Fashion Law : Fashion Lawyer & Attorney : Fox Rothschild Law Firm : Licensing, Intellectual Property

So Congress was back in session for 5 days in September, which was just enough time to enact a temporary budget to avoid a government shut-down, and for the Senate Judiciary Committee to act on the Design Piracy Bill, or as it is known here at the Fashion Law Blog, the Destruction of Affordable Fashion Act.

Renamed the Innovative Design Protection Act of 2012 (S. 3523) (IDPA) when it was introduced into the Senate on September 10, 2012 by CFDA darling Senator Schumer, the IDPA was reported favorably out of the Senate Judiciary Committee on September 20, 2012.  IDPA now sits on the Senate's Legislative calander, waiting for the senators to come back to the "lame duck" session of Congress.  

Having reviewed the bill, we wanted to point out two changes:

• First, a person/company is required to give notice to a potential infringer and then wait 21 days before filing suit.  Us fashion lawyer typically call this a "safe harbor provision."

• Second, damages don't begin to accrue until notice of potential infringement is sent.  This should mean that the amount at issue is only sales made AFTER that date.  Right now, in fabric copyright cases for example, once a potentially infringing item is found, the plaintiff generally claims all profits for the sale of that style or statutory damages.  Most sales are made PRIOR to the sending the cease and deist and/or filing of the action. 

Not much has been said about this radical change in the potential damages, but I think this is a step in the right direction.  The only problem is when you have de minimis damage awards, the case becomes all about attorneys fees.  For example, have you gotten a class action settlement where you get $.25 off your next cable bill, but the attorneys get over 6 figures?  Yeah, that's what will happen here.  As a fashion lawyer who defends copyright infringment cases, I guess I shouldn't complain, but a bill where only the attorneys wins is not good for the fashion industry or you the consumer.

In sum, we maintain our previous position:

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This morning, the Second Circuit Court of Appeal issued its long awaited decision and it contains something for everyone.

To summarize, the Court narrowed Louboutin's "Red Sole" trademark to:

"only those situations where the red lacquered outsole contrasts in color with the adjourning 'upper' of the shoe."

Once the Court reached this conclusion, it necessarily follows that YSL's monochromatic shoe does not infringe on the red sole mark and thus, the District Court properly denied Louboutin's request for a Preliminary Injunction.  Once the Court limited the mark and found in YSL's favor on infringement, the Court did not need to discuss the highly debated affirmative defense of aesthetic functionality.

Louboutin is very lucky that it gets to keep some of its trademark and should say a prayer of thanks to the Court of Appeal (remember, the District Court was ready to cancel the Red Sole Mark in its entirety). 

As I said back in August 2011:

I also have to wonder why Louboutin chose YSL as its test case.   Especially when the YSL shoes Louboutin claim are causing customer confusion look nothing like his and have been used by YSL long before Louboutin used his red soles. 

Again, poor lawyering or maybe the result of two long time French competitors taking a grudge match to the US Courts.  Someone should have warned Louboutin about the American legal system.

While this morning's blog posts tout this decision as a victory for Louboutin, I am not so sure.  Yes, it is nice that the Court found that the Red Sole Mark, as modified, had secondary meaning, but no one really doubted that.  To me, in determine a win, I ask:

Are you in a better position today than before filing the suit?

Here, the answer to that question is clearly "NO."  Louboutin's trademark is narrowed (not far enough in my opinion - I would have included the pantone number for the red).   

YSL, and anyone else out there for that matter, can sell all the monochromatic shoes they want.

So despite claims of victory, if I were Louboutin, I would still be seeing red.

xoxo

Staci

ps -- check out footnote 19 where the Court explains that "the more appropriate vehicle for the protection of the Red Sole Mark would have been copyright and not trademark."  Does this set the stage for future IDPPPA battles or what?  Imagine the drama!!  This footnote also gives insight on the Court's view of functionality.  So, Fashion Law fans stay tuned!  (and remember that the juiciest bits are always in the footnotes!)

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Apparel manufacturers.  I am worried about the Innovative Design Protection and Piracy Prevention Act ("IDPPPA") and so should you. 

Do you know that last week WWD predicted a 10-15% rise in the wholesale price of fashion products for spring 2011? Or home sales are down 27% this year and unemployment remains about 9.5%? Or that cotton costs are up 32.2% and analysts are predicting dim holiday sales?

The last thing our country, its fragile economy and the apparel industry needs is more legislation that is guaranteed to drive up the cost of fashion products.  IDPPPA would do just that. 

How?  By giving fashion houses with fat litigation budgets the opportunity to convince judges that their designs are uniquely different from anything that has ever been made before.  If you know your design history, or even have worked in the fashion business for awhile, you know how hard that standard is to meet. 

But this is America and everyone is "entitled" to their day in court.  Plaintiff's lawyers (working on a contingency) are creative and judges historically interpret copyright law expansively.  Companies all along the supply chain would pass off the cost of litigation to the retailer purchaser.  Just what the country needs right now, right?

And the harm of IDPPPA doesn't stop there.  Since IDPPPA requires a plaintiff show that a defendant had "access" to the alleged copied products, designers would have to stop:

• reading fashion magazines;
• shopping retail stores or attending trade shows;
• watching or subscribing to trend reports, or
• caring about the runway shows.

If they do, designers will be prohibited from claiming that their designs are the "result of independent creation."   Another hit our economy doesn't need.

So, if you want to influence the process, now is your chance!  Call your congressmen and senator today. 

Otherwise, you'll have no right to complain when it costs more for clothes for you and your family, or when an unscrupulous plaintiff (think of the ones we see making fabric claims) sues you.

Take action now!!!

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In 2008, Alexander Wang won the CFDA/Vogue Fashion Fund Award.  Alexander Wang won cash and mentoring to learn how to "execute my ideas into a business,” as he states in a recent New York Times article by  Ruth La Ferla.  Since winning the award, Alexander Wang has grown his company into a 25 million dollar business.

Jennifer Wheeler, the vice president for designer apparel at Nordstrom stated, that Wang's success can be attributed to the CFDA/Vogue mentoring Program:

 “He hasn’t bitten off more than he can chew. His deliveries are steady, and his quality is consistent. He hasn’t gone through some of the growing pains new designers can go through if they have success right off the bat.”

My clients frequently ask me for assistance in finding financing and investors.  Unfortunately, unless you are very lucky like Alexander Wang, the options were slim.  Until now. 

The founders of FashInvest recently contacted me to become a steering committee member and speaker at their upcoming Summit in Spring 2010 in New York.   What does FashInvest do?

It will help fashion companies acquire the necessary skills, successfully present their opportunities to investors, raise the necessary investment capital and eventually launch and/or grow their businesses.  Just like the CFDA did for Alexander Wang.

The Spring Summit will allow a select group of fashion designers or fashion companies to present their vision to venture capitalists and operating executives in order to to secure capital investment.  Fashion Designers/Companies will need to apply and go through a selection and training process prior to presenting. 

You should know that the founders of FashInvest are also the founders of Early Stage East, which to date has provided participants with over 1 billion in capital.   This will be a great, and welcome opportunity for the fashion community to mix with venture capitalists.

I am trying to talk them into doing a similar event here in LA.  Do you think the Los Angeles fashion community needs it?  Does your fashion company need investment?  I would love to hear from you.

photo credit: Alexander Wang with Gap Models from theFashincult.com

Editor update:  On December 14, 2009, WWD highlighted FashInvest in an article titled, "FashInvest Aims to Connect Entrepreneurs, Investors."

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