One of the hot topics du jour in the fashion press is the copyright battle in the Supreme Court involving cheerleader uniforms. It poses the question of when a two-dimensional design that is part of a useful article is copyrightable—in this case, designs consisting of color blocks, chevrons, and lines in uniforms for cheerleaders. The Copyright Act provides that a “useful article” is not copyrightable, but it allows for copyright in the “pictorial, graphic and sculptural” features of useful objects as long as those features are “separable” from and can exist independently of the object itself.
Under the statutory definition, you can secure a copyright for a fabric or lace design, but you cannot secure a copyright in a dress made with the fabric or lace. An artist who draws a dress can secure a copyright in the drawing and can prevent someone from using it on greeting cards or wastebaskets, but the artist cannot use the copyright to prevent anyone from actually making the dress depicted in the drawing.
Although the concept of separability is easy to state in the abstract, at times it has been hard to apply in practice. Cheerleader uniforms present a particularly difficult problem. The designs here are not printed on the fabrics used in the uniforms. They are part of the garment’s construction. The placement of the design features—color piping around the neckline and arm holes, lines down the sides in color blocks, chevrons in the center, lines marking the boundaries between blocks of color—results from the contours of the garments. The placement also serves the functional purposes of hiding seams that are sewn on the outside (instead of the inside) of the garments to prevent chafing, strengthening parts of the garments so that they hold their shape, and creating optical illusions that lengthen the torso and slim the waist. The designs also help make the garments recognizable as uniforms and not street clothing.
The challenger, Star Athletica, focuses on those functional considerations and argues that the designs are inherent in the useful objects and do not exist independently. It argues that, if the designs have any function, they are not separable from the uniforms.
The United States and Varsity Brands, the copyright owner, argue that, because the graphic designs can be applied to products other than dresses, they are separable, can exist independently and are therefore copyrightable. The government further argues that the Copyright Office cannot be in the business of determining how any particular two-dimensional design functions in any given context when called upon to determine whether it can indeed exist independently. Under that argument, any two-dimensional design could potentially be deemed independent and separable from the three-dimensional objects to which it is applied.
In a great irony, the case was argued before the Supreme Court on Halloween. Halloween costumes frequently have been the subject of litigation under the particular provisions of the Copyright Act at issue in the case. (In case you are wondering, under current precedent, costumes are generally not copyrightable, but masks generally are.)
Reading the oral argument before the Supreme Court and the briefs, I was struck by the fact that the case is not unlike the famous figure ground optical illusion in which you can simultaneously see either a goblet or the profile of two faces. Star Athletica sees the goblet. If the lines define the goblet, it is the design of a useful object, and Varsity Brands cannot prevent Star from making the goblet. But Varsity Brands and the government see the profile pictures, which are separable, and it would be irrelevant whether they also define a goblet from the perspective of another viewer.
Stanford Law School Professor Mark Lemley, as the lead author of a brief submitted by a number of law professors in support of Star Athletica, attempts to separate the figure from the ground. He argues that copyright could protect the designs, but not the coordination and arrangement (i.e. placement) of the elements of the designs that result from the shape or construction of the garments. In effect, this proposed test would exclude from the protection of copyright those elements of the designs dictated by the needs of making the useful article truly useful.
There are other relevant questions that none of the lower courts in the case considered and which none of the briefs submitted to the Supreme Court addressed: What are the two-dimensional designs that are protected and are those designs copyrightable under more general principles of copyright law? Are they original or are they in the public domain? Is there a merger of the general idea with its expression so that there is nothing that is copyrightable? Are the decorative aspects what copyright law refers to as “scènes à faire” (stock representations implicit in the subject matter, in this case cheerleader uniforms)? Both the trial court and the appellate court expressly said they were not addressing whether the two-dimensional designs were copyrightable and were reserving that question. And the Supreme Court, in accepting the case, refused to consider this question, because it was not ruled on below.
Justice Elena Kagan inquired at argument: What is your design; can someone just add another stripe to avoid infringement? Varsity Brands’ counsel did not address the first part of the question and, in response to the second part, said that merely adding something to a copyrightable design “usually” does not avoid infringement. The response did little to address the Court’s expressed concern for the anti-competitive effect on the market for cheerleader uniforms and markets for other products for which the design has a functional purpose, such as camouflage fabric for military use. Indeed, it is worth noting that Star Athletica made a point of informing the Court that Varsity Brands controls 80% of the U.S. market for cheerleader uniforms.
That may help explain why all of the Supreme Court Justices who asked questions were troubled by the idea of handing Varsity Brands a monopoly over cheerleader uniform designs through the use of its copyright registrations. How they might avoid that result is an open question. Star Athletica offered one alternative that might have a major impact on the fashion industry, particularly on the accessories market, where protection of three-dimensional designs is an on-going concern: Any aspect of the design that is functional in part is not conceptually separable. (Say goodbye to the Kieselstein-Cord belt buckle decision, a ground-breaking case won by this firm and which a number of briefs argued was wrongly decided.) Another alternative, endorsed by the American Intellectual Property Association, is to vacate the decision and instruct the court below to determine first the validity of the copyright in the designs under more general copyright law concepts that would factor into the analysis the use of routine design features in uniforms. Either way, one suspects that Star Athletica’s use of its copyrights to prevent competition in the cheerleader uniform market may be short lived.
Credit: Helene M. Freeman
“100% Grated Parmesan Cheese.” Several consumers claim this seemingly straight forward product description is misleading, so misleading in fact that crafty lawyers have dragged Kraft and other cheese manufacturers into court on false marketing claims. So many parmesan cheese class action lawsuits have been filed (sixteen and counting) that the U.S. Judicial Panel on Multidistrict Litigation has lumped these actions into a single massive case.
What’s wrong with saying “100% Grated Parmesan Cheese” when referring to my favorite pasta primavera topping? According to the class action plaintiffs, this grated parmesan cheese contains substantial amounts of cellulose (wood pulp) which acts as an anti-clumping agent (so the grated cheese stays grated). This, the plaintiffs say, means that the grated parmesan cheese sold by the defendants is not “100%” grated parmesan cheese.
Since I am not involved in any of the parmesan cheese class action lawsuits, there is at least entertainment value in the cases. But for consumer products manufacturers, there are lessons to be learned. Some marketing claims may land you in court!
Consider one goal of the Federal Trade Commission. Its website (https://www.ftc.gov/about-ftc) says its mission is:
To prevent business practices that are anticompetitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity.
Let me paraphrase here, the FTC wants to keep manufacturers and retailers honest with the consuming public about the products they sell. Word choice is important because some words can be interpreted differently by different consumers and thus misleading because of an ambiguity.
An amazing fashion company I work with uses GOTS certified organic cotton for one of its product lines. Is it okay for that company to say that the product is 100% organic? Unless every component of these garments is organic (dyes, trims, buttons, etc.), the answer is no. The correct advertising claim should say that the products are made from GOTS certified organic cotton without implying that product as a whole is organic.
“All Natural” is another potentially problematic claim, even where the product is intended to be made from all-natural components. Consumer product companies that don’t carefully control their supply chains are at the mercy of suppliers who may (knowingly or not) substitute synthetic ingredients for natural ingredients. I am told by people who know about these things that many synthetically derived ingredients act the same as the natural ones. But some consumers are willing to swear under oath that their purchasing decisions are guided by whether a product is “all-natural” and are willing to join class action lawsuits when a purchased product does not live up to the “all-natural” claim.
Let me mention another recent case. Trader Joe’s, which markets certain oatmeal and cereals as containing “maple” (TJ’s Frosted Maple and Brown Sugar Shredded Bite-Sized Wheats and TJ’s Oatmeal Complete Maple and Brown Sugar) is being sued in federal court. Can you guess what’s not on the ingredient list?
Credit: Jeremy D. Richardson
A case that was decided last year by the New York Supreme Court, Kings County, illustrates the importance of protecting the confidentiality of proprietary supplier and manufacturing sources.
In this case, a wholesale distributor of off-price apparel engaged an employee to assist the distributor in sourcing merchandise from overseas manufacturers. The distributor and employee made a number of trips to a South American country where the distributor sourced merchandise through a business broker who provided introductions to local apparel factories.
After a few years, the employee left the distributor to work for a competitor that began to place orders for merchandise with these same factories through the same broker.
The distributor subsequently brought an action against the employee and the competitor for unfair competition claiming that the identity of the broker and associated factories constituted trade secrets, which the employee misappropriated for his own and the competitor’s benefit.
Under New York law, a former employee may generally solicit a business’s customers, so long as the employee is not bound by a non-compete agreement, does not solicit the customers while still employed by the business and does not rely on customer information that was wrongfully obtained or which constitutes a trade secret. The courts have applied a similar standard when evaluating whether the identity of a company’s suppliers may be treated as a trade secret, often also considering whether the company had exclusive arrangements with those suppliers.
In determining whether information is a trade secret, New York courts frequently apply a six factor analysis:
- the extent to which the information is known outside of the company;
- the extent to which it is known by employees and others involved in the business;
- the extent of measures taken by the company to guard the secrecy of the information;
- the value of the information to the company and its competitors;
- the amount of effort or money expended by the company in developing the information; and
- the ease or difficulty with which the information could be properly acquired or duplicated by others.
The court ultimately decided the action in favor of the employee and competitor, determining that the identity of the broker and the associated factories were not trade secrets. The distributor did not establish that the broker or the factories had promised to or did, in fact, sell exclusively to the distributor and did not show that the identities of the broker and the associated factories were confidential. The distributor also failed to provide evidence that it had undertaken great effort in discovering the factories, in establishing a business relationship with the broker or in keeping the identities of the parties secret.
The lesson here is that businesses that depend on key suppliers should not rely on trade secret protection alone to protect these relationships. Instead, they should take steps to identify as proprietary that information which they wish to protect and should enter into appropriately tailored non-compete and non-solicitation agreements with their employees that are designed to prevent them from disclosing or otherwise taking unfair advantage of such information of which they become aware during the course of their employment.
Credit: R. Brian Brodrick
Brian is a partner in Phillips Nizer’s Corporate Law and Securities & Private Placement Practices.
While the Supreme Court’s recent healthcare and marriage equality rulings garnered a lot of attention, there was another decision at the end of the Court’s term that may be more meaningful to the business of fashion – Kimble v. Marvel Entertainment, the Spiderman patent litigation. Steven Kimble secured a patent for a Spiderman toy that shot the character’s “webs” from a hand. Marvel, owner of the character, purchased the patent to resolve a claim of patent infringement, promising to pay royalties on sales of the toy.
The popularity of the toy outlived the twenty-year patent term. Under a fifty-year-old Supreme Court decision, the obligation to pay royalties under a contract ends when the patent term expires, even if the agreement contains no termination date. Court decisions have applied the same rule to copyright licenses and assignments.
The Spiderman case called for the Supreme Court to reconsider the rule and permit the continued collection of royalties as provided in the contract. Although conceding that the fifty-year-old case might have been wrongly decided, as a number of courts and commentators have noted, the Court declined the opportunity to overrule it. Instead, it advised that, if the rule is to be changed, it is up to Congress to do so. Spidey is now free to cast his web without writing any more checks.
The decision is a reminder to licensors that patent and copyright rights do not last forever. In contrast, trademarks last as long as they are used and protected and trade secrets last as long as their secrecy is maintained. Joining a license for patents and copyrights with related trademarks or trade secrets can be a good way to maintain royalties after the patents and copyrights have expired. Licensees, on the other hand, should periodically investigate whether they are paying royalties under patents or copyrights that may have expired.
Credit: Helene M. Freeman
The U.S. Copyright Office delivered a Christmas present to the creative industries: The third edition of the Compendium of Copyright Office Practices. Unlike its predecessors, the third edition is not merely a set of instructions to the Copyright Office staff for administering the registration and recordation functions of the Register of Copyrights. The new version is intended to provide guidance to applicants for copyright, as well, setting forth what is and is not copyrightable and identifying who is entitled to claim copyright ownership.
Fabric and jewelry designers will find its lists of non-copyrightable subject matter and its examples of the distinction between copyrightable and non-copyrightable designs instructive. While the Compendium reflects significant judicial decisions, collected in a table of authorities, it also ventures into areas that have been considered unsettled.
This is particularly apparent in the section devoted to the copyright in websites. Insofar as the Register of Copyright is concerned, the format, layout and “look and feel” of a website are not copyrightable; but the content—text, photographs, audio and audio-visual works—are copyrightable. The website creator may have a copyright in the collection or compilation of these materials, consisting of their selection and arrangement, even if it has not created the contents. If the website’s terms of service require a user to convey “exclusive rights” in user generated content, uploading by the user of his or her content to the site will entitle the site to claim ownership of the copyright in the content. But the Copyright Office does not make registration easy. It requires the users who authored the content to be identified by name in the application for registration. If there are too many to name all, the application should list several authors and indicate the number of additional authors and the staff of the Copyright Office may ask for a more complete list to verify that the identification of authors of user-generated content has been maintained by the site owner. And any registration for the content on a website will pertain only to the particular version submitted with the application, so new matter added after registration will not be covered by the prior registration. Although it may be made available for display throughout the world, a website is considered an “unpublished work”, unless downloading or sharing of content is authorized.
The Compendium does not have the force of law and the Copyright Office has frankly stated that it has addressed unsettled areas in the hope that its reasoning will be considered persuasive should the issues be presented in future cases. But the Compendium does control how the Copyright Office will address applications for registration and a review of its provisions will assist applicants for copyright in avoiding common problems that can impede registration. It is readily available on the Copyright Office website, www.copyright.gov, and each chapter can be downloaded or accessed separately as a pdf.
Credit: Helene M. Freeman