Stay You, LLC v. H&M Hennes & Mauritz LP

Background

Stay You, LLC sued H&M Hennes & Mauritz, LP for three claims: federal unfair competition under the Lanham Act, New York common-law unfair competition, and New York common-law trademark infringement. Both companies sell casual clothing. Stay You sells clothing bearing the registered “Stay You” trademark. During a one-month June 2019 promotion, H&M sold a limited Pride Collection, including four items bearing the four-word phrase “Stay True Stay You.”

H&M moved for summary judgment on all three claims. Summary judgment is a decision without a trial that is appropriate when there is no genuine dispute about a fact that could affect the outcome and the moving party is entitled to judgment under the law.

Likelihood of Confusion

The three claims use substantially the same two-part test: whether Stay You’s mark is legally protected and whether H&M’s use was likely to confuse consumers about the source of the products. Because the parties agreed that Stay You’s registered mark was protected, the court focused on likelihood of confusion.

The court applied the eight factors commonly used in the Second Circuit, known as the Polaroid factors:

- Strength of the mark: Stay You presented evidence that “Stay You” could be an arbitrary or fanciful mark for casual clothing, which would give it strong protection. H&M presented evidence that other casual-clothing companies also used “Stay You,” potentially weakening the mark. The parties also disputed whether Stay You adequately policed its mark. This created a factual dispute. - Similarity: H&M used “Stay True Stay You,” while Stay You used “Stay You.” H&M’s clothing also displayed H&M’s name on hangtags, which reduced the likelihood of confusion. Still, a factfinder could consider the marks similar because they appeared in the same casual-clothing market and both included “Stay You.” - Proximity of the products: The parties’ products were closely related because both companies sold casual clothing. Their geographic overlap was disputed, so a factfinder could reach either conclusion on this factor. - Bridging the gap: Stay You had not shown an intent to target H&M’s consumers or evidence that consumers would expect it to do so. This factor favored H&M. - Actual confusion: Stay You claimed that its sales fell by more than 56 percent during June through August 2019 compared with the same period in 2018. H&M disputed the financial analysis, and the court stated that the sales correlation did not itself establish that H&M’s collection caused the decline. The court nevertheless found a factual dispute on this factor. - Good faith: H&M provided evidence that it did not intend to capitalize on Stay You’s goodwill. The H&M hangtags, the phrase’s stated connection to individuality and LGBTQI+ pride, and H&M’s inquiry to its legal team supported H&M’s good faith. Stay You offered no contrary evidence, so this factor favored H&M. - Product quality: The parties disputed prices but did not provide enough evidence for the court to determine whether H&M’s products were inferior or sufficiently low-priced to harm Stay You’s reputation. This remained a factual question. - Consumer sophistication: Casual-clothing purchases generally do not require heightened consumer sophistication. The parties disputed whether Pride Collection consumers were especially thoughtful because of the collection’s social purpose or instead focused on low prices. This created a factual dispute.

Although some factors favored H&M, the court concluded that a factfinder could reasonably determine that consumers were likely to be confused. H&M therefore was not entitled to summary judgment on this argument.

Fair-Use Defense

H&M also argued that its use of “Stay True Stay You” was descriptive fair use. Fair use is a defense that can defeat trademark liability even when other elements of infringement are present. H&M had to show that it used the phrase other than as a trademark, used it descriptively, and acted in good faith.

The court agreed that H&M did not use “Stay You” alone as a trademark. The phrase appeared on H&M products and in at least one window display, but H&M prominently identified itself on the hangtags, and the collection lasted only one month. The court also found that H&M acted in good faith.

However, H&M did not show that “Stay True Stay You” described a characteristic of the clothing or an action consumers would perform with the clothing. H&M’s argument that the phrase conveyed a social message connected to the Pride movement did not establish descriptive use. Because H&M failed to prove all three elements of fair use, it was not entitled to summary judgment on that defense.

Disposition

Judge Kimba M. Wood denied H&M’s Motion for Summary Judgment. The opinion does not determine that H&M infringed Stay You’s trademark or violated unfair-competition law; it holds that the claims and H&M’s fair-use defense could not be resolved in H&M’s favor on summary judgment. The parties were ordered to submit a joint pretrial order by July 8, 2022.