark described in (1) above, namely a block font with contrasting background shading to give a "shadow" effect.
3. The placement of the "house" trademark (i.e., "Fubu"):
a. on the upper left chest of the garment in an italicized font style, above the mid-chest "05" trademark and below the shoulder "05" trademark;
b. on the back of the garment across the yoke and below the neck ribbing;
c. between two stars, one on either side of the "house" trademark as used in (b), above; and
d. as used in (b) and (c) above, placed on a rectangular overlay sewn onto the garment.
4. The placement of various patches, embroideries and applications on the garments, including:
a. a geometric shield with the words "Official XXL Champion," on the right chest of the garment;
b. a large rectangular patch containing the "house" trademark and the words "The Collection" on the left sleeve of the garment;
c. a smaller, embroidered trademark logo design on the right sleeve of the garment;
d. a large, horizontal rectangular patch located on the lower left front of the garment; and
e. a pentagonal patch featuring the "05" trademark at the center of the neck ribbing.
5. The use of unique fabric and color treatments, including:

a. bright colors and color combinations; and

b. gradient color fades, i.e., colors on the garment changing gradually into other colors on the garment, either vertically or horizontally;

c. a streaked color pattern; and

d. vertical stripes of alternating mesh and solid material fabric;
6. The use of neck tape with a black background with red and/or white lettering, featuring repeating use of trademarks.

Despite this effort to define a trade dress, the baseball and football jerseys consist of a wide variety of patch patterns, color patterns, and design features. The only trade dress elements consistently used on the jerseys are the "FUBU" trademark and the "05" trademark. The "05" trademark tends to be dominant on the football jerseys while the "FUBU" trademark tends to be dominant on the baseball jerseys. There are no other specific trade dress elements consistently used on all of GTFM's baseball jersey designs or football jersey designs. As John, GTFM's chief designer, stated in his deposition testimony, it is the presence of the "FUBU" trademark and "05" trademark that distinguishes GTFM jerseys from other jerseys in the marketplace:

Q: What characteristic about FUBU 05, 05 jerseys that makes [sic] it distinct, unique from others?
A: [] The fact that — well, we design several different jerseys so we try to use cutting-edge designs, which is just an aesthetic thing. But the major difference from our jerseys and everybody else's, which is it carries our mark, which is 05, is FUBU, or both can be combined and our fonts.
Q: How would a customer know when he's looking at a FUBU product? How would we know it's a FUBU product? A: He would know by the name either FUBU or 05.

Plaintiffs have used the "05" mark in tandem with the "FUBU" mark on a variety of garments in addition to the baseball and football jerseys, including baseball jackets, "racing" jackets, fleece pants, acrylic sweaters, baseball hats, t-shirts, jogging sets, and sleep wear, for men, women, and children. Beginning in the year 2000, GTFM also began to use "05" and "FUBU" together with phrases such as "Dirty Dirty," "Dirty South," "Southside," or "Uptown" on its shirts. Nearly all of GTFM's garments are characterized by the use of bright colors, bold forms and connotations of athleticism. GTFM does not contend, however, that its entire line of apparel carries specific and consistently-used trade dress elements other than the "FUBU" and the "05" trademarks.

GTFM's Sales and Advertising of the "05" Trademark

The average wholesale price of GTFM's jerseys is $30. The jerseys retail for prices ranging from $60 to $120. The football jerseys and larger size jerseys carry extra patches and tend to cost more. GTFM jackets range in price from $75 to $300 retail. GTFM's apparel is available both at independent "mom and pop" sportswear stores as well as at large department stores, such as TJ Maxx, JCPenney, and those operated by the Federated and May Company department store chains. GTFM's customer base consists principally of males ranging from ages twelve to twenty-five.

Since 1998, GTFM has sold more than three million units of apparel items bearing the "05" trademark. The large majority of these items have been baseball and football jerseys. Sales of apparel bearing the "05" mark have resulted in gross revenues of nearly $87 million since 1998.

Since 1996, GTFM has spent approximately $16.6 million to advertise its apparel products. Approximately 50%, or $8 million, of this amount was directed towards the promotion of goods that bear the "05" trademark. GTFM print advertisements have appeared in magazines such as The Source, Vibe, Rolling Stone, GO, Teen People, and Maxim.

GTFM admits that its advertising expenditures are relatively low as compared to the expenditures of other apparel brands. GTFM has pursued a strategy of leveraging its advertising expenditures by persuading celebrities to wear its trademarks. For example, since 1994, the recording artist and actor LL Cool J has worn "05" garments in numerous music videos, television interviews, motion pictures, concerts, and public appearances, for which GTFM has paid him more than $4 million or approximately one-fourth of its total advertising expenditures of $16.6 million. Heavyweight boxing champion Lennox Lewis ("Lewis") also consistently wears GTFM apparel. Lewis recently appeared, for example, on the HBO sports interview program "On the Record" wearing an "05" baseball jersey. GTFM's compelling story of inner-city African-American entrepreneurs building their own apparel company against enormous odds has also received widespread, unsolicited media coverage on network and cable television programs such as ABC's World News Tonight, CNN's Business Unusual, Fox News's Cavuto Business Report, and ABC's The View, as well as in major newspapers. The "05" mark has also been the subject of several newspaper and magazine articles describing the cultural significance of "05" and "FUBU," particularly to the African-American community.

Solid's Business

In 1998, Park and Kim formed Solid Clothing Inc. as a California "S" corporation. Both Park and Kim had extensive experience in the apparel industry. From 1988 to 1995, Park worked as a wholesale salesmen for H & G International, an importer of clothing in Los Angeles. From 1990 to 1995, Kim opened and closed a series of apparel businesses in the Los Angeles area. In 1995, Park and Kim formed ZAM Clothing Company as a partnership to manufacture and wholesale men's casual wear. The two formed Solid three years later from the assets of their former partnership.

As is apparent from a review of its catalogues, Solid is a producer primarily of knock-off goods. As a recent inspection of its premises revealed, Solid maintains a collection of samples, computer assisted designs ("CADs"), hangtags, catalogues, and advertising for the clothing of popular garment manufacturers, such as Nike, Adidas, Tommy Hilfiger, and GTFM. It uses these samples and material to design and sell its own clothing.

In 1999, Solid's inventory included a wide variety of sports jerseys bearing the colors and sometimes the insignia of well-known professional sports teams. Some of these jerseys also bear the numbers of famous athletes, such as Michael Jordan's "23," Dallas Cowboy running-back Emmitt Smith's "22," or Green Bay Packer quarterback Brett Favre's "4." Solid has since shifted primarily to producing shirts bearing imprints of Japanese anime images like those created by Bandai Entertainment, Inc. under the "GUNDAM" trademark as well as the distinctive designs of fashion designer Gianni Versace. Since its founding, Solid has repeatedly received cease and desist letters from third parties complaining that it infringed their intellectual property rights: in December 1997, from Tommy Hilfiger Licensing Inc.; in April 1999, from High Image, Co.; in November 1999, from the Coalition to Protect the Advancement of Sports Logos; in February 2000, from Kairouz Corporation; in May 2000, from Hoffman California Fabrics; in February 2001, from Bandai Entertainment Inc.; and in January of this year from Usso Apparel Co., Inc. Nearly all of these disputes have resulted in settlements whereby Solid agreed to cease and desist. Some also involved cash payments.

Solid's Design, Manufacture and Sale of "05" Clothing

In February 1999, Solid began to sell men's sports jerseys with the number "05" prominently displayed mid-chest on the front of the garment. Solid ordered these "05" jerseys from its Korean suppliers in the fall, of 1998. The football jerseys also commonly carried a geographical designation on the upper left such as "New York." Sewn to the inside of the neck of the garments was a label on which was embroidered "ZS Sports" and the name "ZAM" under which Solid does business. Various hang-tags also carried "ZS Sports" or "ZAM" marks. The football jerseys in particular also carried a "ZS Sports" patch on the left sleeve of the garments.

Park and Kim have testified that their manufacturers in South Korea came up with the idea to use the number "05" on their apparel and chose the placement of the "ZS Sports" patch on the left sleeve. They contend that their manufacturers were aware of so many different Korean companies creating "05" garments for the American market that they merely recommended this design to Solid as a popular one and that Solid naively accepted the recommendation with no understanding that GTFM had or claimed to have trademark rights in the "05" mark. Park, in particular, has testified that Solid has little input into the design of its apparel and that at the time Solid began to sell "05" merchandise, he was aware of many users of the "05" designation, including GTFM. When cross-examined on this issue, however, Park was unable to identify any users of the "05" mark in early 1999, other than GTFM and Solid.

Park's and Kim's testimony that they chose to place the "05" designation on their merchandise in good faith is not credible. It is belied by Solid's repeated copying of popular brands, by its deceit during the discovery process in this litigation, deceit that was designed to hide the extent of its sales of "05" clothing and materials relevant to an accurate assessment of its knowledge and intent, and by the perjury of Park in particular during his deposition and at trial. In this regard, Solid's bad faith is evident from its insistence that its apparel was in no way copied from GTFM's apparel. The similarities between Solid's and GTFM's jerseys are unmistakable, particularly with respect to elements of their trade dress. It is particularly telling that when GTFM inspected defendant's business premises in Los Angeles in June 2002, it found GTFM's Fall 1998 catalogue, which was released in the summer of 1998, and which includes numerous CADs of clothing bearing the "05" trademark. Solid's 1999 catalogue includes a full line of garments in which the most prominent ...


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