For years now, True Religion has been on a vigilant hunt for apparel makers illegally using the company’s iconic horseshoe back-pocket design, which symbolizes everything cool about the premium-denim brand.

But in an about-face, an English apparel maker, who said he had registered the trademark years before True Religion was even in business, took the $364 million apparel company to court in Los Angeles and may be much richer for it after a recent out-of-court settlement was reached.

Last year, Philip Duff filed a case in U.S. District Court in Los Angeles charging True Religion with trademark infringement and unfair competition. The English businessman said in court papers filed on June 22, 2010, that he began selling blue jeans in the 1980s with a horseshoe design stitched on the back pocket that was just like the one employed by True Religion, based in Vernon, Calif. A few years later, Duff’s sales branched out to the United States.

By 1995, Duff said, he successfully registered the design with the U.S. Patent and Trademark Office, renewing the trademark on May 27, 2006, for another 10 years, according to court papers.

A few months later in 2006, the same government patent and trademark office awarded True Religion a trademark for the horseshoe design that has been a mainstay of the denim company since it was founded by Jeffrey Lubell, and his ex-wife, Kym, in 2002.

Coincidence? Duff didn’t think so. In court papers, the English clothing maker maintained that True Religion knew of his trademark all along. “Defendants had actual knowledge of the existence of … Duff’s ‘Horseshoe’ mark because, among other things, before making the application, they had received a copy of the online records from the USPTO showing [Duff’s] mark and the particulars of its registration,” court papers noted.

But True Religion, answering the charges, said that its horseshoe design was more of a “Stylized U” and was not similar to the one used by Duff, despite court photos showing the two looking virtually alike.

Plus, their trademark is set apart by a special, bold stitching design.

True Religion also maintained that Duff didn’t sell blue jeans but rather “equestrian clothing” in the United States and Europe.

On the trail

Meanwhile, True Religion was maintaining an aggressive campaign to root out counterfeiters copying its trademark pocket design, which sets it apart from other high-end blue jeans.

In the last six years, the company has filed dozens of federal lawsuits protecting its trademark. The company also works closely with the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, various federal agencies and a private investigator to sort out counterfeiters who are selling fake True Religion jeans at a discount.

In October 2010, the Los Angeles Police Department raided a counterfeit-apparel factory in Lynwood, Calif., where allegedly knockoff True Religion blue jeans, T-shirts and polo shirts were being made.

The jeans were selling for $40 to $60 on the street and for $100 to $120 at blue-jeans parties, police said. Legitimate True Religion jeans sell for $168 to $375.

True Religion jeans also have been a favorite knockoff target by Chinese factories. Last year, a 40-foot cargo container stuffed with 21,024 counterfeit True Religion jeans was discovered after it entered the Port of Los Angeles.

Settling up

As fake True Religion blue jeans were being apprehended in Los Angeles, English businessman Philip Duff and True Religion were trading legal documents back and forth, each maintaining to be the rightful owner of the horseshoe trademark.

On June 27, the two sides reached an out-of-court settlement. While the terms of the settlement were not made public, True Religion noted in its most recent second-quarter earnings report filed with the Securities and Exchange Commission that it set aside $1.5 million in June “for a settlement of a pending litigation claim against the company.”

Gregory Gilchrist, the San Francisco attorney representing Duff, said it was a very interesting case, but he was not at liberty to discuss the legal proceeding or the settlement.

Calls to True Religion’s in-house counsel, Deborah Greaves, and the company’s lawyer in the case were not returned.

Trademark symbols are the bread and butter of the apparel industry. Ralph Lauren is known for his polo player embroidered on polo shirts and jeans. Los Angeles–based 7 For All Mankind is recognizable for its large “A” or its own stylized squiggle on its back pockets, and Joe’s Jeans, another L.A. company, has its own distinctive pocket design.

“The brand is your nest egg,” said L.A. attorney Mark Brutzkus, who works with apparel companies. “It is probably the biggest component to the company. If you sell the business, a piece of the puzzle is the value of the brand.”

Los Angeles attorney Milord Keshishian, who specializes in intellectual-property rights, notes that apparel makers need to undertake a thorough trademark and use investigation that combs through the records of the U.S. Patent and Trademark Office as well as state records. “A lot of people are unaware that the secretary of state maintains a state trademark registration,” he said.

Doing due diligence can save new companies money and avoid headaches down the road. “I think it is very important for apparel manufacturers to make sure that any private labeling they do is initially documented and the trademark is registered to make sure they don’t spend time and money marketing the label, lest it be shut down,” he said
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