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.
My partner Helene Freeman has offered her reflections on these pages about the recent Supreme Court opinion in Star Athletica, L. L. C. v. Varsity Brands, Inc., commonly known as the cheerleader uniform case. Our Fashion Practice held a seminar recently for the industry where Helene provided further thoughts based on her posts, and I provided some practical considerations based on the court’s ruling. Here is a brief summary.
The key point to remember is that the Supreme Court has greatly simplified how you look at cases of apparel and accessory copyrights and claimed infringement. Because the case involved fabric patterns, I will limit my discussion to them, but there are broader implications, from belt buckles to furniture. The bottom line is this: from now on, we will not examine the garment itself, just the surface design. It no longer matters that, if you take stripes, chevrons and other familiar cheerleader-uniform patterns off the uniform, all you have left is a tennis dress–that is, something with a different function from a cheerleader uniform. All we need do is look at the pattern on the fabric used to make the dress, as if it were unrolled from a bolt of cloth and laid flat. In fact, it does not even matter if a cutter snips pieces from the bolt into a recognizable shape of a dress. It’s the design of the fabric, and just that design, that matters from now on.
That possibly makes even more important the question that the Supreme Court sent back for consideration by the trial court: whether the design that was allegedly copied embodied enough original expression to warrant protection by copyright. The rule is that even modest creativity, when fixed in a creative work, is protectable by copyright. (All you haiku writers, take heart.) Using neckties from several makers and nations as an example, I showed our conference attendees that original variations to familiar patterns (such as bees and starbursts) could be protectable. Even if what results is a “thin” copyright, it is still enforceable.
That leads to a follow-on reflection: There being no central database of protected designs, and with fabric designs now being viewed as if standing alone, as some kind of sartorial Ding an sich (a “thing in itself” in Kantian philosophy), if you have a pattern that looks like it might be original, and if you intend to spend time and money using it to make clothing (or other products), now, more than ever, it is important that you seek copyright registration–and that you discuss your options with counsel. Because the cut of the cloth and claimed usefulness (as in, “Those look like the kind of stripes I would find on a cheerleader uniform.”) are now irrelevant for copyright purposes, you will have to undertake your analysis in a field of potential risk beyond that formed by the goods you are making. Using cheerleader uniforms as an example once more: stripes and chevrons on those uniforms, if upheld as protectable by copyright, could, in theory, be infringed upon not merely by designs on competing uniforms but also by fabric designs on anything that is nonfunctional (such as a purely decorative wall hanging) or functional (such as neckties, carpets and sofas).
That brings us again to our favorite money-saving advice: discuss these issues with knowledgeable counsel before you invest your time and money. In the law, that ounce of prevention is worth at least a ton of cure.
Credit: Alan Behr
Pose! Click! Flash! Those are just a few of the sights and sounds of Fashion Week, an exciting time here in New York City. I had the privilege of attending one of the week’s first events–PH5’s Presentation at Bortolami Gallery in Chelsea.
I was awed by the entire experience–stark white walls adorned with giant white balloons set against a row of willowy models in unique and colorful knits and clear plastic above-the-knee boots. As the models stood in mannequin-like pose on small white pedestals, cameras went off at lightning speed and reporters surrounded designer Mijia Zhang and owner Wei Lin. Others, many of them dressed to perfection, crowded into the gallery to see the looks–and look over each other. The energy was high and fast.
After some gawking and conversation over maple water, the onlookers drifted out and the room cleared just as quickly as it had filled up. It was then that I was struck how much the show reminded me of Christmas morning when the kids tear through numerous well-wrapped gifts in literally minutes. After all of the time-consuming preparations in browsing, choosing and wrapping gifts and placing them under the trimmed tree, the excitement is over in a matter of minutes. The same is true of a fashion show.
I thought of all of the hard work Wei, Mijia and their team put into making the excitement of the show. From choosing a brand, to designing the clothes, selecting eye-catching fabrics, obtaining quality manufacturers and selecting the “right” models, space and décor, the coordination is overwhelming.
As a lawyer, my mind, of course, then jumped to the “dark side.” The months of planning to over-in-minutes analogy made me think of how quickly PH5’s designs could be ripped off. We do not have copyright protection for clothing designs in the United States so copying is not only inevitable but also permitted. I have heard many a designer tell me about the frustration they experience when all of the time, effort and money they expend to create a line of clothes can be out the door in minutes when photos of fresh clothing are sent overseas and copied instantly. A few years ago, bills were introduced in Congress to give limited protection to clothing designs but they never made it anywhere. As a result, the copying continues, at least in the U.S., at the same frantic pace as Fashion Week. Some countries like France guard their famous designers by protecting clothing designs.
Some designers with novel fabrics may be luckier than others. For example, PH5 has what the Daily Beast calls “technically sophisticated knits” which can be protected by copyright. Original fabric designs are protected by copyright in the U.S., which does help alleviate the created today, knocked off tomorrow syndrome. Whether a design qualifies for protection is a question to raise with counsel—well enough before the fashion show starts—in order to help gain a measure of legal (and therefore business) advantage over makers of knock-offs.
Credit: Monica P. McCabe
Whether you call it shoplifting or shrinkage and the people tasked with stopping it the house detectives or the asset protection department, and regardless of what new technology you put into place, if you are a retailer, stealing is a problem that will never go away. When I was in high school, back in New Orleans, I worked weekends and summers at the department store my family owned and operated (and long since shuttered). I got to see firsthand the extent of the problem—which was harder to track in those days before electronic inventory controls. The manager of my department was arrested for stealing a pair of Mickey Mouse suspenders from the warehouse. He had been collared by the four-man security team brought in to replace the aging and quite ineffective store detective. During a big three-day sale taking place over a long summer weekend, as the junior and surely least valuable member of our sales team, I was relegated to sitting in the men’s fitting room, watching for thieves. All I got for my trouble was the chance to alert security to the customer who thought that the fitting room stall belonged in the men’s bathroom and had used it accordingly. That incentivized me to petition for repatriation to the sales floor and, just to be sure my position did not revert, I became the top sales person of my department during the next three-day sale.
Jump some years ahead, and now I find myself working with clients in retail on the law of asset protection. There was the time I had to work with the manager and assistant manager of one department store branch that was being sued for assault and false imprisonment by an alleged shoplifter who claimed he had been injured in his apprehension. The plaintiff appeared at the first hearing on crutches, and justice being as slow as it is, by the time the second hearing came around, he was practically pole vaulting with the things, which his lawyer, who could now hardly catch up with him, obviously told him to keep using in an effort to garner sympathy and a favorable settlement.
It was frustrating to our client, but none of that has changed much. You still need to be sure that you work with counsel to know what you can and cannot do in pursuing, approaching and ultimately challenging a suspected shoplifter. There are rules about that, and they vary from state to state. Just as an example, in New York you need to show that the suspect took possession of the item with an intention to make off with it. If you are found purposefully trying to sneak out a T-shirt by wearing it, give your lawyer a call; but if you tuck the T-shirt under your arm while paying for something else and mistakenly head out with it, you are guilty only of absentmindedness.
As long as retailers work very hard to create demand for what they sell, and as long as objects of desire hang and lie in public view, shoplifting will be a problem. As with all other problems that are certain to occur, it is always best to have policies and procedures in place and to make sure that the individuals charged with being the first line of defense—the sales staff—are thoroughly briefed on what to do. It is prudent to have counsel and the security team conduct periodic joint seminars with sales and security personnel. As with everything else in the law, the proverbial ounce of prevention will alleviate the need for the more than typically expensive, when it comes to litigation, pound of cure.
Credit: Alan Behr
If you are interested enough in fashion to be visiting this page, I cannot tell you anything new about Roy Halston Frowick, better known as Halston. He was unique in many ways, starting with the fact that he launched his career with a single piece: the pillbox hat that Jacqueline Kennedy wore to John F. Kennedy’s inauguration as president, in 1961. (The fact that Mrs. Kennedy was also wore a Halston pillbox while sitting in the car next to the president as he was assassinated, in Dallas, led to the style going out of fashion in the blink of an eye.) By 1983, Halston’s company, Halston Limited, was owned by Norton Simon, Inc. Unless Halston had agreed to all that at some point, the likely explanation was that there had been no form of what lawyers call a non-assignment clause in place in the relationship that Halston, the man, had set up with the owners of Halston, the brand. In any event, within about one year, Halston was no longer designing for Halston Limited. He died in 1990, a man without his own name in design. Once that disassociation occurred, Halston, the brand, which still exists, has a life of its own, and it has since changed hands seven times more.
Catherine Malandrino recently filed a lawsuit against Elie Tahari and others, claiming she was wrongfully deprived of rights under a deal by which she sold her brand (and, for all intents and purposes, her professional name) to a company controlled in part by Tahari, which employed her as its creative director. Malandrino had only minority representation on her new employer’s management committee. She alleges that her co-venturers and others routed around her in subsequent dealings, damaging the brand and failing to compensate her as agreed. Although the complaint is passionately composed, it does not directly address what appears to be the underlying issue: Malandrino and her representatives did not provide, in the agreements she signed, the kind of contractual protections that could have reduced or eliminated many of the alleged wrongs and that would have given her final say as to what was and was not a Catherine Malandrino creation.
On a happier note there is the long, circular tale of Joseph Abboud. His eponymous menswear line debuted in 1987. His name was registered as part of trademarks that he licensed to a joint venture in which he took an interest through a corporation he owned. He then sold off his equity interest and worked as a consultant to the company that now exclusively owned his name in the fashion business—until creative differences caused an abrupt. Abboud tried to start a new brand called “jaz,” making it known in the trade that he was the designer. In the lawsuit filed by the company that owned the Joseph Abboud trademarks, the court ruled, “Abboud is permanently enjoined and restricted from using her personal name to sell, market, or otherwise promote, goods, products, and services to the consuming public.” In all, a humiliating result for one of my favorite menswear designers. Several sales of branding rights and changes in price point later, man and brand were effectively reunited; in 2014, Abboud became chief creative director at Men’s Wearhouse, which is the current owner of the Joseph Abboud brand and trademarks.
And we must not forget that there are many success stories. Karl Lagerfeld is still a walking brand, regardless of whatever house for which he has already has served or may yet serve as designer. Ralph Lauren’s name is owned by his company, which is public and so owned by many shareholders—but he has set up everything quite nicely and is surely not losing sleep worrying about whether he will still be designing under his own name.
The message: every good designer is either a good business person or should work in close company with someone else who is just that—and every good business person watching over a designer’s name should have a lawyer nearby who knows what to do to keep the designer and his name permanently in each other’s company.
Next: we will show a bit of how that works.
Credit: Alan Behr
See previously published related posts:
The applied arts, including fashion, stand in service of utility. There is no l’art pour l’art (art for art’s sake) even if you are talented and even if you are French. A useful object made beautiful, fun or even compelling is still something you can use, and things that can be used are objets de commerce, first and foremost. That is one of the reasons, as we have discussed in these postings (and surely will again) that the law treats fashion, jewelry and accessory designs—and related objects such as perfume bottles and lipstick cases—differently from how it treats paintings, sculptures and photographs. All art follows commerce, and artists do not quit their day jobs if they are not commercially successful, but when it comes to fashion, commercial success remains rather the point. If you are a designer and do not believe that, ask your retailers and financial backers if they disagree.
The first and perhaps most personally compelling fact of that distinction between what the law considers design to be versus how it treats fine art is that, although the artist can never lose his name—there was only one artist who could paint a Pablo Picasso and only one artist who could chisel out a Michelangelo—it is possible for a designer to wake up one morning and find that, professionally, his name is no longer his. To his mother, he may always be, “My son, Martin, the designer,” but the clothes bearing his name might be designed by someone else—perhaps someone he does not know, or perhaps even someone whose work he finds indifferent or just plain terrible. Even worse, should he wish to continue designing clothes, he may have to do it under a different name.
The reason for that is because the name is not merely a name; it has become a brand. And brands can be sold, along with the trademarks that represent them, and the goodwill that those trademarks generate and perpetuate. (An artist’s name can also be his brand—but the art market has not yet accepted the idea that, say, Lucian Freud could have sold his name on retirement, for use in connection with fine art by Damien Hirst.) When designers sell their trademarks, therefore, they are, to the fashion world, effectively selling their names.
If the price is right, that may be a great idea. Sometimes, however, regrets follow. In posts to come, we will show what has happened and can yet happen when designers lose control of their own names.
Credit: Alan Behr