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Protecting The Brand

Nygård Inc. may be a privately held company, but occasionally information about some of its financial expenditures can be gleaned from public sources.<br><br>That’s the case with a lawsuit filed by Nygård and its affiliated company,...

Nygård Inc. may be a privately held company, but occasionally information about some of its financial expenditures can be gleaned from public sources.

This story first appeared in the December 11, 2002 issue of WWD.  Subscribe Today.

That’s the case with a lawsuit filed by Nygård and its affiliated company, Nygård Ltd., last month against Haggar Clothing Co. and its women’s apparel division, Jerell Ltd. The lawsuit, alleging trademark infringement and unfair competition under both federal and California state laws, was filed in a Los Angeles federal district court. Officials at Haggar haven’t responded to requests for comment on the action.

Although the parties had been in discussions over allegations of infringement concerning Nygård’s “Comfort Fit” mark, Nygård apparently became incensed over the defendants’ decision to file a lawsuit in a Texas federal district court seeking a declaratory judgment over the issue. It was a move Nygård referred to in its Los Angeles lawsuit as an improper “anticipatory filing.”

Nygård’s affiliate, known at that time as Nygård International, is a Canadian firm that is the licensee of the Comfort Fit mark. At one point, according to court papers, Nygård Inc.’s predecessor-in-interest, Eddie Haggar Limited Inc., was affiliated with one of the defendants. That one-time affiliation should be enough to impute actual knowledge of Nygård’s rights to the mark, court papers said. Eddie Haggar held the original rights to the name, and those rights were transferred to Nygård Inc. in May 1995, the lawsuit said.

The Comfort Fit trademark has been used in women’s apparel, mostly for pants. Court papers said that one of the unique aspects of Nygård’s Comfort Fit apparel is the waistband design. That design, the firm said, is what the trade and consumers are familiar with and have associated with Nygård’s Comfort Fit pants.

Financially, Nygård said in court papers that Comfort Fit has been a “very successful” apparel mark for the firm.

“Nygård sells millions of dollars in Comfort Fit pants annually in the United States, and in 2002 has already sold over $6 million of Comfort Fit pants. Nygård’s products bearing the Comfort Fit mark are sold in and marketed to major retail outlets throughout the United States, [including] Dillard’s, Kohl’s, J.C. Penney and Belk’s,” the firm said in court papers.

Nygård was less verbose about how much it’s actually spent on advertising and marketing so far, but noted that such “expenditures in advertising and promoting Comfort Fit pants exceed $1 million annually.”

According to Nygård, it does expend “substantial resources in advertising and promotion pants” under the Comfort Fit mark. The firm also disclosed in court documents that it employs a nationwide sales force and funds cooperative advertising placed by its customers in catalogs and national, regional and local publications for Comfort Fit pants.

According to Nygård’s lawsuit, the defendants allegedly have been selling apparel labeled “Comfort Fit Pants” and “Comfort Fit Waist Pants.”

Nygård said it sent a cease-and-desist letter to the defendants on Oct. 7, 2002, over their use of the mark. Four days later, the defendants announced a nationwide advertising campaign for Haggar using the alleged infringing mark. By the end of October, the Texas suit was filed, with Nygård responding in kind with a lawsuit of its own in Los Angeles.

Nygård’s beef concerning the infringement, besides the fact that it was “without Nygård’s authority or consent,” was that the alleged actions were “intended to and are likely to confuse consumers and members of the trade as to the source of defendants’ ‘Comfort Fit’ pants and waistbands, and falsely suggests a connection or association between Nygård and defendants,” the lawsuit said.

Nygård added that the alleged unlawful activities will continue to result in irreparable harm and injury to the firm. Among those injuries are the deprivation of Nygård’s “absolute” right to determine the manner in which its image is presented to the public and a false representation of sponsorship or association between Nygård and the defendants.

Also mentioned, but with no dollar amount specified, are the financial implications from the alleged infringing actions.

Nygård is seeking a preliminary injunction barring the defendants from either selling any infringing product or using the mark in any promotional material. Nygård also wants the Haggar defendants to turn over all alleged infringing products and packaging, as well as an accounting of profits gained from the manufacture of its Comfort Fit pants.

To be sure, while Comfort Fit pants were the subject of the lawsuit, they aren’t the only products manufactured by Nygård.

As reported, Nygård produces under the labels Peter Nygård Signature, Bianca Nygård, Nygård Collection and Lia. The company has been looking to different avenues to expand its manufacturing base.

In September, Peter Nygård, acting independently of his role as chairman and ceo of Nygård, acquired 6.4 percent of the publicly held firm Tarrant Apparel Group through his investment vehicle Emerald Point Inc., which is based in the Bahamas. Tarrant is based in Los Angeles.

At the time, the entrepreneur characterized the purchase as a “private investment in a public company that’s indicative of my long-term commitment to Mexico.”

According to a Form 13-D filed with the Securities and Exchange Commission, Emerald Point acquired 1,019,093 shares of Tarrant, or 6.4 percent of its outstanding common stock, for about $5.2 million during a six-month period ending June 4.

The investment in the Mexican production facilities was a move to compensate for the scaling back of Nygård-owned plants in Canada to two from seven several years ago. The Nygård firm has a number of exclusive arrangements and controlling interests, including joint ventures, in Mexican plants.

Peter Nygård said at the time of the Tarrant investment: “There have been problems with reliability out of Mexico, but it’s here to stay and we want to be involved in seeing that things begin to work properly. To get it done in Mexico, you have to be directly involved.”

So far, there haven’t been any work orders through Tarrant’s Mexican facilities, and Gerard Guez, chairman and ceo of Tarrant, told WWD that his firm and Nygård had no previous business relationship.