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.
The Supreme Court decision in Star Athletica L. L. C. v. Varsity Brands, Inc., No. 15-866 was announced today and the fashion industry can breathe a huge sigh of relief. In fact, the industry, especially accessory businesses, would be justified in popping open the Champagne. Not only did the Court uphold the Sixth Circuit’s judgment that the designs of the cheerleading uniforms were separable, it greatly simplified and expanded the two- and three-dimensional features of useful articles that can qualify for copyright protection.
The opinion holds that the design of a useful article is eligible for copyright protection if the feature can be perceived as a copyrightable two or three-dimensional pictorial, graphic or sculptural design separate from the useful article, on its own or in some other tangible medium, if it can be “imagined” separately from the useful article. Physical separability is not required. The analysis of separability under the statute is a purely conceptual undertaking. Conceptual separability does not require that the remaining part of the useful article, apart from the two and three dimensional design, be either fully functional or even equally useful. The focus of the separability analysis under the copyright statute is on the extracted two- and three-dimensional design and, according to the Court, one need not “imagine a fully functioning useful article without the artistic features.” Nor does it matter, the Court holds, that the artistic feature plays a role in the function of the useful article.
All of the other glosses on conceptual separability that the various appeals courts had previously articulated are swept away. It does not matter that the artistic feature of the design would be marketable separately, so long as it can be imagined as existing. It doesn’t matter that it was conceived originally for the useful purpose to which it was put.
Left for another day is whether the specific designs at issue are copyrightable. That will be the task of the trial court on remand. However, Justice Ginsberg notes in a footnote that the requisite creativity for copyright is extremely low.
Credit: Helene M. Freeman
Every autumn, at my high school in New Orleans, for many, education was made to stand in line behind football. Ordinarily, in the heat and humidity of The Big Easy, any kind of activity beyond that needed to populate bars and strip clubs was considered unnecessary and even dangerous. (The older brother of a good friend died of heat stroke from playing high school football.)
And yet football, that proud exception to the rule, was worshiped every autumn. If the players were the priests of this brawny faith, what did that make the cheerleaders? The nuns? For their habits, the girls wore blue and yellow uniforms that were both comfortable and amenable to much athleticism, the requirements for the job being lots of jumping, pom-pom pushing and the occasional lift and twist into a fully inverted position. The garments were not all that successful in wicking away moisture, and the girls made quite an effort to maintain the required posture of irrepressible enthusiasm—while battling cascading perspiration.
That comes to mind as we consider that the Supreme Court has just agreed to hear an appeal from a copyright case about cheerleader uniforms: Varsity Brands, Inc. et al., v. Star Athletica, LLC. The Supreme Court rarely accepts copyright cases—it will accept one every few years—and barely will the decision have been announced before a cascade of articles by professors, lawyers, law students and the lay press will appear to interpret it and opine on its implications for the freedom of expression and the business of expression.
As the case currently stands, the Court of Appeals for the Sixth Circuit, in an appeal from a district court in western Tennessee, has ruled that simple designs on cheerleading uniforms consisting largely of “stripes, chevrons, zigzags, and colorblocks” are protectable by copyright. The court noted the basic rule, which we have discussed on these pages, that, “the Copyright Act protects fabric designs, but not dress designs.” The court went on to say, “Because we believe that the graphic features of Varsity’s cheerleading-uniform designs are more like fabric design than dress design, we hold that they are protectable subject matter under the Copyright Act…as pictorial, graphic, or sculptural works.” Functionality, such as wicking away all that perspiration, proved not to be a consideration for the court.
The court also rejected the argument of the defendant that the designs in question simply represented by the cheerleading uniform should be unprotected. There are just so many ways to make a uniform for an adolescent girl look like she is a cheerleader by the uniform alone—without, that is, making her shake her pompoms until you get the point. Although there may indeed be characteristics common to most cheerleading uniforms, those stripes, chevrons, zigzags and colorblocks, when sewn into a dress, were sufficiently unique as to warrant protection as a copyrightable design.
What the Supreme Court will be reviewing is quite specific: the standard employed by the court in determining how to separate (only conceptually because it cannot be removed physically in these fashion cases), a two-dimensional design from the functional garment on which it is placed in order to examine whether it is protectable by copyright. The lower court previously examined nine such standards (or “tests,” as they are often called) that have been floated or actually used and then went on to adopt one of its own invention, formed around five questions it asked itself.
The adage that the Supreme Court does not accept cases in order to affirm them may possibly apply here, but with its own tenth test now on the books (by the Sixth Circuit’s reckoning), it also seems quite possible that we will either be seeing the embrace of one of the prior nine or will be presented with an eleventh that will potentially replace all its predecessors nationwide.
And that, in short, throws open for speculation whether, in applying the test the Supreme Court will enunciate, the lower courts will still hold that uniform designs such as those at issue in this particular case are subject to copyright protection. Whatever the outcome on that point, the general rule does not appear in any way in danger: at least for the purposes of copyright, in the USA, copying a dress pattern (but not necessarily the pattern of the fabric itself) is largely permissible. The rest, as in so much about both fashion and law, is all about the details.
Credit: Alan Behr
While the Supreme Court’s recent healthcare and marriage equality rulings garnered a lot of attention, there was another decision at the end of the Court’s term that may be more meaningful to the business of fashion – Kimble v. Marvel Entertainment, the Spiderman patent litigation. Steven Kimble secured a patent for a Spiderman toy that shot the character’s “webs” from a hand. Marvel, owner of the character, purchased the patent to resolve a claim of patent infringement, promising to pay royalties on sales of the toy.
The popularity of the toy outlived the twenty-year patent term. Under a fifty-year-old Supreme Court decision, the obligation to pay royalties under a contract ends when the patent term expires, even if the agreement contains no termination date. Court decisions have applied the same rule to copyright licenses and assignments.
The Spiderman case called for the Supreme Court to reconsider the rule and permit the continued collection of royalties as provided in the contract. Although conceding that the fifty-year-old case might have been wrongly decided, as a number of courts and commentators have noted, the Court declined the opportunity to overrule it. Instead, it advised that, if the rule is to be changed, it is up to Congress to do so. Spidey is now free to cast his web without writing any more checks.
The decision is a reminder to licensors that patent and copyright rights do not last forever. In contrast, trademarks last as long as they are used and protected and trade secrets last as long as their secrecy is maintained. Joining a license for patents and copyrights with related trademarks or trade secrets can be a good way to maintain royalties after the patents and copyrights have expired. Licensees, on the other hand, should periodically investigate whether they are paying royalties under patents or copyrights that may have expired.
Credit: Helene M. Freeman
Why is a can for Minute Maid juice like a coat? The answer: Because federal statutes and government regulations prescribe how each is labeled. In the case of juice, the label is prescribed by the U.S. Food and Drug Administration (FDA) regulations promulgated under the Nutritional Labeling and Education Act of 1990. In the case of the coat, as apparel manufacturers are all too aware, by the Federal Trade Commission (FTC) under either the venerable Wool Products Labeling Act of 1939 or the Textile Fiber Products Identification Act. The regulatory schemes share ostensibly the same goal: to assure a uniform national standard and to inform consumers of the content and the qualities of the goods. But what if prescribed rules do not further that purpose?
That is a question posed by a case that the Supreme Court heard on April 21, 2014 Pom Wonderful LLC v. The Coca-Cola Company. Pom’s business revolves around marketing beverages featuring pomegranate juice. Coca-Cola, wishing to cash in on the craze for such beverages, introduced a Minute Maid juice it called “Pomegranate Blueberry.” Notwithstanding the name, pomegranate juice constituted only 0.3% of the contents, and blueberry only 0.2%. The 99.4% of the contents which consisted of apple and grape juice was uncredited in the product name and the graphics decorating the label. Pom sued, claiming that the name “Pomegranate Blueberry” constituted false advertising and unfair competition, as consumers would naturally infer that the product’s main ingredients were pomegranate and blueberry juices. Unfortunately for Pom (and, one might add, for consumers seeking the health benefits of pomegranates and blueberries), FDA regulations specifically permit naming a product for ingredients so minor that they could be described as no more than flavoring.
So, now, the Supreme Court will decide whether a competitor can sue for false advertising and unfair competition when the contents of a label are authorized (or sometimes even required) by government regulations, no matter how misleading. In the language of the law, do the specific provisions of federal labeling law preempt federal and state laws that more broadly and generally protect consumers and competitors from deception as to the contents or quality of the goods?
Should the Court find for Pom, attention will have to be given not only to technical compliance with legal requirements, but also to whether consumers are likely to be misled. One might think Coca-Cola has the better argument. After all, if your labels comply with federal regulations, you should not have to worry about what consumers think. If there is a problem, the fault lies with the government and its regulations. But that conclusion might be wrong. Some of the justices appeared to view the labels as very misleading. Others wondered whether the FDA considered anything other than health and safety in promulgating the regulations and questioned whether assuring that consumers are not misled was the responsibility of the FDA.
Of course, that is the responsibility of the FTC and it is the purpose ostensibly served by the FTC labeling rules for textiles. But even under the FTC rules, you can name your line of sheets “Bamboo,” as long as that is just the name and the fine print on your label states that the fabric is rayon made from bamboo fibers. After all, this is consistent with a regulatory scheme that requires you to state the country of origin of a coat but not that of vitamins or toothpaste.
Credit: Helene M. Freeman