THE FASHION LAW EXCLUSIVE – One of the U.S. army’s camouflage pattern developers has lost its intellectual property-related battle against a fellow army fatigue supplier. Crye, a Brooklyn, NY-based designer and producer of apparel and equipment for military use, filed suit against Duro Textiles, a Massachusetts-based textile producer with a 30-year history of producing textiles for both the army and the general public, in 2014 in the Southern District of New York, a federal court in Manhattan. According to its $2 million-plus lawsuit, Crye alleges that Duro’s printing of an army camouflage pattern amounts to breach of contract, trade dress infringement, and common law unfair competition.
A bit of background: Crye holds four design patents and trade dress protected relating to the “MULTICAM” camouflage pattern it developed, which was used as the standard issue camouflage pattern for U.S. soldiers deployed to Afghanistan from 2010 to 2014. It entered into a licensing agreement with Duro, thereby granting Duro the exclusive right to print the MULTICAM pattern on fabrics and sell it in the U.S. in connection with both government and commercial sales from 2008 to 2014, after which the license expired. Two years later, in 2010, the U.S. Army asked that the exclusive deal between Crye and Duro be ended, to ensure that it had access to an uninterrupted supply of camouflage bearing the MULTICAM print. As a result, Crye arranged to license the print to other textile-printing parties.
In 2014, the U.S. Army changed its designated camouflage from MULTICAM to “Scorpion W2” which, according to Crye, was made by the Army “by making very minor modifications” to MULTICAM. Around this point in time, Duro chose not to renew its licensing deal with Crye in connection with the production of the MULTICAM print.
Problems arose shortly thereafter, when the U.S. Government ordered army garments bearing the Scorpion W2 print through contractors, with Duro serving as one of Government’s suppliers. Duro’s only sales of Scorpion W2 have been for the Government, specifically to Government contractors and subcontractors in the supply chain for the U.S. Army.
As a result of the similarity between the MULTICAM and Scorpion W2 designs and Duro’s sale of the latter, Crye filed suit against Duro and several other entities, alleging that such sales were in violation of the parties’ licensing agreement, which prevented them from selling patterns that were “similar” to the MULTICAM pattern previously licensed by Crye for U.S. government sales.
Duro responded to Crye’s lawsuit, filing twelve counterclaims of its own, and asserting that Crye’s suit is based upon invalid patents and amounts to little more than “patent infringement against the Government masquerading as a contract claim.” The lower court dismissed eight of Duro’s twelve counterclaims, finding that Duro had failed to plausibly plead that plaintiffs’ patents are invalid.
THE NON-COMPETE CLAUSE IS TOO BROAD
In her most recent ruling Judge Cote granted Duro’s motion for summary judgment, thereby dismissing the case.
She first looked to the validity of the non-compete clause that was included in the licensing agreement entered into in 2008 by Crye and Duro, which prohibits Duro from selling any print that is similar to the “color palette, pattern or arrangement or placement of any element incorporated in MULTICAM.” Cote found this wording to be too broad, holding that if the clause is “enforced to its extreme, Crye could prevent Duro from printing any camouflage pattern.”
Further, Cote took issue with the fact that the clause “has no limits on its geographic scope or temporal duration, which places its burdens on Duro anywhere in perpetuity.” Moreover, she found that even if the court were to limit the covenant to six years, that would still be too broad. As such, Cote ultimately found that the clause is “impermissibly broad in scope and unduly burdensome” and thus, should not be upheld.
NO LIKELIHOOD OF CONFUSION
In addition to the issue regarding to breadth of the covenant not to compete, Duro also took issue with Crye’s trade dress infringement claim. (For the uninitiated, trade dress encompasses the overall design and appearance that make a product identifiable to consumers). Cote similarly shot down Crye’s claim here, too.
In order for a party to make a claim for trademark or trade dress infringement, he must show that the defendant’s use of a similar mark is likely to cause confusion among “ordinary prudent purchasers.” In the case at hand, Crye claims that Duro’s sale of Scorpion W2-printed goods is likely to create confusion amongst consumers because it is similar in appearance to the MULTICAM print. But Judge Cote didn’t buy that assertion. She held that “there is no likelihood of confusion associated with Duro’s sales of Scorpion W2 to the Government.” Here’s why …
The Government is the creator and only purchaser of Scorpion W2. It is a sophisticated consumer, as its creation of Scorpion W2 and its announced switch from MUTLICAM in 2014 evidences. Duro’s only sales of Scorpion W2 have been for the Government, specifically to Government contractors and subcontractors in the supply chain for the U.S. Army. These contractors order Scorpion W2 from Duro by name. Thus, while MULTICAM and Scorpion W2 compete in the same Government sales market, there is no likelihood of actual confusion on the part of the Government or its contractors.
As a result, Duro is off the hook for claims of breach of contract, trade dress infringement, and common law unfair competition, and the case is being dismissed as we speak.