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


#Influencers?

Social media influencer asking followers to like and subscribe

What do the Special Prosecutor and the New York State Attorney General have in common? If you answered fake social media accounts and social media bots inflating followers, likes, tweets and retweets, you would be correct.

At the end of January, 2019, Attorney General Letitia James announced she had reached a settlement with Devumi LLC, which she described as “the first in the country” to find that selling fake followers and likes on social media is illegal deception and using stolen identities from real people is illegal impersonation. The Attorney General’s investigation began under James’ predecessor in response to an article posted online by The New York Times on January 27, 2018, entitled “The Follower Factory”.  That article is the best source to understand the underlying facts.

Devumi operated a business through which individuals who wished to appear more popular and influential could purchase views on YouTube, plays on SoundCloud, endorsements on LinkedIn, as well as followers, likes and retweets on Twitter and other social media platforms. According to the Times, Devumi’s customers included the model Kathy Ireland, the former pro-football player Ray Lewis and even the Treasury Secretary’s wife. Engagement with the platforms was effected by using computer operated fake accounts, generally referred to as “bots”. In some instances, the social media personas of real people were “cloned” to create multiple accounts in multiple languages to create thousands of other accounts used to promote products or services, so-called “sock puppet” accounts. According to the Times, Devumi supplied customers with over 200 million followers, using 3.5 million accounts.

Reaction to the article was swift and resulted in Devumi ceasing operations when the publicity “caused a major decline in its sales”, according to the Attorney General. But Devumi is hardly the only entity or individual conducting similar questionable operations. A simple search for “Buy Followers” on Google will lead to links for many offering followers or likes for sale. The search is so common that Google has pre-programmed questions and answers related to the search as well as related searches targeted to specific social media platforms.

Fraud and deception related to influence on social media platforms are not limited to purchasing followers and likes. According to an article posed on-line by The Atlantic in December 2018, wanna-be professional “influencers” are also feigning sponsorship deals on-line to convince brands of their credibility as influencers—what the article aptly calls “faking it until you make it”.

While many athletes and performers have entered into lucrative endorsement deals with brands for many years, the influence they sell has been earned through a record of actual accomplishment in their professional fields. Roger Federer, for example, can endorse coffee machines and watches because he justly has earned fame based on long years of actual accomplishment playing professional tennis. The same cannot necessarily be said of professional “influencers” whose only claim to fame is an Instagram following that may or may not have been manufactured. So, when it comes to social media “influencers”, the watch word should be: let the buyer beware.

Credit:  Helene M. Freeman


A tale of red soles

Much has been said and written about Christian Louboutin’s iconic red sole brand. It has sparked endless debates about trademark law in various courts around the world, including in the U.S., France, Switzerland, and most recently at the EU Court of Justice.

Christian Louboutin began selling his high-heeled red-soled women’s shoes in the early nineties. The red soles gradually became a signature brand, somewhat comparable to the famous Burberry check pattern. The creator’s idea starts as a mere decorative design, just like any fashion design. But over the years, it gradually becomes a brand in itself because the public begins to perceive it as a source identifier even without any concurrent word mark on the product. Burberry registered its design as a two-dimensional trademark around the world; it recently sued Target in the U.S. for selling scarves with a similar design. As has been the practice of Burberry over the years, that is a trademark claim, not a copyright claim—which would present greater challenges to Burberry under U.S. law.

Back to Louboutin’s red soles: The United States Court of Appeals for the Second Circuit ruled in 2012 that Louboutin owns a valid trademark for his red sole shoe design. Louboutin had taken Yves Saint Laurent to court for trademark infringement. The red sole trademark was deemed inherently distinctive, Louboutin having given ample evidence that the trademark had acquired secondary meaning. Those words sound like music for the fashion brand owner and its lawyers because it means that the court rewards years of investments in sales, advertising and free publicity. (As the court duly noted, Louboutin shoes are popular items to wear when walking red carpet events in the entertainment industry.) Louboutin’s victory was unfortunately limited to the court having confirmed the validity of the trademark; the court also ruled that the same trademark registration could not be invoked against shoes – such as those sold by YSL – that are monochrome red, covering the insole, outsole, heel and upper part.

The U.S. thereby paved the way for Louboutin, which is, after all, a French brand. A long-awaited judgment in the European Union was recently rendered by the EU Court of Justice. This time, it was the Dutch discounter Van Haren that was selling red-soled women’s shoes. The court held, after a long debate, that a red sole applied on the sole of a shoe can be a valid trademark in the EU. Under pre-2018 EU law, the shape of an object that “gives substantial value” to the product itself could not be registered as a trademark. (An example would be the distinctive shape of the Perrier bottle.) The court that the color red, as applied to a shoe, was not as a “shape,” as Van Haren had asserted; after all, Louboutin had not sought to register a shoe but merely a color applied at a certain location on shoes. Following the EU court’s guidance, the District Court in the Netherlands that had referred the issue will now ban the sale of Van Haren’s shoes throughout the European Union.

The Louboutin trademark registration

A crucial takeaway from this case is the reward given for the smart way in which the trademark had been registered. In many trademark systems, the registrant is allowed to specify its two- or three-dimensional object with a brief description. Louboutin’s lawyers had wisely specified the filing as follows: “The mark consists of the color red (Pantone 18‑1663TP) applied to the sole of a shoe as shown (the contour of the shoe is not part of the trade mark but is intended to show the positioning of the mark).”

That victory may not last very long, however. EU trademark law was recently amended, with the effect that not only “shapes” but also “other characteristics” giving substantial value to the product may be barred from trademark registration. This change in the law opens a new can of worms: in particular, it remains to be seen whether pre-2018 trademarks, such as the one owned by Louboutin, can be invalidated on the basis of the new law.

Credit:  Diederik Stols | Guest Post

Phillips Nizer would like to thank Diederik Stols for the contribution of this post to the Fashion Industry Law Blog.  Diederik is a partner at the law firm BOEKX Advocaten in The Netherlands where he specializes in intellectual property, media and entertainment and e-business. (http://www.boekx.nl/en/)


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


Brooks Brothers at 200 – Part 1: Background

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At a time when the fashion press engages in a group hug with brands over how labels can stay viable in the digital age, it is fitting that we should pause to consider a brand that has been doing just fine, thank you, since James Monroe was president of the United States. Brooks Brothers, which celebrates its 200th anniversary this year, has had different owners and various designers (with Zac Posen now directing womenswear), but has adhered to a consistent philosophy that can be described in abstract terms as “wearable and confident American style.” Brooks Brothers can also be described, more explicitly, as one of the few places where, no matter what you buy, if the color and fit work, you can forget the term “fashion victim.” To celebrate its anniversary, the brand mounted its first show at Pitti Uomo in January. Sixty-one models (including eight women who made the term American style into a synonym for chic) were presented to the accompaniment of a full symphony orchestra; unusual for almost any show anywhere, every piece could have been worn out the door of the Palazzo Vecchio onto the streets of Florence (or New York, London or Tokyo).

As a branding lawyer, constancy in branding message and in legal protection are always on my mind. Managing that from the flagship at the corner of Madison Avenue and E. 44th Street in Manhattan may have been easy enough back when, if someone said he was going to Brooks Brothers, you just assumed that he meant going to that corner and into that store. Keeping consistency in message and legal protection became a bit more complicated when the brand expanded across the USA (eleven stores by the 1970s) and then, in 1979, to its first international location, in the prosperous Aoyama neighborhood of Tokyo. The challenges are global now, with the brand maintaining hundreds of stores in nearly fifty countries, and with a wholesale business that places Brooks Brothers products onto shelves and racks of many third-party retailers.

I sat down recently with Arthur Wayne, the vice president of global public relations at Brooks Brothers, in his office in the tower behind the company flagship, to gain some understanding on how it is done.

The first thing that became clear in speaking to Mr. Wayne is that Brooks Brothers adheres to the strategy (which I fully support in general and for fashion in particular) that a brand is its story made temporal. The Brooks Brothers story is the American experience. There are many examples, but consider just three outlined briefly by Mr. Wayne: when miners landed in New York from around the world and headed (one might say herded) west in 1849 during the gold rush, Brooks Brothers innovated, with the ready-made suit. No need to wait to be measured and return for fittings. Pick one off the table,* let it out or take it in, and off you went to California, well-dressed, with a pickaxe in hand. Then came the Oxford button-down shirt, which has been copied by nearly everyone trying to look American.** And I have gone into detail on these pages about why the stripes of American ties, led by Brooks Brothers, go from right to left instead of left to right, as do the British regimental ties of their inspiration.

In my next post, I will pick up with what brought the company to where it is now—and what it is doing to keep its brand on message.

– end –

* Until comparatively recently in the company’s long history, men’s jackets were neatly folded and presented in stacks on counters.

** American style is about looking effortless; that does not mean it is easy to do. I shared with Mr. Wayne how I once knew the American representative of a renowned British shirtmaker. As he explained it to me, after several failed attempts on Jermyn Street to get that American collar right, he walked over to Madison & 44th, bought two Brooks Brothers button-down shirts off the shelf and sent them back to England with the message to please just copy this.

Credit:  Alan Behr


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