The USPTO has a good write up about ornamental refusals:
An ornamental refusal is when the USPTO refuses registration of your mark because the sample of how you actually use the applied-for mark (the "specimen") or other information in the record shows use of your mark merely as an ornamental or decorative feature on the goods and not as a trademark to indicate the source of the goods. For example, a slogan prominently displayed on the front of a t-shirt may be considered merely ornamental use and not trademark use. That is, most purchasers of the t-shirts would not automatically think the slogan identified the source of the goods but would view the slogan only as a decoration on the goods.
But is everything on the front of a clothing item merely ornamental?
No. A small, neat, and discrete wording/design located on the pocket or breast portion of a garment (for example, a small design of an animal) may create the commercial impression of a trademark, whereas a larger depiction of the same wording/design prominently displayed across the front of a garment may be more likely to be seen as a purely decorative or ornamental feature of the goods. The size, location, dominance, and significance of your mark as applied to the goods are factors used to determine whether your mark functions as a trademark to identify the source of your goods or is merely ornamental. Although there is no definitive method or place to affix a mark to the goods, the location and size of a mark on the goods is part of the environment in which the public perceives the mark and may influence how the mark is perceived. Also, common expressions and symbols (for example, the peace symbol or the phrase "Have a Nice Day") are normally not the type of matter perceived as a trademark.
