What a Lovely Ankle, Dude.

Guy-CroppedRolledJeans-AnklesShowing

Last summer, we were treated to a new take on the skinny pants trend for men.  In this go-around, it was sans socks, and the trousers were either hemmed several inches above the ankle or simply rolled up to resemble a pair of clam-diggers that had spent too much quality time in the clothes dryer.  In the late Victorian era, you might have heard that an attractive woman had a “well-turned ankle”—because that was about the only part of her below the neck that cleared most of the enveloping layers in between.  As anyone has recently offered such praise for women’s ankles?

We invite readers to share with us whether, at any point in the history of humankind, in any culture or territory, anyone has had anything exceptional to say about the allure of men’s ankles.

I have a photograph of my father at about the age of twelve, standing beside his nanny and his horse.  He was wearing plus-fours, and as was correct for the period, he also wore socks that disappeared into the breeches.  You see, guys: sometimes the old ways are the best ways.  As the summer season unfolds, let us all sit back and take heed of the advice of a wise friend who has often reminded me, “Socks are important.”

Credit:  Alan Behr


Would Bogart Play An Asset Protection Associate?

Woman Stealing Clothes From Store

Like government, finance and many sectors of business, fashion is not above altering its use of language to soften perceptions.  My brother’s first job was assistant fragrance buyer at a department store; if he had known that he was actually developing a career in “beauty,” he might not have quickly given it all up for a life in the financial markets.

When I first began working in a department store, the in-house cop was called the “detective.”  Although there were days when it seemed that our shoplifters outnumbered our paying customers, our man never caught as much as a head cold.  Needless to say, he was replaced by four rougher sorts who called themselves “security.”  Not long after my mother retired from the department store where she worked (You see a pattern here, right?), security became “loss prevention.”  More recently, we’ve seen “asset protection.”  Along the way, practitioners’ tools have become more sophisticated, and they have gotten better at what they do—which is the important job of stopping theft (now called “shrinkage”); but the perception of dangerous charm of a “detective” in the Raymond Chandler/Dashiell Hammett mode does not come to mind when considering the tech-savvy guy who controls a bank of video monitors.  Would Humphrey Bogart have played an asset protection associate?  We will have to think about that.

Credit:  Alan Behr


To Pay Or Not To Pay – The Intern Question

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Did you hear the one about the man and woman who walk into a bar and say they interned for a luxury fashion company, a magazine conglomerate, a movie studio, a modeling agency, a jewelry designer or the Los Angeles Clippers and say they should have been paid for it?

It’s not a joke. The legal assault on the unpaid internship continues to pose serious issues for unwary employers. More and more unpaid interns (typically, but not always, students or recent graduates) and their attorneys are rejecting the age-old rite of passage/symbiotic relationship that requires them to work long hours and perform varied tasks without pay in exchange for the opportunity to learn the business, make meaningful contacts, pad a short resume and demonstrate the moxie to make big money from future paid employment. Interns and former interns who never before (outwardly) complained about their arrangements are finding clear support from federal and state wage and hour laws requiring payment of minimum wage and applicable overtime premium pay for all the hours they work—just like regular employees—and are filing and participating in lawsuits to get what they believe they are owed. The public interest website ProPublica compiled and updates a chart tracking filing and status of interns’ lawsuits (http://projects.propublica.org/graphics/intern-suits#corrections).

I Don’t Want to Pay My Interns…

Okay, and you don’t have to—if your unpaid internship program satisfies all six of the following factors:

  • the internship, even though it may include the actual operation of the facilities of the employer, is similar to training that would be given in an educational environment;
  • the internship experience is for the benefit of the intern;
  • the intern does not displace regular employees and works under close supervision of existing staff;
  • the employer that provides the training derives no immediate advantage from the activities of the intern—and indeed, on occasion, its operations may actually be impeded;
  • the intern is not necessarily entitled to a job at the conclusion of the internship; and
  • the employer and the intern understand in advance that the intern will not be entitled to wages for the time spent during the internship.

If that does not sound like the program in place for your summer (or other) unpaid interns, you should carefully re-evaluate whether you are in compliance with the federal Fair Labor Standards Act and applicable state law. The test creates a very high threshold, but not an impossible one—for example, it may be satisfied where, among other things, an intern receives educational credit for an internship program that extends a classroom educational experience for her or his benefit to provide experience and training in a company setting. However, employers most often fail the test where an intern does work generally performed by paid employees, is left to work independently or does productive work for the company’s benefit (even if it also benefits the intern). In all of those cases, the intern likely will be entitled to payment for his or her services.

I’m Not Going to Pay My Interns…

Okay, but be aware of the potential consequences for misclassifying someone as an unpaid intern, which include all the back wages owed (including overtime for hours worked in excess of forty in a workweek) for three years (under federal law) or more (under some state laws), penalties of 100% or more of the unpaid wages and the obligation of paying not only your own legal fees, but those of the intern who sued you. Additionally, understand that many of these cases are brought as class or collective actions on behalf of other similarly situated interns. When you add to the mix the fact that companies rarely keep accurate working time records for those interns they elect not to pay, it all makes for a potentially very expensive proposition—particularly when weighed against the option of simply paying minimum wages in return for work performed. Given the wealth of resources and advocates for unpaid interns, the time has come for employers to toss out the “that’s the way it has always been around here” mentality and carefully re-evaluate their unpaid internship programs.

Credit:  Marc B. Zimmerman

Marc is a partner in Phillips Nizer’s Labor & Employment Law Practice and Litigation Department.


Keeping Control Over Your Brand

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In the movie A Hard Day’s Night (1964), unscrupulous menswear marketers lure George Harrison into their office, there to assure him that the two new shirts they put into his hands are essential to his self-esteem. When George says the goods are frightful, the head marketer comforts his team that, “within a month, he will be suffering a violent inferiority complex and loss of status because he isn’t wearing one of these ‘nasty’ things.”

The point was that the guiding spirits of the generation of the 1960s formed up against the commercialism and consumerism that were behind marketers’ attempts to pass off “nasty” goods as status symbols for insecure youth. How times have changed. Someone with a device in his pocket that pitches out brands and branding stories faster than summer rain drenches a field views branding and the commercial motives behind it in a much more positive light. Brands ignite consumer interest as never before, and brands win when they have good stories to tell—stories that create interest and become viral once consumers are engaged. Brands are, after all, nothing but good will with consumers, and once that is obtained, the message is spread most effectively by consumers imitating each other and aspiring to what each other has. The bad news that follows from the good is that consumers, in exchanging with each other messages about brands they know, are becoming as important in the control of a brand’s destiny as the brand’s owner—and its marketers.

For that reason, never has the creation and the protection of strong trademarks been more important for the fashion business. The value of the trademarks is applied directly to the bottom line in the form of good will. There are terrific fashion brands that own little else but their trademarks and related domain names—not the factories that make the clothes, not the stores in which they are sold, not even the photocopy machines in the corporate office. What they have are strong trademarks protected throughout the areas of current use and expected operations. The moral of the story: work with your trademark lawyer to develop, as early as possible, a solid and workable trademark protection program, and then stick to it by carefully searching and analyzing all new prospective trademarks and by registering them promptly as soon as the anticipated need arises. What have you to lose by not doing that? Only everything you may have.

Credit:  Alan Behr


BOTL III

During the course of negotiating a license agreement, a licensee may propose certain changes that may appear logical and reasonable. However, a licensor should be on the lookout for seemingly innocuous proposals that could impede its ability to operate its business.

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  • “I need a longer sell-off period after termination and the types of customers to which I can sell during the sell-off period [e.g., only closeout accounts] is too limiting.” Agreeing to these requests may not be problematic if no new licensee is in place, but the license agreement must contemplate the possibility that there may be a new licensee; and extended and extensive sell-off rights may make it more difficult to conclude a new license and may increase the pressure to give financial and other concessions to the new licensee. (In a later post, we will discuss the substance of sell-off provisions, including circumstances of termination that could result in a bar to a sell-off beyond the date of a termination of the license agreement.)
  • How much time does a licensee actually need, particularly considering that, for a seasonal business with a typical December 31 contract year/term end, sell-off actually could be starting as early as September?
  • While selling off prior seasons’ inventory should not seriously compete with a new licensee’s business and while closeout accounts may be the only meaningful customers for closeouts, it cannot be good for the licensor’s brand or the new licensee’s business if the former licensee’s products, whether or not they include “basics,” are being offered to the new licensee’s regular customers at the same time that the new licensee’s business is being launched.
  • “I would like an option to renew the license agreement.” While renewal options are quite common, and sometimes may even be offered by a licensor, accepting some common licensee complaints can have unintended consequences.
  • “The date by which I have to exercise the option is too early.” Depending on the length of the term, this could be a fair point, but a licensor must keep in mind that, if the option is not exercised, it will need time to locate, negotiate with and conclude an agreement with a new licensee and the new licensee will need time to develop its initial collection, which, for a seasonal business, will have to go to market well before the end of the current licensee’s agreement. (In a later post, we will discuss the need for provisions in an exclusive license allowing the licensor to engage a new licensee during the term and the new licensee to start business before the end of the term.)
  • “The conditions for renewal are not objective.” As noted in an earlier post, a licensee will want only objective standards when it comes to the conditions it will have to satisfy in order to exercise its option. However, is it unreasonable for a licensor to be able stop doing business with a licensee that, while not technically having defaulted in its obligations, has been a terrible partner and exceedingly difficult to deal with?
  • “I would like a right of first refusal for additional products or countries or trademarks.” A right of first refusal, in effect, requires the licensor to make a deal with a prospective third party licensee and then offer the current licensee the right to match it. There is not much chance that a prospective licensee will be willing to devote the time and expense of negotiating a license agreement in these circumstances. If pressed, giving the existing licensee a first right to try to make a deal with the licensor – a right of first negotiation – is a better, and reasonable, alternative.
  • “I want more countries in my licensed territory.” If a prospective licensee can demonstrate the wherewithal to properly exploit the proposed additional countries, the inclusion of the additional countries is often just a question of business judgment. (There may, however, be legal considerations to be addressed in the license agreement depending on the status of the licensor’s trademark rights in the additional countries.) If additional countries are included, though, a licensor should retain the right to take back countries that the licensee does not exploit adequately; and any such reversion right must be carefully drafted, particularly to take into account that getting back a few countries in a region may not be of any real value to the licensor. (What potential new licensee is going to be interested in a license for a few scattered Asian or European countries if the existing licensee retains the major markets in the region?) A possible compromise here might allow the licensee to keep the entire region if it is appropriately exploiting the major markets in the region, but to lose the entire region if it is not.

Credit: Jonathan R. Tillem


True Colors

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A few weeks ago, I went to Paris as I do several times yearly for my work. This trip, though, had two parts: after a week of running around like a chicken without a head to see as many of my clients, business colleagues and potential contacts as possible in the limited time available, my wife’s closest friend from college had organized three days of partying for her 50+ guests from the U.S. to celebrate her birthday in the City of Light. This visit was the first time in seven years that my wife accompanied me to France.

I had nothing to wear to a party in Paris, no less three of them. In fact, my leisure wardrobe was looking seedy (and let’s face it – too tight). For a change, I was the one who had to shop for the social outings. My wife was all set. I knew exactly which colors I wanted to wear – after all, this summer, the American male is dressing like a peacock. I quickly assembled a vivid collection of chinos and sport shirts bright enough to rival Joseph before his brothers shipped him off.

Once we were on the streets of Paris, it didn’t take me long to realize that I was the only man strolling down the boulevards in red pants. I should have known better. Walk into a “Gap” store in the States and you’ll find yourself in the middle of a prism. The merchandise in the “Gap” on the Champs Elysées, on the other hand, appears to have been assembled to outfit the city’s mortuaries.

Sketching-FashionDesignOne of the most difficult jobs in the fashion industry, under the radar of most of the American public, is to take a cohesive collection created over months with a clear point of view and to adapt it to the tastes of the country into which it is being imported. Orange may be the new black in the United States, but that is not necessarily the case in Milan. Skirts may need lengthening, a palette that reflects local tastes has to be coordinated with the different pieces of the collection often necessitating a change in fabric, and if the line has been designed for slender European women but is now to be sold in the American heartland where 16 is the average size of wedding dresses purchased, the cut must be altered if not completely reconceived.

These changes can be lethal to a collection and its designer. They must be implemented by an artistic chameleon with the ability to visualize the designer’s look adapted to a different context. Often this is more difficult to achieve than to design the collection from scratch, because one doesn’t start with a clean slate. Rather, there are rules, standards and limitations that are not published anywhere and are difficult to sense. When you splurge on that special beaded sweater while on vacation but it just doesn’t look the same once you’ve gotten it home, you will have an idea of what these adapters are up against.

They have to be able to see true colors shining through.

Credit: Stephen D. Kramer


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