HIGH END FASHION LAWS AND BUSINESS

ABSTRACT

If imitation were truly the sincerest form of flattery, then high-end fashion houses and designers such as Versace, Celine, Gucci, Alexander Wang, and Christian Dior would welcome the praise rather than sue retailers who copy their original designs.1 In the United States, where the laws provide very few protections for fashion designs, imitation is not a compliment to designers. While consumers benefit from the ability to purchase trendy items sooner and at lower price points, the designers lose sales from their original designs, which are copied often before the original becomes available for purchase. Luxury fashion houses are not the only victims of the weak protections provided by the laws of the United States; small independent designers also see their original designs walking down the runway at Fashion Week or advertised on a retailer’s website without a license or permission.2

INTRODUCTION

Because fashion design does not benefit from copyright protection, high fashion designers often see their designs knocked-off or copied by retailers and manufacturers.3 To clarify, a knockoff is significantly different from a counterfeit. With counterfeits, the entire design including the trademark is replicated and sold as the original, usually through back channels.

A knockoff, however, is considered legal because the copyist creates an item of his own expression that is substantially similar to the original, but sells it under its own brand or trademark, thereby not palming it off as originating from a source other than that of the designer.

The Business of Fashion

The global apparel industry currently generates $1.4 trillion in sales annually. The value of the fashion and apparel industry has consistently grown at a rate of 4.78% since 2011 with no sign of slowing down. The traditional fashion design process from concept to consumer typically averages fifty-two weeks or more.4 Because of the long lead-time, designers unveil their collections for the upcoming fall season during a fashion week in February; likewise, collections developed for the following spring season are debuted in September.5 Fashion week events occur bi-annually in New York, London, Milan, and Paris.

Retailers like H&M and Zara take inspiration and often copy designs from runway shows, competitors, designers, and photos on social media to create knockoff items in a fraction of the time.

If the Deal Fits— Buy It!

Almost all M&A activity results in redundancies, but missteps regarding personnel issues are not always easily overcome in the fashion industry, where human capital plays an integral part in the company’s success or failure. It is absolutely essential that the functional leaders work with human resources to shape the functionality of the post-rationalization entity as closely as possible to executive management’s vision for the post-integration entity.

If an eponymous designer is associated with the target brand, there must be a plan as to whether and under what terms they will remain with the company because post-transaction disputes between an eponymous designer and the entity owning the brand bearing her name can be disastrous. Before discussing the specifics of sound integration planning, it is worthwhile to note two challenges inherent in post-transaction integration that are magnified in the case of M&A activity in the fashion industry. Successful integration must navigate corporate culture issues and address potential rifts between the creative team and the management team in cases where such roles are filled by distinct organizations. “It is clear that such a strategic acquisition doesn’t create value unless the purchase is followed by a concrete sharing of values, experiences and management practice.”

Intellectual Property Protection

Intellectual property is a term that includes trademarks, patents, and copyrights.6Depending on the item, designers may use one or more of these protections to prevent or deter copying of their work.7 A trademark protects “any word, name, symbol, or device . . . used by a person . . . to identify and distinguish his or her goods” or services from those of another.

 Trademark protection also exists under the common law and by many state statutes.8 Trademark protection lasts for as long as the mark remains distinctive of goods or services and is in continuous use in commerce; a trademark has no set time limitation. Trademark law serves to protect against a likelihood of confusion in the minds of consumers or dilution of a famous mark.

Patent law extends to inventions or discoveries of “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof . . . .” To qualify for patent protection, an invention must be useful, novel, and nonobvious. Patent protection typically lasts for twenty years after the date of filing. Historically, it is challenging to obtain patent protection in most categories of fashion.

Copyright is a species of civil litigation, so the plaintiff is only responsible for proving that copying-in-fact was more likely than not. Courts typically require the plaintiff to show that the defendant did have or reasonably could have had access to its work. Access means an opportunity to view or experience the work. Yet proof of access is only proof that copying was possible. And more access to a work doesn’t necessarily mean that copying was more possible. Although Alexander Wang had access to Diane von Furstenberg’s famous wrap dress when he designed Kate Middleton’s wedding dress, there is no reason to think that he copied it. Why? Because the two dresses don’t look anything alike. Access makes copying possible, but similarities make copying probable.

The Need for Fashion Design Protection Is Evidenced by the Growth of Fashion Law

This growing need for professionals with specialized knowledge regarding navigating through the United States weak intellectual property protections clearly demonstrates the value of fashion design in the economy and the need for reform. The argument against increased protections for fashion design is that the fashion industry actually benefits from copycats. According to what is called the “Piracy Paradox,” fashion trickles down.

Gucci v. Gucci Shops, Inc.9

Since the time of Cain and Abel, family disputes have been marked by the irrational and impulsive decisions of those involved, the fierce battles which ensue, and the senseless destruction they cause. This case is but a skirmish in one of the most publicized family disputes of our time, among the heirs of Guccio Gucci, who founded the business empire which bears his name. It is recognized internationally as a manufacturer and retailer of high-quality leather goods and other fashion accessories and gift items. The Gucci family feud, which has raised legal issues currently being litigated before judges and arbitration panels throughout the world, at enormous cost to members of the family and the businesses they control, is also the focus of a recent best-selling book written by Gerald McKnight entitled Gucci: A House Divided.

Defendant Gucci Shops has counterclaimed against plaintiff for trademark infringement and dilution, unfair competition, breach of a 1972 Guccio Gucci, S.r.l. Shareholders Agreement, false designation of origin and abuse of process.

Finally, plaintiff’s other claims and defendant’s counterclaims are all dismissed. There was no credible evidence at trial that either plaintiff or defendant acted in bad faith at any time.

In sum, it is clear based on the evidence adduced at trial that if Paolo Gucci were to continue to use his name as a trademark or trade name, an appreciable number of consumers would confuse his goods with those of the defendant. Therefore, in order to protect the interests of defendant in the “Gucci” name, Paolo is enjoined from using “Paolo Gucci” as a trademark or trade name. To enable Paolo to exploit his own talents and identity, however, he is entitled to use his name to identify himself as the designer of products sold under a separate trademark which does not include the name “Gucci.” To avoid confusion, the name Paolo Gucci must always appear after the trademark in advertisements and on labels, and must be no more prominent than the trademark. Moreover, plaintiff must use a disclaimer, similar to the one he now employs, which notifies consumers that he is no longer affiliated with any of the Gucci entities.

Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc.10

Louis  Vuitton  Malletier,  S.A.,  sued  Managed  Solutions Group,  Inc.  (“MSG”),  Akanoc  Solutions,  Inc.,  and  Steven Chen  (collectively  “Defendants”)1  for  contributory  copyright and trademark infringement, contending that Defendants were liable for their role in hosting websites that directly infringed Louis  Vuitton’s  trademarks  and  copyrights.  After  a 

trial,  ajury  found  Defendants  liable  and  awarded  damages  againsteach  defendant.  In  response  to  Defendants’  motion  for  judg-ment as a matter of law, the district court set aside the jury’sverdict  and  award  against  MSG.  The  district  court  otherwisedenied  the  motion.

Because it is clear from the jury verdict form that the jury found each defendant liable for $10,500,000 in calculated statutory damages for contributory trademark infringement and $300,000 in calculated statutory damages for contributory copyright infringement, a new trial on the issue of damages is unnecessary. Instead, the damages as established by the jury may be implemented by making Akanoc and Chen jointly and severally liable for single awards in those amounts.

For the reasons expressed above, we affirm the district court on all issues of liability raised by the appeal and cross-appeal. But we vacate the judgment and remand with instructions that the district court award statutory damages in the amount of $10,500,000 for contributory trademark infringement and $300,000 for contributory copyright infringement, for which Akanoc and Chen shall be jointly and severally liable. The parties shall bear their own costs.

Cartier is suing Tiffany & Co for allegedly stealing confidential info & ‘high jewelry’ trade secrets

Cartier has bought a lawsuit against Tiffany & Co (in a New York Federal Court) for trade secrets claiming that “Cartier has not only uncovered direct evidence of a former employee’s unlawful taking of Cartier’s valuable confidential information and trade secrets, but through determined investigation, Cartier has also opened a window into Tiffany’s disturbing culture of misappropriating competitive information.”

Under LVMH’s creative relaunch, Tiffany’s high jewelry section has been a crucial aspect of the jeweler’s ascent. Tiffany announced the appointment of Nathalie Verdeille, Cartier’s longstanding creative director for jewelry, as vice president, artistic director of jewelry and high jewelry in July. LVMH leadership is said to be hoping to build a unison between French management’s savoir-faire and Tiffany’s uniquely American sensibility. The two rival luxury brands are owned by rival luxury conglomerates. Cartier is owned by Richemont, and Tiffany was purchased last year by LVMH.

Cartier has said in a statement it:  “fully respects the rights of competitors to pursue their commercial objectives. In this case, however, Tiffany’s commercial ambition crossed the line between the ordinary course of business and unfair competition.”

“Tiffany formally denies these baseless allegations and intends to vigorously defend itself” assures the US firm

LOUBOUTIN LOOSES RED SOLE LITIGATION IN JAPAN

Christian Louboutin filed a complaint against the Eizo collection, a Japanese footwear manufacturer founded in 1959 that started to sell a red coloured rubber sole on a women’s shoes from May 2018 – alleging that the manufacture, exhibition and sale of seven types of shoes with a red (rubber) soles by Eizo Collection caused confusion with “Louboutin” products and infringed its intellectual property right under Japan’s Unfair Competition Prevention Law, demanding 42 million yen in compensation for damages.

In the 39-page judgement  the court sided with Eizo and ruled against Louboutin.

In this case, the courts homed in on the difference in characteristics of the two brands’ shoe products. The courts noted the different overall impressions of the products, pointing out that: “the sole of the plaintiff’s product is made of leather and has a red lacquer coating on it, so the colour of the sole is a glossy red like nail polish. whereas the sole of the defendant’s product is made of rubber, and since it is not specially painted, the colour of the sole is dull red.” Whereas it is recognised that the Eizo sole is red, it does not ‘use’ colour, said the courts, because the defendant’s high heel shoe “sole is made of rubber and is not specially painted.”

Because of this, the courts did not recognise it as being ‘similar’ or even ‘well-known among consumers or purchasers’  as required under Article 2, paragraph 1, sub-section 1 of Japan’s Non-Competition Law because in terms of lustre and texture the characteristics of the goods specified are different, and were not deemed to correspond to Louboutin’s product label.

CONCLUSION

Trademark, patent, and copyright law today provide designers with patchwork protections that ultimately serve to only protect a portion of their design. This environment breeds a marketplace of knockoff designs where the first to market reaps the benefits of another designer’s creative efforts. In a landmark ruling the UK High Court has recognised NFT’s as property, in what could be set to become a leading judgment for NFT rights holders. “This ruling, therefore, removes any uncertainty that NFTs (as tokens consisting of code) are property in and of themselves, distinct from the thing they represent (e.g., a digital artwork), under the law of England and Wales” says Racheal Muldoon, the Barrister that led on the case.

REFERENCES

https://www.fashionlawbusiness.com/flbstories/nfts-are-property-says-uk-high-court-in-landmark-judgment

https://www.sheppardmullin.com/media/book/1901_Kolsun%20Hand%20Business%20and%20Law%20of%20Fashion%20and%20Retail.pdf

https://fashionlawjournal.com/

https://www.fashionlawbusiness.com/

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

IF YOU ARE INTERESTED IN PARTICIPATING IN THE SAME, DO LET ME KNOW.

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The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at secondinnings.hr@gmail.com

In the year 2021, we wrote about 1000 Inspirational Women In India, in the year 2022, we would be featuring 5000 Start Up Stories.

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