Textiles and Tariffs

Just as fashion designers and retailers have been struggling to adapt to changing consumer demands, they now must face a new battle: a trade war.

Back in May, the White House announced its plan to impose tariffs on $50 billion of Chinese goods in the hope of pressuring China to stop alleged unfair trade practices and intellectual property infringement. After the U.S. Trade Representative, Robert E. Lighthizer, released the final list of goods subject to the new tariffs, China responded with tariffs of its own on U.S. goods. Upping the ante in July, the U.S. next threatened to impose a second round of levies, resulting in 25% aggregate tariffs on an additional $200 billion of Chinese goods. Once again, China hit back with more tariffs of its own.

Many economists have warned that the effect of a prolonged trade war between China and the U.S. will ultimately increase prices for American consumers and will damage U.S. businesses. Those working in the fashion industry are likely to agree. The May round of tariffs placed on Chinese imports, which covered a range of industrial, agricultural, and medical goods, left the fashion industry relatively unscathed. But the next round of tariffs, initially rumored to include textiles, handbags and suitcases, is likely to hit designers, retailers and, ultimately, the American shopper.

Following the U.S. threats made in July, Mr. Lighthizer agreed to hold a hearing to discuss market opposition to the proposed tariffs. In attendance at the hearing, held in August, were more than 350 stakeholders, including the Council of Fashion Designers of America, the American Apparel & Footwear Association and the Accessories Council.

To say that the American apparel industry relies on Chinese manufacturing may be an understatement. Kathryn Hopkins of Women’s Wear Daily (WWD) has noted that “China is vitally important to the industry with government data showing the U.S. imported $27 billion worth of apparel from the country last year, accounting for 34 percent of all apparel imports. That is more apparel than was imported from any other country, dwarfing second-place Vietnam at $12 billion.”

Concerned about impending tariffs, Edward Rosenfeld, the CEO of Steve Madden, told WWD: “We and others will certainly try to pass on a good chunk of this to the consumer in the form of higher retail prices.” Steve Madden is also looking to move its handbag manufacturing from China to Cambodia in response to the higher duties.

National Retail Federation President and CEO, Matthew Shay, told WWD: “This round of tariffs amount[s] to doubling down on the recklessness of imposing trade policy that will hurt U.S. families and workers more than they will hurt China – it’s two-and-a-half times the amount already imposed.”

Smaller businesses are particularly vulnerable to the proposed levies. Anne Harper, the CEO of OMG Accessories (annual sales: approximately $2 million), expressed her concern for the impending tariffs, stating: “I can’t just absorb that percentage…. The bread and butter of my business is selling to retailers, so that’s a big challenge. Q4 is where we ship all of our holiday goods. If the 10 percent comes into effect right before the goods ship from China, we’re subject to that extra 10 percent so it represents hundreds of thousands of dollars for my business. It’s basically a loss.”

On August 26, 2018, China filed a formal dispute with the World Trade Organization (WTO), alleging that the U.S. tariffs violate WTO rules.

On September 17, 2018, the White House made good on its warnings in July, confirming that tariffs of 10% would be placed on $200 billion worth of Chinese imports – ranging from silk to handbags. China promptly responded again, stating it would impose its own tariffs, of 5% to 10%, on $60 billion worth of U.S. goods. Meanwhile, the U.S. has threatened to increase tariffs on Chinese goods to 25% total on January 1, 2019, unless the two countries can conclude a trade deal.

Is there an endgame in sight? At this point, there are more questions than answers. The White House is slated to share more information following its September 17th announcement. One can only wait for the next episode of Textiles and Tariffs.

Credit:  Candace Arrington


An American in Paris

Greg Kessler
Rodarte S/S 2018 Paris Haute Couture Week July 2017

Looking back on Paris Fashion Week 2018, it is fun to reflect on the undeniable allure of Paris. Maybe it is the Parisian lights. Maybe it is because it is the City of Love. But there is something that attracts Francophiles from all over the world. A long-time fashion hub, Paris has been winning the hearts of more and more American fashion designers. Traditionally, New York Fashion Week is the reference mark for American design. Yet in just the past year, American designers Rodarte, Proenza Schouler, Thom Browne, and Joseph Altuzarra have opted to show their collections in Paris instead.

All of the Americans in Paris cited creativity as the major reason for relocating their spring and fall shows to Paris. Prior to Rodarte’s Paris Haute Couture Week debut last summer, co-founder Laura Mulleavy told The New York Times’s Elizabeth Paton: “I like being part of a new situation.” Co-founder Kate Mulleavy expanded:

“Ultimately a process should fuel creativity…France treats fashion as art; it just isn’t like that in America. Just spending time in [Paris], being part of it, is a reminder that enjoying new experiences fuels your best ideas and designs. Your imagination can totally come alive.”

Nevertheless, new opportunities also bring new legal issues. The initial question regarding work in France often is: Will I need visas or work permits for my American staff in order to show my collection in Paris? The good news: since 2016, if you are working in France for three months or less for the purpose of putting on a trade show, an art exhibition, or a fashion show, you need neither visas nor work permits.

Also, keeping in mind that French law emphasizes employee well-being, France requires its foreign employers to have documentation on file with the French counterpart to the United States Social Security Administration.

France and the United States have a reciprocal agreement whereby time spent working in France is considered eligible for social security and future benefits, like retirement, disability, and survivor’s insurance, in the United States. US employers must file a social security form for each employee working abroad. However, those benefits (as with so many others) do not apply to independent contractors. Therefore, those make-up artists, hairstylists, and public relations personnel employed by others but who are “hired out” by designers for shows must have their own full-time employers file social security forms for them.

Before starting work in France, an American employer transferring employees temporarily must file a declaration of workplace safety with the office for the International Posting of Workers in France, also known as Prestation de Services Internationales en France (SIPSI). Upon such filing, SIPSI will alert the French authorities responsible for inspecting the posting locations of foreign employees to examine the proposed fashion show site. Unlike the multiple social security forms required by an employer in the US, only one SIPSI filing is needed per employer, per location.

Much as in the critically acclaimed movie, as an American in Paris you will want to spend your free time eating baguettes, sightseeing, taking pictures, creating memories, and perhaps falling in love. It therefore would be wise to consult counsel and to address the business and legal issues in advance so that, once the fashion show has been completed, you will be able devote your time to drinking wine, eating cheese, and indulging in the many facets of French culture.

Greg Kessler
Rodarte S/S 2018 Paris Haute Couture Week July 2017

Credit: Candace R. Arrington

Photo Credit: Greg Kessler


MoMA: Is Fashion Modern?

The Museum of Modern Art (MoMA) is currently hosting the exhibit, “Items: Is Fashion Modern?” So, what is modern? Back in 1944, the MoMA asked, in an exhibition titled, Is Clothing Modern? in the hope of inspiring museumgoers to, “reconsider their relationship with the clothing they wore.” Today, MoMA asks: Is fashion modern? to provoke thought about the world’s relationship with fashion and to examine how and why it is made. In this exhibition, we see fashion born out of creativity and necessity; created by man and machine. The museum’s elevation of both the evening gown and the flip flop illustrates society’s multifaceted relationship with fashion, clothing, and art.

The curators walk you through the history of fashion, using fashion as a lens through which to view and analyze culture and society. Upon entering, I was pleasantly surprised. The galleries, sparsely but carefully filled, teased visitors with vivid colors, sounds, textures, and interactive displays. The exhibit progresses chronologically and also practically, by starting with base layers like undergarments, switching to classics like the little black dress, then working toward wardrobe fundamentals such as pants and later on, accessories.

Underwear starts out not to be a simple thing. Brassieres, stockings, and then jumpsuits pique visitors to contemplate form, function, and aesthetic. Subsequently, the exhibition moves to khakis, trousers, and collared shirts. This casual wear showcase also highlights how pants have evolved for women. With images of a pants-clad Audrey Hepburn in Breakfast at Tiffany’s and Mary Tyler Moore in capris on the Dick Van Dyke Show in the 60’s, the exhibit’s wall labels provide gender-charged commentary on how pant suits became socially acceptable for women.

The exhibit moves forward to a survey of the quintessential little black dress. Just within the exploration of the little black dress, one can see the evolution of fabrics, design, class, and social custom. This collection contains a range of dresses from Christian Dior to Thierry Mugler; starting with a modest Chanel evening dress from 1925 and ending with the controversial, close-fitting Versace cocktail dress worn by Elizabeth Hurley in 1994. The exhibit even highlights the relationship between technology and fashion by including a 3-D printed dress designed via a form of classical mechanics and motion called, kinematics.

Next, fashion is studied as an extension of culture. The collection exalts prints, fabrics, and silhouettes from all over the world, showcasing an anthology of Indian saris, Cuban guayaberas, Ghanian gowns, Brazilian jumpers, and Dashikis inspired by Nigerian prints, yet made right in Harlem.

Flanking one side of the exhibition is a spotlight on men’s suits. The stylistic progression goes from the zoot suit to the power suit, and even a double-breasted pant suit by Ralph Lauren for women. The wide range of tailoring, fabric, and shape is also a reflection on style, age, and class.

After covering each major piece of clothing, the exhibit moves on to highlight accessories. What some may consider superfluous or merely decorative additions, the accessories prove to be staples on their own. This collection looks at show-stopping shoes, handbags, hats, furs, and jewelry. The curators even established a small homage to the famous Hermès Birkin bag and Alexander McQueen’s platform armadillo boots, as worn by Lady Gaga.

But wait: there’s more. The exhibition has small fashion asides where one can find a biker jacket derivative made from polymers and LED lighting, and a textile designed through a computer-programed knitting machine.

“Items: Is Fashion Modern?” is indeed a modern take on fashion. After examining the entire 111 items, it is impossible to walk away uninspired and unprovoked. The curators do an excellent job of covering a wide range of subject matter, addressing the fundamentals of fashion, and examining where fashion is purely aesthetic and less functional, yet nonetheless enthralling and important. The exhibition demonstrates the complexity of fashion, as it can serve as adornment, a reflection of culture, or counterculture. If modern is to reflect the present and recent times, then yes, fashion is modern.

The Museum of Modern Art exhibit, “Items: Is Fashion Modern?” runs through January 28, 2018. https://www.moma.org/calendar/exhibitions/1638

Credit:  Candace R. Arrington

Candace Arrington works in Phillips Nizer’s Intellectual Property, Corporate, Fashion, and Entertainment Law Practices.


What’s In A Letter?

Recently, the New Balance footwear company won a landmark $1.5 million trademark decision in the Suzhou Intermediate People’s Court, near Shanghai, China. Daniel McKinnon, the New Balance senior counsel for intellectual property, told the New York Times: “If the China marketplace can be thought of as a schoolyard, New Balance wants to make it abundantly clear we are the wrong kid to pick on.”

The schoolyard brawl all started when New Balance alleged that three Chinese brands infringed upon its well-known New Balance “N” trademark. The three Chinese shoemakers, New Boom, New Barlun, and New Bunren, saw fit not only to use similar brand names, but also to trade off of New Balance’s international acclaim by mimicking its slanted “N” design on their shoes. A Suzhou Court cited the defendants’ free-riding, consumer confusion, and market harm as the basis for its ruling in favor of New Balance.

What makes this case important is not only that New Balance was prepared to fight for its rights in China—often a challenging thing to do—but also that it was willing to do so over a single-letter trademark.

A trademark is a source indicator that can convey a range of messages about your brand such as quality, price, taste and reputation—the sometimes obvious and sometimes mysterious factors that, in total, are the goodwill of the brand.
Brand owners often reflect upon the value and protectability of words, names, logotypes, slogans and even colors as trademarks. The victory by New Balance in a famously tough territory tells us that a lot can ride on who is found to own and have the rights to exploit a single letter.

Minimalism is as much a factor in trademark recognition as anywhere else in the broad field of visual expression. Mercedes Benz has made a simple three-pointed star one of the most recognizable marks on earth. In the USA, Louboutin owns the color red for the soles of shoes, and Federal Express owns the truncated version of its mark popularized by the public: FedEx. Take it down even further, and you get marks with one or two letters: PayPal is recognized by two cerulean stylized “P’s” and Facebook by a solitary but consequential byzantine blue lower-case “f”. Uber upgraded its former “U” mark to a modernized “U” enclosed by emerald green.

In fashion, designers have been using single-letter marks for decades. Hermès uses its elegant “H”; and of course, New Balance is using its slanted “N”. A few logos have doubled letters: Gucci has made the twin “G” into a brand; as with the seemingly reflective Tory Burch “T”, the mirrored Fendi “F”, and the interlocking “Cs” of Chanel.

Single-letter marks can be significant in fashion because a single letter can serve not only as a logo, but also as a design that can be emblazoned on clothing, handbags, shoes, etc. Meanwhile, the boom in online retail—where a mark may be only barely visible—has been the basis for the further simplification of marks. The large British online retailer Asos recently abbreviated its trademark to the letter “a,” the better to identify the brand on its mobile app.

 

Credit: Candace R. Arrington

Candace Arrington provides research support as a law clerk to our corporate and business law, intellectual property law and entertainment law practices.


Legally Chic in Barcelona

Hotel El Palace (Barcelona) rooftop twilight | © Alan Behr

In the cosmopolitan city of Barcelona, several of us, including my colleague Alan Behr, gathered for a private fashion industry meeting at the exquisite Hotel El Palace. While sipping tea and sampling fine pastries, we heard brief presentations on important legal developments from around the world.

Owen Tse, a partner at Vivien Chan & Co. in Hong Kong, presented on the New Balance case before the Intermediate Court in the People’s Republic of China. The court ruled in favor of the Chinese company New Barlun, which New Balance had accused of selling infringing footwear. The court relied on the fact that New Barlun had filed the Chinese mark before New Balance had made an attempt. To add insult to injury, the court awarded the equivalent of US $15.8 million to New Barlun, which was subsequently reduced to the equivalent of approximately US $700,000 by the Appeals Court. Owen also reported an interesting fact—“Ivanka Trump” in Chinese was the subject of more than 300 trademark applications in the PRC since 2016.

In addition, the practice of using “shadow companies” to infringe the Chinese translation of well-known brand owner’s trademarks is on the rise in Hong Kong. Infringers promote themselves by claiming they have authorization or license from the shadow companies. Example: Pearl Bay vs. Peony Bay in English and Chinese.

From Amsterdam, Herwin Roerdink of Vondst Advocaten gave a presentation regarding fashion brand owners and European Union data protection regulations. Herwin discussed the issue of smart products, such as socks that collect running data of their wearers and golf shirts that track swings, all in connection with EU privacy regulations. Specifically, a new EU privacy law, GDPR, EU 2016/679, which will become effective on May 25, 2018, imposes heavier regulation and more obligations on data controllers and data processors, whether or not the data is processed in the EU. GDPR also applies to the processing of data of those in the EU by non-EU entities that offer goods and services that monitor behavior in the EU. Non-EU fashion brand owners who target EU customers with monitoring products will therefore be subject to the regulation.

Herwin also explained the differences between the approach of the Dutch data protection authority and the United States Federal Trade Commission regarding the permissibility of WiFi tracking by retailers. Although the Dutch decision was based on Dutch implementation of the EU Privacy Directive, which focuses on whether the processing is necessary to achieve the desired purpose, the FTC decision was based on balancing the concern for customer harm and the legitimate interests of the retailer.

From London, Roland Mallinson of Taylor Wessing updated us on the implications of Brexit to fashion IP, on the assumption that the United Kingdom will not leave the EU before March 2019. Roland predicted that existing European Union Trade Mark (EUTM) registrations will likely continue to be recognized in the UK. He posited that parallel filing in the EU and UK is not imperative now, especially if you are not yet using your mark in the UK. He expressed confidence that there will be some arrangement by which current EUTM trademarks and those being filed now will result in protection in the UK, from the current priority date; however, because nothing is for certain, Roland recommended that strategically key brands continue to file UK applications in parallel with any new EUTM applications. For existing UK and EUTM registrations, it does not automatically follow that a new UK application should be filed now – even for strategically key brands.

The discussion also focused on the practical issue of transferring 900,000 EUTM registrations to the UK system, a process made more complex by the fact that a fair number of the registrations were not filed in English. Some issues, like parallel imports and European design rights, have political sensitivities.

Finally, I made a presentation regarding the important Star Athletica case, which was decided by the US Supreme Court in March 2017. We have previously reported on that development in our blogs on March 22, 2017 and May 5, 2017.

In short, we had a very enjoyable and productive meeting. And as anyone who attends the INTA annual meeting knows, half the pleasure for us was being able to sit down while we networked with friends and colleagues.

Credit:  Monica P. McCabe

Thank you to Phillips Nizer law clerk Candace Arrington of our Corporate & Business Law and Intellectual Property Law Practices for providing assistance with the review and preparation of this blog post.


Our Fashion Law Team

ALAN BEHR, Chairman, Fashion Law Practice
Alan is a member in the Corporate & Business Law Department and Intellectual Property Practice, and chairs the Fashion Law Practice.  Alan concentrates his practice on international intellectual property, fashion and entertainment law.  He provides ongoing anti-counterfeiting, trademark enforcement and other intellectual property protection activities for leading European and American luxury and general-market brands. He also represents major retailers in the implementation of strategic initiatives, including private label programs and development of new lines of business, and represents established and up-and-coming businesses and individuals in the fields of fashion, consumer products, electronic entertainment, emerging technologies, and publishing.

More here: http://www.phillipsnizer.com/attorneys/behralan_bio.cfm

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COURTNEY L. BIRNBAUM

Courtney is a counsel in our Corporate & Business Law and Real Estate departments, advising businesses and individual clients on contract, transactional and day-to-day business matters. She brings a business-oriented perspective to her work, informed by her legal experience, her M.B.A. in Finance and Management, and a Master’s degree in Corporate Law.  Courtney represents jewelry, clothing, and art industry clients in some of their most important business matters, including sale and consignment to U.S. and Canadian retailers, financing, and intellectual property.

More here: http://www.phillipsnizer.com/attorneys/birnbaumc_bio.cfm

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MONTE ENGLER
Monte has been engaged in the practice of corporate and business law for over 35 years.  He has developed a significant clientele in a number of businesses, including the representation of well-known personalities in the fashion, home furnishings, design and entertainment industries. Monte’s extensive experience includes the negotiation and completion of a multitude of transactions, including mergers, acquisitions, and private and public financing. He counsels clients at all levels of their representative business operations, and provides dispute resolution assistance among shareholders of privately-held corporations.

More here:  http://www.phillipsnizer.com/attorneys/englermonte_bio.cfm

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MICHAEL S. FISCHMAN
Michael’s (“Mike”) practice focuses on civil litigation and arbitration.  He represents both plaintiffs and defendants in a wide range of complex commercial matters from the pre-complaint stage through trial and appeal. Mike’s clients have included well known fashion and home furnishing designers and manufacturers, diamond businesses and trade organizations, women’s wear licensing agents. His representations have involved disputes over licensing, copyrights, trademarks, insurance, shareholder, buy-sell and employment agreements and chargeback disputes with national retailers.

More here:  http://www.phillipsnizer.com/attorneys/fischmanmic_bio.cfm

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BARRY H. FISHKIN
Barry is a member of the Corporate, Technology and Intellectual Property Departments. Barry’s principal areas of concentration are (1) corporate law, including mergers and acquisitions, particularly in the fashion industry, purchase and distribution arrangements, commercial finance, joint ventures, IP licensing and corporate governance; (2) technology law, including outsourcing agreements, software development and licensing agreements, website development and service agreements, information technology licensing agreements, content acquisition and sharing agreements and master service agreements for technology development services; and (3) trademark law, including trademark clearance and registration, opposition and cancellation proceedings and the maintenance of trademarks domestically and internationally. Barry chairs our Firm’s trademark prosecution practice.

More here:  http://www.phillipsnizer.com/attorneys/fishkinbar_bio.cfm

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HELENE M. FREEMAN
Helene’s practice is focused on all facets of entertainment, publishing, the arts and fashion. As a litigator with more than 30 years experience, Helene has been trial and appellate counsel in precedent setting cases under both copyright and trademark law throughout the United States. She provides assistance in securing registration of copyrights and trademarks in the United States and developing plans for the worldwide exploitation and protection of creative property. She also regularly advises on international transactions involving the acquisition of rights in entertainment and media properties.

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DONALD L. KREINDLER
Donald (“Don”) specializes in the resolution of business disputes – by negotiation where possible, and otherwise through trial in arbitration or in court. Don has tried cases in court and in arbitration which cover virtually the entire spectrum of business disputes, including disputes involving sales contracts, acquisition agreements, license agreements, brokerage agreements, partnership and shareholders’ agreements and employment contracts, copyright infringement claims (representing both copyrights holders and claimed infringers).

More here: http://www.phillipsnizer.com/attorneys/kreindlerdon_bio.cfm

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MARC A. LANDIS
Marc, Co-Chair of the Real Estate Department, maintains a diverse real estate and corporate transactional practice focused on the acquisition, development and preservation of affordable housing, commercial leasing matters, the representation of lenders and borrowers in real estate financing transactions, loan workouts and foreclosures, architectural and construction agreements, and the representation of cooperative corporations and condominium associations. He also serves as general counsel to an acclaimed luxury fashion brand.

More here:  http://www.phillipsnizer.com/attorneys/landismarc_bio.cfm

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LAURA E. LONGOBARDI
Laura as a multi-discipline background in complex commercial litigation, with concentrations in employment litigation and real estate litigation. She advises clients on pre-litigation matters; develops case strategies; prepares clients and other witnesses for depositions and trial; supervises the discovery process; argues motions and appeals; attends court conferences and negotiates settlement agreements. Laura also counsels clients in connection with employment contracts, severance agreements and other matters concerning their employment relationships.

More here: https://www.phillipsnizer.com/attorneys/longobardil_bio.cfm

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MONICA P. McCABE
Monica chairs our Intellectual Property Practice and specializes in intellectual property and entertainment law.  She represents a broad range clients, including consumer goods; fashion, apparel and jewelry manufacturers and distributors; actors, musical performers, authors, publishers, illustrators, and photographers. Monica has directed copyright and trademark litigation, supervised the prosecution and maintenance of hundreds of trademarks, and advised and represented clients regarding the protection, assignment and licensing of copyrights, trademark portfolios, and domain names. She has also represented clients in matters including rights of publicity and privacy, breach of recording agreements, celebrity bankruptcies, and royalty disputes.

More here: http://www.phillipsnizer.com/attorneys/mccabemonica_bio.cfm

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JONATHAN R. TILLEM
Jonathan (“Jon”) is a general corporate practitioner with a significant clientele in the domestic and international apparel and fashion industries.  He has a concentration in licensing, representing licensors and licensees, including, numerous high-end designer and luxury brands and other major, as well as up-and-coming, American and European fashion companies and apparel manufacturers, in their licensing activities.  Jon also represents a number of “brand management” companies that have acquired prestigious brands for the purpose of establishing licensing programs.

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ANDREW J. TUNICK
Andrew (“Andy”) represents both foreign and domestic corporations, partnerships, other business entities and individuals in a wide variety of corporate and commercial matters including licensing, franchising, mergers and acquisitions, shareholders’ and partnership agreements, distribution agreements, employment agreements, financing agreements, security agreements and also trademark and intellectual property matters.  Andy’s clientele includes foreign and domestic apparel designers, manufacturers and distributors, jewelry designers and manufacturers, fragrance and cosmetics companies, retail enterprises, footwear designers and manufacturers, and licensing representatives.

More here:  http://www.phillipsnizer.com/attorneys/tunickand_bio.cfm

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LAUREN J. WACHTLER
Lauren Wachtler Co-Chairs Phillips Nizer’s Litigation Department where she focuses her practice on commercial and business litigation with extensive representation of business clients in a wide range of jury and non-jury trials in New York State and Federal Courts, including cases involving the fashion industry, retailers, manufacturers, designers, business torts, and employment-related issues.

More here:  https://www.phillipsnizer.com/attorneys/wachtlerl_bio.cfm

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CANDACE R. ARRINGTON
Candace is a law clerk working in our Intellectual Property, Entertainment, and Corporate & Business Law Practices. She assists the Intellectual Property Practice represent a broad range of clients, including consumer goods; fashion, apparel, and jewelry manufacturers; actors, musical performers, authors, and photographers. Candace has assisted in copyright and trademark litigation; trademark maintenance; and protecting clients’ rights of publicity and privacy.

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