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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September is turning out to be a hot fashion law month, and we are only into week two!

Today, WWD reports Senator Charles Schumer (D., N.Y.) has once again introduced the Design Piracy Bill into the Senate. It is no secret that we here at the Fashion Law Blog are not fans of this legislation, and have dubbed previous incarnations of the bill, the Destruction of Affordable Fashion Bill. 

This time, we reserve judgment (kinda) as the exact text of what was introduced toady is not yet available, but we have no expectation that it will be any better than Schumer and crew's last five attempts.  But, we'll share it once we can get our hands on it and then we can all decide together.

In the meantime, one has to wonder WHY Schumer introduced this bill now?!  With elections rapidly approaching, Congress will only be in session about another two weeks.

Maybe Schumer is being passive aggressive - submitting the bill to please his generous contributing constituents, but knowing nothing will ever happen on it.  Win-Win, for him right?

Sigh.  Well, here's to hoping that Congress spends its Fall dealing with our economy, expiring tax cuts, fixing the deficit and avoiding a government shut down.  Otherwise, this will really be a September to Remember.

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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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Where's the beef? In Philadelphia of all places!

We all know that Philly is famous for its cheese steak, but last week, Louis Vuitton apparently had a cow and decided to send a cease and desist letter to the University of Pennsylvania Law School's Penn Intellectual Property Group ("PIPG") trying to stop PIPG from using the following parody on its flier announcing its annual symposium:

The symposium will address current hot issues in fashion law, such as trademark use in fast fashion as well as a personal favorite, the Innovative Design Protection and Piracy Prohibition Act ("IDPPPA"), or the destruction of affordable fashion act, as I like to call it.

Given that I am not chopped liver - I am one of the speakers, and my firm is a sponsor - I will hold the tongue for now. 

Read LV's cease and desist letter here, and U Penn's response here so you can decide who is the big cheese.

All puns aside, I hope you'll join me and some of the top names in Fashion Law at U Penn on March 20, 2012 at 4:30 pm for fashion, fun and food.

Better get those buns moving and RSVP to pipgsymposium@gmail.com today!  Check out complete event information below.

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I said it before and in response to Bloomberg Law's interview of Professor Susan Scafidi [Video] I will say it AGAIN:

IDPPPA will not prevent improper litigation.  Period.

Any argument that the "Heighten Pleading Standard" will prevent improper suits i.e. suits based on a designer's belief that their design is unique or original, is just nonsense, or a red herring as we lawyers call it.  Ask any litigator, not just a fashion litigator like me, and I promise you they will tell you the same thing.

I am seriously disturbed by the Bloomberg Law interview and you should be too.  Why?

• Professor Scafidi's comments - did she really say "elements" of Diane Von Furstenberg's wrap dress would get protection under IDPPPA or the Destruction of the Affordable  Fashion Bill?;
• It was 15 minutes and only presented one side;
• IDPPPA will be very costly to fashion brands because litigation costs will have to be factored into the price of clothing, increasing the price;
• It will cause less choice in the market place.  All designers need to do is "tweak" a garment compared to the original, says Scafidi.  What does that mean?
• It will flood the courts with litigation - Americans, unlike the rest of the world are KNOWN to be litigious; and
• By the way Professor Scafidi laughed at the suggestion of addition of loser pays langauge into the bill.

The only good thing about the interview? Professor Scafidi looked great!  Loved her necklace.

Repeating all the reasons why the Destruction of Affordable Fashion Bill is a really.bad.idea would take too long, but you can read more at the following related posts:

BREAKING NEWS: New Design Piracy Bill Introduced into Senate

Why IDPPPA is going to KO the Business of Fashion

IDPPPA: How to SLAPP the Sting Out of Frivolous Litigation

F21 Defeats Express: an IDPPPA Preview?

IDPPPA will not prevent frivolous litigation

The "Destruction of Affordable Fashion Bill" or IDPPPA gets one step closer to becoming Fashion Law

Senator Feinstein Puts the Breaks on The "Destruction of Affordable Fashion Bill"

Destruction of Affordable Fashion Bill Gets A Hearing Date

More Propaganda from Professor Scafidi on the Destruction of Affordable Fashion Bill on Bloomberg Law 

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Consumers beware.  The cost of clothing is about to rise.  Reasonably priced fashionable items will be non-existent and affordable clothing will be utilitarian and boring.  Why? 

The Innovative Design Protection and Piracy Prevention Act ("IDPPPA") was unanimously approved by the Senate Judiciary Committee yesterday and now moves into the Senate for a full vote.

Deceptively called the "fake fashion bill" by its supporters, this bill has nothing to do with Counterfeit goods or Knock-off goods, which are covered under trademark law and are illegal.

This bill, more appropriately called the Destruction of Affordable Fashion Bill, seeks to amend copyright law and will:

• put numerous small businesses that don't have $400,000 to spend on litigation out of business;
• cause 1.6 jobs to be lost in Los Angeles for every fashion job lost;
• severely disrupt the fashion manufacturing process;
• cause lenders to stop lending;
• increase expediently the work load of the federal judiciary -- the court that rules on copyright litigation;
• narrow your choice of clothes; and
• increase the cost of the few items you can buy by at least 30%.

Pretty scary right?

And legally, the Destruction of Affordable Fashion Bill will wreck havoc in the courts, tying up dockets (and your inventory) for years because: 

• it violates due process because designers are not required to file a copyright registration on their alleged "original design;" and  
• its has new, uninterpreted terms - like "substantially identical," "deliberate copies" and "independent creation."

just to name a few problems. 

And, yes, the trial lawyers i.e. the plaintiff's bar that work on contingency fees, support this bill.  Why wouldn't they?  There is no loser pays provision in the Destruction of Affordable Fashion Bill, so if a plaintiff files suit on a design they feel is original and they lose, they never have to deal with the economic consequences. 

So let's all give a big round of applause to the CFDA and Senators Charles Schumer, Orrin Hatch and our own Dianne Feinstein. 

When unemployment rises, your business collapses and the economy gets more depressed then it already is, you'll know where to send your thank you notes.

Related Fashion Law Blog Posts:

Why IDPPPA is going to KO the Business of Fashion

IDPPPA: How to SLAPP the Sting Out of Frivolous Litigation

IDPPPA will not prevent frivolous litigation

BREAKING NEWS: New Design Piracy Bill Introduced into Senate

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Anyone in favor of the Innovative Design Protection and Piracy Prevention Act needs to read the recent ruling in Express v. Forever 21.  In that case, Express claimed that Forever 21 infringed on both its copyright in a plaid print and its tradedress in 4 pairs of shorts and a jacket.

Express lost, as it should have, as its copyrights were improperly filed and more importantly, it's tradedress claim failed because Express could not prove secondary meaning, a very high standard as we have often discussed. 

Sitting here today, I wonder if this case foreshadows what awaits us if IDPPPA passes?

In this matter, we have one large company suing another, because it thought its plaid jacket and shorts were so distinctive that consumers associate the item (ie the jacket or shorts) with the supplier (ie Express).

Here the Court note that if it were to accept Express' arguments:

"virtually every garment Express sells has secondary meaning.  Unfortunately for Express, secondary meaning is not so lightly bestowed."

What about "originality" under the new IDPPPA??  Will Court's look, like this one did, to the designer's testimony about the creation process and look for documentation supporting that process?

If your designers use trend reports, magazines, look books or runway shows as inspiration, will you be liable for copying?  Likely.

Will large company's sue because they think their non-distinctive design is original?  Probably.

And could they win?  Maybe -- we'll have to see which way the fashionable judiciary's gavel rolls.

photo credit: shoppingblog.com

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Dear Susan:

As a fellow fashion lawyer, I applaud what you are doing at Fordham University with the Fashion Law Institute, despite your unfortunate "pink and lavender" comments to New York Magazine, and agree that the fashion industry desperately needs fashion lawyers who have industry insight and knowledge.

I have to say, though, that the comments published in the press, touting Fordham as the legal arm of the Council of Fashion Designers of America (CFDA), have left me disturbed and disappointed. 

Law school is suppose to be an open forum -- a safe place to share ideas, debate concepts and teach tolerance of all sides of an issue.

While I understand that the CFDA and Diane Von Furstenburg were instrumental in helping the Fashion Law Institute open, it seems that the CFDA will be forever inter-twined in its future:

• "The collaborative efforts between the Fashion Law Institute and the CFDA will prove beneficial.....

• “The CFDA is committed to nurturing this important new venture.....

• "The CFDA’s invaluable support and advice will help ensure that the Fashion Law Institute is able to provide a resource and research platform to law students, fashion houses and especially emerging designers..."

I just hope CFDA money and its political agenda of protecting high-end New York designers at the expense of small businesses, jobs and the financial well being of the rest of the country, does not color or taint the open discourse of ideas that a law school is suppose to be. 

As I know you know, Fashion is a $350 Billion dollar industry in the United States, and only a very small fraction of that out-put comes from NY.  As you launch this new, very important endeavor, please remember that as a pioneer in Fashion Law you will be watched and scrutinized. 

Please don't make this about politics and rhetoric, but instead use the platform you have been given to help the US fashion industry continue its incredible growth and dominance.

To proceed otherwise would be truly be a fashion disaster.

Sincerely,

Staci Riordan

Chair, Fashion Law Practice Group, Fox Rothschild LLP

Editor, Fashion Law Blog

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As you know, I am not a fan of the proposed Innovative Design Piracy Protection and Piracy Prohibition Act ("IDPPPA").  IDPPPA is something that sounds good on paper and lures in the public, like Johnnie Cochran did with OJ's glove.  And then, before we know it, the jury will conclude that OJ Simpson is not guilty, despite the DNA evidence.  Best.closing.argument.ever.  (and you should read the book)

There is no debate that counterfeits are illegal.  But there is no such thing as "original design" in fashion.  And without originality, nothing truly can be a copy.

If you read last week's WWD you were able to see where the inspiration of s/s 2011 came from.  If you watch Project Runway you can see contestants are given look books and style guides to draw inspiration for new creations.

But I digress. 

The proponents of IDPPPA claim that this third version protects against frivolous lawsuits by requiring the plaintiff to plead with particularity.  Nonsense.  As any seasoned litigator will tell you, this requirement will only increase the cost of litigation. 

Now, if I were a proponent of this law, and I really wanted to stop frivolous litigation under it, here is what I would do:

• I would require all fashion designs be registered with the Copyright Office, and have them indexed, examined and searchable, just like Trademarks currently are; and
• I would incorporate Strategic Litigation Against Public Participation-like (SLAPP) procedures to afford a falsely accused Defendant an opportunity to get out of the lawsuit quickly and for a fraction of the cost of regular litigation.

(note, I am about to sound like the Fashion Litigator I am, so if this stuff makes your eyes glaze over, I am warning you to stop reading now.....)

Most of you are probably familiar with the Trademark Office and can related to the suggestion in point 1 above.  SLAPP, on the other hand may be a foreign concept so I am going to give you a bit of an overview.

SLAPP was enacted by the California legislature to protect the rights of free speech of environmentalists and other "little people" fighting big oil companies, developers and such.  The government found that Big Businesses were using lawsuits to abuse protesters by suing them for a variety of free-speech related reasons, usually under the guise of slander or libel, merely to scare the protesters into going away instead of having to spend tons of money defending themselves personally in court. 

So, the legislature devised a way for the small fry to get out of frivolous litigation fast and easily - it allowed them to yell "SLAPP," and then file an ANTI-SLAPP motion to reveal the true motivation of Big Business - squashing free speech with their large litigation budgets. 

But then, to the dismay of (some) the judiciary and (most) of the legislature, SLAPP morphed at the hands of crafty attorneys and expansive-reading judges, and became this neat trick that litigators tend to over use for all types of causes of action not just those relating to free speech, and it has spanned further legislation like SLAPP-Back motions. 

Yes, it is a bit of a hot mess, but some of its provisions can be useful in strengthening the proposed IDPPPA legislation.  Here's how:

1. Allow a defendant to file an "ANTI-SLAPP" type motion within 20 days of service of a fashion design copyright complaint.  In this motion, a defendant would essential plead that the plaintiff's "fashion design" is not original and doesn't warrant copyright protection under the act.
2. Once Defendant's motion is filed, all discovery is stayed until the ANTI-SLAPP motion is ruled upon by the Court.
3. Then, the burden shifts to the Plaintiff.  To proceed with the litigation, in its response to the ANTI-SLAPP, the Plaintiff must prove that its Fashion Design is original within the meaning of IDPPPA, and Plaintiff has substantial probability of prevailing on the merits of its case.
4. If the Defendant wins, the Plaintiff must, like under SLAPP, pay for ALL of defendant's legal fees incurred in filing the ANTI-SLAPP motion.  And a Defendant may be award punitive damages if the Court finds the Complaint frivolous.  (If the Defendant loses, the case proceeds as usual and the Plaintiff only gets their fees if the Defendant's ANTI-SLAPP motion was frivolous.)

If we are going to be stuck with this terrible new law that will put numerous companies out of business, and raises the cost of clothing for all consumers, don't you think America's manufacturers deserve as much protection as the environmentalist? 

Both are endangered species, right?

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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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So for those of you who don't know, Cassidy and I are in Vegas for Magic, Project, ENK, Pool and all the other shows running concurrently.  I had hoped to get a final post up before leaving LA, but President Obama and his security look down of Century City  cabashed that.

So, for now, please follow my show updates or tweets via twitter.  My "handle" is @staciriordan.  The Fashion Law Blog just got a flip so we will be posting all kinds of video content from the shows.

And as one last final reminder, I am moderating Social Marketing: Strategies for Customer Engagement, Product Research & Sales," a panel discussing social media marketing ideas and tools, and tips for fashion retailers and wholesalers today at 1:30.

Details: August 17, 2010, 1:30 PM I LAS VEGAS CONVENTION CENTER – NORTH HALL 2ND FLOOR, N261

Panelists include:

• Macala Wright Lee, Principal – Fashionably Digital Los Angeles
• Daria Shualy, CEO – Sense of Fashion
• Crosby Noricks, Sr. Social Media Strategist –  Charlotte Russe
• Daniela Zeltzer, Director of Marketing – XCVI Clothing
• Carolyn Coles, Digital Culture and Innovation – Lululemon Athletica

We'll be discussing the overall evolution in social media marketing, how brands and retailers should can use online marketing strategies to build brand awareness, how to create meaningful online engagement with customers, how to use social communities for product development and research and how to effectively generate online sales.

Hope to see you there!!!

ps -- please come introduce yourself and if really want to have a fun conversation, as me about IDPPPA.

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Well, we knew it was coming.  Today, Senator Charles Schumer introduced the Innovative Design Protection and Piracy Prevention Act, or Senate Bill S. 3728 (IDPPPA).

While it seems that NY academics, the Council of Fashion Designers of America (CFDA) and the American Apparel and Footwear Association (AAFA) have signed off on this bill, I cannot find any indication that the people involved in the business of fashion, or fashion litigators were consulted.

From a review of the bill, I only see some small improvements over the last version:

1. Home sewers are free to make copes of anything for personal use;
2. The increased damages that were proposed under DPPA were stricken, leaving section 1323 unchanged;
3. The Plaintiff will have to plead his or her case with particularity -- like a fraud cause of action now, for example.  This implies that the Plaintiff will have the burden of proof on those elements, but we'll have to see how the courts interpret that language; and
4. The drafters have tried to clarify what constitutes infringement.  The new standard is "substantially identical," which means "an article of apparel" (which includes clothes, handbags and eyeglass frames and hats, among other things) "which is so similar in appearance as to likely be mistaken for the protected designs, and contains only those differences in construction or designing which are merely trivial."  HUH?

Here are the confusing parts: 

First, fashion designs will automatically be protected so designers don't have to register the designs with the copyright office, saving the designer a $35 fee.  Interestingly, Counterfeit Chic is touting this point as a victory, but to me, how could one verify that a design is "new and unique" if there is no public database to search? 

Also, most federal circuits require copyright registration as a pre-requisite to filing suit.  In legal terms, this means a plaintiff does not have standing to file a claim unless they have a copyright registration.  Is this bill trying to change that federal requirement?

Second, so many designers mistakenly believe that their creation is new.  But almost all the design we see these days pull inspiration from the art of past designers.  A great example is Diane Von Furstenberg and the wrap dress.  She claims to have invented it, but fashion history students know that McCardell introduced a wrap dress in the 1940's.

Third, only an article that is "unique, distinguishable, non-trivial and non-utilitarian variation over prior designs for similar types of articles," qualify as a fashion design.  As a member of the fashion community, I shrudder to think how a judge is going to decide THAT question.

In sum this propossed legislation ignore the realities of the business of fashion including the financial ramifications of such a law and would make judges the arbitrator of fashion.

For example, I see:

• a ton of litigation as the courts sort this out.  Pleading with particularity is no game changer.  It only adds an extra round of litigation costs.  Added litigation costs will raise the price consumer pays for apparel, something definitely not needed right now because the cost of clothing will likely rise anyways due to increasing cotton and labor prices.  Do we really need the consumer to bear more cost increases when our economy finally seems to be rebounding?  OR 
• No one will be able to create a "fashion design" that qualifies under IDPPA as written, making it needless and irrelevant.

So, while I wait to see how the rest of the industry reacts, I see this as a big win for lawyers and big companies with the resources to sue. For now, I stick to my previous position:

As a practicing fashion lawyer, litigator, former COO of apparel companies and the fourth generation of my family to work in fashion, law professors and politicians with no hands-on fashion industry experience should not be allowed to "fix" something that they have no practical knowledge of. 

 photo credit: CFA

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