Red carpet darling and New York Fashion Week mainstay Christian Siriano has a reputation to uphold for "creating high- end dresses," which is precisely why the brand decided to pull out of a licensing deal late last year. According to a $10 million-plus lawsuit filed against Christian Siriano Holdings in November by wholesaler M&A Imports, the Project Runway alumni illegally walked back on the parties’ licensing deal, which gave M&A the right to slap the Siriano brand name all over its collection of "ladies’ dresses, girls’ dresses, intimates, and sleepwear."
Well, ahead of Sunday night’s Golden Globes, where his dresses will surely be a hit on the red carpet, Siriano has filed a lawsuit of his own, naming New York-based M&A in a trademark infringement suit in a New York federal court on Wednesday.
According to Siriano’s countersuit, it was not his brand that was in the wrong, but instead, it was M&A. Siriano alleges that the parties’ binding legal agreement gave Siriano "extensive approval rights and control over the nature and quality of the goods produced," including the right to approve (or reject) all pre-production samples for the Christian Siriano Just Love collection in advance.
Things started to go south, per Siriano, this past summer when M&A breached its end of the bargain by "producing garments based on unapproved samples or produced garments that were inferior in quality to previously approved samples." The garments at issue, according to Soriano's complaint, "were of extremely poor quality, including serious issues with incorrect stitching and hemming. [They] were also made with low-grade, low quality fabric inconsistent with the quality expected of the Siriano brand."
The inferior quality, says Siriano, "extended to the packaging of the dresses, which was ripped and damaged. Since the packaging often is a customer’s first interaction with a particular brand, the damaged state of the packaging was a particularly poor reflection of the Christian Siriano brand."
It was against this backdrop that Siriano alleges that he was within his full legal rights to call foul and end the licensing deal before its contractually-specified end date, which is set for later this year. Still yet, Siriano, who says he was never paid by M&A for a portion of the garments sold under the Christian Siriano Just Love name, is seeking injunctive relief in order to prevent M&A from further marketing and selling the line and monetary damages to the tune of at least $1 million.
Reward but Risk
It is not uncommon to see lawsuits arise as a result of licensing deals gone awry, at least, in part, because licensing – the practice of contracting with another party to obtain and use rights (intellectual property rights, in our case) in exchange for an agreed payment (a fee or royalty) – is a frequently-utilized tactic for brands to derive significant revenue and expand their footprints both in terms of geography and the expanse of their product offerings.
While licensing is a common industry tool, it has not always been this way. In fact, it largely commenced in the late 1940's, when Christian Dior began marketing Dior stockings in the United States, creating a system to license hosiery. The following year the Paris-based design house began to license its neckties. According to a statement from Dior, "all accessories followed, and within three years, this system was copied by all the couture houses."
Fast forward to 2016 and look to Calvin Klein, which reportedly derived about 90 percent of the $160 million a year in sales at Calvin Klein Inc. from licensing the designer's name to makers of underwear, jeans and perfume, products that the average consumer can afford much more easily than a runway garment.
The practice of licensing stands to benefit brands in a handful of meaningful ways, but it does not come without significant risks, including the tarnishing of the brand's name and reputation if the licensee-manufactured products fall below a certain level of quality and/or are sold through outlets unauthorized by the brand, which is exactly what happened to the Calvin Klein brand in the 1990's.
Licensing helped the New York-based brand gain an international platform and derive steady streams of revenue from products it would not otherwise be making in-house. Such success, however, was not without a bitter lawsuit with the brand's largest licensee, the Warnaco Group. (Warnaco obtained rights to the Calvin Klein brand in the 1990s).
The lawsuit, which Klein filed in May 2000, accused the Warnaco Group and its CEO, Linda Wachner, of diluting the Calvin Klein brand name by producing merchandise that was not authorized or approved by Calvin Klein, and distributing questionable quality-level Calvin Klein jeanswear through unapproved discount outlets, such as warehouse clubs, such as Costco and BJ’s.
The suit was settled in 2001, and while the agreement remains confidential, some of the terms have been made public. Warnaco was able to retain its Calvin Klein licenses (it is currently authorized to use upwards of 12 Calvin Klein trademarks), but Calvin Klein was able to regain some of the creative control he had lost in the original license.
More recently, New York-based Nanette Lepore filed suit against a licensee, Bluestar Alliance LLC, for allegedly selling “shoddy” products bearing her brand name, many of which quickly fell apart or in some cases even posed health risks to consumers, which were in direct conflict with the “unique vision and high quality standards” of her Nanette Lepore brand.
As indicated by the enduring embrace of licensing by brands and the seemingly consistent litigation that springs from this manufacturing/marketing technique, licensing is one trend in the fashion industry that is not going away any time soon.
* The case is Christian Siriano Holdings, LLC v. M&A Imports, Ltd., 1:18-cv-00055 (SDNY).