Fashion Institute of Technology Licensing Agreements Discussion

1.Find a current advertisement (should not be older than 3 months). It can be part of an article but must include an image.  It must be of a fashion product that shows an example of licensing. ( I chose Khaite and Olivier Peoples recent collaboration. Link:

https://www.vanityfair.com/style/2023/02/a-very-na…

)

2.Research and describe in detail (approximately 400 words), how did you know this was licensed (as opposed to created or manufactured by an original designer or brand manufacturer). Apply principles from the textbook and also the mini-lecture. Do additional research to back your information.  Make sure this ad is not an example of Private Label. MAKE SURE YOU SUBMIT THE AD.

3.Use the APA writing style for all of your work during this class. Cite all sources and the specific textbook pages which helped you to ascertain that this is a licensed product.

( Also use a couple of textbook references : NOTE: Only use chapter 1 and 7

Required textbook :

Fashion Law: A Guide for Designers, Fashion Executives & Attorneys.

ISBN # 9781609018955

2nd Edition.

Edited by Guillermo C. Jimenez and Barbara Kolsun

Publisher: Bloomsburg )

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Fashion Law
Jimenez, Guillermo C. “A Survey of Fashion Law: Key Issues and Trends.” Fashion Law: A
Guide for Designers, Fashion Executives, and Attorneys. Ed. Guillermo C. Jimenez and Barbara
Kolsun . London: Fairchild Publications, 2014. 1–24. Bloomsbury Fashion Central. Web. 5 Jun.
2023. .
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Copyright © Guillermo C. Jimenez . All rights reserved. Further reproduction or distribution is
prohibited without prior permission in writing from the publishers.
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A Survey of Fashion Law: Key Issues and Trends
by Guillermo C. Jimenez
DOI: 10.5040/9781501303678.ch-001
Page Range: 1–24
1. Introduction
When the first edition of this book was published in 2010, it was the first comprehensive
guide to fashion law in the United States. Since then, fashion law has achieved widespread
recognition as an emerging legal discipline. Law schools and fashion programs now teach
regular courses in fashion law, bar association committees have been devoted to fashion law,
and continuing legal education seminars (CLE) on fashion law are widely offered. In light of
the first edition’s enthusiastic reception and fashion law’s growing stature, we have greatly
increased the scope and depth of this second edition by featuring new sections on Fashion
Litigation, Fashion Finance, Fashion Entrepreneurship, Design Piracy Legislation, Celebrity
and Model Agreements, and International Fashion Law, as well as by updating our previous
material.
This chapter provides a survey of fashion law today. It opens with an introduction to the
structure of the fashion industry and how to get a fashion company up and running—
including the most common legal issues that will arise in the course of doing business—then
it reviews trends and hot topics in fashion law, including the continuing saga of design piracy
legislative proposals, recent topical cases, technological developments impacting fashion,
increased interest in responsible sourcing practices (in light of widely reported factory
catastrophes in Bangladesh and Pakistan), and the increasing importance of intellectual
property protection in the fashion world. The chapter concludes with guidance for those
desiring further information and educational resources in fashion law and includes
suggestions on career options for law students and lawyers. This chapter also highlights some
of the landmark cases in the evolution of fashion law and provides helpful tips for fashion
designers and fashion entrepreneurs.
2. Defining Fashion Law
Fashion law is the legal specialty that addresses the legal issues typically faced by fashion
companies and fashion designers. As with other legal specialties at the intersection of
business law and intellectual property (such as entertainment law, sports law, or art law),
fashion law is actually a compilation of legal disciplines. Thus, fashion law incorporates
relevant concepts from intellectual property, contracts, corporate law, commercial sales, real
estate, employment, advertising law, and international trade and customs, among others.
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While its growth has been extraordinary, the concept of fashion law is still a relatively new
one, with the first American college course in fashion law taught in 2006 (at the Fashion
Institute of Technology) and the first law school course in 2008 (at Fordham University). An
increasing number of lawyers now refer to their professional practice as fashion law. Since
business lawyers are often called on to give a mixture of business and legal advice, this
chapter also provides an overview of relevant aspects of the fashion business, which later
chapters will explore in greater depth.
3. Fashion Business 101 for Lawyers
The first job of the fashion lawyer or fashion entrepreneur is to understand the structure and
standard procedures of the fashion business.
3.1. Industry Structure
The fashion industry is a highly fragmented global value chain, encompassing textiles
producers, fashion designers, apparel manufacturers, specialized factories, branded
marketers, and retailers. Very few companies attempt to participate in all aspects of the value
chain. Consequently, the fashion industry is marked by an enormous degree of outsourcing
and collaboration between independent firms, which is one reason it is so important for a
fashion lawyer to assist in the drafting of contracts.
One way of classifying fashion companies is by categorizing them broadly as fashion (highend and luxury products), fashion-basic (moderately priced products), and basic (lower-priced
and replenishment products like hosiery, T-shirts, and underwear). Branded fashion
companies are known as vendors or manufacturers, though in actual practice they almost
invariably outsource actual manufacturing to independent factories.
Women’s apparel remains the largest segment of the fashion industry, accounting for roughly
half of all apparel sales. Price points in women’s apparel are designated in industry parlance
as budget, moderate, better, bridge, and designer. Women’s “fashion” garments remain in
stores for approximately four months, “seasonal” garments for six months, and basic
products indefinitely. Women’s apparel vendors can be classified according to company size.
A few dozen large companies account for roughly one-third of apparel sales. The second
group, accounting for some two-thirds of apparel sales, is made up of thousands of smaller
companies.
Fashion retailers are often separated into the following categories: discount/value (e.g.,
Walmart, T.J.Maxx, Payless), mid-price (e.g., Zara, Macy’s, Victoria’s Secret), and highend/luxury (e.g., Neiman Marcus, Barney’s, Ralph Lauren). Retailers are also classified
according to their distribution channel as either specialty (dedicated stores like Gap), mass
(large diversified retail chains like Macy’s), or off-price (like Marshalls or Kmart).
Fashion brands are categorized as national/designer brands (well-known independent
brands), private labels (brands owned by a particular retailer), and retail store brands (brands
associated with the name of the store in which they are sold).
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3.2. Fashion Seasons
Apparel manufacturers produce between four and six seasonal lines per year. For women’s
wear, these are as follows:
Spring (shown in October/November)
Summer (shown in early January)
Transitional (Fall I) (shown in February)
Fall (Fall II) (shown in early April)
Resort (shown in August)
Holiday (shown in August)
Women’s seasonal couture collections are presented in highly touted fashion shows in the
leading fashion capitals, and in particular in New York, London, Milan, and Paris.
Most fashion companies are working on three seasonal lines at any one time. First, they must
carefully track and observe the sales of the current line. Second, they must supervise
production and delivery of the next season’s line. Third, they must design, cost, and market
the following season’s line. The result is that the fashion industry has earned a well-deserved
reputation as a hectic, frenetic, and sometimes chaotic marketplace. From a legal
perspective, one can understand the importance of carefully crafted contract clauses to
address the critical issue of late delivery, which is endemic in the industry.
3.3. Production Processes
3.3.1. Product Development
Fashion companies produce individual garments or other items in assortments known as
lines. Expensive lines are known as collections. The planning and creation of lines is known as
product development. During the planning process, the individual garment or article is
assigned a style number. When the garment is finally sold or marketed, each different size or
color corresponds to a unique stock-keeping unit (SKU). The breadth and complexity of a
fashion line or the size and variety of offerings in a retail store can be measured by the
number of SKUs (pronounced “skews”). A mass discounter like Costco will sell a small
number of SKUs (approximately 10,000), while a large department store will carry as many as
1 million. Even a small apparel manufacturer may sell several thousand SKUs, and a typical
jeans manufacturer will sell as many as 10,000 to 20,000.
3.3.2. PDM/PLM Software Systems and Production Planning
Fashion product development varies from company to company, but most companies now
seek to manage this complex process with integrated software systems known as PDM
(product data management) and PLM (product lifecycle management). PDM/PLM software
packages are sold by a number of large vendors that service production processes in fashion
(such as Gerber, Centric, Stylefile, and many others). PDM/PLM packages often integrate
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other software platforms, such as CAD (computer-aided design) and CIM (computerintegrated manufacturing), allowing the company to track and control the production process
from initial design all the way through manufacturing.
The first step in production begins with the work of a product development team led by a
merchandiser, a central role in fashion production. The merchandiser manages and supervises
the work of designers and technical support personnel. Product development teams often
rely on color- or trend-forecasting services such as Sputnik, Promostyl, or The Color Box.
Manufacturers may also develop their own trend boards, featuring sketches, drawings,
images, fabric swatches, and colors, which help communicate the story or theme of the line.
3.3.3. Tech Packs and Bills of Material (BOM)
Next, designs for individual garments or articles are prepared, and the most promising of
these are turned into samples with the aid of a patternmaker. Samples may be prepared
internally by a sample hand (a designer’s assistant with seamstress skills) or may be produced
by the overseas factory or vendor, in which case the quality of the sample may be a
determinant of whether an order is eventually placed with that factory. The next phase
involves detailed costing and budgeting, which require the development of a detailed
materials summary known as a bill of materials (BOM) for each item. When design and
materials choices have been made for each item, they are summarized in a tech pack, which
is a document containing sketches and specifications from which the product will be made.
Tech packs have multiple functions and are developed in stages; when completed they serve
a quasi-contractual function with the factory that will manufacture the item. Some companies
do not use complete tech packs if they do manufacturing in-house but just summarize
product information on a spec sheet (in Excel, for example). Selection of the final suppliers of
materials (fabric, thread, zippers, etc.) as well as the factory that will assemble the garment is
known as sourcing.
3.3.4. Line Sheets and Look Books
Samples are shown to retail buyers (e.g., department stores) at the manufacturer’s seasonal
shows. An apparel line sheet can also serve as the basis for sales presentations to buyers; the
line sheet contains a helpful summary of the styles in a line, including all information that
might help a buyer make a decision, such as style images and numbers, colors, delivery
dates, and so on. When the buyers place orders with the manufacturer, the manufacturer
concludes the production contract with the factory by sending in a purchase order (P.O.).
Lookbooks are marketing and promotional tools for presenting the brand to potential buyers;
lookbooks are composed of attractive photographs featuring models wearing a brand’s styles
and may feature styles that have sold well in previous seasons.
4. Fashion Law and Business Strategies in the Growth of the
Company
As the fashion company grows, it will require various types of legal services and business
strategies at each stage of development.
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4.1. Entrepreneurship Phase: Start-Up Issues
Many successful fashion companies have been started on the smallest of budgets, with
samples being sewn at home and inventory stored in an apartment bedroom. An initial
question is whether such micro-entrepreneurs should undertake any legal steps alone. It can
be more expensive to try to do business without a lawyer, given the risk that a legal misstep
at the outset could endanger the future of the company. However, there are some steps the
small entrepreneur can take to reduce legal risks. In New York City, for example, the City Bar
Association provides a Micro-Entrepreneurs Legal Support Network, which consists of a pool
of attorneys who are willing to provide legal services for free to small enterprises. A similar
group is the Volunteer Lawyers for the Arts (known as VLA). Although the use of such services
is attractive for small entrepreneurs because the services are free of charge, such pro bono
attorneys will perform only limited, specific tasks, such as the drafting of a single contract or
the registration of a trademark, and will not become permanent counsel for the firm.
It is always a good idea for an entrepreneur to have a basic understanding of business law,
and there are many sources of good information. The publishing house Nolo has specialized
in providing introductory legal texts for the general public. Nolo publishes guides to help the
small entrepreneur, for example, register a trademark, file a patent, or incorporate a business.
The American Bar Association also publishes a helpful legal handbook for small business
owners.
Following are the key threshold legal issues faced by the small firm.
4.1.1. Setting Up the Company and Obtaining Necessary Licenses
Some entrepreneurs mistakenly assume that a company must be set up as a corporation to
be “officially” in business. Although there are many advantages to setting up a business as a
corporation (primarily, that a corporation protects an entrepreneur’s personal assets), it can
be expensive to do so, and it may be satisfactory to start a business as a sole proprietorship
until it begins to earn significant revenues. The distinctions among sole proprietorship,
partnership, and corporation are explored in depth in Chapter 9, “Fashion
Entrepreneurship.”
Even a sole proprietorship, however, must take some minimal legal steps. In order to invoice
clients in the company name, a sole proprietor will have to place the name of that company
on record, usually by filing with the county clerk a “DBA” certificate (“Doing Business As …”
a named company), and obtain a tax identification number from the Internal Revenue Service
(IRS).
4.1.2. Protection of IP
The protection of intellectual property, or IP, is often the first step a fashion entrepreneur
makes. As with the question of choosing a business structure, it can be quite dangerous to try
to file trademark or copyright registrations without an attorney. The scope of IP protection
afforded by trademark, trade dress, copyright, design patent, and utility patent and the best
procedures for obtaining such coverage are addressed in detail in Chapters 2, 3, and 4.
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4.2. Expansion: Growth Issues
As the fashion company begins to do regular business with a number of clients, it will
become necessary to retain expert legal counsel. How does a company find a good fashion
lawyer? The ideal counselor will be an experienced attorney who has worked with fashion
clients in the past. One way to locate such an attorney is to ask for referrals from the local bar
association and then check the recommended firm’s website. If the attorney really does focus
on fashion issues, the website will say so.
Legal services can become quite expensive when charged at an hourly rate (fashion lawyers in
New York may charge from $300 to $600 per hour, or more). When a firm has begun to solicit
legal services regularly from a particular lawyer or firm, it may therefore wish to negotiate a
monthly retainer, a flat fee for all legal services rendered in a given month. While the retainer
generally will not cover expenses or fees associated with litigation, for example, it will permit
the fashion company to obtain a better rate on its everyday legal advice.
4.3. Selling and Buying Fashion Products: Commercial
Agreements
The fashion industry is highly fragmented and diverse, which requires firms to enter into a
wide variety of commercial outsourcing, subcontracting, and supply agreements. As a fashion
company grows it will require assistance in drafting and negotiating a number of important
contracts, as detailed in the following.
4.3.1. Sale/Purchase Agreements
Most fashion companies deal to some extent with the wholesale purchase or sale of fashion
items. When tangible items are sold at wholesale, this is considered a business-to-business or
merchant transaction. Such transactions are covered by a specific area of law known as
commercial sales. Such sales are commonly documented and memorialized in the purchase
order, which the buyer transmits to the seller. The purchase order should clearly address such
key issues as the description and quality control of the goods, the timeliness of the goods
and any penalties for late delivery, and dispute resolution terms (i.e., arbitration or litigation
before a particular tribunal or court). These contractual relations are covered in detail in
Chapter 11.
4.3.2. Employment Contracts and Labor Issues
Fashion companies will need to hire a substantial number of employees, some permanent
and some freelance. Employment of freelance designers requires use of work-for-hire
contracts that specify that any IP created by the designer will remain the property of the firm.
Fashion retail companies that employ a large sales staff are subject to a number of
employment protections that the firm must scrupulously respect (e.g., number of breaks
required, minimum paid lunch hour, and in some cases, provision of uniforms). As with most
other companies, fashion companies today must be on the watch for sexual harassment and
racial or sex discrimination charges. Employment considerations are reviewed in Chapter 12.
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4.3.3. Real Estate Contracts/Leases
Since so much apparel is sold at retail in boutiques, stores, and department stores, fashion
lawyers must be familiar with the law relating to commercial leases, in addition to an
understanding of those lease terms that can be especially important in the apparel context.
Luxury brands, for example, may insist on clauses that prevent the landlord from leasing a
nearby space to a competitor or to an offensive lessee (no luxury tenant wants to be located
next to a “99 cents” discount store). One particularity of the fashion industry lies in the
frequent use of the shop-in-shop concept, in which a department store allows freestanding
and independent sales units to operate within its stores. Shop-in-shops sell merchandise only
from a particular provider. A detailed guide to negotiating the provisions of retail leases is
provided in Chapter 15.
4.4. Large Corporation Issues
Large fashion companies generate so much legal work that most create a position for an inhouse lawyer, known as the general counsel. The largest companies may hire several assistant
or deputy general counsels as well. Often the general counsel will also serve as a vice
president and one of the senior officers of the corporation. Several fashion general counsels
have gone on to roles as CEOs of their companies, as in the notable examples of Domenico
De Sole at Gucci, Jeffry Aronsson at Donna Karan, and Susan Posen at Zac Posen.
The general counsel of a large fashion company may become a large buyer of outside legal
services. A good general counsel should therefore be an excellent legal generalist who knows
where to find the finest specialized legal counsel for specific purposes. Given the rate of
consolidation and acquisition in the fashion sector, the job of fashion general counsel is not
always a secure or permanent one. If the fashion company is acquired or purchased outright
by a larger company, it is possible that the purchaser (which has its own general counsel) will
not wish to retain the acquired company’s general counsel.
4.4.1. Foreign Agency/Distributor/Licensee
The fashion company will lack the time, money, or interest to attack all foreign markets. In
some of these markets, however, parties will step forward with offers to represent, sell, or
manufacture products in a particular country. Counsel will have to choose the most
appropriate legal structure for such a relationship.
Many will enter into a collaborative relationship in the form of an agency, representation, or
distributorship contract, in which the foreign partner will market the fashion products in its
home market. Agents or sales representatives normally charge a commission, while
distributors enter into contracts to buy at a certain price and earn profits by reselling at a
higher price. Key issues that must be addressed in these contracts include the following:
The scope of representation. Which goods are covered by the agreement?
Territory and exclusivity. A foreign agent or distributor will normally request exclusive
rights to sell in a particular national territory.
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Termination provisions. Agency or distributorship relations require a great investment of
time and resources by the agent or distributor, but such relationships may prove
temporary. Termination provisions must be carefully negotiated and precisely spelled out.
These types of agreements are reviewed in detail in Chapter 18, which deals with strategies
for the international expansion of the fashion company.
4.4.2. Supervision of Imports
Today, most apparel manufacturing is outsourced to overseas factories. In light of recently
publicized factory disasters, such as the 2013 building collapse in Bangladesh (see Fashion
Law in the News: Tragedy in Bangladesh: Rebuilding Trust in Fashion Manufacturing), many
fashion companies have established human rights compliance policies to make sure that the
foreign factories are safe and are not operating as sweatshops. The company should also
make proper use of standard international trade devices—such as inspection certificates,
letters of credit, and bank guarantees—to help ensure that foreign providers fulfill their
contracts. These devices are addressed in detail in Chapter 16.
4.4.3. Customs
Given the high degree of importation required by foreign sourcing, customs difficulties are
common sources of frustration in the apparel sector; given tight deadlines for delivery to
retailers, it can be disastrous to have goods stuck in customs because of a customs dispute.
The company should routinely monitor customs classifications to make sure that it is not
paying an excessive import duty on any of the imported products. If the company imports
fabric or materials that are later incorporated in garments that are exported, the company
may apply for a reimbursement of the materials’ import duties, which is known as duty
drawback.
Sometimes, customs and the importer disagree on the most appropriate duty classification.
Generally, customs makes a ruling that the importer should pay a higher duty, and the
importer argues that a classification with a lower duty is more appropriate. Once the importer
has exhausted administrative appeals within customs, the importer may appeal the final
customs ruling to the Court of International Trade. Specialized customs attorneys handle such
appeals (see Fashion Law in Practice: When Is a Sweater Not a Coat? The Art of Customs
Law).
Fashion Law in the News
Tragedy in Bangladesh: Rebuilding Trust in Fashion Manufacturing
On April 24, 2013, the collapse of the Rana Plaza building on the outskirts of Dhaka,
Bangladesh, led to the loss of 1,129 lives, in what is now considered the deadliest
garment-factory disaster in history. Approximately 2,500 people were rescued from the
rubble.
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The tragedy created a storm of criticism of Western apparel brands that manufacture in
outsourced factories. Among the many well-known brands that were implicated as
sourcing apparel in Rana Plaza factories were Wal-Mart, Joe Fresh, Mango, Benetton, and
the Children’s Place.
Many commentators sought to draw a parallel between this tragedy and the infamous
Triangle Shirtwaist Factory fire that occurred in New York City on March 25, 1911, and
caused the deaths of 146 garment workers, including two 14-year-old girls, who had
worked in the factory. The tragedy in New York had shocked the conscience of the nation
and spurred New York into a whirl of public hearings and legislative proposals. Within two
years, 60 new laws on factory and fire safety had been adopted.
Many now asked whether the Rana Plaza tragedy would also serve as a turning point in
global fashion production, forcing apparel manufacturers to take significant action to
ensure that such tragedies would never recur.
However, intense debate continued within the fashion industry on the best way to respond
to the danger of future tragedies. Many large fashion companies came out in support of
the Accord on Fire and Building Safety in Bangladesh, a binding five-year agreement
obliging companies to invest in measures to increase safety in Bangladesh factories, while
other large brands opted for a rival plan, the Alliance for Bangladesh Worker Safety.
Whether these measures will improve factory conditions in Bangladesh remains to be seen,
but they lead to the further questions. What about factory conditions in other countries
around the world? Is enough being done? The rise of ethical fashion is one of the
industry’s responses to continued consumer concern. These issues are further discussed in
Chapter 16.
5. Fashion Law 101: Basic Principles
5.1. Knocking Off
Fashion is an imitative, trend-based industry. To say that an article of clothing is “in fashion” is
to imply that it is part of a larger trend and resembles similar items produced by competitors.
The first issue we must address is the prevalence of “knocking off,” fashion-industry parlance
for imitation of another company’s items or styles. Although knocking off is common in
fashion, in some cases it can represent infringement of another company’s intellectual
property (IP). Despite the ubiquity of knockoffs, many fashion professionals lack a clear grasp
of the difference between legal knockoffs and illegal infringements. This widespread
confusion was one of the reasons that gave rise to this book—fashion designers need to have
a clearer understanding of intellectual property so that they know what types of fashion items
to avoid knocking off and when to seek legal recourse when their own items have been
improperly copied.
Fashion Law in Practice
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When Is a Sweater Not a Coat? The Art of Customs Law
Tom Pollak, the CEO of the small fashion company Tally Ho, imported “boiled-wool
jackets” from China. U.S. Customs classified these under the category for “coats,” which
carried a 20 percent duty.
Pollak argued that the garments should be reclassified as “sweaters” and pay a 17.5
percent duty. The 2.5 percent difference per garment made a big difference to Pollak’s
bottom line. The court heard expert witnesses from both sides and concluded that the use
of the garment should be granted greatest weight in determining its classification. The
judge held that a “coat” is a garment worn over other garments when the person goes
outside to face the elements. A coat is removed upon entering indoors, and it is not
expected to match other garments. A “sweater,” on the other hand, is left on when one
goes indoors, is not meant to be the sole outer garment when one goes outdoors, and is
expected to match or “coordinate” with other clothes. Hence, it was held that the boiledwool garment was not a coat. Pollak won.
Let us first consider why knocking off is essential in fashion. Fashion is an exceptionally
competitive and demanding sector that is in constant flux. Every season witnesses the arrival
of new designers and new trends, and also brings news of the decline and fall of yesterday’s
styles. It is very difficult for any fashion company or retailer to predict which new products will
be hits and which will be misses. When a retailer is lucky enough to stock a very hot fashion
product, it tends to sell out quickly, and thereafter customers who come in looking for that
item are prone to leave in frustration and disappointment unless the retailer can quickly stock
a similar item. Conversely, when a product is a flop, it takes up valuable space on shelves and
racks, and then must often be sold at a sharp discount on sale. Thus, there is a strong
incentive on everyone’s part to join the stampede when a new trend becomes popular. As a
result, retailers are receptive to companies that provide knockoffs of hot new products and
styles, and competitors are always looking to imitate each other’s most successful products.
One way to avoid fashion flops is to anticipate trends, hence the widespread industry reliance
on trend-forecasting and color-forecasting companies. The communal following of trends
reduces the risk of a fashion failure for any one firm, but it also means that many fashion
companies are doing the same thing at the same time. Fashion designers are often
influenced by the same sources and by each other. If any producer is especially successful
with a new item or style, a host of competitors will soon seek to knock off that item or style.
An additional wrinkle has been provided by the arrival of the highly profitable business model
known as “fast fashion.” Fast-fashion companies, such as Zara, H&M, and Forever 21, have
learned to manufacture and deliver their products very quickly, even after the fashion season
has already begun. Such companies have fewer flops (hence, greater profitability) because
they imitate designs that are already proving their popularity in the marketplace.
In contrast to American legal practice, the European Union (as well as Japan and Australia)
provides legal protection for original fashion designs. However, such protection extends only
to original designs, and the vast majority of clothing designs do not qualify as such. Most
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clothing is made from a standard repertoire of sleeves, panels, hems, buttons, pockets,
pleats, and so on and is therefore lacking in originality. Consequently, most fashion designs
can be freely imitated even in those countries that protect original designs. For this reason, a
substantial amount of knocking off will always remain a standard part of the fashion business
in all countries.
The key legal question regarding all this imitation is this: When does it go too far? When
does knocking off become illegal? It becomes vital to be able to distinguish legal and
acceptable forms of imitation from those that involve inappropriate use of another company’s
IP. Therefore, it is important to understand the various protections available to fashion
designers and to identify when a company’s IP has been infringed upon.
5.1.1. Legal Knockoffs
In the United States, it is usually safe to copy a fashion design (with a few, narrow exceptions,
such as when the design indicates the source of a product and is considered “trade dress”).
In this book when we speak of “fashion designs,” we are referring to the cut and construction
of a fashion item (such as a garment, handbag, or shoe), but not to the surface designs that
may be featured on it (such as fabric prints).
5.1.2. Infringements of Intellectual Property
Although fashion designs generally cannot be legally protected, many other aspects of
fashion items can be protected. Fabric designs may be copyrighted, as can surface designs
on shoes and jewelry and accessories designs. Ornamental features on fashion items may also
be protected by design patents. Brand names, logos, and design elements that are
associated in the consumer’s mind with a given brand can be protected as trademarks or
trade dress.
5.2. IP Protection in Fashion, Textiles, and Apparel
A sound understanding of intellectual property as applied to fashion items is at the heart of
fashion law. A company that knocks off another company’s garment design must be wary of
copying any design elements that are protected as intellectual property.
5.2.1. Trademark
Given the lack of easily available protection for fashion designs, many fashion companies rely
heavily on trademark and/or trade dress protection. A trademark is any name, logo, image,
or symbol that designates the source of a product. Trade dress refers to the characteristic
presentation or packaging of a product. Famous trademarks in fashion include the Nike
“swoosh,” the Lacoste alligator, and the prominent “Juicy” logo. The clothing of fashionconscious consumers is often festooned with trademarks.
Fashion Law in Congress Design Piracy Legislation: An End to Exact-Replica Knockoffs?
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On July 13, 2011, Congressional Representative Robert Goodlatte (Virginia) introduced
H.R. 2511, the Innovative Design Protection and Piracy Prevention Act (IDPPPA), a bill that
aimed to provide—for the first time—legal protection for American fashion designs. On
September 10, 2012, U.S. Senator Charles Schumer (New York) introduced a slightly
different Senate version, S.3523, the Innovative Design Protection Act of 2012. Although
these legislative proposals were widely debated in the mainstream and fashion press and
among fashion law scholars, neither bill was given much chance of success, given the long
history of failed attempts to enact similar legislation over much of the previous century.
These two new bills differed slightly but significantly from previous attempts to introduce
legal (some would say, “copyright-style”) protection for fashion designs. Obtaining such
protection had become one of the principal goals of the Council of Fashion Designers of
America (CFDA), an association of America’s most celebrated fashion designers. In order
to overcome long-standing opposition from another powerful fashion industry group, the
American Apparel and Footwear Association (AAFA), the CFDA had agreed to modify the
conditions it would seek in the proposed legislation (and its legislative champions
Goodlatte and Schumer included these modifications in their proposed bills). Most
importantly, the new legislation set the standard for infringement of copies that were
“substantially identical” to the originals—a much stricter standard than the “substantially
similar” threshold for infringement in other copyrighted works. In other words, the
designers had accepted to restrict only those knockoffs that copied fashion items exactly.
This would make it much easier for imitators to vary the design slightly to escape charges
of infringement. Despite this major concession, the opposition remained unmoved and
vociferous.
Opponents of such legislation argue that fashion is fundamentally an imitative,
collaborative industry in which IP protection would be counterproductive. According to
such proponents, knocking off stimulates creativity, accelerates the fashion cycle, and
democratizes fashion. On the other side, proponents of protection for fashion designs
point to the continued global preeminence of the European fashion sector (in which
fashion designs are solidly protected by intellectual property law) as evidence that fashion
design protection would not harm the U.S. industry. Moreover, the rise of technology, from
cell phone cameras to 3D printers, is greatly facilitating the speed and efficiency of
knockoff artists.
Despite its failure to garner sufficient support for passage, such legislation is likely to
continue to be reintroduced in the future for a number of reasons (for example,
international pressure for the United States to accord intellectual property protection for
industrial designs as is required by its membership in the Berne Union and the World Trade
Organization TRIPS agreement). Consequently, fashion lawyers should be conversant with
the pros and cons of this perennial debate. The subject is covered further in Chapter 5.
Fashion Law in Practice Fashion Geography: The Importance of a Global Trademark Search
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In 2007, Jo Williams, the founder of a children’s wear company in the United Kingdom,
was faced with the loss of her trademark as well as approximately $60,000 in relabeling
costs. Williams’s company was named Unique-Kids, and in October 2006, she had
registered her trademark in the United Kingdom. However, a Greek clothing firm had
subsequently registered the “Unique” trademark at the European Union level, thereby
obtaining superior rights.
This case illustrates the danger that entrepreneurs run into when they seek to obtain
intellectual property protection on their own (as by registering their own trademarks) or
without guidance from specialized counsel. An experienced fashion lawyer would have
warned Williams that “Unique-Kids” was a dangerously “weak” name from a legal
perspective. An attorney would also have insisted on the broadest possible trademark
search and would have discovered the existence of the Greek trademark. It seems that
Williams simply should have named her company something else. A good fashion lawyer
would probably have advised her to do so. While Williams ultimately won in court, she
might have avoided the battle altogether.
Fashion companies have good business and legal reasons for relying heavily on prominent
trademarks. As compared with copyright and patent protection, the duration of trademark
protection is indefinite—it is never lost to the public domain (except in rare cases in which
the trademark becomes a generic term in the language, as in the case of aspirin or
cellophane). Given its unlimited duration, trademark is a form of IP that rewards investment
because trademarks can accumulate value over time. For example, the Louis Vuitton
company was founded in 1854 and sought intellectual property protection for its famous
“LV” monogram in 1896. Both the company’s name and its signature monogram will remain
protected as long as trademark law exists. Today, the Louis Vuitton brand is the world’s most
valuable luxury brand, with an estimated value in 2012 of $26 billion.
Trademark protection is thus a business imperative for large fashion companies. Companies
can charge a premium for their fashion products to the extent that they have created brand
value in their trademarks. Thus, a simple white T-shirt (even one made from the finest fabric)
will not sell for more than $50 if produced by an unknown brand, while a similar white T-shirt
by Valentino may sell for $700, largely because it bears the small metallic V, which indicates
its prestigious origin. Brand value of this magnitude can be expensive to acquire, requiring
the investment of hundreds of millions of dollars in advertising. Once fashion companies have
achieved such brand value, they understandably wish to keep it, and as a result, their highest
legal priority is often trademark defense.
5.2.2. Trade Dress
Trade dress is intellectual property in the characteristic appearance or packaging of a
product. To be protectable, it must be inherently distinctive (as in the unusual shape of a
perfume bottle), or the public must have learned to associate the appearance of the product
with its specific source. Trade dress may protect the overall “look” of a fashion line, provided
that it is nonfunctional and has acquired secondary meaning.
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Fashion Law in Court Louboutin v. YSL: The Battle for Women’s Soles
Christian Louboutin’s lawsuit in 2011 against Yves Saint Laurent (YSL) for infringing
Louboutin’s signature red-soled shoe design was the most celebrated fashion law case of
recent years. It illustrates crucial issues and strategies in fashion branding and fashion law.
A native of Paris who arrived at fashion stardom through a tortuous route, Louboutin spent
much of his youth partying in Paris clubs and traveling through Egypt and India. After
working as a freelance shoe designer, he eventually created his own line and opened his
first store in 1991. Fortuitously, an early customer was Princess Caroline of Monaco, whose
expressions of rapturous admiration were overheard by a fashion journalist.
Legend has it that Louboutin came up with his iconic red sole in 1992 after watching a
runway show in which he felt his shoes lacked energy. Taking inspiration from a model’s
red Chanel nail varnish, he applied nail polish to the sole of a shoe. The ensuing success of
Louboutin’s line (and its signature red sole) can scarcely be overstated. He went from
selling 200 pairs his first year to over 700,000 annually today, with a current growth rate of
40 percent despite price points of $500 to $6,000. Author Danielle Steel is reputed to own
6,000 pairs, Jennifer Lopez released a song about her Louboutins, Victoria Beckham wore
Louboutins to the British royal wedding, and even Mattel’s Barbie has featured a special
Louboutin edition. Louboutin registered the red sole as a trademark in the United States in
2008.
It is therefore not surprising that Louboutin saw red when Yves Saint Laurent (YSL) released
a line of monochromatic women’s shoes with colored soles—one style of which was in a
reddish shade. Louboutin’s decision to sue is interesting from a fashion law perspective.
Not only is trademark litigation against a well-financed defendant extremely expensive
(legal fees run well into the millions), it is dangerous: When a trademark suit is lost, it can
in certain cases result in the cancellation of the trademark. Louboutin’s legal team found
themselves matched against one of fashion law’s preeminent litigators, the formidable
David Bernstein of Debevoise & Plimpton.
YSL’s decision to produce the red monochromatic shoe is equally interesting. YSL’s
designers and executives were certainly aware of Louboutin’s signature soles and were
very likely advised by expert counsel on the possible legal ramifications of releasing their
own red-soled shoe. It is possible that there was an element of legal strategy in YSL’s
decision to release the shoe in a line that included a number of monochrome shoes with
colored soles in colors other than red.
In any event, Louboutin responded to the YSL shoe as if it were a provocative and serious
threat to his highly profitable brand. After fruitless negotiations with YSL, he filed a
trademark suit and moved to enjoin YSL immediately from continuing to sell the red-soled
shoe. The lawsuit received celebrity treatment in the press, which noted that Louboutin
was accompanied to court by his friend Diane von Furstenberg. Luxury jeweler Tiffany &
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Co., concerned that a loss by Louboutin would create a legal precedent on color
trademarks that might threaten their Tiffany-blue trademark, filed an amicus brief in
support of Louboutin.
In a highly anticipated opinion by Judge Victor Marrero, the Federal District Court handed
Louboutin a stunning defeat. Not only was YSL not enjoined from marketing their redsoled style, it seemed likely from Marrero’s opinion that Louboutin would soon lose the
trademark protection for his red soles. In Marrero’s view, Louboutin’s attempt to trademark
the color red for shoes was overreaching and violated the prohibition against trademarks
that possessed “aesthetic functionality.” In the judge’s view, the color red had a special
function in fashion; it was striking and noticeable in a way that other colors are not. The
court noted also that red shoes have been known throughout history (e.g., red heels worn
by Louis XIV, Dorothy’s red shoes in the Wizard of Oz), and even YSL itself had sold all-red
styles featuring a red sole since the 1970s. Marrero reasoned that the color red was simply
too important in fashion to allow a single brand to monopolize its use on shoes.
On appeal, however, the 2nd Circuit Court of Appeals overturned Marrero’s decision and
reaffirmed Louboutin’s trademark. In an opinion written by Justice Jose Cabranes, the
Court of Appeals noted evidence that Louboutin’s red soles were instantly recognized by
fashion-conscious consumers as being produced by Louboutin (that is, the soles were
“source indicators” that had achieved “secondary meaning”). However, the Court found
that Louboutin’s trademark should be limited and modified to protect only those shoe
styles in which the red sole contrasts with the upper. Since the YSL shoes were
monochromatic, they were not found to violate Louboutin’s modified trademark. In what
was widely termed a “split the baby” result, neither side won all—nor lost all. Louboutin
retained his trademark (at least for styles featuring a red sole that contrasts with the
upper), and YSL was found not to have infringed this trademark. Tiffany and other fashion
companies associated with signature colors (e.g., Hermès orange) were greatly comforted.
In light of the persuasive analysis performed by the Court of Appeals, Judge Marrero’s
initial opinion seems curiously misguided. Marrero had ruled as if Louboutin were trying to
monopolize entirely red shoes and not merely the red soles on high-end women’s shoes.
As he had presided over numerous fashion-related cases in the past, the judge’s
misreading of the Louboutin case is surprising. It is possible that the judge is simply no
fashionista. It is to be hoped that the current influx of fashion-savvy lawyers into the legal
profession (including the judiciary) will result in more fashion-sensitive judgments in the
future.
Trade dress protection in fashion designs can take years to obtain because it requires a
demonstration of secondary meaning (e.g., evidence of the public’s recognition of the source
of the product). Examples of trade dress in fashion that have met the secondary-meaning
standard (and therefore have been registered as trademarks) include the small red tab on
Levi’s jeans, the “Tiffany blue” shade of robin’s-egg blue on Tiffany’s jewelry boxes, and as
most recently affirmed in court, the signature red soles of Christian Louboutin’s line of
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women’s shoes (see Fashion Law in Court: The Battle for Women’s Soles). Trade dress can be
protected even prior to registration, provided that a company is able to demonstrate that the
public associates the particular packaging or design element with the company that
produced it—a challenging task.
5.2.3. Copyright
Copyright protection does not extend to most fashion designs on the ground that apparel
and footwear are useful articles; under American jurisprudence, creativity in useful articles is
better protected by patent law (introduced below and discussed in detail in Chapter 4). The
creativity of a fashion design is considered to be so intertwined with its utilitarian function
that it is generally not eligible for copyright protection. Conversely, jewelry receives
protection precisely because the law considers jewelry decorative rather than useful—a legal
distinction that may be disconcerting to jewelry designers, though decidedly in their favor.
(Note, however, that not all jewelry designs are protectable; they must meet certain criteria.
These limitations are further discussed in Chapter 3.)
In certain circumstances, components of useful articles may nonetheless be entitled to
copyright protection if the artistic element is conceptually or physically “separable” from the
utilitarian aspect of the article, a concept known as conceptual separability. The decorative
elements of many fashion products meet the criterion of separability. Copyright is thus a
useful tool for fashion firms, protecting fabric prints and images, jewelry, textiles, embroidery
designs, and the surface designs of shoes, handbags, and other accessories.
5.2.4. Patents
There are two kinds of patents in the United States: utility patents for scientific and technical
innovations and design patents for novel ornamental designs. Although utility patents are
better known by the general public, design patents are arguably more important for fashion.
Design patents are currently enjoying a vogue of popularity as a preferred method of IP
protection for fashion companies.
5.3. Legislative Proposals for Legal Protection for Fashion
Designs
It is sometimes surprising to newcomers to discover that fashion designs are not protected
under U.S. law, although they are in Europe. Repeated attempts to pass “design piracy
legislation” in Congress to bring U.S. law in accord with European practice have failed. See
Fashion Law in Court: Landmark Cases in Fashion Law for a summary of the current situation;
this is covered in depth in Chapter 5.
5.4. Fashion Licensing
Licensing is perhaps the most important business arrangement in the fashion industry.
Licensing provides fashion companies with a low-risk way to grow into new sectors and
distant territories. Designers with a reputation in women’s couture, for example, can use
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licensing to extend their brands into fields like cosmetics, eyewear, and watches, even if the
designer lacks manufacturing and marketing expertise in that sector. Increasingly, the highly
fragmented fashion industry relies on licensing agreements to allocate and delegate rights
and responsibilities throughout the “value chain.”
Fashion Law in Court Landmark Cases in Fashion Law History
Kieselstein-Cord v. Pearl (1980)[1]—The famous “belt buckle case” established the rule
that design elements on apparel items may be copyrighted if those elements are
conceptually or physically “separable” from the item’s utilitarian aspects. Mr.
Kieselstein-Cord’s sculpturally artistic belt buckle designs were judged to merit
copyright protection despite being attached to utilitarian belt buckles. The
subsequent expansion and further development of the separability doctrine has often
allowed fabric prints, images and drawings on fashion items, and jewelry designs also
to be copyrighted. However, courts have applied this rule inconsistently, as is
discussed further in Chapter 3.
Knitwaves v. Lollytogs (1995)[2] —A large childrenswear company, Lollytogs, was sued
by a smaller competitor, Knitwaves, for deliberately knocking off a line of sweater
designs. The court’s decision notably featured an in-depth analysis of copyright and
trade dress protection for fashion items. Applying the “ordinary observer” test to
determine whether the overall look of Lollytogs’ designs was substantially similar to
Knitwaves’ designs, the court ruled that the minor changes carried out by Lollytogs
had been insufficient to preclude a finding of copyright infringement. However, since
the designs were not widely recognized by the public as having been produced by
Knitwaves, no relief was granted on the claim of trade dress infringement.
Wal-Mart v. Samara Bros. (2000)[3] —In what is arguably the most important case in
fashion law jurisprudence, the Supreme Court held that fashion designs could never
be sufficiently “inherently distinctive” to receive trade dress protection. In this case,
Wal-Mart had knocked off an entire line of children’s clothing produced by Samara
Brothers. Wal-Mart employees had simply photographed the Samara items and sent
the photos to a sourcing factory in the Philippines. Although there was no question
that Wal-Mart had copied Samara’s entire line, Justice Scalia, writing for the Court,
held that in order to receive trade dress protection for designs, it is necessary to show
that the designs have achieved secondary meaning in the minds of consumers (as
identifying the brand or manufacturer that was the source of the designs). In practice,
this means that it is much safer to knock off the designs of a relatively unknown
company than those of a famous one.
Calvin Klein v. Warnaco (2000)[4] —Although this dispute was settled before trial and
therefore did not yield a significant judicial precedent, it is nonetheless noteworthy.
Calvin Klein sought $200 million in damages, underscoring the increasing importance
of fashion litigation. The case attracted media attention due to the widely publicized
personal conflict between Klein and Warnaco’s CEO, Linda Wachner. The case
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illustrates the crucial role of licensing in the fashion industry, and consequently of the
vital need for clear and precise drafting of licensing contracts. Although Klein’s
licenses with Warnaco had made him a wealthy man, his lawsuit was based on the
premise that Warnaco’s practice of selling to big-box retailers such as Costco had
tarnished his brand’s prestige.
EEOC v. Abercrombie & Fitch (2004)[5]—The trendy youth brand Abercrombie & Fitch
attained market-leading status with a notoriously risqué marketing approach.
Abercrombie’s catalogs featured partially clad youth models, and its stores became
known for Abercrombie’s practice of hiring “beautiful people” for its sales staff.
Beautiful though the sales force may have been, it was disproportionately composed
of white youth, a practice that ran afoul of the U.S. Civil Rights Act. The Equal
Employment Opportunity Commission (EEOC) filed an action (joining two private
actions) against Abercrombie for discriminating against African Americans, Hispanics,
Asians, and women. The case was settled under the terms of a consent decree that
required Abercrombie to pay $50 million in damages and adopt a number of
management practices to avoid future discrimination.
Crocs v. International Trade Commission (2010)[6]—Crocs, a brand of foam clogs
featuring holes in the uppers to improve breathability, experienced a sudden wave of
popularity in 2006, with sales tripling in less than a year. Faced with a spate of cheap
knockoffs, Crocs filed complaints with the International Trade Commission (ITC) and in
Federal Court to block 11 companies from continuing to manufacture and/or import
knockoffs (dubbed “croc-offs” in the fashion press). Crocs’ contention that these
companies violated Crocs’ design patents was rejected by the ITC. However, on
appeal the Federal Circuit Court reversed and ruled in favor of Crocs and in doing so
clarified the standard for determining design patent infringement. Rather than rely on
the verbal descriptions included in the patent application, the court should apply an
“ordinary observer” test to a visual inspection of the allegedly infringing style next to
the patented design. Legal commentators considered this decision to be highly
favorable for companies holding design patents, which may account for a recent
vogue in design patent infringement claims brought by fashion companies. Thus, in
recent high-profile design patent suits the shapewear firm Spanx has defended itself
against competitor Yummie Tummie, while yoga wear giant Lululemon has pursued
claims against Calvin Klein.
Tiffany v. eBay (2010)[7]—The Internet has facilitated the sale of counterfeit goods,
much to the dismay of luxury brands such as Tiffany. When research revealed that up
to 75 percent of the allegedly authentic “Tiffany” goods sold on eBay were fakes,
Tiffany demanded strong measures and eventually brought suit to compel eBay to do
a better job of blocking the sale of counterfeits. Tiffany’s claims of direct and
contributory trademark infringement, trademark dilution, and false advertising were all
rejected by the court. In the court’s view, eBay was undertaking significant measures
to reduce sales of counterfeits and was not in any way intentionally contributing to the
infringing sales, nor was its advertising deceptive. This decision placed the costly
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burden of policing online auction sites for counterfeits squarely on the backs of brand
owners. However, in a similar suit brought in France by LVMH against eBay, the French
court ruled in favor of LVMH and assessed damages of $200 million euro against eBay.
It remains to be seen whether these divergent legal approaches can be harmonized.
For many newly celebrated designers, licensing almost seems to promise “free money,” as
potential licensees materialize from around the world offering large lump-sum payments plus
royalties in exchange for the privilege of manufacturing items the designer is currently unable
or unwilling to manufacture anyway. Licensing is economically efficient because it allows each
party to specialize in a different part of the value chain. While the designer, the licensor,
focuses on innovative design and on effective marketing and public relations, the licensees
focus on efficient production and distribution.
Although licensing offers tremendous financing possibilities for growth, it also has its
downsides. Licensors who have granted too many licenses are sometimes felt to have lost
control of their brand. For example, Gucci at one point had granted licenses covering 22,000
product lines, including lines of disposable lighters and dog food, not to mention toilet
paper. When the last scion of the Gucci family, Maurizio Gucci, attempted to revive the firm’s
cachet in the early 1990s, he found it was necessary to sever relationships with licensees in
order to be taken seriously in the luxury marketplace. This strategy was later employed very
effectively by Gucci’s succeeding CEO, Domenico De Sole, who reacquired or terminated
scores of licenses, thereby reestablishing direct control over product quality and marketing.
The market soon rewarded Gucci by boosting its market valuation into the multibillion-dollar
range.
Many large brands therefore go through a phase in which they begin to buy back licenses to
achieve greater strategic control of their brands.
5.5. Anticounterfeiting
Counterfeiting has become a multibillion-dollar global scourge, infecting industries as diverse
as fashion, pharmaceuticals, and avionics. The counterfeiting industry is a branch of organized
crime and provides funding for international criminal and terrorist networks. Counterfeiting
occurs when a company makes a product that is indistinguishable from another company’s
product and also copies the other company’s trademark with deceptive intent. A classic
example would be a manufacturer of eyeglasses that sells frames with the “D&G” logo on
the side even though it has not been authorized to do so by Dolce & Gabbana, owners of
that trademark. Virtually every prestigious fashion company today is afflicted with some level
of counterfeiting and must devote time and financial resources to an anticounterfeiting
strategy. Often the fashion company’s legal counsel is asked to assume a leadership role in
organizing anticounterfeiting efforts. There are a number of legal measures that a firm can
employ to confront counterfeiters directly. Aggressive anticounterfeiting efforts will often
include the court-ordered seizure of a warehouse; such techniques are covered in detail in
Chapter 8.
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Fashion Law in Practice 3D Printing: Boon or Bane for Designers?
With the arrival of low-cost 3D printers on the design scene, fashion companies are
pondering the positive and negative implications. 3D printers use a process known as
“additive manufacturing” to “print” a 3D conceptual model developed via CAD
(computer-aided design) by laying down thin sheets of polymers or paper compounds.
Given the need to work with materials that adhere to each other, layer by layer, many 3D
objects currently are fairly rigid and not easily made into wearable clothing. However, the
technology already works well to develop molds for such objects as jewelry or customfitted shoes.
3D printers have already begun to be used in fashion. Designer Iris van Herpen started
showing 3D printed pieces in her “Crystallization” show during 2010 Amsterdam Fashion
week and continued to show 3D pieces in fashion shows at Paris and elsewhere in
collaboration with architects and 3D materials companies. Nike is making use of 3D
printing to develop prototypes and even manufacture athletic footwear and reportedly
used 3D techniques to develop the Vapor Laser Talon football shoe. Similarly, New Balance
is also 3D printing to manufacture custom-fit shoes for athletes. Continuing advances in
the materials available for 3D printing are expected by many to lead to 3D printers taking
their place alongside the sewing machine in apparel manufacturing so that 3D printed
clothing becomes commonplace.
However, 3D printers are also expected to be a boon for counterfeiters, especially of
fashion items like jewelry, accessories, and footwear. Counterfeiters will be much more
able to produce identical replicas by using a 3D scanner in combination with a 3D printer.
As 3D printers become household items, the average person will have the means
necessary to copy trendy fashion items, leading to a scenario that might be termed
“cottage counterfeiting.” This will place increased pressure on branded manufacturers of
luxury items to police counterfeiting and heighten the attention to legislative proposals
addressing design piracy.
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3D printing technology has been hailed as a new way to develop apparel prototypes and
products—but also as a potential boon to counterfeiters. (courtesy of wwd.)
6. Fashion Law Tips for Designers and Fashion Entrepreneurs
Master the basics of intellectual property protection (ideally, you should memorize the
initial diagram in Chapter 2 of this book). You must understand the pros and cons of
copyright, trademark, trade dress, utility patent, and design patent protection. Although
it is best to be counseled by an experienced fashion law attorney, your consultations with
this attorney will be more efficient and productive if you understand these concepts.
Moreover, if you are just starting out and lack funds, you may have to make the first
copyright and trademark filings on your own (but don’t do this for patents—they’re too
complicated). You can get good information at the official U.S. Patent and Trademark
website (uspto.gov) or at general fashion law websites (such as fashionlawcenter.com).
If you are a tiny micro-entrepreneur, don’t spend your seed money on legal filings or
lawsuits. If you are trying to launch a concept with a few thousand dollars, you may not
be ready to afford legal assistance for trademark or copyright filings. First, build a
prototype or find at least a single client, or simply raise more money. If you have the
good fortune to be able to start your business with substantial capital, follow the
opposite advice.
Think twice before you rush to incorporate or create an LLC. These can be excellent
decisions, but if you are a fashion student or struggling entrepreneur, do not spend your
first $2,000 creating an LLC. On the other hand, if you begin with significant personal
assets, such as a house, inheritance money, or investment account, then you should
shield these assets by creating a corporation or LLC.
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There is an art to knocking off in an acceptable manner. You may generally imitate
functional garment designs and constructions, but avoid making exact copies—especially
of copyrightable elements, such as original fabric prints, surface designs, and ornamental
elements and accessories. Do not even think about imitating a trademark or
incorporating another brand’s signature look (i.e., stay away from Gucci’s red-and-green
stripes or Bottega Veneta’s signature leather weave).
Unusual and quirky brand names are easier to trademark than are well-known or obvious
names, as is discussed in Chapter 2. Uniqlo, 7 For All Mankind, Spanx, and Lululemon are
all examples of brand names that were unlikely to infringe on existing trademarks. On the
other hand, obvious names, such as Cinderella, Soft Silk, and Tough Denim, would be
dangerous or even impossible to register and defend.
Get free legal advice if you have to, but be very wary about relying too much on it. Heed
the old saying: free legal advice is often worth just what you pay for it: zero. This is
especially true if you informally consult an inexperienced attorney or one without fashion
experience. However, if a reputable fashion attorney agrees to give you pro bono advice
(for example, through an organization such as Volunteer Lawyers for the Arts), this can
sometimes solve a problem or give you an understanding of your situation.
7. Tips for Law Students and Lawyers Wishing to Practice Fashion
Law
The boom in fashion law’s popularity has created a daunting job market for would-be fashion
lawyers. While it used to be possible to “luck” into a job as an assistant general counsel at a
fashion company, those days are long gone. Today, every fashion attorney is continually
solicited by law students and lawyers seeking a job that will enable them to develop a fashion
law practice. The situation has become akin to that found in show business or the fine arts—it
is no longer enough simply to be smart and well trained; today, every candidate must figure
out his or her own personal strategy to “break in to” the sector. Family and personal
connections, internships, and creative personal marketing strategies can all play a role. The
following options are suggested as starting points rather than as guaranteed strategies.
Fashion Law in Practice Where and How to Learn More About Fashion Law
Places to take a course on fashion law:
The Fashion Institute of Technology (FIT) offers a regular course on fashion law,
including one that students can take online from anywhere: www.fitnyc.edu. FIT also
offers a number of fashion business courses and programs that are relevant to fashion
law, for example, fashion design, licensing, sourcing, and retail practices.
Fordham Law School’s Fashion Law Institute offers regular “boot camps”—intensive
courses—on fashion law: www.fashionlawinstitute.com.
Cardozo Law School offers courses on fashion law as well as several LL.M. (Master of
Laws) programs in intellectual property.
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The New York Bar Associations (NYSBA, ABCNY, and NYCLA) all offer continuing legal
education (CLE) courses on fashion law.
Blogs or Internet sites on fashion law, such as:
Fashion Law Center (www.fashionlawcenter.com)—Edited by Prof. Guillermo Jimenez
of FIT.
Law of Fashion (www.lawoffashion.com)—Edited by fashion attorney Charles Colman
The Fashion Law (www.fashion-law.org)—Edited by fashion law expert Julie Zerbo
Case Clothesed for Fashion Law (www.caseclothesed.com)—Edited by students of
New York Law School
For law students:
Master intellectual property and contract law related to fashion. Take (and do well in)
every course your school offers on fashion law, intellectual property, contract drafting,
commercial sales, and international trade.
Learn about the fashion industry, and develop industry contacts. Subscribe to Women’s
Wear Daily and Vogue, read industry newsletters and blogs, take courses at fashion
colleges, and join fashion associations.
Specialize via writing, research, and internships. Develop a specialty (e.g., fashion
licensing, beauty law, jewelry copyrights, textiles imports) via writing for law reviews and
intern/law clerk opportunities.
For lawyers:
Join bar association committees on fashion law—This will expose you to practicing
fashion attorneys and to your competition in would-be fashion counsel.
Join fashion industry associations—You will learn about the industry and network with
possible clients.
Take courses at a fashion school—You will learn industry practices and network with
possible future clients.
Help write practice guides on fashion law—Legal publishers are going to develop a full
range of practice guides for fashion law; write one or offer to help a fashion law expert in
researching one.
Take and/or teach CLEs on fashion law—Every additional aspect of fashion law you learn
can offer a potential career opportunity.
Offer pro bono services to designers and small companies—A number of bar associations
and legal groups (e.g., Volunteer Lawyers for the Arts) offer pro bono legal services; or
you can post on Craigslist or informally let your fashion contacts know you are open to
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this; every pro bono case gives you experience, contacts, and a useful war story (but be
careful to make sure you have sufficient malpractice insurance).
For both:
Consider a lateral move into fields like licensing, consulting, advertising, trade, or finance
—If you really love fashion, you may enjoy working in the industry more than practicing
law. Use your legal background as an additional qualification to get an executive position
in a fashion company or one of the industries.
Consider fashion entrepreneurship—Start your own fashion company or partner with a
fashion entrepreneur or small startup; your legal acumen can provide invaluable input.
8. Summary of Key Points
1. Fashion law addresses the legal issues faced by fashion designers and firms. Intellectual
property issues are at the heart of fashion law, but the scope of fashion law also includes
licensing, anticounterfeiting, commercial agreements, fashion finance, employment law,
commercial leasing, customs, and international trade law.
2. Since most apparel is manufactured in outsourced factories, fashion companies must
understand trade law and customs, and they must further have in place programs to
reduce the likelihood of subcontracting to factories that use sweatshop labor.
3. A central question in fashion law is the legality of “knocking off” another company’s
products or designs. Some knockoffs are completely legal, others constitute
infringements of intellectual property, and yet others may constitute counterfeits, an
egregious form of infringement subject to criminal penalties.
4. Fashion designs (meaning the cut and construction of a garment or fashion item) are not
easily protectable under U.S. law. Recently, a number of bills have been introduced in the
U.S. Congress to extend copyright-style protection to fashion, but these have failed to
gain broad support.
5. With regard to fashion IP, copyright law may protect fabric designs, surface design,
images and photographs, sculptural accessories, and jewelry. Trademarks are very
important in fashion, especially given the common use on fashion items of prominent
logos or other brand signifiers (such as the Burberry plaid or Louis Vuitton monogram
print). Trade dress can protect fashion product features that have achieved secondary
meaning (recognition by the public as identifying the source of the product). Design
patents are relatively slow and expensive to obtain, but they allow fashion companies to
protect aesthetic, nonfunctional designs. Utility patents are often used by fashion
companies that develop new fabrics or new textiles processes.
6. Licensing is one of the basic business structures of the fashion industry. Recognized
brands and designers are able to expand quickly into new product categories and
territories by licensing their trademarks to specialized manufacturers and distributors in
exchange for royalties.
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7. Given the rise of global counterfeiting operations, virtually all famous brand fashion
companies employ a specialized staff with significant resources to battle counterfeiting.
[1] Kieselstein-Cord v. Accessories by Pearl, Inc., 632 F.2d 989 (2d Cir. 1980).
[2]
Knitwaves, Inc. v. Lollytogs, Ltd., 71 F.3d 996 (2d Cir. 1995).
[3]
Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 209 (1980).
[4]
See the complete discussion on licensing in fashion and the specifics of the legal dispute in
the Harvard Business School Case Study “Calvin Klein, Inc. v. Warnaco Group, Inc.” (2002) by
Susan Fournier and Jessica Boer, HBR Prod. #503011-PDF-ENG.
[5]
See companion case, Gonzalez, et al. v. Abercrombie & Fitch Stores, Inc., et al. (No. C032817).
[6] Crocs, Inc. v. International Trade Commission, No. 08-1596 (Fed. Cir. Feb. 24, 2010).
[7]
Tiffany Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010).
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Ash, Karen Artz , and Barbara Kolsun. “Fashion Licensing.” Fashion Law: A Guide for Designers, Fashion
Executives, and Attorneys. Ed. Guillermo C. Jimenez and Barbara Kolsun . London: Fairchild Publications, 2014.
115–138. Bloomsbury Fashion Central. Web. 5 Jun. 2023. .
Accessed from:
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Accessed on:
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Access provided by: Fashion Institute of Technology (FIT)
Copyright © Karen Ash . Barbara Kolsun . All rights reserved. Further reproduction or distribution is prohibited
without prior permission in writing from the publishers.
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Fashion Licensing
by Karen Artz Ash and Barbara Kolsun
DOI: 10.5040/9781501303678.ch-007
Page Range: 115–138
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1. Introduction
This chapter presents an overview of brand licensing and identifies the various issues that arise from these
contractual arrangements in the fashion industry. License agreements are absolutely vital to the fashion
industry, and it is no exaggeration to state that global fashion is built substantially on a foundation of brand
licenses. As we will see, license agreements must be living instruments. As a result, the best ones are carefully
designed to govern how people and companies work together over significant periods of time as true business
partners, united in the mutual goal of exploiting a common intellectual property right (usually, a fashion brand’s
trademark).
2. What Is a License?
A license is an agreement under which one party grants to another the right to exploit certain intellectual
property, subject to guidance, oversight, and other specific constraints. A licensor is the owner of the
intellectual property (or, in some cases, a related party authorized by the owner to exploit its IP rights).[321] The
licensor–licensee relationship should always be memorialized in a written contract. In the fashion industry, the
principal asset of most fashion houses is their trademark (and associated logos). Accordingly, in addition to
state law governing the formation and interpretation of the contract, the Lanham Act (i.e., Federal Trademark
Act) is also applicable.
3. Why License?
The licensing relationship should be mutually advantageous to the parties involved. Licensing allows a brand
owner to engage in controlled expansion without having to invest in costly infrastructure. Frequently, licensing
facilitates expansion into new product categories, increases market penetration, expands distribution channels,
and enhances brand awareness. For example, a clothing designer can seek brand extensions into fragrances,
cosmetics, jewelry, shoes, eyewear, accessories such as handbags, home collections, and lower-priced apparel
to create a complete “lifestyle brand.” These complementary extensions can enhance brand awareness,
supported by new points of sale in prime locations (e.g., accessories and perfumes, common objects of a
licensing brand extension strategy, generally appear on the first floor of department stores) and different
categories of stores (e.g., optical shops and home goods stores).
Licensees also benefit from licenses because they allow a party with infrastructure and expertise to market a
well-known brand. In many instances, marketing of a famous brand can enhance the licensee’s access to
retailers for other brands—although most licenses prohibit a licensee from making or marketing brands and
products that are directly competitive to the licensor’s brands or products.
Licenses are also beneficial for licensors looking to enter international markets or for licensees looking to
import foreign brands. Licensors may benefit from access to foreign distributors and retailers who have
established local commercial relationships and expertise. Likewise, local retailers may benefit from introducing
foreign brands and products to their home locations.
Strategic fashion licensing can be very profitable. Of the world’s top five licensors in 2011, fashion companies
were the second and third most profitable.[322] In 2011, retail sales of licensed fashion merchandise exceeded
$18 billion in the United States and Canada alone.[323] The best licensors succeed through strategic license
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agreements that increase brand exposure while minimizing business risks and costs.
4. Finding Licensing Opportunities: Licensing Agents
4.1. Licensing Agents—How Can They Help?
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Licensing agents can assist a brand owner in identifying and capitalizing on marketable opportunities via
licensing.[324] In the law, an “agent” is one who is empowered to act on behalf of another person or entity.[325]
In the context of licensing, agents may be called upon by licensors to:[326]
1. Develop a strategic licensing plan, including identifying promising retail channels and identifying target
licensees capable of assisting in the execution of the licensing objectives.
2. Identify and pursue opportunities with potential partners who have the proper expertise and market
positioning.
3. Provide guidelines on realistic financial goals.
4. Broker and negotiate licensing arrangements.
5. Monitor performance and assist in quality control.[327]
While agents are often called upon to help expand product scope and market penetration for young and
rapidly growing brands, agents may also help identify “out-of-the-box opportunities” for developed or wellknown brands. For example, a fine watch brand might be advised to target luxury automotive companies for
prestige product placement through branded interior clocks.
Fashion Law in Practice Licensing by Entertainers and Celebrities
Entertainment personalities commonly lend their names to fashion accessories and clothes. Jennifer Lopez (J
Lo) and Lauren Conrad are two notable examples of celebrities who lent their names and images to apparel
and accessories marketed exclusively through a single retailer, such as Kohl’s or JCPenney. Since celebrities
are usually represented by agents in their entertainment lives, they turn to agents to identify licensing
opportunities, to negotiate equitable terms, and to administer the day-to-day execution of licensing
relationships. Agents will make sure that new licensing opportunities do not conflict with existing ones and
that photographs or likenesses used to promote the products are commensurate with the star’s image and
persona.
Conversely, a prestige designer might be interested in exploiting down-market opportunities in the mass
channel, an option fraught with risk (since brand integrity is at stake). A wrong move with a poor partner can
compromise a prestige brand’s exclusivity. A good licensing agent will have the know-how to match the
licensor with the best possible licensee and thereafter assist with the negotiation of a successful license
agreement.
In choosing an agent, the licensor should first carefully consider whether the agent’s strategy is aligned with the
licensor’s. In many cases, the agent’s relationship with the brand owner is short term. Since agents do not get
paid until licenses are signed and revenue starts to flow, they have an incentive to quickly sign as many licenses
as possible. This can result in contracts with inappropriate partners or with less advantageous terms. This
approach raises the risk to the brand that the licensee may produce and sell substandard products that will
damage the brand’s image in the marketplace.
Business terms with a licensing agent vary according to the type of licensing arrangement that is ultimately
concluded. Typically, agents receive some portion of the royalties or profits generated through the licensing
facilitated by the agent. Since the agent’s commissions are usually based upon the services provided by the
agent, the licensor should clearly define the role and extent of the agent’s services.
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5. Negotiating a License
Key issues to keep in mind when negotiating a licensing contract are as follows.
5.1. Preparation
Get to know your licensing partner. Allow sufficient time in the negotiation to really get to know the other
party. Otherwise, after the contract is signed, you may find yourself locked into an underperforming
partnership for years.
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Address brand goals, strategic vision, and readiness to expand into other product lines.
Ascertain whether the licensing partner has the infrastructure to adequately support the license.
Investigate the other party’s financial situation to determine whether it has the resources to support the
alliance.
Research the other party’s reputation and track record in the industry.
Licensors should carefully investigate the market success of the candidate licensee’s other licensed
products.
Licensees should carefully evaluate the licensor’s brand strengths and potential weaknesses.
5.2. Post-Preparation, Pre-Negotiation
Since the typical licensing arrangement requires a multiyear commitment, any sign of antagonism in the initial
negotiations is an ominous warning sign. If the negotiations are difficult from the start, it may be prudent to
simply reevaluate the choice of licensing partner. As a general rule, neither party should seek a significant
concession without granting an equivalent concession. Business executives often want to close the deal quickly,
but it is important nonetheless to make every effort to ensure that the agreement clearly and precisely spells
out the parties’ mutual obligations and thereby protects each side’s interests. When negotiations hit a
roadblock, experienced professionals will calmly seek to discern the reasons underlying the other side’s
positions so as to identify a potential compromise that meets both sides’ legitimate business requirements.
Both sides should remain open to the need to modify terms in the proposed contract at the other side’s
request, subject to the caveat that the licensor should always maintain tight control over creative and
distribution channels to protect the integrity of the brand.
Fashion Law in Practice To Deal or Not to Deal?
Parties should be careful not to enter into unclear “deal memos” or letters of intent just to get things
started. Such vehicles are best used to propose terms but should clearly state that they do not intend to
constitute a final agreement. Used improperly, such agreements may be interpreted as binding and thereby
ultimately harm brand reputation and relations between the parties. For example, in World Championship
Wrestling, a deal memo did just that. While working on a complete marketing and distribution agreement,
the parties entered into the deal memo. Relations broke down, however, and the parties never reached
agreement on the full merchandising agreement. In the full agreement, the licensor wanted to limit
distribution channels to department stores, specialty stores, and mid-tier stores. However, the court found
the deal memo enforceable. Thus, sale of T-shirts bearing the licensor’s marks at flea markets, a distribution
channel harmful to the brand, was permissible. If the parties had taken the time to flesh out the agreement,
the licensor could have avoided the detrimental sales or had adequate grounds to bring an action for breach
of contract, trademark infringement, and other relevant claims.
Source: World Championship Wrestling, Inc. v. GJS Int’l, Inc., 13 F.Supp.2d 725 (N.D. Ill. 1998).
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6/5/23, 1:23 PM
Fashion Law
Licensing agreements are too important and too constraining to be rushed (see Fashion Law in Practice: To
Deal or Not to Deal?). A poorly drafted licensing agreement or a bad match can be detrimental in the long run
to a company’s brand image, sales, goodwill, and customer relations.
Negotiation Checklist
Draft a term sheet with key goals and responsibilities (with the caveat that it clearly states that it does
not represent the full or final agreement).
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Figure out how far you will bend to accommodate the other party if it does not agree to your proposed
terms.
Work with counsel to memorialize terms, understand the meaning of the terms, and help reach a final
agreement for execution.
6. Key Terms and Sample Clauses
The key terms in a licensing agreement are as follows.
6.1. Definitions
The Definitions section sets forth the meaning of the terms within the agreement. This is important because
parties may want to attribute specific meanings to terms that may otherwise be used differently in everyday
language.
6.2. Grant of License/Rights Retained by Licensor
The Grant of License/Rights Retained by Licensor section sets forth exactly what intellectual property is being
licensed. It should clearly define the rights granted, such as trademark, patent, copyright, trade secret,
manufacturing, and technical know-how. Note that a copyright owner maintains a “bundle” of exclusive rights,
[328] so any license concerning copyright should clearly define which rights are granted (these rights are
separable).
The grant section should clearly state which rights are retained by…