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).
We have commented here before that the necktie is the surviving element of the male wardrobe that is purely decorative. If it is true that form follows function, there is no prescribed form for an accessory that, by definition, is completely without function. For that reason, you can make it a classic neck to waist cravat, go for a Pharrell bowtie, or go for a turquoise-clasped bolo — at least if you are from the West.
Cloth ties can come in any width, as long as you can close them and they do not rub into your face or flap into your arms. When I was young, my father was friends with George Goldman, a legendary New York necktie manufacturing impressario, back when most ties sold in the USA were made there. I remember when my father came home from a meeting with George, bearing a fistful of thin neckties –only to note, not long after, that they had slipped out of fashion. The Mad Men age was over, taking with it the thin tie and long-accepted business terms such as “career girl” and “make it a double.”
Ties next grew wide, to the point of obesity, during the following decade. And then, thanks to the temperate good taste of designers such as Giorgio Armani and Ralph Lauren, ties went to the gym and trimmed down. And then, wouldn’t you know it: the thin tie, now known by its workout-sanctioned name of the skinny tie, returned, along with thin lapels.
Because it has become tough to say what is “correct” in business wear of late, those of us who pay attention to these things keep two tie collections, one in the moderate ninety-centimeter width of the classic Kiton seven-fold and the other in the anorexic sixty centimeter width of the just-discontinued Brooks Brothers Black Fleece line designed by Thom Browne. And to think: all that fuss over something that most men working in offices and classrooms do not even make part of their daily wardrobes anymore.
This rolling in and out of necktie widths throughout the decades illustrates another key element of fashion law: it is of no matter if you were the first to bring back the skinny tie or even if you found a way to make them from thermal-insulated cloth for inclement winter days. You will not get intellectual property protection for the shape and other physical characteristics of any tie in any form that we know at this time that the market will accept. However, it is still possible to obtain protection on the pattern of the tie fabric, if it is truly unique. Considering the way that trends go and come and that, in the 1970s, chunky ties appeared with elaborate printed scenes to fill out their broad canvases, if your vision is of a complete Tahitian village or perhaps of a new interpretation of the Judgment of Paris, your day may soon be here. And if your designs are truly unique, you can register your copyrights. Those neckties will not have any more use than the ones you see today, but their designs will be exclusively yours.
Credit: Alan Behr
In the service of consumer awareness, I have helped clients with event promotions ranging from setting up rub-down booths for aching feet at half marathons to participating in the closing off of Times Square for New Year’s Eve and the engagement of major talent to entertain the revelers. I was particularly amused, however, when Henry Poole & Co, the tailor shop that founded London’s Savile Row (back in 1846), alerted me to the closure of the Row for its one-day transformation into a pasture eighty meters long, populated by sixty squishy sheep and twenty-five anything-but-squishy male models, each of the latter in a bespoke outfit by one of the twenty-five participating tailors. For Savile Row Sheep Day (yes, big promotions need big names) on October 5 of this year, Henry Poole showed, on one of those big men, a made-for-the occasion three-piece suit made of a blue-gray 11-12 ounce Prince of Wales wool and cashmere blend. The sheep came as they were.
That is not the first time Savile Row has been disrupted for a special promotional event. As documented in the film Let It Be, on January 30, 1969, The Beatles gave their last public performance from the headquarters of their company at 3 Savile Row, creating a commotion that brought in the police and became part of the history of popular music.
Getting the famously phlegmatic London bobbies stirred up for the benefit of posterity was likely integral to the thinking behind The Beatles’ rooftop concert, but when fashion companies do big promotions—whether to let Shaun the Sheep and friends graze on a city street or to rent historic venues for fashion shows—they do not want legal troubles. Along with all the usual contractual complexities with vendors, models, transportation providers, venues and more, for big promotions, there typically are municipal permits, special insurance problems (Just what is the premium for coverage against damage by rampaging ruminants?), and often import/export and duty considerations, to name only a few of the additional legal concerns.
Big events are often borne of creativity at marketing and public relations companies and departments; but it is a good idea to bring in the lawyers well before a fashion company commits to move forward with such an event. Marketers are both inventive and parental, quickly falling in love with their creations, with the result that legal considerations can be put off to the last minute. That is why promotional lawyers are used to providing services in a rush. Under those conditions, even their best efforts may not be enough to prevent an exciting opportunity from becoming an expensive mistake due to missed deadlines for permits, hurried and failed attempts at gaining necessary consents and much more (and much worse). The simple rule of thumb is this: when you think big in a promotion, think legal. Before the big idea is a go, go to the lawyers and ask if it is possible and what it likely will cost to make it happen.
As for those sheep on Savile Row: someone did it all just right that day in October. The promotion went off as planned, the cops stayed away, everyone had a good time, and Henry Poole and the rest of the Row’s tailors got their message across, which was, “Gentlemen: wear wool and look smart.” We have to assume that, somewhere in London that night, an advertising and promotions lawyer slept soundly. He or she certainly deserved to.
Credit: Alan Behr
Photo Credit: Henry Poole & Co
The bankruptcy and attempted reorganization of American Apparel demonstrate not just that fashion is a risky business but also that, in bad times as well as good, it brings into play some unique considerations. First among those is that fashion businesses tend to arise from the unique vision of one or a very few individuals. That is true as well for tech startups, but except for a few software geniuses (such as Mark Zuckerberg), entrepreneurial masters (such as Bill Gates) and brilliant marketers (such as Steve Jobs), once a tech business gets going, skilled replacements are relatively easy to find.
That is not the case when the founder and guiding light of a fashion business is also its chief designer. As even well-established brands have demonstrated, bringing in a new designer who understands a brand’s signature looks and who can add his or her own vision while somehow keeping all that fresh (and keeping loyal customers purchasing) is not an easy feat.
The situation at American Apparel was ironically even more complicated because much of the trouble started when its founder, Dov Charney, was forcibly removed. More of a businessman than the creator of a signature style (American Apparel was all about ever-cool basics made in the USA), he dominated the company. He made a failed effort to return; and while everyone involved focused attention on that, the business lost its vision and too many of its customers, and then slid into receivership. That might have happened anyway, but the disruptions caused by the long-running Charney episode may well have been the tipping point.
It all serves as a reminder that, in fashion, getting a clear and effective legal structure into place as early as possible, with understandable methods and procedures for personnel transitions and successions, could potentially be a business-saver. True, Ralph Lauren, that grand warrior for American gentlemanly style, simply and graciously stepped aside as CEO of his company, letting the business keep running, apparently seamlessly, from there. But legal planning is not about expecting the best; it is, unfortunately, about hoping for the best while planning for the worst. And when it comes to fashion and the people in fashion, that is nearly always a prudent way to go.
Credit: Alan Behr
In most cases, a new store tenant will require work to be done to make the premises suitable for its purposes. As a rule, a landlord will insist that no work can be done without prior approval. That puts the prospective tenant on the horns of a dilemma while negotiating a lease: if an architect is hired to design the plans while negotiations on the lease are ongoing and the lease is not ultimately signed, time and money invested in the premises will be lost. If the plans are not prepared, however, the opening of the store may be delayed as the landlord goes through the approval process, or worse, the landlord forces the tenant to change the plans. The result: the tenant may not get the store it wants on the date the tenant needs it.
Whether or not to advance the money for plans is always an individual consideration, depending on the relationship with the landlord and the time pressure to open the store.
Even if the tenant prepares the plans and the landlord approves, there is still the issue of getting the approval of the local authorities. Estimating the time that it will take to get approvals is crucial in calculating when the store will open. Without that information, planning for seasonal inventory can be thrown off, with potentially serious business consequences. Ideally, a tenant would have a contingency in every lease for cancellation if the plans are not approved by the authorities. However, it can be difficult to get landlords to agree to that in good measure because of an inability to predict what plans the prospective tenant will submit and what the official reaction to them will be.
However, if the plans are already completed and approved, the municipal authority will likely have someone who would be willing to meet with the tenant’s architect to give an indication of whether there will be problems and to provide an estimate of how long the approval process might take. In some cases, the government representative would also be able to alert the tenant as to any existing problems in the building, especially if the landlord has not been cooperative. It is, therefore, often a good idea to pay a visit to the local building department once plans are completed and approved.
Credit: Steven J. Rabinowitz
Steve is counsel in Phillips Nizer’s Real Estate Law practice.
I was struck by the news that Target’s limited edition Lily Pulitzer collection sold out within hours, after Target took its website off-line in the face of extraordinary demand when the collection went on sale. It is surprising that a sophisticated retailer and a well-known fashion brand did not expect either the demand or that it would manifest itself in a stampede to Target’s website. Can it be that fashion brands and retailers do not appreciate the fundamental shift in consumer behavior of which this is merely the latest manifestation?
As the mother of a daughter who is what the media has taken to calling a millennial, I have had a highly personal view of the change in what was once a fundamental consumer activity: shopping. For me, shopping, which includes searching for luxury brands at bargain prices, is a treasured leisure time activity. It was an activity I used to share with my daughter. The siren call of the mall in Florida, California or wherever else I might be where there was a mall was an essential not-to-be-missed feature of any vacation. And in Manhattan, which has no malls, a stroll on Fifth Avenue or Madison Avenue was a wonderful activity on a nice day.
That stopped when my daughter became a teenager. The one and only shopping trip we have taken in the last 5 years was to find a gown for the prom. That’s not to say that my daughter is not obsessed with fashion or is not an inveterate shopper. She spends more time shopping than I ever did. But the only stores she visits in person are Sephora, to play with cosmetics, the Apple store, to play with gadgets, and thrift shops and vintage stores to find that perfect ugly Christmas sweater or 60’s bargain accessory.
Instead, she shops on-line at all hours of the day and night, particularly when she is procrastinating to avoid writing papers or completing other school assignments. She shops on her iphone, on her iPad and on her Macbook. She orders everything she is interested in on-line, preferring to try things on in the comfort of her own room, returning what doesn’t work and keeping what does.
For her, on-line shopping is also a highly social and communal activity. She sends links of potential purchases to friends and solicits their opinions. She takes selfies of herself in garments to poll her friends on what she should keep. She follows the brands she likes on social media so that she knows what’s coming and when the sales start.
None of this is new. It has been going on now for years. It is the reason why malls are dying and why some teen retailers have struggled while others have thrived. It has dramatic implications for fashion brands and retailers and important implications for lawyers who serve them. We all must master the internet, social media and the changes in distribution channels that these portend. So bear in mind all: this is the generation that killed the compact disc and record stores and is well on its way to killing iTunes, even though it consumes more music from all over the world than we ever did. It is killing the book store and books (college texts can be rented, ordered on-line and sometimes consumed electronically), although it actually reads more than we do. You’d better get with the “what I want, when I want it, without getting dressed” generation or you’ll soon be a relic of the past. And message to Target and other retailers: if you frustrate your customers and they see your goods as something unattainably dangled out of their reach, you’ve lost them as customers. Millennials do not take frustration well, and the web offers lots of alternatives that are more accommodating. Like Top Shop!
Credit: Helene M. Freeman