Will Barneys New York Retail Makeover Work?

Alan Behr, Fashion Law Group Chair, Phillips Nizer LLP

Authentic Brands Group’s legally approved bid Nov. 1 of bankrupt U.S. department store chain Barneys New York isabout intellectual property, not inventory or real estate.

The sale of the trademark, along with appurtenant goodwill, is what is at issue. Great brands are sold and reborn, such as Abercrombie & Fitch becoming Abercrombie, with different products to a different market.

What would Barneys mean under different owners? The answer is: whatever the market accepts. It is all about building from what was left to create something more durable. However, it is obvious that the new owner of Barneys is going to reposition the brand and align its retail business
with another department store chain, Saks Fifth Avenue.

Will the overall repositioning of the Barneys retail brand, as outlined by Authentic Brands Group in its bid, work?

Retail brands can be repositioned if it is done properly. Indeed, that happens all the time. Many retailers have longworked, for example, to reposition themselves to draw in younger customers.

Vendor brands are not necessarily pliable in any event. A brand must tell a “story” to its customers to keep their loyalty. To rebrand is to change the story, and that is not easy to do. Chanel was a clothing brand that, for American customers, came in time to be little more than the brand of a
fragrance, Chanel No. 5, only to return in a big way as a label for premier fashions. That took effort. As for retailers, first, some history.

My family owned one of America’s regional department stores, and dinner conversation from my father, who in time became chief merchant, was focused on retail store management: theory and practice. A book was published about the history of the store.

From Father, who knew best: a true department store is a “one-stop-shopping” destination. It provides a selection of most things you will need, rather than a comprehensive product line. That is, a bike shop may have dozens of different bicycles, every commonly needed accessory and a repair facility.A department store bicycle department will have a small selection of bicycles and accessories, typically at a lower price point than the specialty stores, but you can buy your bike on the same shopping trip for buying back-to-school clothing for the kids, winter boots for yourself and a bed for the guestroom, getting your hair done at the store’s salon, picking up the latest best seller in the book department, and getting the battery changed in your watch in the jewelry department or at customer service.

In those days before designer names were well known, the brand that sold the shopping experience was that of the store. The store was the destination and your respect for its brand, as the umbrella under which all else was
provided, drove the sales of all those products and services. Harrods still operates generally that way, and Macy’s still does much of the same.

Most of what we call department stores these days are effectively large women’s clothing stores with ancillary departments for menswear and childrenswear, and perhaps toys and gift items. Consider as well that, in place of what might have been a lunch counter or small restaurant, stores now may have multiple venues for different styles of dining and other food services. Add the shop-in-shop model, by which the store is essentially real estate for a department built out and operated by a particular vendor.

Throw in the fact that major brands now dominate consumer thinking, and – putting aside private-label and even white-label goods – most of the major stores are competing for customers by selling them things that are available from competitors and the vendors’ own chain of retail stores.

As it has been from the start, what is now called the “edit” is the key to success: the store will not have all of a particular designer’s line, and success during any given season depends on the skills of the buyers in selecting themost saleable pieces from each vendor. Competition is, therefore, increasingly based on service – personal shopping, same-day delivery – rather than product.

Finally, consider the increasingly successful integration between the physical stores of a chain and its online sales channels. SO THE ANSWER is that department stores have already repositioned their brands by substantially changing how they do business – quite beyond recognition from the perspective of what a chief merchant during the last century might have seen as sound practice.

That process will continue, and repositioning will be a part of what stores will be doing for the foreseeable future.The store brands will come to be increasingly identified by the services provided: editing, styling, delivering,
repairing, accepting returns, and more.

So, yes, they can rebrand in fundamental ways into reliable services providers who maintain entertaining places to shop, dine or simply to visit, all in the service of the shopping experience. There is good reason to believe that the best will do that in an effective manner in the years to come.

Advising a Department Store on Its Brand Strategy? Get Creative or Go the Way of Barneys

Alan Behr, Fashion Law Group Chair, Phillips Nizer LLP

Whenever I wanted my grandmother to reveal a deep secret—such as what I was getting for my birthday—she would reply by asking, “Does Gimbels tell Macy’s?” That was when the Gimbels and Macy’s department stores battled for market share like colossi astride Herald Square. Gimbels is long gone from the New York metropolitan area retail market—as are, from all levels of pricing—Alexander’s, B. Altman and Company, Bamberger’s, Bonwit Teller, Galleries Lafayette, E. J. Korvette, the Lord & Taylor flagship on Fifth Avenue, Stern’s, Takashimaya, and Two Guys, among others. And to that list we can now add Barneys.

I know from personal experience how sad that can be. My family owned one of the regional department stores that closed in the same manner as the New York-area stores had done: with much nostalgia dusted over cold business calculation. The long goodbye invariably comes in the form of a going-out-of-business sale. (Barneys has started that process, offering everything-must-go discounts of between 5% and 10%—a markdown that is as well-received by New Yorkers as would be a pub’s invitation to Dubliners to have their Guinness taken in shot glasses).

The reasons for the closings varied. Consolidation of the retailing business into national brands was a factor, and now we have online shopping as the great equalizer, turning what a generation ago might have been deemed warehousing and logistics companies into retailing superheroes.

Finding the Brand Story
As I never tire of advising our clients, trademarks are the awards that the law bestows upon a well-operated brand, and brand—in fashion and luxury, and in retailing of all but the most elemental variety—is about story. That is, the brand has to tell a story that is clear and identifiable to the customer—a story so compelling that he or she will elect to participate in it by making purchases. Enter an Hermès and you are sharing in a gentrified vision of France as authentic to the XVIe arrondissement as to a canter on horseback through the fields of the Loire. Walk down the block to Salvatore Ferragamo and inhabit that world of Florentine grace and worldliness that has guided the West since the Renaissance.

Paradigm Shift
Back in the day (until even after most of us had been born), a department store brand was built upon what later came to be known as private label, upon broad-ranging services from shoe repair to hair dressing, and upon a product line stretching from fine jewelry to bicycles. Except for the high end, all of it was made in the USA. By their size, their seeming permanence and their product range, big stores were comforting, reassuring—the retail equivalent of banks and insurance companies. To give legal protection to the store’s intellectual property, attorneys mainly had to keep an eye on a few key trademark registrations—for retail store services and for major clothing and accessory items. And that worked—until it no longer did.

With a few exceptions, most department stores now feature women’s clothing, accessories and cosmetics shops with smaller departments for men, children, housewares, and gift items. Nearly all brands of merchandise sold there are international in some form or another because nearly everything is made outside the USA. With the exception of private label and a typically small amount of space given to emerging designers, most of what any one store sells are the same brands and merchandise sold by its competitors. And everyone does more and more business online.

It’s All About the Experience
How does a department store compete in that environment and not get its name added to the list that opened this article? It is less and less about what is sold that helps a retailer stand out. It is the services it provides that increasingly make the difference: personal shopping/style consulting, event planning assistance, cooking lessons, a spa for those who relax a certain way, and a Champagne bar for those who relax as I prefer. The story of the retail brand is now the story of what you do and how you feel when you are in the store and on its website and social media pages.

The trademarks of the store will likely brand a broader range of services than before, and IP protection by copyright, trade dress, design patent, and even utility patent, all of which were once of minor importance, if needed at all, should be carefully examined as tools to protect the store’s brand and the goods and services it identifies. Seen another way, time was that the creative person in the retail chain was the designer; those on the business side were the hard-nosed “garmentos.” Today, it is the retailer who sees himself or herself as not merely a merchant but as a creative force in the delivery of experiences to customers who is likely best able to adapt to the new retailing world.

And the lawyers? Creativity is not taught in law schools, but it is just what an attorney needs to bring to retailing clients now.

Maintaining a distinct brand image is often challenging for a manufacturer/design company, especially if it operates its own boutiques. But it can by even more demanding for a large, multi-brand retailer, especially now.

(originally published)

Copyright Protection of Designs in the EU

By Wendy Donkor

On September 6, 2019, in an important decision affecting the protection of fashion designs throughout the European Union, the Court of Justice of the European Union (CJEU) issued a preliminary ruling on the question of compliance of national law with an EU directive.  The case was C-683/17 Cofemel – Sociedade de Vestuário SA v G-Star Raw CV.  At issue was whether the court’s interpretation of Art. 2 (a) of Directive 2001/29 precludes enforcement of national (in this case, Portuguese) legislation that grants copyright protection to a design that, beyond any utilitarian function, has a distinctive aesthetic effect.  Simply, the question was whether the design could be protected under national copyright law while giving due regard to EU copyright and design law.  In this case the answer was no.

One of the core objectives of the EU is the establishment of an internal market.  Pursuant to Art. 26 (2) of the Treaty on the Functioning of the European Union (TFEU), the internal market comprises an area without internal frontiers in which the free movement of goods, people, services and capital is ensured.  One of the techniques used to provide consistent legal treatment throughout the EU is the requirement that national laws meet the requirements of EU directives.  That is, upon the issuance of an EU directive, the constituent nations have to adjust their internal laws to implement it.  According to Art. 288 TFEU, although a directive is binding upon each member state to which it is addressed as to the result to be achieved, it is left to the separate national authorities to devise the legislation to attain that result.

In Cofemel, the Court addressed the question of whether G-Star RAW, a Dutch company that designs and sells clothing, could enjoy copyright protection for its designs of jeans, sweatshirts and T-shirts.  G-Star RAW proceeded in a Portuguese court against Cofemel, a company that designs and sells clothing under the brand “Tiffosi”, accusing the defendant of copying G-Star RAW’s designs.  The CJEU held that, under Directive 2001/09, the fact that a design produces a specific aesthetic effect is not, by itself, enough to qualify it for copyright protection.

Complicating the case is that, unlike the United States, the European Union has specific rules protecting designs independently of copyright law.  The Court in Cofemel therefore had to examine the competing purposes and potential effects of the application of Directive 2001/29 (for the legal protection of copyrights and related rights) on the one hand and, on the other hand, Directive 98/71 (for the protection of designs within member states) and Regulation 6/2002 (for the legal protection of designs on the EU level) in deciding if the same design would be granted protection in both ways.

The Court noted the different purposes behind the two different forms of protection.  The purpose of the protection of designs is to provide exclusivity for a limited period of time (up to twenty-five years for registered designs; and three years for unregistered Community designs) to the owners of new, distinctive and functional designs that are liable to be mass-produced, giving the owner the chance to obtain a return on the investment without unreasonably limiting competition.  Copyright protection, however, is of far greater duration (for the life of the author plus seventy years) and, generally speaking, relates to artistic expressions of intellectual creation, known simply as “works.”

In order for a design to be classified as a “work” protectable by copyright within the meaning of Directive 2001/29, two requirements must be met.  First, the design has to be original.  In other words, it has to be “the intellectual creation of the author reflecting his personality and expressing his free and creative choices.”[1]  Second, the design must be “the expression of the author’s own intellectual creation”[2].  It “must be expressed in a manner which makes it identifiable with sufficient precision and objectivity, even though that expression is not necessarily in permanent form.”[3]

As the Court in Cofemel observed, although aesthetic considerations are a part of the creative process, the aesthetic effect of a design, by itself, cannot be considered when determining whether the design is an intellectual creation that reflects the author’s freedom of choice and personality and therefore meets the first (originality) requirement for copyright protection.  It also stated that the aesthetic effect of a design is the product of an essentially subjective sensation of beauty, which means that a design could never be identified with the precision and objectivity required to make a functional design protectable under EU design law.

In short, in this case, at least as to obtaining double protection, the beauty of fashion is self-defeating.  The clothing designs at issue will remain protected as such but will not also enjoy the benefits of copyright protection.

[1] Painer, C‑145/10, p. 94; Renckhoff, C‑161/17,p. 14

[2] Levola Hengelo, C‑310/17, p. 37

[3] Levola Hengelo, C‑310/17, p. 40

The Tricky DB

The classic sophistication of a bespoke double-breasted suit.
Photograph courtesy of Henry Poole & Co., London.

There are few items of men’s clothing more classic than a double-breasted suit.  But men’s fashion moves (slowly) in cycles, and the “DB,” as it is called in tailors’ shorthand, has not been commonly worn in this century.  Although it is currently enjoying a tempered resurgence among more fashion-forward types, it has not penetrated to the level of the average suit- or jacket-wearing man.

When done right, the DB looks great.  With its roots in the military uniform, its pronounced V-shape, and generous peak lapels, it presents a rather heroic silhouette.

But the DB suit faces two basic problems.  First, it is uncommon, and therefore draws attention – it can thus be considered flashy, which is one of the paramount attributes to be avoided in one’s dress.  Second, its jacket is architecturally a much more complicated garment than its single-breasted cousin – there is more fabric, which wraps around the torso, and more (and larger) buttons.  In this unforgiving era of relatively trim-fitting suits, where the fit must be more precise and flaws are more readily apparent, the DB is much more difficult to tailor than the SB (single-breasted) and therefore more likely to fit poorly, particularly if bought off-the-rack.

So the first thing you need to do if you want to wear a DB is to have a first-rate tailor ensure that you don’t leave until it fits perfectly.  The basic rules of successful tailoring apply – no excess fabric, no pulling, no bunching, no wrinkles.  “Clean” is the key concept, but it may be more of a challenge to get there than with a single-breasted jacket.  Be especially wary of any pulling across the front when the jacket is buttoned or any gap where the collar meets the back of your neck – these are the twin downfalls of the DB.  Fabric is always a matter of personal choice, but consider the virtues of solids, ideally navy or dark grey, in order to minimize the amount of attention the garment already inherently calls to itself.

In terms of the cut of the jacket, you will likely be the most comfortable with the classic “6×2” button stance, meaning there are six buttons across the front in two vertical rows of three, and the jacket buttons at the second button from the bottom.  The proportions of the peak lapels are critical.  They should extend roughly halfway to the shoulder.  (This, by the way, is the right proportion on a single-breasted jacket as well.)  If the lapels are too skinny or too wide, the overall balance will be thrown off and you will look either like a hipster or a clown. 

Once you have the right fit, be sure that everything else you are wearing is appropriately restrained.  The DB itself will already stand out so much that any other element of the ensemble that is less than discreet could put it completely over the top.  Best shirt choices are usually solids, thin, subtle stripes or small box checks.  The same goes for the tie – simple and restrained works best.  No more than a white linen or cotton handkerchief in the breast pocket.  Shoes should also be discreet; black or dark brown lace-ups are always appropriate. 

Given that suits these days are generally worn in a business setting, and therefore should not be distracting, in many ways, the DB is a better choice as an odd jacket (i.e., a jacket worn without matching trousers).  In a more casual setting, such as a cocktail party, the attention that the DB elicits is more likely to be of the “fun” variety than the mortifying.  And it is in such a setting that you can get more creative with your choice of fabric, buttons, etc.

Either way, wherever you wear the DB and however well-executed, get ready for comments, some flattering, some envious, some merely curious, and, yes, some simply perplexed.  If you’re not comfortable with that, stick with a single-breasted jacket and forget about what fashion magazines are telling you give a try.

Jeffrey Legault is a partner with Perricone Law and of counsel to Phillips Nizer

The Other Shoe Drops

Photo courtesy of Reinhart Julian (Unsplash Photos)

The fashion industry has debated the effect of the Supreme Court’s 2017 decision in Star Athletica, LLC v. Varsity Brands, Inc., interpreting the Copyright Act’s rules for registration of two and three dimensional designs incorporated into useful objects, on the availability of copyright protection for fashion designs and accessories. There now appears to be an emerging consensus of finding copyright protection in circumstances where it might not have been previously expected. This is hardly surprising. What is surprising is that the Court’s decision may be impacting a key question that the Court side-stepped.

While Star Athletica resolved that an otherwise copyrightable design that is a part of a useful object could be the subject of copyright so long as it could be conceived independently of the object in which it was incorporated, the Court pointedly refused to decide whether the cheerleading uniform surface patterns were copyrightable under the rules applicable to all two and three dimensional designs. Chief among those rules is the requirement of “originality”.

The breadth of the potential impact of Star Athletica is reflected in the recent decision of the Copyright Office to issue copyright registrations to adidas for the Kanye West Yeezy Boost 350 and Yeezy Boost 350 Version 2 sneakers. The application for registration as a two dimensional design and a three dimensional sculpture had originally been refused on the ground that it was a useful article. A request for reconsideration of the refusal was filed and registration was again refused on the ground that the “simple shapes arranged into common and expected pattern in very simple color schemes” did not meet the originality requirement.

But on a second request for reconsideration, the Copyright Office reversed itself, concluding that under the test of Star Athletica the two and three dimensional aspects of the designs could be “perceived” as separate from the sneaker, the useful object on which the designs appear.

It also decided that given the very low standard for copyrightability, the designs’ lines, stripes and swirls, although individually not copyrightable, had been combined in a sufficiently distinctive manner so that the designs, when viewed as a whole, merited registration. The copyrightable combinations, as described by the Copyright Office, consisted of “irregular black lines of various lengths and shapes on a grey fabric with a black semi-circle in the arch and an orange dotted stripe on an off-white heel loop” in the case of version 1 and “several grey lines in a wave pattern with a thick orange stripe on the outsole that fades toward the heel” with an inner orange layer that adds “intermittent orange coloring” in the case of version 2.

In light of the Copyright Office’s decision to register the Yeezy 350 sneaker patterns, at least in their contrasting color ways, fashion brands should now consider seeking copyright registration for their important designs containing any variation beyond the most basic, unvaried stripes.

Credit: Helene M. Freeman

Read other blog posts related to Star Athletica, LLC v. Varsity Brands, Inc. here.

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