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
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
Registering copyrightable designs as “unpublished” collections can be an efficient and cost effective way to register multiple two dimensional print patterns in a single registration. But to derive the benefits of registration, you need to be able to identify the designs included. Standard Fabrics International, Inc. (“Standard Fabrics”) learned that lesson the hard way, when it sued Louise Paris, Ltd. and its retail customer for copyright infringement of one of the fabric designs it claimed was part of its “Spring Summer, Collection 1”.
To succeed in a suit for copyright infringement, you must prove that the design in issue was registered with the Copyright Office. To register, you must submit a copy of the design with an application for registration.
Standard Fabrics’ registration identified its work only as “Spring Summer, Collection 1”. Nothing in the title referred specifically to the particular design number that was the subject of the suit. Therefore, Standard Fabrics was required to prove that the design was actually included in the collection registered. Because Standard Fabrics could not prove the design infringed was part of the collection registered, it was denied judgment on its infringement claim.
The problem Standard Fabrics faced can be avoided. In an application to register a collection of designs, be sure to set forth the design number for each design covered by the application. Each individual design in the collection can be uploaded separately on the Copyright Office’s electronic website and appropriate records of the upload can be printed and maintained.
The Copyright Office generally maintains deposit copies of unpublished works. It will provide copies of these for use by the lawyers for parties to litigation, but it requires a written application in its proscribed form and time to search for, reproduce and certify its records. The fee charged for this service can be hundreds of dollars, as the Copyright Office will charge for its time as well as imposing copying and certification fees.
But beware, the Copyright Office does not undertake to retain deposit copies of published works. Full term retention must be arranged for a fee.
Credit: Helene M. Freeman
It is an oft repeated truth that copyright exists automatically from the moment a work is fixed in tangible form and that no formalities are required to preserve the copyright. In the United States, registration with the Copyright Office is only necessary to sue for infringement, but it is not uncommon for owners to defer registration until litigation is contemplated. The recent decision in Solid Oak Sketches v. 2K Games, Inc. is a healthy reminder that the timing of the registration can significantly affect the remedies available to the copyright owner in a suit for infringement and that a delay in registration can be costly.
The remedies for copyright infringement include recovery of actual damages and the profits of the infringer, as well as an injunction of continued infringement in appropriate cases. But the law also permits recovery of “statutory damages”, in lieu of proving actual damages or profits. Attorney’s fees, expert witness fees, deposition costs and similar litigation expenses can be recovered by the prevailing party. Given the potential cost of prosecuting a copyright infringement action and proving damages, the plaintiff’s ability to recover its attorney’s fees and litigation expenses, as well as statutory damages, can be important factors in the calculus of the value of the litigation for both the plaintiff and the defendant.
However, the law permits recovery of attorney’s fees and statutory damages from a defendant only if the copyright was registered with the copyright office before the infringement “commenced”.
The plaintiff in Solid Oak was the copyright owner of the artwork for eight designs, tattooed on five different National Basketball Association (NBA) players. (If you did not realize tattoo art is copyrightable, you didn’t read my colleague, Alan Behr’s, recent post.) The defendants created and sold realistic basketball simulation video games, using animated versions of the NBA players as they appeared in real life, complete with their tattoos. The first video game in the series was introduced in 2013 and new versions appeared in 2014 and 2015. The plaintiff registered its tattoo designs in 2015, after the initial versions of the game appeared, but prior to the release of the 2016 game in the series. Unable to convince the defendant to take a license for the tattoo artwork appearing on the players depicted in the game, Solid Oak brought suit for copyright infringement.
The court held that Solid Oak was not entitled to recover attorney’s fees and statutory damages, even with respect to the 2016 version of the game which was released after registration of the copyright, because the infringement had commenced before the registration of the tattoo art in 2015. According to the court, when the first act of infringement in a series of on-going infringements precedes registration, these special remedies are not available, even if the versions released after registration differed from the prior versions.
In the fashion industry, where knock-offs can appear in the market within months of the introduction of an original design, it can be advisable to register print, lace and jewelry designs as “unpublished works” before they reach the market. The fee for registration is only $35 and it can be done on-line without a large investment of time. The benefits, which also include a presumption that the two or three dimension design is an original, copyrightable work, owned by the registrant, are well worth the money and effort.
Credit: Helene M. Freeman
I vaguely recall, from long repressed memory, the time when only sailors and thugs had themselves tattooed. But anyone caught in a crowd, especially on a summer’s day, when long-cloaked skin comes into the fore, can clearly see that having oneself inked has become quite the fashion. Apparently, late in the last century, the movement was begun by, or was at least energized by, Los Angeles celebrities who risked going to less than savory places to have butterflies, arrow-pierced hearts and other traditional artifacts poked into them with commanding permanence. The fad grew quickly to become an international trend. I remember sitting down for dinner at a restaurant in a small Bavarian town in the year 2000 and wondering, as the waitress arrived in a fetching spread-eagle bodice, how far down the tattoo on her left breast extended. The answer, we now know, is that it went as far below the line as nature gave room for its descent. When something becomes as obviously popular as tattooing, it tells us that it is time, of course, to consider the legal implications.
Covering an entire arm with words, phrases and graphic-novel style illustrations (known in the trade as “doing a sleeve”) is now not uncommon. There remain limits. The military has the right to refuse potential enlistees who arrive with what is deemed excessive or “grossly offensive” tattooing. There appears to be no legal impediment to the military in making those distinctions, but we can anticipate that someone may, at some point, raise a First Amendment objection. There has already been a federal appeals court decision striking down a municipality’s ban on tattoo parlors as a violation of the First Amendment.¹
Copyright law presents a more interesting problem: In the absence of a contract stating otherwise, the owner of the copyright in the artwork worn by the tattooed person is the artist. That is, if you go to a tattoo parlor and have it do a sleeve filled with flying dragons, flying skulls and terrestrial motifs, the owner of the copyright in the art you are wearing is not you but the person with the tattoo gun who pummeled it into you—unless (a) the artist is an employee of the salon or (b) the artist and the salon have entered into an assignment of rights contract, in which case the salon is the owner of the art on your arm. The lawful owner can register the art with the Copyright Office and sue to protect its rights against infringers, most notably including copycat rival tattoo artists.
If your artist has tattooed onto your arm something to which the copyright is owned by another—say Mickey Mouse or the Batmobile—you, as the bearer of the arm, could theoretically be caught in the middle of a legal fight with the copyright owner. In copyright cases, impoundment and destruction are possible remedies, but we likely will not see the day when the wearer of a tattoo would be required to visit a local tattoo-removal center to resolve copyright litigation. What could happen in theory in copyright matters is, fortunately, often removed from what typically does occur.
What is the takeaway from all this? Your arm is lovely the way it arrived along with you. Strictly as a question of taste, perhaps it is better just to let that be enough for you.
¹ Anderson v. City of Hermosa Beach, 621, F.3d 1051 (9th Cir. 2010)
Credit: Alan Behr
A young lawyer walked by while working late, waving the striped tie he had just removed, announcing that, after 9:00 p.m., business casual was mandatory. European-born, my colleague’s tie had blue, white and green stripes angled downward from left to right (as seen by the wearer), in the classic British (and predominantly European) tradition. In Britain, the convention developed that, just as each clan in Scotland has its own tartan, each regiment, club and school would likely have its own, distinctive, diagonally striped tie.
On not quite as classic but by now traditional American ties, however, diagonal stripes run in the opposite direction, from right to left. There are various stories about why that is so. As with anything you can find on the Internet, you can discover much that is of interest, some of which might even prove to be true. You may learn, for instance, that the reason the ties slant in different directions is that European infantrymen shouldered their weapons differently from Americans and that their rifles ejected spent casings in an opposite direction. Those explanations are not only fogged by inaccuracy but bear little evidence of good fashion sense.
More credible is the claim by Brooks Brothers that it invented the American right to left downward slide on what it calls a Repp tie (freely admitting that an early spelling error caused it to get wrong the name of the French Rep ribbed silk fabric it used to make the ties). The idea was to bring American “roguish charm” to British tradition–an act that, as is often the case when Americans reference British traditions–acts as both homage and gentle satire. The British officers and gentlemen men who earned the right to wear regimental colors around their necks sometimes being quite sensitive about having earned the exclusive right to that privilege, Brooks Brothers reversed the direction of the stripe in an effort to soothe warrior sensitivities.
American schools have their Repp variations. My American university’s thick-striped tie, in navy blue and burgundy, is guaranteed to dull down almost any suit that goes with it.
The striped tie having now been commonplace for over a century, uncountable combinations of alternating stripe widths and colors have been used. A designer looking to protect his or her intellectual property rights in the patterns of ties may theoretically create a novel combination of colors and widths running in either direction–just enough to warrant a claim for copyright protection. Given the multiplicity of existing designs, that protection, if granted, would likely be a “thin copyright,” but in theory it could happen. The larger question is: why bother? Individual styles rarely last more than one season, after all. Would you really sue to protect the design, hoping the defendant does not dig into neckwear history to find something similar warn by officers of a British regiment since before it fought in the Battle of the Somme?
Each of those regimental, school and club ties identifies a source of origin–raising the possibility that a particular pattern of stripes can be protected as a trademark. As a practical matter, unless a stripe acquires such distinctiveness that the market accepts that it designates a specific source and so is not merely decorative, it is probably not protectable as a trademark. It is possible, again in theory, that a particular pattern of stripes could gain “secondary meaning.” That is, they now serve, through usage, advertising and the passage of time, as branding and devices not merely as pleasing patterns. If that should happen, is it indeed enough of a difference to prevent a claim of infringement to run the same pattern in the opposite direction, just as Brooks Brothers and other American makers did in order to distinguish their patterns from those British ties from which they freely borrowed both conventions and patterns? Much could depend on survey evidence of consumer habits and consumer awareness of the differences. That is another way of saying: if you did not know about all that before reading this post, the difference in the direction of the stripes probably is of no consequence to you; your response to the survey would therefore likely aid the plaintiff in a claim that simply changing the direction of the stripes did not make the defendant’s pattern less likely to cause infringing confusion.
That would support the generally held view that, when it comes to neckties, diagonal stripes, in whatever direction they run, are, in nearly all situations, open territory for designers. Within the quite narrow sartorial conventions of male business attire, however, there is not really all that much new that can likely be done with diagonal stripes in neckties. So, let us all celebrate an ongoing tradition and try not to worry too much about all this. A good striped tie will not necessarily be the one that a lawyer attempts to protect as intellectual property. It will, however, always be one that will work for him just about anywhere.
We would like to thank Stephen Sidkin of Fox Williams LLP, London, UK, for providing the inspiration and background for this post.
Credit: Alan Behr
Since the announcement of the result of the UK’s referendum about its future with the European Union so far as UK fashion is concerned, there has been no discernible change in the previous pattern of doing business. But the designs of business will change irrespective of what replaces the UK’s existing trade relationship with the EU.
Already there are forecasts of an increase in inflation for fashion and footwear prices. It follows that a supplier which fails to build into its contracts an inflation indexing provision is simply giving its customer an opportunity to make a greater margin on resale!
Correspondingly, UK fashion businesses sourcing clothes, footwear or accessories from overseas which do not include a currency conversion clause in their purchasing contracts are asking for trouble. The immediate fall in GBP on 24 June 2016 has been nowhere reversed.
But on the plus side, buying UK fashion assets – brands or trophy stores – in USD or pretty much any currency (excluding Bank of Toytown) has become a whole lot cheaper.
For those British fashion businesses not falling prey to overseas buyers, uncertainty can be expected to translate itself to an increasing use of pop ups and the taking of concessions in department stores.
And what of legal issues? The UK’s ‘affection’ for lawyers (”The first thing we do, let’s kill all the lawyers,” Henry VI, Part II, act IV, Scene II) is likely to grow. This is because whilst the referendum will not in itself have any immediate implications in legal – terms – it could take years before the UK exits the EU officially – good lawyers who look to try and achieve their clients business objectives will consider what the referendum means.
As such, can it be said that the decision to leave the EU has or will frustrate the purpose of a contract so making it impossible to perform the contract? Possibly. But the English courts have consistently been unimpressed by an argument that a contract is frustrated because it is more expensive to fulfil or more difficult to perform.
But then does the Brexit vote constitute an event of force majeure? Unlikely as it would be necessary either for the contract to expressly state it to be so or for it to be interpreted as falling within a more general force majeure category, such as the act or decision of a government body. However, this has still to be tested in the English courts.
Will English choice of law and English court jurisdiction clauses continue to be upheld in the English courts given that these are currently governed by EU regimes? For the time being – yes. But in the future?
Equally, how will the intellectual property rights of fashion brands fare? The EU trade mark and the EU design, both pan European rights will almost certainly cease to cover the UK and this will result in a need to secure separate rights in the UK. The conversion of existing EU IP rights to national UK rights is likely but on what basis this will be implemented and whether it will involve re-examination of the rights is unclear.
The enforcement of IP rights may also throw up some interesting issues. What happens to a pan European injunction granted in favour of a non-UK company pre-Brexit? Does it automatically cover the UK post-Brexit or will it need to be registered in the UK to continue in place? This has the potential for re-opening a number of hard won disputes by designers and fashion brands alike.
Finally, what about grey imports? The UK could become a haven for parallel imports and worse if any transitional provisions on the protection of EU trade marks leave gaps in protection, the rights could be left unprotected if the fashion brand does not already have a UK trade mark in place.
A few years ago a successful telecoms company – Orange – claimed, “The future’s bright. The future’s Orange.” Today the future is grey as we try and see through an interesting period in the history of the UK.
*The Fashion Law Practice appreciates this guest post from Fox Williams LLP (London, UK).