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

Guest post by: Lindette Hassan, Esq.

When creating a fashion line, it is important to be just as original and creative with the name as it is to be with the clothing.  From an intellectual property perspective, the strongest names or trademarks get the most protection, and when deciding on a mark, creativity and originality are key.

With regard to creativity, marks generally fall into one of four categories: 

1. fanciful or arbitrary;
2. suggestive;
3. descriptive; or
4. generic. 

The strongest and most easily protectable marks are fanciful marks and arbitrary marks.  Fanciful marks are words created for the sole purpose of being a trademark, such as XEROX for copiers. 

Arbitrary marks are words with a common meaning that has no relation to the goods or services being sold in connection with the mark, such as APPLE for computers.

Suggestive marks suggest a quality or characteristic of the good or service being provided in connection with the mark, such as COPPERTONE for sunscreen.  Suggestive marks are also considered to be strong and registerable.

Descriptive marks describe the goods or services being sold in connection with the mark.  Descriptive marks are considered “weak” and hard to protect.  In fact, descriptive marks are not federally registerable unless they have acquired distinctiveness, which usually happens by use and heavy marketing of the mark for more than five years.

Generic marks are common names for a type of product made by multiple companies, such as clothing, soda, or chocolate.  Words used in this way are not distinctive and do not point to a particular company as the source of a product or service.  Generic marks are the weakest marks and are not protectable.

At the end of the day, when picking a name for your fashion line, the best thing to do is to either (A) make up a word (fanciful mark), (B) select a random word (arbitrary mark), or (C) use a word that suggests a characteristic of the fashion line (suggestive mark).

So, while brain storming for the perfect name for your brand, just remember......creativity is key!

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It may come as a great of a surprise to you as it did to my Loyola Fashion Law class:

It is illegal to sell, distribute or manufacture counterfeits.  But it is perfectly legal to purchase them.

After my class got over the shock, we had a fabulous discussion (best of the semester in my opinion) about the ethics of buying counterfeit products, and compared that action to how society looked at illegally streaming or downloading music or movies. 

Last week, NY City Council woman  Margaret Chin proposed new legislation that would amend New York's administrative code so that anyone caught purchasing a counterfeit product would be subject up to a year in jail and have to pay a fine of $1,000 fine.  Chin previously introduced similar legislation in 2011, but it died in the City Council.

Like my class, I am conflicted over this issue and question whether new legislation is needed.

Let's be clear.  I do not support counterfeits.  In many industries, like pharmaceuticals or consumer products (think tires or water bottles), counterfeits have the potential to poss serious risk to your health, safety and well-being.

That said, I have read the MIT study that show that almost half the purchasers of counterfeit fashion products subsequently purchased the authentic version.

And from listening to the passionate discussion in my class, most didn't regret buying counterfeit fashion items stating luxury brands mark up their products so much, what's the harm? 

When we compared purchasing fashion counterfeits to illegally downloading or streaming music and/or movies, the overwhelming majority of my class felt more guilty about pirating music and/or movies than buying counterfeit fashion products. 

Interesting, when we discussed online purchases verse in person purchases, my class thought those who purchased online should not be punished, as they are less likely to know the item is counterfeit (although some vocal dissenters said the price of the item and which website you were on should clue you in.)

Perhaps threats of fines or jail will change the attitude and behavior of the buyers.  But compare our "war on drugs."  Has that really stopped, or even decreased, the drug trade?

In the end, throwing tourists visiting canal street in jail won't will drain the city of its counterfeit problems.  The new law could harm tourism, which is New York City's largest industry, and be a PR nightmare.

New York, and other cities around the world, LA included, face an moral dilemma.  As a society, we need to take a hard look at what drives consumer purchasing behavior and weigh the best possible steps to effectuate change.

Announcing new laws relating to fashion is a great PR play. 

But don't forget, at issue is ethics.  And I am not sure our country's politicians always have the best moral compasses.

xoxo

Staci

ps -- you can read more of our tips, thoughts and advice for protecting your brand against counterfeiting here.

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In the past year, the $350 billion fashion industry has not only captured a share of your income, but has also seized the attention of the nation's courts. Controversial decisions have been issued in a variety of cases — from Christian Louboutin and Yves Saint Laurent's epic battle over red soles, to Marilyn Monroe and the right to use the image of arguably the most famous American "blonde." 2012 even saw Apple and Samsung square off over whether a rounded corner design can be copied.

I bet you are sitting there asking yourself - Staci, what in the world smartphones and stilettos have in common?!

Well, I will tell you.....but just not just yet!  You'll need to join me at the American Bar Association's 28th Annual Intellectual Property Law Conference in Arlington, Virginia.

I am honored to be invited to join a team of IP professionals and practitioners who are coming together from around the world to share and discuss the most critical issues in IP law.

During our panel discussion, "The Blonde, the Red Shoe, the Round-Cornered Rectangles: Debating the Frontiers of Trade Dress Law," we'll share insight and ideas into these issues through a series of lively debates that will explore these pivotal cases.

Please join me and my fellow panelists (listed below) analyze whether trade dress protection was properly granted by the courts, and whether as a nation, we have the proper policies in place to protect designs, prevent copying and encourage competition.

Click here for more information about the 28th Annual Intellectual Property Law Conference.

Moderator:
Hon. Linda Kuczma, U.S. Trademark Trial and Appeal Board

Speakers:
Staci Jennifer Riordan, Partner and Chair, Fashion Law Practice Group, Fox Rothschild LLP

Michael J. Allan, Partner, Steptoe & Johnson LLP

Christine Haight Farley, Professor of Law, American University, Washington College of Law

Belinda J. Scrimenti, Partner, Pattishall McAuliffe

Welcome Remarks:
Robert O. Lindefjeld, General Counsel and Chief Intellectual Property Counsel, Nantero, Inc.
Chair-Elect, ABA Section of Intellectual Property Law

Crystal Gateway Marriott Hotel
1700 Jefferson Davis Hwy
Arlington, VA, 22202

Click here to register!


 

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Guest post by Tom Chan, Esq.

The entire fashion community is talking about Lululemon's recent design patent infringement suit against Calvin Klein, wherein Lululemon claimed Klein violating its rights in its iconic "cross-over waistband."

The recent settlement between Lululemon and Calvin Klein is stirring up renewed interest in design patent protection for apparel brands.

Contrary to common misconceptions, design patents should be an arrow  in every fashion designer's quivers because they are:

·  inexpensive to obtain, about $2,000-2,500, including fees and costs, around the cost of a trademark registration.

·  easy to get: almost 90% are allowed and around 80% do not even receive an office action,

·  often granted in 6-8 months, faster than trademark applications and comparable to copyright applications.

Oh, and the best part? Recently, we have successfully avoided the cost of technical drawings by using a digital picture instead.  

And there is more good news:  protecting your design patent in court posses less challenges than protecting other types of IP your brand may own.  For example:

·  unlike in a trademark  infringement case, a costly survey to show confusing similarity is not needed; and

·  unlike in a copyright infringement case, the designer does not have to prove access and the USPTO will not reject the application because it is an utilitarian article.

 Now, to give you the full picture, you need to know there are some disadvantages, which include: most garment employers/principals do not have the proper pre-employment agreement to vest the title of the fashion design patent in the employer/principle, since unlike the work for hire concept in copyright law, the employer only has a “shop right” in the design patent, which amounts to an implied nontransferable paid-up license from the creative employee; only registered patent lawyers can apply for design patents, even though a design course is not  a prerequisite for qualifying to be a registered patent lawyer, instead science/engineering lab courses are required; and styles change so quickly in fashion, so you need to have "staple" or iconic pieces in your collection.

Other brands besides Lululemon are successfully using design patents to protect their items.  For example, Nike aggressively protects its shoe designs using design patents and files many design patents.  This Nike's Design Patent No. D659,988 was issued after less than three-months.  

Yet, many fashion lawyers are not familiar with design patent law, giving design patent plaintiffs a leg up, and many fashion designers do not have an ongoing relationship with a patent litigator who the designer can call on to show up in federal court on 24 hour notice to defend a TRO.   

So don't be stuck in down-dog; instead try a sun salute, center your third eye and remember to consider design patent protection to keep your brand in top shape.

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Hi Y'all!

Well, YSL and Louboutin are in the news again. Just in case you missed it, here is what happened:

1. Harley Lewin appeared on Bloomberg Law with Spencer Mazyck [see video below]. During the interview, Lewin claimed victory and predicted YSL and Louboutin would settle the action.
2. His prediction came true, because today, YSL dismissed its counterclaims against Louboutin, which effectively ends the parties red sole battle (at least for now - again see Lewin Video, below).

Interestingly, in theBloombergLawpiece, which is totally Louboutin spin by the way, we learn two important things:

First, Lewin claimed that Louboutin's loss, was a win. Why? Because the Court of Appeal limited Louboutin's trademark. This is a win you ask? Lewin can claim so, yes, because the District Court was prepared to invalidate the mark completely. So which is preferred -- no trademark or a limited trademark? Clearly a limited trademark, hence Lewin's claimed win.

Yet this overlooks the obvious, while Louboutin may have exited this battled with its (limited) trademark, he still lost. Why? Because, as we said before, before Louboutin sued, his trademark was not limited to a red sole with a contrasting upper. If you end up with less then you started with, you definitely lost (at least how I keep score!)

Good job wagging the dog Harley !!!

Oh, and the second thing we learned in the Bloomberg Video? Lewin was referred to ChristianLouboutinby his good friend, and CFDA chairperson, Diane Von Furstenberg. Maybe that explains why Louboutin choose to challenge YSL's monochromatic shoe that looks nothing like a Louboutin pump.

Check out the Bloomberg Video here:

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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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Fashion is all about appealing to the senses of your customer.  A color that is visually attractive to one may not be to another - that's why most companies offer designs in array of colors or patterns.

But, sight is only one of the human senses.  Don't forget that as humans, we have multiple senses and your brand should strive to engage your followers on multiple levels by using touch, scent and sound.   

Studies show that as you connect with your customer across multiple sensory planes, the strength of the bond you create with your customer grows stronger, which results in a deeper brand loyalty.  

For example, I often post about the connection between music and fashion [as an aside, have you made your MAGIC playlist yet?].  Did you know that there is a 65% chance of a mood change when exposed to a positive sound?

Which brings us to the point of this post: did you know you can trademark scents, sounds, and tactile touch?

Yes, you can.  Famous examples include the NBC "chimes," the Harlem Globetrotters "Sweet Georgia Brown," and Club Med's "Hey Baby," "Hand's Up" and "Paraiso."

These songs are not necessarily owned nor created by the sensory trademark holders, but the sound is so closely connected with the brand it is considered a source identifier and thus entitles the applicant to trademark protection in the audible component only.

So you have an opportunity here -- what can your fashion brand do to connect with your customers across multiple senses? 

What can you do to deepen your bond with your followeres and turn them into raving fans?

So turn on your speakers and watch this clip for inspiration:

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Hi everyone.  Thank you for all the feedback on the CBS segment.  Your support has been overwhelming and super encouraging. 

Now, let's turn to the question on everyones mind: why did Louboutin lose when his red lacquered sole is so distinctive and clearly has secondary meaning (which is a legal term meaning consumers see the red sole and immediately know Louboutin makes that shoe)? 

(remember SJP in Sex in the City?  Louboutin can thank her and J-LO for increasing the recognizablity of his red sole, but I digress)

In the legal world, color can sometimes be a trademark if it meets the Qualitex test, which says color alone sometimes may be used as a trademark:

“where that color has attained secondary meaning and therefore identifies and distinguishes a particular brand (and thus indicates its source),” but not where it is functional, meaning that the use of the color will put a competitor at a significant disadvantage because the color is essential to the use or purpose of the product, or affects the cost of quality of the product."

But wait, Staci, you say.  I though I just read that you think Louboutin's red sole has secondary meaning?  Yes, I do.  But Louboutin still loses to YSL and here's three reasons why:

1.  Louboutin's testimony.  This was probably Louboutin's biggest mistake.  When asked why he put red on his shoe's outsoles, he said red gave his shoes "energy," red is "engaging," red is "sexy" and red "attracts men to the women who wear my shoes."  WOW.  His lawyers did not do a good job here, or more likely Louboutin just didn't listen.  All the reasons stated are considered functional under trademark law and do not support a finding the color red is a source indicator of the brand (a requirement for securing trademark protection).  To be even more blunt, Louboutin should have said, I put red on the bottoms of my shoes so people knew who made them while women were walking in my shoes ans wearing them around town. 

2.  Louboutin's trademark.   Louboutin's trademark application was vague -- it did not specify what color red (i.e. pantone color), it did not specify whether the red would limited to laquard (as is most common with Louboutin, which begs the question why did they challenge YSL "flat" red shoe) or whether it would be used only on soles of high heels or flats (the application said high fashion shoes) or even whether the use would be limited to couture compared to mass.

3. Chilling effect on the Business of Fashion.  In our world, there are three primary colors: red, blue and yellow.  If one designer was granted a monopoly on red, what would stop another from claiming yellow?  Due to Louboutin's poorly drafted trademark application, Louboutin asked for and received, very very broad protection.  If the Court upheld its registration, it foresaw unlimited controversies: is a red to close to Louboutin's?  Is use on a low end flat ok?  Does every designer have to run to the court before releasing a collection or worse yet ask Louboutin's permission?  Granting one company a monopoly on a color would allow large companies with large legal war chests to flood the trademark office and the courts.  Small designers would be hurt and the same litany of concerns surrounding the adoption of the Destruction of Affordable Fashion Bill i.e. the IDPPPA are raised here.

And one side note, sorry because I usually hate long posts: the judge did not say a fashion companies can never trademark a color as many are claiming he did. 

The judge said it is hard to claim color as a trademark in fashion and based on the facts of this case - Louboutin's awful trademark application and disastrous admission - Louboutin is not entitled use red as a trademark.

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.

Now, based on the judge's comments this week, it is clear he will cancel Louboutin's red sole mark, unless Louboutin immediately appeals the Judge's denial of Louboutin's request for a preliminary injunction. 

Since the law and the facts of this case are so clear, the only reason Louboutin would appeal is ego or lack of clear thinking as he is likely still seeing red.

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My esteemed Fashion Law Colleague, Susan Scafidi, and I were both featured on CBS's the Early Show commenting on U.S. District Judge Victor Marrero's denial of Christian Louboutin's request for a Preliminary Injunction to stop Yves Saint Laurent  from selling red shoes, claiming YSL's shoes infringe on Louboutin's trademarked red sole.

As seems to be our pattern, Susan and I are on opposite sides of the issue.  While not shown on the CBS [Video], Judge Marrero's decision was "Dead On Balls Accurate."

WHY? 

Stayed tuned to learn why Louboutin should be seeing red from his many blunders in this lawsuit.

photo credit: CBS's The Early Show

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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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In a position paper published by the California Apparel News on September 24, 1010, Kevin M. Burke President and CEO, American Apparel & Footwear Association ("AAFA") said:

The IDPPPA also dramatically curtails the opportunities for the industry to become mired in frivolous lawsuits. Unlike previous attempts at design-piracy legislation, this bill establishes a clear system to both initiate and defend against an infringement claim.

To discourage legal intimidation and unnecessary lawsuits, the legislation creates a heightened three-step pleading process in which the burden of proof lies completely with the plaintiff. A plaintiff must demonstrate that the design in question is protectable, the offending design is substantially identical and the infringer had access to the protected design. In other words, this improved pleading requirement stops mischief before it even hits the courtroom.
 

As a seasoned fashion litigator, I can tell you that Mr. Burke is just wrong.  There is nothing the IDPPPA pleading requirement, heightened or not, that would deter a plaintiff from suing that believed that its design was original. 

Lay people tend to forget that pleading does not equal proving.  You prove to a jury or judge, at the end of the litigation process. 

The purpose of pleading is to give the other side enough information so they know why you are suing them.  It occurs at the very beginning of a lawsuit and if you don't plead well, judges almost always let you try again.

Again, if I were a proponent of this bill, and I really wanted it to deter frivolous litigation, I would include ANTI-SLAPP like procedures, which significantly, make the Plaintiff pay for the Defendant's attorneys fees if the Defendant prevails.

But, my guess is that the CFDA and the AAFA aren't worried about defending suits, as their constituents will be the ones suing.

Only time will tell.

ps -- if you want to join me for a live discussion on the current state of Fashion Intellectually Property Law and IDPPPA, I will be presenting at GlobalTex on September 29, at 'Your Legal Lifeline - Specialists Required! '

The panel, which is from 4-6 in the West Hall, Hall A, is preceeded by a wine tasting starting at 3pm - fun!!  Hope to see you there.

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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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by: Cassidy Saitow

On Friday, the California Apparel News reported that a major shipment of fake True Religion jeans was discovered in a random search of incoming cargo. Authorities unveiled over 21,000 pairs of jeans that were disguised under Tuff Made USA labels and false metal button covers. Underneath were counterfeit True Religion brand labels and True Religion embossed button heads. The street value of the contraband is $1.5 million dollars, and if sold at full price, the jeans would be worth $6.2 million dollars!

While it was a random search, this huge stop does show the Port of LA means business, and is going to keep a watchful eye out for counterfeit goods.

Here are a few other things you can do to help out the ICE and Border Patrol officers:

1. Centrally ship your product from the same location so that authorities know the chances its genuine are better when it comes from one place;
2. Keep authorities up to date on what your product looks like and how counterfeiters are trying to fake your genuine product. For example, True Religion knows that counterfeiters actually cover up the fake True Religion "made in the USA" labels with other brand labels, as they did here. Their brand enforcement people train the authorities at the Ports to look extra closely at goods to determine authenticity; and
3. Trademark and copyright the aspects of your product that you can, as the more protection you have, the more chance you can enforce your rights. There's a reason why True Religion jeans have T's and R's on the rivets and the Buddha all over the pocket bags: they are marketed as design features, but are actually critical components of the jeans that are protected which helps give some recourse when they are full on counterfeited!

While this was just a random check, the scary thing is that True Religion spokespeople pointed out that an average consumer who didn't already have a pair of True Religion jeans could be deceived into thinking these were real.  I have True Religion jeans, and I'd hope I could distinguish the quality, but for the company to point that out shows just how valuable this seizure was.

Go Port of Los Angeles!!!

photo credit: CAN

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Post contributed by Jaysen Chung, Summer Associate

The United States Soccer Federation (USSF) is sure to be elated with the US soccer team beating Algeria in the 91st minute this past Wednesday to win its group and move on to the round of 16.

The USSF, however, has other things to worry about.  It has filed a trademark infringement suit against The Sports Authority for airing a television, Facebook, and Youtube advertisement depicting two soccer players wearing the US team’s jersey bearing the USSF’s trademark logo without obtaining the USSF’s authorization.  The USSF has only licensed one retailer, Dick’s Sporting Goods, to use its trademarks. 

The USSF lawsuit highlights just how important these national team jerseys are as a source of sales for the clothing companies that make them and the retailers that sell them.  AskMen.com has even gone as far to rank the most fashionable "top 10" World Cup jerseys, with the US ranking #5. 

As often said here at the Fashion Law Blog, there is a lot of money to be made in t-shirts!

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We are well into this weeks series on counterfeits and the fashion industry.  You understand that fashion counterfeits are harmful - socially and to your business -- and you need to fight them.  You have also taken preliminary steps such as registered your marks, done your homework on your contractors and supply chain and made the government your closest ally. 

But I received some emails yesterday from some of you wondering just what a fashion anti-counterfeit battle plan should look.  How do you fight the forces of evil?

The answer: Identify, Seek and Destroy.  [click here to listen to the Star Wars theme song while reading the rest of this]

Here is how:

Identify the scope of your plan by answering these preliminary questions:

1. What is your tolerance level?
2. What is your tolerance level?
3. What is your budget?

Seek out counterfeits:  [For Yoda's wisdom, click here]

1. Field investigators.  There are companies you can hire that will go into the stores, factories and marketplaces looking for your brand's items.  They will either  buy and/or photograph the offending item, so you and you team can respond appropriately.
2. Low cost Internet monitoring.  As discussed the past few days, you can have your staff monitor the Internet at low cost.  Be sure to follow-up with the offenders with either a cease and desist letter or take down letter or both.
3. Proprietary software.  There are soft wear companies out there, like Site Staydown, a service from online brand security firm MarkMonitor, that attempts to not only shut down knock-offs selling websites, but keep them closed.

Finally, destroy the counterfeiter's ability to manufacturer and sell:   [For Darth Vader's Theme, click here]

1. Take down notices.  As discussed yesterday, you can issue take down notices under the Digital Millennium Copyright Act, use eBay’s VERO (Verified Rights Owners) policy or other social media sites polices.
2. Writing campaigns. A simple cease and desist letter is effective, quick, and inexpensive.  For example, McCarter & English LLP partner Harley Lewin was able to reduce Diane von Furstenberg online postings of fake goods from "18,000 posts to about 1,000 in 120 days.”
3. If all else fails, litigation.  While the most costly option, you should be able get monetary damages, an injunciton and some times attorneys fees.  Your willingness to litigate signals your commitment to this battle and will likely deter future or repeat offenders.

In sum, while battling counterfeits may seem like an impossible, insurmountable task, like plugging a dam with your finger, small, purposeful, consistent steps, as shown by some of the success stories above, make a big difference. 

Remember, as yoda says:  "Try Not.  Do or Do not.  There is no try" [Video]

 photo credit:  ebay

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The answer is: it depends.  (yes annoying answer, I know, but even a Fashion Lawyer sound like a regular lawyer at times)

It is undisputed that counterfeits are illegal.  But no one really knows what economic or social effect fakes have on the U.S. economy.  An MIT study has shown that almost half the buyers of counterfeit fashion products subsequently purchased the authentic version.

In the rest of today's post, Cassidy Saitow, my fabulous intern and FIDM student, takes a look at the costs of counterfeits:

Fakes are bad. But just how bad are they?

The US Government Accountability Office ("GAO") can’t put a number on it, but estimates counterfeit goods affect the economy in the order of $200 billion.  Apparel, footwear and handbags comprise just over 50% of this figure. 

The World Customs Organization estimates that counterfeit goods steal $600 billion annually from brand owners, or 7% of global trade. Whether it’s $200 or $600 billion, it is clear that counterfeiting is putting a dent in the global economy.

Buying a fake is not harmless.

Profits from counterfeit sales have been linked to human trafficking, drug crimes, and terrorism. The worst part is that while much counterfeiting occurs in factories in other countries, it also occurs under the radar at "purse parties" which are much harder for law enforcement agencies to track.

How can you stop it?

Don't buy counterfeits!  If you are a brand owner you can take some affirmative steps to protect your brand as well as educate your customer so they understand the importance of buying the real thing.

Put the government to work

You and you company pay taxes so take advantage of government programs designed to combat counterfeiting.   For example, US Customs can help stop the importation of counterfeits and local law enforcement also takes an active role in prosecuting trafficking and smuggling counterfeit goods. Often they view it as the tip of the iceberg into cracking a larger crime ring.

Remember, in her days before serving on the United States Supreme Court, Justice Sonia Sotomayor wore a bulletproof vest while conducting warehouse and alley raids in New York’s Chinatown to crackdown on Fendi counterfeits.

As we have discussed on this blog previously, people buy fakes for appearances (also called signaling), self-esteem and because they just cannot afford the originals.  Some you have commented that it could be a sizing issue also, which I also find credible.

But in the end, they why doesn't matter -- it is illegal,   The GAO or the powers that be need to figure out just how big of a problem fashion counterfeiting really is as compared to drugs or auto parts -- counterfeit products that directly endanger human safety.  That would calm the hysterics and allows us to fight Cannel street (and its ilk) with the appropriate amount of government resources.

photo credit: the Fashion Bomb

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What exactly is a counterfeit anyway? You have likely heard the term and if you have been to Canal Street, Sante Alley, High Street, the Silk Market or a Turkish bazaar, you don't need a fashion lawyer to tell you, as you have surely seen them.

A counterfeit product is one that is made without permission of the brand owner, that the seller is trying to pass of as an original product.  In fashion, the seller will generally incorporate a brand's logo or name, which is illegal.  By doing so, the seller violates trademark law as well as federal, anti-counterfeiting law.

Interestingly, in fashion, unlike many other industries, the purchasers of counterfeit products usually know that they are buying a fake.  Even more interesting is a recent study that  show that 46% of all people who buy counterfeits end up buying the real thing.

Finally, you must know that there is a distinction between counterfeits and knock-offs.  In fashion, clothing designs do not have any sort of legal protection.  Hence the prevalence of designers paying homage to, gathering inspiration from or copying the products of another.  The fashion industry refers to these imitations as "Knock-Offs."

photo credit: For The Love Of Lily

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On Tuesday, April 20th, the California Fashion Association hosted a presentation and panel discussion on the Design Piracy Prohibition Act (DPPA), as part of the ‘Market Tuesday’ series for the California Market Center.  I was honored to have been asked to speak, and I am working on posting some video clips. 

I am still having some problems, but try these for now:

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The Design Piracy Prohibition Act polarizes the fashion industry.  In an industry where many designers come out with similar looks each season and where inspiration is said to be "in the air," the question remains whether fashion design should be given intellectual property protection when currently it has none.

On Tuesday, April 20, 2010, from noon to one, the California Fashion Association (CFA) invites you to the California Market Center Annex (in the lobby) come join an interactive panel discussing:

• Difference between copyright, trademark and counterfeit
• Inspiration vs. knock-off?
• Legal Ramifications
• Effect on Retailers

Moderated by CFA President, Ilse Metchek, the panel includes:

• Janine Blain, Vice President, The Doneger Group
• Brian Weitman, President, STC-QST and TALA 
• ME, Staci Riordan!

The event is free, but you must register.  [click HERE to RVSP] or email jriggs@californiamarketcenter.com.

Please come by and introduce yourself.  Not only should it be fun and educational, but a good in-person networking opportunity as well.

Hope to see you there!

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Want to liven up a party?  Ask a room of fashion industry executives how they feel about design piracy and watch the melee that ensues.

Yesterday, we discussed that most readers are more bothered by imitation purses than imitation shoes.  

Coincidentally, Fashionista's "Adventure in Copyright" post from yesterday pointed out that NastyGal copied, or  "ripped off," Alexander Wang’s Rocco duffel. 

And recently, as reported by Counterfeit Chic, Marc Jacobs made news when he sued Ed Hardy for trade dress infringement, the latest in the trade dress trendlet.

So why is it that purse "snatching" (compared to counterfeiting) is so bothersome? 

Personally, I think it is because of the visibility of the imitation and the credibility the "toter" wants to achieve with it.

What do you think? 

Photo Credit: Fashionista and Counterfeit Chic

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The debate over Design Piracy continues in the blawgosphere this week.  Princess Dominique highlighted a Steve Madden shoe inspired by Christian Louboutin and asked her readers:

• Should there be limits to copying? and
• Would your view change if your living came from a business where knock-off's were ramped?

The commentators made an interesting point. 

After clearly distinguishing between the two types types of goods commonly referred to as "knock-offs" --  imitations, copies or inspirations compared to counterfeits, which violate trademark law -- to most, imitation shoes were not as disturbing as imitation purses.  

I wonder why?

Could it be the price tag, the visibility or the status each alleged gives the owner?  What do you think?

photo credit:  princess dominique

p.s. h/t The Manolo

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Guest post by Macala Wright Lee, Editor-In-Chief of FashionablyMarketing.Me, the largest, international digital fashion marketing magazine online. Wright Lee has been a consumer marketing consultant for 10 years.

During Magic in February, Los Angeles fashion industry executives Frances Harder, Dana Fried, David Perry, Rob Greenspan, Staci Riordan and Ernesto Mantilla examined the various aspects of planning, merchandising, branding, sales and international marketing opportunities for a US fashion business.

The panel offered these expert tips before starting and expanding your business in a global market place.

Develop A Business Plan or Strategic Roadmap

If a designer wants to make $1 million their first season, they need to have $250,000 in liquid capital. It's easy for new businesses to make a $10-, $20- or $50,000 mistake their first year. As a new company, designers have to be very frugal; ditch the Starbucks and make coffee at home.

A designer can start a line with less than $250,000. Successful lines have launched with $12,000 to $50,000 and made $1 million to $2 million in their first 24 months. Those lines had both a business plan and a strategic marketing plan. Designers must have a business plan, especially if they're seeking investment funding.

When designers start their business, they need to know their market space; identify your target market, competitors and sales outlets; work them into your plan and marketing strategies.

Insider Tip: Ask yourself, "What does your brand promise? What's your brand's message?" Knowing who you are and what you stand for is key to developing a successful business plan. If you don't know how to brand your product, you will never be able to monetize it.

Expert Manufacturing and Product Development Advice

Sourcing and manufacturing are "seamless" operations. Regardless of how a designer plans their line or who their partners are, they have to be prepared. Things don't go they way you plan them. If something can go wrong in production, it will.

Do your research, conduct all product development in America before you send production overseas. As a designer, know who you're working with, go to the facilities and inspect them (even if it's in China).

Insider Tip: If you're a designer in California, do you have your manufacturer's license? If you don't, the state can confiscate your product.

Digital Resource: Fashion Incubator. Author, Kathleen Fansella, is a 27-year apparel industry veteran and author of The Entrepreneur’s Guide to Sewn Product Manufacturing. The site is a must read for any one starting their own line.

Legalities of Fashion: Advice from Staci Riordan

In order for your company name to become a corporate asset, you must trademark it with the United States Trademark Office.

In the US, a designer gets common law rights to their brand name when they use it, but if they don't legally register it, they can't sell it, license it or prevent cybersquatting.  It can cost up to $2,000 to $3,000 to register a name and can take up to 24 months to get it registered. 

If you are going to use your own personal name as your trademark, consider registering the trademark in your name as an individual, as compared to the company, and then license it to the company for a nominal fee. Please note, though, if you have partners, this will be very challenging.

Insider Tip: Companies come to trade shows (such as Magic), take the listings catalog, walk the floor and take designers' names and register them. Designers and brands can spend up to $20,000 to get the these names back. If a webmaster, hosting company or individual is cybersquatting on a designer's or brands' federal registered name, know that it's illegal and can be taken care of easily with a lawyer.

Finding Sales Representation

When a sales rep takes on your line, they want to know that you have finances in place and are able to fill orders for their clients.

Sales reps are usually paid every 90-120 days, and the average sales commission for 2010 is 12 percent. Don't be surprised if showrooms or sales reps ask for cash up front; many have monthly base fees of $550 - 1500 per month just to have a designer's product line in the show room. Most sales reps and showrooms don't take lines if they have no sales history because of the high risk of not being able to fulfill orders.

Start identifying showrooms in your product development phase. Show how your brand is different to showrooms, get them excited about you and try and generate demand before you come to market.

Insider Tip: If the showrooms are asking for money up front, a designer needs to ask them, "What guarantees or incentives do you offer designers who pay you $1500?" For high showroom fees, designers should also ask what kind of promotion, trade shows, PR or marketing the showroom does in order to help promote the designers.

Digital Resource: How do you find good sales representation? Online, of course! FindFashionRep.com, digital resource for brands and sales reps to connect online, last month.

FindFashionRep.com own Kelli Nelson offers this advice to brands or designers seeking representation:

"Have a clear understanding of who your customer is. Observe trade shows and showrooms and then speak to the reps at the show rooms that you'd think would be a good fit for your product line. Always check references of the showrooms and sales representatives you wish to work with."

The No Risk, No Sales business panel was extremely enlightening for brands and designers who wanted to take the time to build their businesses correctly.

Photo Credit: i slam

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Here's what I am reading this week:

Theory’s Insider Looks Now Include Videos [The Cut]

5 Things I Have Learned As a Generation Y Business Owner [The Personal Branding Blog]

Xerox asks Hollywood to stop saying 'Xerox' (picture) [THR, Esq.] (editor's note: Channel ran a simalar Ad on the back cover of WWD.  I would post it, but cannot find it.)

If you think something important was missed, feel free to send stories and tips!

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co-written by Dana Shultz, Esq.

California based fashion clients often ask if they need a fictitious business name ("FBN"), which is also known as a DBA, which means “doing business as.”  Luckily, Dana Shultz of the High-touch Legal Services® Blog recently posted the answer to this question:

California Business & Professions Code Section 17910(a) states that a Fictitious Business Name Statement must be filed within 40 days of the time when the FBN first was used by the registrant to conduct business in the state.

The Statement is files with the County Clerk in the county where the registrant’s principal place of business is located in the state, or in  Sacramento County if there is no such place (Business & Professions Code Section 17915). In addition, if the registrant wishes, FBN Statements can be filed in other counties.

After the FBN Statement is filed, it must be published in a newspaper of general circulation once per week for four successive weeks (Business & Professions Code Section 17917; Government Code Section 6064).

The process is not difficult, and there is a statutory incentive to do things right: No lawsuit may be brought based on a contract or transaction entered into under the FBN until the filing and publication procedures have been complied with (Business & Professions Code Section 17918).

One word of caution, filing your FBN aka DBA (or registering your entity with the Secretary of State) DOES NOT protect your company name.  To turn your "name" into a company asset you must Trademark it.

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