Quiksilver Loses Latest Round Over Roxy Name

After eight years of battling Quiksilver Inc. in federal court, a small Los Angeles manufacturer has won the right to resume making clothes under its Roxywear label.

Kymsta Corp., a women’s clothing maker located close to downtown Los Angeles, recently received a ruling from the U.S. 9th Circuit Court of Appeals overturning a 2-year-old U.S. District Court decision mandating Kymsta phase out its Roxywear line over an 18-month period.

The appeals-court decision on Dec. 30 is the latest chapter in a legal tussle launched by Quiksilver, which complained the Roxywear name was too close to its Roxy brand for teens and young women. Quiksilver, based in Huntington Beach, Calif., had 30 days to seek further review of the appeals-court decision, but it has not taken further legal action.

“After all these years, we’re finally done,” said attorney James Nguyen, who represented Kymsta.

“This is very positive for us,” said Art Pereira, who with his wife, Roxanne Heptner, owned Kymsta.

“Hopefully this is the end of it,” said Charles Exon, Quiksilver’s chief administrative officer, executive vice president, secretary and general counsel. “From our first meeting, Quiksilver was happy to have Kymsta live within the parameters that were ultimately set forth.”

After the 2008 ruling mandated that Roxywear disappear, Pereira and his wife shuttered Kymsta and started a new apparel company called Parc & Pearl. The venture makes a contemporary, tops-driven line called Wilt that sells to Barneys New York, Intermix and Fred Segal. The couple also makes a secondary label called C.C. Outlaw, once carried by Anthropologie.

The legal saga between Kymsta and Quiksilver began long before the two went to court in 2002. Since the early 1990s, the companies and their brands had co-existed. Bob McKnight—chairman, chief executive and president of Quiksilver—noted that in the mid-1990s, the two even had showrooms next door to each other in New York.

But Roxywear at the time was almost like a private label, he said, with no hangtags and no marketing. Roxy was a surf-inspired line for young women that eventually branched out to encompass girls and infants. The two didn’t cross paths on store floors.

But by the end of the 1990s, conflicts arose. Roxywear, which traditionally had been in stores’ contemporary departments, started infiltrating the juniors department, such as the Brass Plum division at Nordstrom, Quiksilver said in court documents.

Quiksilver said it went to court after experiencing confusion at a 2002 trade show and receiving mistaken returns of Roxywear apparel from retailers.

For Quiksilver, Roxy is an important label to protect. In fiscal 2009, the line of sportswear, swimwear, footwear, backpacks and home furnishings, which was introduced in 1991, accounted for 33 percent of Quiksilver’s nearly $2 billion in revenues, according to financial documents.

After the first trial ended in 2004, U.S. District Court Judge Dickran Tevrizian ruled that Quiksilver had waited too long to bring the brand dispute to trial and that the two labels could co-exist. However, restrictions were placed on Kymsta, such as no hangtags on garments and no licensing privileges. Kymsta appealed and won.

A second U.S. District Court decision, in 2008, wasn’t as kind to Kymsta. U.S. District Court Judge Valerie Baker Fairbank handed down a decision aimed to put the 16-year-old Roxywear away forever after 18 months.

Kymsta appealed that ruling, which resulted in the Dec. 30 appeals-court decision before a three-judge panel of David Thompson, Barry Silverman and Susan Bolton, a U.S. District Court judge in Arizona sitting in by special designation.

The appeals court decided that Roxywear could continue operation with certain limitations, such as no licensing, no external hangtags, distribution through current channels, no advertising to consumers unless through co-op ads placed directly by retailers and no sale of the name. In addition, labels should read Roxywear by Roxanne Heptner or Roxywear by Roxx.

The long drawn-out court battle left both companies with hefty legal bills. Kymsta’s owners said they spent more than $2 million, and Quiksilver spent at least $2.5 million.

Brand names are a contentious issue, particularly when it costs millions of dollars to establish one and future revenues are at stake. In 2000, Polo Ralph Lauren took the U.S. Polo Association and Jordache Limited to court over who could use the logo of a man playing polo. After a two-week trial, the U.S. Polo Association and Jordache prevailed by being allowed to use horse logos on their goods.

Another recent brand battle took place last year between Woolrich Inc., which calls itself “The Original Outdoor Clothing Company,” and Eddie Bauer Inc., whose motto is “The Original Outdoor Outfitter.” Woolrich sued the outdoor retailer for trademark infringement in U.S. District Court, claiming the parties compete for the same customers in the outdoor-clothing market and distribute their clothing through the same channels of trade. Both sides had U.S. registrations for the phrases. After extensive negotiations, Woolrich withdrew its lawsuit a few months later when the two determined their respective trademarks were not infringing.

“Experienced parties will look to arrive at a business solution that permits co-existence if it seems the inevitable end of litigation anyway. Thoughtful companies will recognize the value of getting to that result as quickly as possible,” said Greg Weisman, who chairs the apparel-industry practice group at the Los Angeles law firm of Silver & Freedman. “Another lesson that companies learn the hard way from this process is that they should invest a little money in locking up their trademark as securely as they can from or before their first shipment because sloppiness can come back to haunt you years later in litigation.”