Defendants found not to use trademark as registered

In Old Navy (ITM) Inc v Chirazi (April 28 2011), the Federal Court of Appeals has upheld a decision of the first instance court in which the latter had ordered co-defendants Rafael Chirazi, Favio Chirazi and Ginotex SA to cease using the trademark OLD NAVY and to pay plaintiff Old Navy (ITM) Inc Ps50,000 (approximately $12,000) as compensation for damages. The court also dismissed the defendants’ counterclaim requesting the cancellation of Old Navy’s registration for the trademark OLD NAVY.
Old Navy brought suit against the co-defendants, requesting that they cease using the trademark OLD NAVY and seeking compensation for damages (Court Docket 5163/04). The co-defendants counterclaimed for the cancellation of Old Navy’s registration for OLD NAVY on the grounds that it was confusingly similar to their YACHTING OLD NAVY mark.
Ginotex had owned a registration for YACHTING OLD NAVY (together with a dolphin device) for products in Class 25 of the Nice classification, which was later assigned to co-defendants Rafael Chirazi and Favio Chirazi. The Chirazis failed to renew the registration and, shortly after the registration lapsed, they reapplied for the same mark. Old Navy, which has owned the trademarks OLD NAVY in Class 25 since 1994, and OLD NAVY (with oval design) in Class 25 since 1997, opposed.
When examining the co-defendants’ use of the trademark acquired from Ginotex, the court highlighted that, instead of using the mark as registered, the co-defendants had introduced changes which rendered the mark similar to Old Navy’s mark. It was shown not only that they used the mark OLD NAVY within an oval, but also that they did not use the dolphin device. Furthermore, they had used their trademark together with English words (ie, ‘medium’, ‘small’, ‘American L’ and ‘for export’) to promote the belief that their products were imported. Therefore, the way in which they used the trademark YACHTING OLD NAVY was very close to Old Navy’s registered trademark.
Moreover, the 7,700 pieces of clothing seized following a court order had labels bearing the oval device (white letters against a blue background) of the OLD NAVY mark, and the term ‘yachting’ was negligible. Further, the cardboard labels included with the pieces of clothing bore the oval device in blue and white, which was characteristic of the plaintiff’s OLD NAVY mark. Finally, in the invoices issued by the company owned by the Chirazis, the plaintiff’s trademark and oval logotype could be seen, and the term ‘yachting’ was written in an extremely small type font.
Based on the foregoing, the court held that the co-defendants intended to mislead consumers and profit from Old Navy’s reputation.
Regarding the counterclaim for cancellation of the trademark OLD NAVY, the court pointed out that the registration for YACHTING OLD NAVY had lapsed in 2007 and had not been renewed. Therefore, there was no basis for the counterclaim. Moreover, even if it was deemed that the co-defendants’ re-application for the same mark amounted to renewal, the trademarks at issue were not confusingly similar: the co-defendants’ mark consisted of three words, while Old Navy’s mark consisted of only two, and the devices were different. It was also proved that the OLD NAVY mark had been extensively used by a significant client base.
Finally, the court upheld the amount of damages awarded by the lower court. In the court’s opinion, the co-defendants’ actions did not constitute normal exercise of their rights, and the way in which they used their mark showed bad faith. 
Fernando Noetinger, Noetinger & Armando, Buenos Aires

Unlock unlimited access to all WTR content