Category: Business Law

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Retailing with Foam and A Good Swing

Photograph Copyright © 2019 by Alan Behr

Two cappuccinos worthy of a caffè in Milano started my last visit, with a fashionable friend, to the Brooks Brothers store on Madison Avenue, here in New York. The chain’s mother ship had recently opened a bright and hospitable Red Fleece Café, and so my friend and I met right on the ground floor, within handshake distance of displays of shirts and ties, had a refreshment and then, coupons in hand, went shopping, women’s first, men’s second. On our way, we passed a golf simulator, where a pro patiently guided a customer on improving his swing—with a real club toward a virtual green. Retailers have always offered something besides what are now universally called “items.” From lunch counters to hairdressing and beyond, stores have been attracting generations of visitors with more than just merchandise.

What has changed, however, is both the breadth and the layered complexity of it all. Even the décor matters as it never has before. The luminescent, open-plan renovation of the Saks Fifth Avenue store is a veritable invitation to come on in and have a look. As for services: soon after our visit to Brooks Brothers, this note arrived by email: “Your trousers are ready… We can pull nice coordinating pieces for you.” Personal shopping used to be a benefit given to the best customers of a retailer, but with physical (“bricks-and-mortar”) retailing challenged so completely now by online competition, all shopping has become personal, and stores must engage and entertain customers as they never have done before.

When a business expands, however tangentially and however much in pursuit of the raison d’ê·tre for a store—selling goods—the store should be aware of the likely importance of protecting its brand for the other activities. That means reexamining the retailer’s portfolio of registered trademarks. There should already be a registration for retail store services and there is likely one for online sales, but if a café or coffee bar has just been added, the next application should be for restaurant services (if not already there as a legacy from the days when even modest-sized retailers had soda fountains). But that virtual driving range? Entertainment services. I was recently invited to a delightful event at Saks, hosted by Switzerland Tourism. Two of my favorite things converged within a roped-off area of the sales floor: great retailing and Swiss chocolate. From a trademark point of view, however, that would be providing catering services and event location services. And so on.

Insurance policies need to be examined to be sure that the new range of activities is covered. The cappuccino is foaming, the Champagne is popping and the golf clubs are swinging—check with your carrier to be sure your coverage is current and sufficiently comprehensive.

Finally, be sure your employment policies are up to date. A dress code that applies to salesmen in men’s suits doesn’t necessarily apply to a golf pro, after all, to say nothing of a barista.

Credit: Alan Behr

See posts: “Brooks Brothers at 200“

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Business Law Cases Intellectual Property

Supreme Court Rules: Copyright Registration Required to File Suit

On March 4, 2019, the U.S. Supreme Court resolved an intriguing circuit split in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC. Justice Ginsburg authored the unanimous decision, holding: “registration occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers a copyright.” The Court rejected the argument by Fourth Estate that the registration requirement of the Copyright Act was accomplished by filing an application for registration. In its rationale, the Court leaned heavily on the language of the statute.

The Copyright Act (17 U.S.C. §411(a)) reads: “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title. In any case, however, where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute a civil action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights.”

Simply put, the Court stated that, “if application alone sufficed to ‘make’ registration, §411(a)’s second sentence –allowing suit upon refusal of registration –would be superfluous.”

The Court examined other provisions of the statute to interpret the meaning of §411. The Court found that the phrase “after examination” in §401 meant that “registration,” as used in the statute, follows action taken by the Register. The statute provides an exception to the registration requirement before suit through preregistration of a work that may be “vulnerable to predistribution infringement –notably a movie or musical composition,” and permits the start of an infringement action prior to registration for some live broadcasts.

How will the fashion business be affected by the ruling? This being an industry that spans the world, many creators argued in amicus briefs that requiring pre-suit registration for U.S. authors and domestic works placed them at a disadvantage since such a requirement conflicted with the Berne Convention’s de-emphasis on copyright formalities. However, the Court’s decision noted that the U.S. Congress had the opportunity to amend the copyright statute in 1988, 1993, and 2005, but declined to remove the registration formality in each instance.

The Court also pushed back against Fourth Estate’s argument that the Copyright Office’s processing time for applications was too slow, and instead pointed out that expedited processing was available, albeit for an additional $800 fee. The Court also indicated that the Copyright Office’s slow processing times could be improved should Congress address budgetary and staffing shortages.

In practice, the amount of time the Copyright Office takes to process an application is less relevant once the registration issues.

Since copyright subsists from creation in tangible form, requiring registration prior to commencing a suit for infringement does not preclude copyright owners from recovering compensatory damages from infringement that occurred prior to registration. A registration within three months of first publication will relate back to the publication date for purposes of recovery of statutory damages and attorneys’ fees; and the effective date of the registration is the date on which the copyright application is submitted and completed with the submission of the deposit copy and payment of the registration fee.

The Court’s decision is understandable as it is compelled by the statutory language. But what does this mean for creators, practitioners, and other stakeholders? Only the future will tell the long term effects in the fashion industry, but the message remains clear: if a design that is protectable by copyright is important, register it as soon as you can, preferably before it is distributed or displayed to the public, if you want to obtain the best protection and the broadest remedies in the United States.

Credit: Candace R. Arrington

See post: Supreme Court to Resolve When Copyright Suit Can Commence

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Business Law Cases Federal & State Laws Intellectual Property

Supreme Court to Resolve When Copyright Suit Can Commence

On January 8, 2019, the U.S. Supreme Court heard oral arguments in, Fourth Estate Public Benefit Corp. v. Wall-Street.com LLC. The court is expected to resolve a decades-old split of opinion among the federal Circuit Courts on whether the Copyright Act permits a lawsuit to be filed upon submission of a copyright application or not until the copyright registration certificate has been issued or refused.

The language in the statute is simple. 17 U.S.C. § 411 reads: “no civil action shall be instituted until … registration of the copyright claim has been made in accordance with this title.” The statute also provides that, “[i]n any case … where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute a civil action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights.”

In this case, Fourth Estate sued Wall-Street.com when the website continued to publish Fourth Estate’s work after the expiration of the limited license that had been granted to the website. Fourth Estate filed copyright applications for the misappropriated online publications and then asserted a claim for copyright infringement; however, its claim was dismissed by the Eleventh Circuit because the Copyright Office had not yet issued registration certificates. As have the Courts of Appeal for the Third and Seventh Circuits, the Eleventh Circuit follows the Tenth Circuit’s “registration approach,” which requires the Copyright Office to have acted on an application for registration by approving or denying it prior to initiating a lawsuit. The Fifth and the Ninth Circuits, however, follow the “application approach,” which allows for the commencement of an action upon filing a copyright application.

The split among those courts has large implications for photographers, writers, musicians, and fashion designers. For instance, the Copyright Office application processing time is notoriously slow: it can range from six months to more than a year to issue a registration. Creators are forced to endure an unpredictable wait time – or avoid that delay by paying an additional $800 special handling fee for expedited processing. In a seasonal industry such as fashion, where trends evolve so quickly and styles head to market within just a few months from creation, a small company cannot afford to sit back and wait for its copyright applications to be processed if infringement appears to be a credible threat, but it may also find that filing multiple applications with very significant expedited processing fees imposes an unacceptably great financial burden.

The fashion industry is a multi-billion dollar international industry. It has been argued that requiring the issuance of a registration certificate (or a refusal to register from the Copyright Office) for American authors and domestic works before litigation can commence conflicts with the de-emphasis on copyright formalities established by the Berne Convention, which governs copyrights across the globe. For now, this is all in the hands of the Supreme Court. We will provide a follow-up post when its decision is rendered.

Credit: Candace R. Arrington

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Business Law Employment & Labor General / Musings

Model Behavior

In September, 2017, LVMH and Kering jointly adopted “The Charter on the Working Relations with Fashion Models and Their Well-Being.” It was created following consultation with key external players, such as casting directors, stylists, models and modeling agencies. Intended to help improve working conditions for models, the charter seeks to apply standards of conduct to the signatory companies and to their external contractors, such as modeling agencies, worldwide. A monitoring committee will meet with brands regularly to assess compliance.Key provisions of the charter require compliance with the following:

  • Cast only female models for adult clothing who are at least French size 34 (US size 2) and only male models who are at least French size 44 (US size 34).
  • Require a valid medical certificate from each model, attesting to good health and ability to work.
  • Have a dedicated psychologist or therapist at the models’ disposal during work hours.
  • On the sometimes-difficult topic of nudity and semi-nudity, the charter is refreshingly frank: it will be allowed only with written consent of the model and parent/legal representative if under the age of eighteen. For all, there must be comfortable room temperatures and private changing zone, and the model may not be left alone with the photographer or other person connected with the production.
  • No hiring of models under the age of sixteen for photoshoots or shows in which the model would be called upon to represent an adult and, for those models aged sixteen to eighteen, a restriction of work hours to 6:00 a.m. to 10:00 p.m.
  • Provide food and drinks that comply with the models’ dietary needs. Alcohol is not permitted, with limited exceptions.
  • Establishment of a grievance system (such as a hotline). Brands have the right to make unannounced inspections.

As leading multi-brand companies based in the world’s fashion capital, LVMH and Kering are positioned to make a global industry-wide impact with the charter. By extending enforcement by their brands to external contractors (such as modeling agencies) the companies are using their collective power potentially to cause change throughout the fashion business. LVMH and Kering have invited other brands to sign the charter. Antoine Arnault, a member of the LVMH board of directors and the CEO of its Berluti men’s footwear brand, has expressed his belief that, “[other brands] will have to comply because models will not accept being treated certain ways by [some] brands and another way with others.”[1]

Within less than a year following the announcement of its adoption, the charter is bringing change throughout the fashion business by, in part, influencing others in the field to adopt similar measures to promote improved working conditions for models. ELLE and Version Fémina magazines signed onto the charter. Condé Nast and Tapestry Inc. – the parent company of Coach and Kate Spade – each released their own standards of conduct for models, and Elite Models is expected soon to follow.

Katie Grand, editor-in-chief of Love magazine, expressed to Women’s Wear Daily that learning about the LVMH/Kering Charter made her “mindful that models need to change in private.”[2]

In February of this year, LVMH and Kering Group further demonstrated their commitment to the charter by launching www.wecareformodels.com, a website that is intended to provide models with access to advice from expert nutritionists, psychologists, and other professionals in the fields of mental and physical health.

Previously, the Council of Fashion Designers of America had implemented health initiatives and guidelines to promote wellness and healthier working environments for models. The initiatives were not about policing brands but were intended to raise awareness and promote education. The LVMH/Kering charter differs in that the companies have implemented the policy and are self-monitoring. But it is more: the charter does not function merely as a set of corporate guidelines but as rules of conduct for all participants in corporate projects in which models are involved. The founders of the charter have stated clearly that, if any external partner should fail to comply with the charter, they will sever their relationship with it.

Although the charter is not legislation, it is important to recognize that its medical certification requirement is in line with the EU labor laws for fashion models that were implemented in October 2017, only a month after the adoption of the charter. The charter’s age-specific rules for models under age 16 are in accordance with New York child performer laws that require special considerations for underage models, including restricted working hours, mandatory breaks, and school attendance obligations.[3] In short, the charter is current on where the law has been headed internationally, and it is quite possible that showing compliance with the charter could have bearing on judicial thinking, particularly on questions of liability and in any potential damages awards, in future actions concerning treatment of models.

Will the charter create a new norm for the modeling industry? The fashion business has shown that, while styles change quickly, patterns of behavior generally change far more slowly; but for models, some change appears to be coming at last.

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[1] Osman Ahmed, A New Charter Aims to End Model Abuse: Will it Work?, The Business of Fashion (Sept. 7, 2017), https://www.businessoffashion.com/articles/intelligence/lvmh-kering-model-charter-will-it-work.

[2] Rosemary Feitelberg & Lisa Lockwood, Next Steps: How to Cure Fashion’s Model Scandal, Women’s Wear Daily (Mar. 26, 2018), http://wwd.com/fashion-news/fashion-features/fashion-reaction-french-law-skinny-models-10302035/.

[3] Nora Crotty, New York Signs Law Protecting Child Models’ Labor Rights, Fashionista (June 27, 2018), https://fashionista.com/2013/10/new-york-signs-law-protecting-child-models-labor-rights.

Credit:  Gloria Kim | Guest Post

Gloria Kim begins her third year at the Fordham University School of Law in the fall of 2018. Gloria has worked at Ralph Lauren as a wholesale planner and at Louis Vuitton as a legal intern. She is an active participant in the school’s Fashion Law Institute and earned her Bachelor of Arts degree from the University of Virginia.

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Business Law Intellectual Property

Brooks Brothers at 200 – Part 3: Lessons

Earlier in this series of posts (here and here), I reported on my interview with Arthur Wayne, the vice president, global public relations of Brooks Brothers. We discussed how the brand maintains continuity throughout hundreds of points of sale (wholesale and retail). In business and legal terms, here is the short and simple version:

  1. Stylistic consistency creates trademark consistency. Brooks Brothers maintains uniformity of cut, pattern, SKUs and style names worldwide. I own suits and jackets in the 1818 line, which is the company’s standard, positioned between its premium Gold Fleece line and Red Fleece bridge line. My pieces are of Italian fabric, sewn, variously, in Italy, Thailand and the company-owned workrooms in Haverhill, Massachusetts. All bear the trademark 1818, all are in the slimmest of the company’s fits, which is branded Milano. As a customer, I know that, wherever I find Brooks Brothers in the world, I can put on an 1818 Milano jacket made in any of three continents and know it will fit just as do the ones in my suitcase. In legal terms: The more consistent the message, generally speaking, and the more clearly a trademark represents just one source of origin, the stronger will be that trademark.
  2. Control the message, but respect regional differences. Japanese customers much prefer the company’s products made in its US factories—which they view as a mark of authenticity. French customers, in contrast, want to experience the brand, but they care relatively little where items they buy are sourced. (Interestingly, offered Mr. Wayne in an aside, when foreign buyers visit, it is the Japanese men who typically have the best interpretation of “American traditional style.”) United States trademark law does not permit the registration of geographically descriptive marks, so from a legal point of view, where it is made is of no matter: if customers get that the brand is about the American experience (reinterpreted and, to my taste, noticeably improved, by Italian ownership), that is what matters most.
  3. As in the movies, story is everything to a brand. Marketers and lawyers do not always see eye-to-eye. Every business day, in multiple places around the world, marketing teams are presenting to their lawyers exciting new trademarks, only to hear the lawyers say that they are unavailable for use. On the importance of story for a fashion or luxury brand, however, there should be no disagreement. Just as the mere mention of Veuve Cliquot brings to mind the story of the taste and luxury of Champagne and the mention of Leica brings to mind the story of precise German optics, so does a reference to Brooks Brothers open a page on a story about the American experience—in style of dress and in style of living. When Ralph Waldo Emerson said, “A foolish consistency is the hobgoblin of little minds,” he omitted any reference to wise consistency. That is the path taken by Brooks Brothers and by other international brands that know that, from consistency comes the strength to endure and prosper in multiple territories, among multiple customer bases.
  4. Newness is the best tradition. “People think of us as a traditional brand,” said Mr. Wayne, “but our founder, Henry Sands Brooks, was a fashion guy—a dandy. Look at what followed: collars with buttons; readymade suits; pink shirts on men. All of these things were innovative in their time—probably even shocking to many.” Tradition, in other words, is what happens when innovation meets inheritable acceptance. And that is the best way a marketer, together with his or her lawyer, can build, expand and ultimately preserve a fashion brand.

Credit:  Alan Behr

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Video: Brooks Brothers | Made in America: Makers and Merchants

Categories
Business Law Intellectual Property

Brooks Brothers at 200 – Part 2: Method

In my last post, I offered some of the history of the Brooks Brothers brand provided to me by Arthur Wayne, Vice President, Global Public Relations, during a recent visit with him at the company’s headquarters in New York. Having been to Brooks Brothers stores from Milan to London and beyond, I asked if the styles, brand names and trademarks appurtenant to them were used consistently throughout the world.

“When Claudio Del Vecchio bought the company, in 2001,” explained Mr. Wayne about its Italian owner, “he already ‘got’ the brand. The first thing he did was undertake a comprehensive product review. Under its prior owners, the company wasn’t really looking in its own garden—for quality of construction, tailoring—the core elements of the brand.” Mr. Wayne noted that, in the mid-to late 90s, there was much talk that casual Friday would be the death of tailored clothing, and the result at Brooks Brothers was that too many items were inexpensively made—something that is possible to accomplish credibly with fast fashion but is not possible to do stylishly with most tailored clothing.

“Claudio approached the brand as a customer,” continued Mr. Wayne. “His thinking has always been, ‘If I feel this way about what I am seeing, others must, too.’ He brought back quality tailoring and made sure the stores have a consistent Brooks Brothers look. The review was a long process and not everything was changed, but the initiative made us ready for the next challenge: brands are now in their customers’ hands.”

That was elegantly put and it shows the current problem faced by all brands and their lawyers: a brand in its legal form is its portfolio of trademarks, along with other intellectual property rights. And a trademark is above all an identifier of source of origin. If you see the trademark COCA-COLA on a soda bottle, that means it comes from Coke, not Pepsi—and so on. If someone else uses your mark, you take legal action to prevent that or risk potentially losing control of the mark and its registrations.

But how do you accomplish that in the age of social media, when consumers get to rate a brand’s offerings down to individual products—and when the brand feels obligated to post negative consumer reviews of those products on the very website where it is trying to sell them—and when it must deal as well with influencers, who can influence whosoever they please, on their own terms? Those forces can alter the perception of where a brand stands, rather as the gravity of the sun bends the approaching light of a distant star, changing the perception of the position of that star. Brooks Brothers partners with influencers, and it features two of them—one American and the other Polish—in its anniversary edition of its house lifestyle magazine. It is all about what Mr. Wayne calls, “the importance of creating a dialogue with your customers. This is what matters to them.”

What is a fashion lawyer to do with all these new forces and new demands? In the third and final post in this series, we will consider some contemporary lessons for international branding.

Credit:  Alan Behr