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Fashion Law Blog An Interactive Discussion on the Business of Fashion

The “30% Rule” Can Get Your Company Sued

Posted in Fashion Intellectual Property

There are two business mantras that every fashion company should follow:

  1. Always take the meeting, and
  2. Get it in writing

Recently, due to the drastic increase in the numbers of copyright infringement cases being filed, I have added a third: there is no such thing as a 30% rule or whatever “rule” your designer may tell you.

Buying a copyrighted print, then changing it a certain percentage is not permitted and can get you into expensive litigation quickly. In October, the California Apparel News reported that one recent trial over a paisley print ended in a six figure judgment.

Why are more lawsuits being filed? Two reasons:

  1. Due to the current state of Copyright Law, an unscrupulous plaintiff can easily obtain a substantial windfall based on an invalid Copyright Registration.
  2. Most designers still think it is okay to take a print of another, change it a certain percentage and then have it produced by their own supplier.

Once a potential plaintiff has a Copyright Registration, Courts presume that it is valid. Trying to argue that you were unaware of the copyright or you believed the design was in the public domain generally does not work. In plain English, if a average person, imagine two guys at a bus stop, think the two items look alike, you will likely be held liable for copyright infringement.

So, what should you do? Find out after the jump…

While there is no absolute way to stop an unscrupulous plaintiff, there are a few things an apparel company can do to minimize the impact of any such suit on its business.

  1. If you design your own fabrics, you can document the source of your inspiration and you should file a copyright registration on your proprietary materials.
  2. There is no such thing as a 10% rule, 30% rule or whatever “rule” your designer may tell you —these are merely urban legend! Copying someone else’s fabric print is not okay. Proper education of your design staff and salespeople is an absolute must.
  3. Make sure that you have indemnity provisions in your contracts with your fabric suppliers.
  4. Urge your elected representatives to change the laws in this area. The Copyright Office is aware of these problems, the increased litigation over invalidate registrations, and is considering changes in the regulations, but only Congress can issue the legislation needed to prevent abuse.
  5. Remain alert to this problem and the potential liability by using experienced professionals familiar with fabric, the manufacturing process and defending these meritless actions cost effectively.

In sum, eradicating the Urban Legend of the 30% rule is one of my missions. I urge you to adopt it as one of yours as well. Time spent addressing this issue now is time well-spent as it could save you hundreds of thousands of dollars in legal fees down the road.

  • http://fashion-incubator.com/ Kathleen

    I get so annoyed every time that old saw of 10/20 percent pops up. Hadn’t heard 30%, that’s inflation for you. I knew it couldn’t possibly be true because there is no criteria established to determine the baseline from which percentage of change can be measured. I’m a pattern maker, and expert witness even and I’m telling you, there’s no way to do it.

    And after having read this, now I can say a lawyer said so.