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


License Negotiations – A “WORD” to the Wise

Ask Why

Lately, I have been seeing some licensor counsel sending out first drafts of license agreements as PDFs rather than in Microsoft Word. Putting aside that it is getting easier and easier to covert PDFs accurately into Word, I must ask why. Are they seeking to avoid getting back a markup of their draft? Again, I must ask why. Do they really prefer the good old days when the licensee’s lawyer would send back a 50+ paragraph memo of comments to be followed by hours upon hours of give and take negotiations just to get to round 2?

To me, it is unquestionable that sending or receiving a track change or compare copy saves a tremendous amount of time (and psychic energy) in and within the process of documenting a license, particularly with experienced parties and counsel. (Note to sender – if you do a compare copy, send along a clean copy of the revised draft!) It takes me far less time to do even an overly comprehensive markup than it would to describe all of my proposed changes, with the associated reasoning, in a memo of comments (and this does not even factor in the time saved by effectively eliminating the first round of “live” negotiations). Similarly, as licensor counsel, much less time is involved in reviewing a markup and incorporating the acceptable changes into the draft than in talking through the comments with opposing counsel and then redrafting. Much gamesmanship is eliminated and the truly open issues are set; and, frankly, I have found that, at this point in the process, both lawyers tend not to revisit most items that, in a practical sense, are inconsequential and to focus on resolving larger issues and moving toward consummation. Sort of like seeing the forest!

Credit: Jonathan R. Tillem


Seeing Red–and Your Brand

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One of the ways to build brand identity in fashion is to create strong customer recognition of a particular color as a signature of the brand. That has value across all lines of commerce. We can be sure, for instance, that no one will consider starting a worldwide package delivery service that uses solid-brown trucks and driver uniforms. In fashion, there are many examples, from Tory Burch’s orange doors to the red outsoles of Christian Louboutin footwear—the latter of which became the subject of important litigation in the United States.

In the Louboutin case, Louboutin v. Yves Saint Laurent Am. Holding, 696 F.3d 206 (2d Cir. 2013), the Second Circuit Court of Appeals held that Louboutin could retain its trademark registration for red lacquered outsoles for “women’s high fashion designer footwear” in which the outsole and upper were of contrasting colors. What that means is that, if your competing shoes are monochrome, as was the YSL style (which had a red heel and insole as well), you can use red lacquered outsoles. But for all other such footwear, Louboutin owns the exclusive right in the United States to use lacquered red for outsoles. Both sides in the case were therefore able to claim victory: the particular Yves Saint Laurent style did not infringe the Louboutin trademark because it was indeed all red, but the Louboutin trademark was not stricken from the register, simply limited to what Louboutin has mostly been doing all long—which is to put lacquered red outsoles on women’s footwear with contrasting uppers.

It is not often that litigation ends in such a win-win scenario, but the message remains the same in any situation: If you have an important color that you believe is part of your brand’s “signature,” work with counsel to structure efforts to seek protection of that color as an element of both a trademark (a brand identifier in the form of words and logotypes) and trade dress (a brand identifier in the form of particular elements of product packaging and, with a bit more effort, the products themselves).

There are related issues. One is the color spectrum: if you are claiming the color blue, what range between blue-tinted white to midnight blue, on one hand, and green-blue to gray-blue, on the other, are you claiming as your true blue? Another issue is the business spectrum: what are the product categories and the markets (by type of customer, price point, etc.) for which you are claiming exclusivity for your color? And as the Louboutin case shows us, much may ride on the positioning of your “signature” color on products (and packaging) and your ability to prove that the marketplace understands that the signature is yours alone.

The takeaway from all this remains much the same as with other questions concerning branding in the fashion and accessories sectors: marketers should work closely with lawyers and get them involved as early as possible in the decisions that they make.

Credit: Alan Behr


Do More But Restrain Yourself Too

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Luxury, being the thematic opposite of necessity, must be at least as much about what you desire as what you need. Building a brand to fill that role requires both diligence and self-restraint.

A luxury brand and its products should be readily identifiable as superior to both existing and aspirational customers. That is not to say that that non-luxury brands and their products do not require legal protection; we are simply recognizing that the luxury premium adds a new class to the market—those aspirational customers—whose perceptions and desires are vital to the future of brands in the luxury sector. For that reason, and many others, it is particularly important for luxury brands to work with counsel to identify and protect all the important proprietary elements that are capable of being protected. That includes protection, where appropriate, by trademark (and trade dress) registration, design patent registration, and—something rather unique to the United States—copyright registration.

With few exceptions, it is generally better to err on the side of more rather than less when it comes to registrations. Styles and style names that will only be in the catalog for a season or two are usually not worth the trouble, but anything of medium to long-term consequence to the bottom line and brand value almost certainly is. In these posts, we will go into more detail about various forms of legal protection, but a key guideline is this: once each season, have a look at what engages the public with your brand and your products and how that engagement might lead you to adjust your legal protection program. There is probably no more important work that marketers and counsel can undertake together in order to make your protection program both thorough and cost-effective.

This year, the International Trademark Association held its annual meeting in Hong Kong, giving the world’s intellectual property lawyers the opportunity to congregate in an important commercial city where branding is all. Once a playground for bargain hunters for, consumer electronics and rapidly cut and stitched men’s suits, Hong Kong has become a destination for consumers of luxury goods. Indeed, I cannot remember seeing another city in which almost any international luxury brand I can think of had more than one boutique. What was particularly interesting this time is that, for various reasons, visitors from the mainland were uncommonly absent, with the result that, in every store in which I had a look, the sales floors were empty of patrons. That may be a temporary problem, but it raises a bigger question: as surely as luxury is about something greater than necessity, it is also about relative inaccessibility; it is an experience over and above the ordinary that is made all the more desirable by its very lack of ubiquity. When luxury is everywhere, can it start to look commonplace? The risk is that new entrants will have a chance to succeed (in no small part due to their newness and limited production) in poaching customers sated by what has become too familiar. That may be healthy for the marketplace but not for you if you have a valuable brand.

There are no perfect formulas, of course, but here is a general reflection that might well apply when protecting a luxury brand and its products: under law, more is better; when preserving the reputation of a luxury brand and its products in a business sense, less may sometimes indeed be more.

Credit: Alan Behr

Photo Credit: Iskciedlam (Creative Commons)


BOTL II

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When reviewing a license agreement, be on the lookout for provisions, whether boldly set forth in the “Default/Termination” section or sitting innocuously in the body of the agreement, that inappropriately (from the licensee’s perspective) may create potentially uncurable defaults or otherwise end the agreement. Some examples:

  • “Licensee shall ensure that if (a contractor or a distributor or a retailer, etc. does/does not …..).” Although a licensee should be responsible for damages to its licensor caused by a third party with which the licensee chooses to deal, should it be subject to termination if one of these third parties fails to act properly? Yet “shall ensure” means that, if the third party acts in a way that violates the license agreement requirements, an uncurable default has occurred. Go for “seek to ensure” or, better, no termination for third party acts if the licensee stops dealing with the offending third party (unless the licensee was aware/involved).
  • “Licensee may renew the license agreement if (among other things) it has maintained a performance standard acceptable to Licensor throughout the initial term.” Such a subjective standard could make the option illusory. If a licensor offers an option to renew, generally any conditions should be objective.
  • “Licensor may terminate the license agreement if Net Sales on account of sales of Licensed Products to Closeout Accounts during a Contract Year are more than X% of all Net Sales during that Year.” Licensors do not want the licensed business to evolve into a special make-up/closeout account business so, hence, they propose termination as a disincentive. Good reason, but a bit heavy-handed, so long as the licensee doesn’t make a habit of it. (Assuming an 8% royalty rate, it is fair to say that a licensee is not closing out the Licensed Products at substantial discounts to cheat the licensor out of its 8% royalty on the discounted amount, while eating the other 92% itself.)
  • “Licensor may terminate the license agreement if there are more than some number of late payments within a Contract Year or even within a period of months (even if no default notices have been sent).” Surely the licensor must have recourse if payments are habitually very late or, more clearly, if a licensee were to keep forcing a licensor to send out notices of default before curing payment defaults, but the words here also would cover a few payments arriving within a few days after they are due. I know – “no licensor would try to terminate” or “no arbiter would side with the licensor” in such a seemingly extreme case, but a line has been drawn in the license agreement. For a remedy as draconian as termination, something more should be required. While not perfect, a “no harm, no foul” window and a notice requirement would serve fairness.

Credit:  Jonathan R. Tillem


Mon Chapeau

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Full disclosure: I love hats. Of course, they are functional. Is the sun in your eyes or has the snowfall become a whiteout? Don’t walk around with your hands on your brow or head—wear a hat. There is no reason that a man or a woman should take care to be stylish from toes to eyebrows and call a halt there. Head north and crown your work with an appropriate chapeau.

Headgear loyalty recently came to mind when my wife, a stylist at a major retailer, again attended the annual “hat luncheon” in the Conservancy Garden in Central Park (officially, the 29th Annual Frederick Law Olmstead Awards Luncheon given by the Women’s Committee of the Central Park Conservancy). My wife and her buds looked great in their hats. How hard is it to choose the right hat in an age in which the rules of hat wearing, one as clear as the rules of chess, have become a bit opaque? My wife’s elegant solution: take our preschooler to the store and wear whatever he selects. (It was the yellow one.)

My dilemma with hats is circumference—of my cranium, I mean. I have known only one guy who ever had a hat size bigger than mine—the inimitable Stan Murray, the late father of Shep and Ian Murray, the founders of Vineyard Vines. When Stan put one of my enormous lids onto his head, it looked like a yarmulke.

Just the same, there is one hatter in London and another in Dublin that carry good selections in my size. In Los Angeles, I had a fedora custom-made for me by Baron Hats, which did the same for Indiana Jones (i.e., Harrison Ford, in character). And how will I choose my hats going forward? Luckily, at home, I have a preschooler.

Credit: Alan Behr

Photo Credit: WhatsThatPicture (Creative Commons)


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