As everyone knows, lawyers have far too many stellar qualities to enumerate here. We have a sense of humor. (Who can forget, after all, the priceless nugget of wit that goes: “What do you call one hundred lawyers on the bottom of the ocean?” Answer: “A good start.”) We are sure there must be just as many good ones about chiropractors, occupational therapists and entomologists.
And lawyers are media stars. Whenever an attorney is convicted of a felony in the line of duty, doesn’t it always make headlines? Lawyers are also highly respected for their assertiveness, as knows any lawyer whose application to rent an apartment was mysteriously and inexplicably denied.
But who knew that lawyers could also be fashion trend-setters? So it appeared from a blog several months ago, in which the author of this blog was blogged. The post was in the form of a column about accessories worn by attendees at the charity benefit held on the opening night of an antiques fair.
The site is New York Social Diary, in which David Patrick Columbia, combining the roles of Edith Wharton and Henry James for an earlier generation, chronicles the real life moments that those earlier writers drew upon for much of their fiction. The blogger in the guest column was Alison Minton, a friend and queen of New York style, who reports for the site on accessories. In my debut as a fashion icon, you can clearly see the Ralph Lauren necktie and pocket square that were the objects of the author’s attention, along with a fair bit of the Henry Poole bespoke suit that they accented and almost none of my face. As my earlier appearances in New York Social Diary and elsewhere have shown, that omission was no loss at all to the reader. It did, in this instance, force all attention on not who I am but on what I had chosen to wear in the expression of who I am. It demonstrates in pictorial form that what each of us holds as our personal style is both a part of us and an abstraction of us. We are what we wear, but what we wear is also a part of us and a metaphor for how we wish to be perceived.
It also reminds me that, as someone who will on occasion take this forum as a soapbox on which to stand and proclaim what is and is not good style, acting as a fashion authority is uniquely hard work. A theater critic need not act or direct; an art critic is not expected to paint or sculpt; but we all wear clothes. A style critic, therefore, is always in danger of being held accountable for his or her own style success and failures. (And we all have both, to be sure.) This line of work is not for the faint-hearted—but neither is any job in fashion and accessories. Would any of us have it any other way?
Credit: Alan Behr
Each year, as winter approaches, I prepare for a presentation—solely in my own mind—of the Frostbite Award. That is the imaginary award that I give to the last person seen wearing flip flops in the course of a given autumn/winter season. Flip flops as working or commuting footwear have always been something of a mystery to me. Flip flops are, after all, beach sandals, but as urban footwear, the flip flop trend has had formidable staying power far north of the Tropic of Cancer. In spring/summer, I assume it is all about comfort, but how does that explain the continued presence of urban flip flops as the days shorten, the leaves fall, and even as the snows arrive? Only the recipient of the Annual Frostbite Award knows for sure—that brave, hearty urbanite who freezes from their toes to their heels in the name of style. We can only admire their perseverance.
Credit: Alan Behr
As we noted in an earlier post, one of the most familiar teams in fashion is the designer and his business manager, such as Yves Saint Laurent and Pierre Bergé. There are also design teams such as Domenico Dolce and Stefano Gabanna. (Taking the role of the “suit” in that family business is CEO Alfonso Dolce, who is Domenico’s brother.) If it is essentially just two of you at first, little, if anything, may end up in writing, but as your business expands, that kind of relaxed approach will become impossible to maintain. If roles and, just as important, compensation, are not formalized, misunderstandings and disputes are likely to arise. The law being about nothing if not the prevention of disputes and their resolution, we always advocate the preventative approach: set things up to prevent troubles from the start, so that they don’t jump out at you from a bend down the road—and make doing business either unnecessarily difficult or completely impossible.
Start with the form of your organization. Although it is legally possible, to a point, for two or more people just to announce they are a business and to operate as an unorganized general partnership, that is rarely a sound approach. Every partner will immediately become, and remain, personally liable for everything the business does and for its financial problems—all of them, whoever among the team may have caused them. You can make things a bit easier for yourselves by putting it in writing, but what you put in writing is critical, and it makes sense to organize in a way that limits personal liability. Keep in mind that the word partner, which has a precise legal definition, is thrown around indiscriminately these days to mean any pairing, from companies doing business together to people in love. In a general partnership, however, the old-time definition of partner applies: a co-venturer who is personally on the hook, for whatever he or she is worth and then some, for whatever debts and other liabilities the business may incur.
To prevent that from happening, two generally preferable organizational structures are available for new businesses that intend to engage in designing, manufacturing, distributing or selling fashions or accessories: the corporation and the limited liability company. They are both roads that lead to the same good end: if the business is conducted properly, its owners generally are immunized from personal liability for the actions of the company. Which organization form works better for you is a question that your legal and tax advisors will help you resolve at the time of organization.
For both forms, however, there is an important doctrine of law that has to be considered, and its consequences need to be avoided: “piercing the corporate veil.” It is every bit as brutal as it sounds. The “veil” of limited liability is “pierced” and you end up personally liable for the debts of the business, legal judgments against it, and so on. The easiest way for that to happen is for a business owner to use the company as a “mere instrumentality” for himself or herself, for example, using the business’s checking account to pay for personal obligations or otherwise comingling business and personal funds. You say you would never do that? Good. Now look over your shoulder and ask if your co-venturer is as careful in the segregation of business from personal affairs as you are. If that is not the case, it may be a good time to get the company’s attorney involved and do a business practices compliance review.
We never said that getting along is easy to do.
Credit: Alan Behr
Last summer, we were treated to a new take on the skinny pants trend for men. In this go-around, it was sans socks, and the trousers were either hemmed several inches above the ankle or simply rolled up to resemble a pair of clam-diggers that had spent too much quality time in the clothes dryer. In the late Victorian era, you might have heard that an attractive woman had a “well-turned ankle”—because that was about the only part of her below the neck that cleared most of the enveloping layers in between. As anyone has recently offered such praise for women’s ankles?
We invite readers to share with us whether, at any point in the history of humankind, in any culture or territory, anyone has had anything exceptional to say about the allure of men’s ankles.
I have a photograph of my father at about the age of twelve, standing beside his nanny and his horse. He was wearing plus-fours, and as was correct for the period, he also wore socks that disappeared into the breeches. You see, guys: sometimes the old ways are the best ways. As the summer season unfolds, let us all sit back and take heed of the advice of a wise friend who has often reminded me, “Socks are important.”
Credit: Alan Behr
In the movie A Hard Day’s Night (1964), unscrupulous menswear marketers lure George Harrison into their office, there to assure him that the two new shirts they put into his hands are essential to his self-esteem. When George says the goods are frightful, the head marketer comforts his team that, “within a month, he will be suffering a violent inferiority complex and loss of status because he isn’t wearing one of these ‘nasty’ things.”
The point was that the guiding spirits of the generation of the 1960s formed up against the commercialism and consumerism that were behind marketers’ attempts to pass off “nasty” goods as status symbols for insecure youth. How times have changed. Someone with a device in his pocket that pitches out brands and branding stories faster than summer rain drenches a field views branding and the commercial motives behind it in a much more positive light. Brands ignite consumer interest as never before, and brands win when they have good stories to tell—stories that create interest and become viral once consumers are engaged. Brands are, after all, nothing but good will with consumers, and once that is obtained, the message is spread most effectively by consumers imitating each other and aspiring to what each other has. The bad news that follows from the good is that consumers, in exchanging with each other messages about brands they know, are becoming as important in the control of a brand’s destiny as the brand’s owner—and its marketers.
For that reason, never has the creation and the protection of strong trademarks been more important for the fashion business. The value of the trademarks is applied directly to the bottom line in the form of good will. There are terrific fashion brands that own little else but their trademarks and related domain names—not the factories that make the clothes, not the stores in which they are sold, not even the photocopy machines in the corporate office. What they have are strong trademarks protected throughout the areas of current use and expected operations. The moral of the story: work with your trademark lawyer to develop, as early as possible, a solid and workable trademark protection program, and then stick to it by carefully searching and analyzing all new prospective trademarks and by registering them promptly as soon as the anticipated need arises. What have you to lose by not doing that? Only everything you may have.
Credit: Alan Behr
During the course of negotiating a license agreement, a licensee may propose certain changes that may appear logical and reasonable. However, a licensor should be on the lookout for seemingly innocuous proposals that could impede its ability to operate its business.
- “I need a longer sell-off period after termination and the types of customers to which I can sell during the sell-off period [e.g., only closeout accounts] is too limiting.” Agreeing to these requests may not be problematic if no new licensee is in place, but the license agreement must contemplate the possibility that there may be a new licensee; and extended and extensive sell-off rights may make it more difficult to conclude a new license and may increase the pressure to give financial and other concessions to the new licensee. (In a later post, we will discuss the substance of sell-off provisions, including circumstances of termination that could result in a bar to a sell-off beyond the date of a termination of the license agreement.)
- How much time does a licensee actually need, particularly considering that, for a seasonal business with a typical December 31 contract year/term end, sell-off actually could be starting as early as September?
- While selling off prior seasons’ inventory should not seriously compete with a new licensee’s business and while closeout accounts may be the only meaningful customers for closeouts, it cannot be good for the licensor’s brand or the new licensee’s business if the former licensee’s products, whether or not they include “basics,” are being offered to the new licensee’s regular customers at the same time that the new licensee’s business is being launched.
- “I would like an option to renew the license agreement.” While renewal options are quite common, and sometimes may even be offered by a licensor, accepting some common licensee complaints can have unintended consequences.
- “The date by which I have to exercise the option is too early.” Depending on the length of the term, this could be a fair point, but a licensor must keep in mind that, if the option is not exercised, it will need time to locate, negotiate with and conclude an agreement with a new licensee and the new licensee will need time to develop its initial collection, which, for a seasonal business, will have to go to market well before the end of the current licensee’s agreement. (In a later post, we will discuss the need for provisions in an exclusive license allowing the licensor to engage a new licensee during the term and the new licensee to start business before the end of the term.)
- “The conditions for renewal are not objective.” As noted in an earlier post, a licensee will want only objective standards when it comes to the conditions it will have to satisfy in order to exercise its option. However, is it unreasonable for a licensor to be able stop doing business with a licensee that, while not technically having defaulted in its obligations, has been a terrible partner and exceedingly difficult to deal with?
- “I would like a right of first refusal for additional products or countries or trademarks.” A right of first refusal, in effect, requires the licensor to make a deal with a prospective third party licensee and then offer the current licensee the right to match it. There is not much chance that a prospective licensee will be willing to devote the time and expense of negotiating a license agreement in these circumstances. If pressed, giving the existing licensee a first right to try to make a deal with the licensor – a right of first negotiation – is a better, and reasonable, alternative.
- “I want more countries in my licensed territory.” If a prospective licensee can demonstrate the wherewithal to properly exploit the proposed additional countries, the inclusion of the additional countries is often just a question of business judgment. (There may, however, be legal considerations to be addressed in the license agreement depending on the status of the licensor’s trademark rights in the additional countries.) If additional countries are included, though, a licensor should retain the right to take back countries that the licensee does not exploit adequately; and any such reversion right must be carefully drafted, particularly to take into account that getting back a few countries in a region may not be of any real value to the licensor. (What potential new licensee is going to be interested in a license for a few scattered Asian or European countries if the existing licensee retains the major markets in the region?) A possible compromise here might allow the licensee to keep the entire region if it is appropriately exploiting the major markets in the region, but to lose the entire region if it is not.
Credit: Jonathan R. Tillem
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