The Fashion Law Exclusive - A significant portion of Coach's efforts to revamp its brand have taken the form of lawsuits to protect its trademarks (this form of intellectual property is, after all, one of a brand's greatest assets and one that must be policed by the rights holder), and Coach's recent suit against Tumi is indicative of this endeavor. The New York-based brand filed a trademark infringement lawsuit against Tumi, alleging that luxury travel bag company is infringing Coach's "Story Patch," a federally registered trademark leather patch that is present inside the vast majority of its bags.
According to Coach's complaint, which was filed last week in the Southern District of New York, "In or around April 2014, Coach discovered that Tumi had been selling and/or offering for sale products bearing a mark confusingly similar to the Coach Story Patch." Coach alleges that the patch that Tumi is using in its bags is "identical to Coach's Story Patch in size, placement and design."
Coach, which welcomed new creative director Stuart Vevers (who came from LVMH-owned brand, Loewe) last year, further alleges that "the language on [Tumi's] mark is substantially indistinguishable from the Story Patch, thereby creating the same look and feel as Coach's Story Patch." Its patch reads: "This is a Coach bag. It was handcrafted from genuine leather. Its superior craftsmanship and attention to detail reflect our commitment of enduring quality." Tumi's allegedly infringing patch reads: "This Tumi bag is distinguished by time-honored artisanal traditions. It was meticulously crafted from the finest materials, custom-made hardware and an uncompromising attention to detail." In terms of placement: Both brands' patches are stitched into place towards the top of the inside pocket of their bags.
Coach's Story Patch (left) & Tumi's allegedly infringing patch (right)
Due to what Coach deems to be trademark and trade dress infringement (it is also alleging unfair competition and false designation of origin and false descriptions in its lawsuit), it sent Tumi a cease and desist letter in late May, alerting the brand of the infringement and requesting that it cease the sale of any bags that include the patch design. Tumi responded on June 11th with a letter of its own, stating that it would continue to manufacture, sell, and offer the goods for sale, despite Coach's demands. According to Coach's complaint, Tumi continues to engage in the sale of the infringing goods.
In its suit, Coach is asking the court to step in and order temporary, preliminary and permanent injunctions (which would immediately and permanently prevent Tumi from using the patch design at issue, significant remedies for the brand) and to award it an array of monetary damages, including all profits gained from Tumi's "wrongful acts."
In other news, Coach reported its fourth quarter results today. The house, which revealed soft sales in North America (after losing additional market share to affordable luxury rival, Michael Kors), still managed to beat estimates for revenue and sales for the quarter ending June 28, 2014, posting net income for the quarter of $163.5 million and $4.81 billion in net sales for the year. The brand reported annual revenue of $1.14 billion, higher than analysts’ estimate of $1.10 billion. Lastly, shares of Coach Inc. (COH) are up 5%. (Analysts have taken a relatively neutral stance on Coach: 22 of the 39 analysts covering the stock consider it a Hold, 11 have called for a Buy, and 6 are advocating a Sell). According to a statement from the brand: "Most recently in June, we unveiled our comprehensive long-term strategic plan to reinvigorate our business, and rewrite the Coach playbook to achieve growth and leadership. We are taking the key transformation actions to enable the strategic path forward, embarking on the execution phase of our journey."