5 Lawsuits that Stand to Impact the Fashion Industry

Image: The RealReal


5 Lawsuits that Stand to Impact the Fashion Industry

Lawsuits that pit fashion brands and oftentimes, their intellectual property, against one another are filed almost every day (and in some cases, such as when sportswear giants are involved, these disputes are seemingly only increasing frequency). In light of the large number of ...

November 27, 2018 - By TFL

5 Lawsuits that Stand to Impact the Fashion Industry

Image : The RealReal

Case Documentation

5 Lawsuits that Stand to Impact the Fashion Industry

Lawsuits that pit fashion brands and oftentimes, their intellectual property, against one another are filed almost every day (and in some cases, such as when sportswear giants are involved, these disputes are seemingly only increasing frequency). In light of the large number of fashion-focused cases on courts’ dockets across the globe, which center not only on intellectual property but a host of other legal issues, as well, some certainly stand out more than others in terms of the potential ramifications they will have for the companies at play and the fashion industry at large. Others serve to capture the state of things in the industry as a whole.

Here are five currently pending or recently decided cases that are worth keeping a close eye on, as they could serve to impact – or otherwise speak to the state of – the fashion industry (and in some instances, pop culture, more generally) in a big way …

1. Chanel Versus Luxury Resale

On the heels of filing a strongly-worded lawsuit against What Goes Around Comes Around in March, taking issue with the way that the well-known vintage retailer has been selling a sizable array of second-hand Chanel goods (at least some of which are allegedly fake), Chanel has filed a similar suit against The RealReal. Earlier this month, the Paris-based design house accused The RealReal of trademark infringement and counterfeiting, asserting that the popular resale site is “selling counterfeit CHANEL handbags,” despite its claims that it “ensure[s] that every item on[its site] is 100% the real thing.”

Chanel also takes issue with what it says are efforts by both of the retailers to make it seem as though they maintain some sort of relationship with Chanel, which they do not. The Karl Lagerfeld-helmed fashion brand claims that the retailers know that “the value of its CHANEL-branded inventory and attraction for consumers is enhanced if consumers believe that Chanel has a business relationship or affiliation with [them].”

While many luxury brands have begun to embrace  resale sites, such as The RealReal, Chanel –  which does not offer any of its garments or handbags for sale online – has proven a marked outlier. Julie Wainwright, the founder of The RealReal, told TechCrunch last year that her company was actively “in talks with high-end brands like Louis Vuitton parent LVMH and Gucci owner Kering over potential partnerships.” However, she noted that at least one brand, whose name, she said, “begins with a C,” is particularly unhappy with the resale model and not looking to partner up any time soon.

The RealReal told TFL this month that Chanel’s new lawsuit “is nothing more than a thinly-veiled effort to stop consumers from reselling their authentic used goods, and to prevent customers from buying those goods at discounted prices.”

These lawsuits are interesting – and significant – not only because of their focus on the potential bounds of permissible uses of luxury brands’ names in the context of resale, particularly as luxury brands continue to police the usages of their names. But more than that, they are very relevant given the vastly growing resale market and the willingness of consumers and brands, alike, to engage with this ever-growing model.

2. Influencer(s) Gone Rogue

Fashion “it” boy Luka Sabbat is on the wrong end of a lawsuit for failing to live up to his influencer obligations. PR Consulting filed suit against 20-something Sabbat in late October, alleging it signed a $60,0000 deal with the young creative to promote Snap, Inc.’s Spectacles glasses on Instagram during the Spring/Summer 2019 fashion shows in September and October, and to wear the glasses in public during that time.

Sabbat allegedly accepted $45,000 up front and after he allegedly lived up to less than half of his contract obligations, the PR company filed suit, asserting breach of contract and unjust enrichment.

While this may be one of the first lawsuits filed against an influencer specifically for failing to uphold his end of an Instagram promotion contract, industry sources reveal that such breaches are commonplace among influencers and celebrities, alike, meaning that this very well might be the start of many similar lawsuits to come, especially since nearly all fashion and luxury brands are engaging in influencer marketing to some extent.

As for influencer contracts, particularly ones that call for social media activity, brands with smart legal teams have taken to including provisions in their influencer contracts that enable them to respond to — or maybe better yet, anticipate — such breaches by prorating payment (i.e., issuing payment after the fact that takes into account that only part of the contract was actually completed). This enables brands to pay less that the original contract price for services (since the contract was breached) and dodge unnecessary (and costly) lawsuits.

3. Lawsuits Over Paparazzi Images on Instagram Raise Right of Publicity Questions

Gigi Hadid revealed on Instagram recently that she is being “legally pursued” for posting a paparazzi photo of herself on Instagram. The reported legal action comes after the supermodel and her agency IMG Models were sued last fall for copyright infringement over an Instagram post, and also follows from a similar lawsuit, in which Khloe Kardashian was sued after she posted a paparazzi photo of herself on Instagram without licensing the image from the copyright holder.

These cases all center on violations of copyright law, but putting copyright aside, there is a larger question at issue: at what point does a celebrity’s right to control how others’ profit from his/her likeness extend to paparazzi photos? In other words, is there a right of publicity case to be made against photo agencies/paparazzi more generally?

One specific case – which football star Odell Beckham Jr., filed suit against photographer Miles Diggs and California-based Splash News & Picture Agency for allegedly attempting to “extort” him into paying $40,000 after he posted a photo of himself on his Instagram account – should prove telling. Beckham argues that “the only reason that the photos [at issue] have any value is because they depict [him].” It will be interesting to see how the court balancing celebrities’ right to control the commercial use of their images with the newsworthiness/public interest elements that automatically come into play when public figures are involved.

4. Converse & “One of the Hottest ITC Trademark Cases Ever”

Almost exactly 4 years after Converse filed 22 separate trademark infringement and dilution, and unfair competition lawsuits against Skechers, Walmart, Tory Burch, H&M, and Ralph Lauren, among other brands for allegedly infringing the trade dress-protected design of its signature Chuck Taylor shoe, and initiated a separate proceeding, what many have called “one of the most hotly-litigated trademark cases ever decided by the International Trade Commission” (“ITC”), the Federal Circuit has sounded off and sided with the Nike-owned sneaker company.

The Federal Circuit’s 3-judge panel overturned the ITC’s findings, holding that “the ITC erred in applying the wrong standard in aspects of both its invalidity and infringement determinations.” After setting out the proper tests, the Federal Circuit sent the case back to the ITC to decide the case again using those particular tests.

The case is striking due to the new test that the Federal Circuit fashioned for secondary meaning and the limits it set for asserting trade dress infringement. Beyond that, though, the impending ITC decision very well may prompt brands to rely more heavily on the federal agency to fight fakes.

It is worth noting that the ITC does not provide an all-encompassing solution to the fake trade. While the agency has the power to keep intellectual property infringing products from being imported into the U.S., a swiftly growing number of counterfeit and otherwise infringing goods regularly arrive in the U.S. via express courier and international mail, thanks to individual consumer orders placed on Amazon and other counterfeit-selling sites, and thereby, go largely undetected by law enforcement, which tends to focus more regularly on large-scale shipments through U.S. ports.

5. The #MeToo Movement

Both Nike and Etro are currently facing lawsuit centering on allegations of gender-based discrimination and harassment in the workplace.

This summer, Nike was hit with a headline-making lawsuit, which accused it of systematically failing to address formal sexual harassment complaints from female employees, and creating a hostile work environment for women, who are paid less and given fewer opportunities for advancement than their male colleagues despite comparable experience and performance.

Nike has since responded by asking a federal court in Oregon to dismiss a number of the claims cited by former Nike employees Kelly Cahill and Sara Johnston, who filed a potential class action suit against it in August.  In addition to asking the court to refrain from certifying the potential class action and thereby, preventing other similarly situated women from joining in the case, which currently includes 7 named plaintiffs, including both former and current Nike employees, Nike asserts that Cahill and Johnston “have not alleged any factual predicate that makes [their] claims plausible or warrants imposing upon Nike and the court the considerable burden and expense of litigating their overbroad claims.”

Meanwhile, the American arm of Italian design house Etro was also named in a discrimination suit filed by its former longtime HR director, Kim Weiner, who claims that the brand has maintained a “discriminatory animus, [which] has festered among the highest levels of management and plagued [its] employees” for more than two decades.

According to Ms. Weiner’s complaint, while Etro may have a “glamorous public image” and a practice of “publicly supporting women’s causes to promote its brand, including organizations aimed at ending gender-based discrimination,” in reality, Etro USA’s own female employees are regularly paid considerably less than their male counterparts in comparable roles. Even worse, the company, itself, has allegedly engaged in “severe and pervasive … race-based harassment,” with Weiner going so far as to accuse the brand of “carefully designing a plot to create a hostile work environment” in order to rid its staff of African American employees.

Etro has denied all of the allegations and asked the court to toss out case because Weiner not only “failed to state a claim upon which relief can be granted,” she “failed to exercise reasonable diligence in seeking employment since her discharge from Etro.” Because Weiner “has failed to mitigate her damages, if any,” Etro argues, her “claims are barred, in whole or in part.”

The lawsuits come as Hollywood has been busy making moves to out some of the most egregious predators in its ranks, including film executive Harvey Weinstein. While the fashion industry is certainly talking about the #MeToo movement and the role of sexual harassment and other abuses that run rampant in the industry, as a whole, fashion has been relatively slow to cut ties with some of its most notorious (alleged) predators, whether it be photographers Terry Richardson and Bruce Weber (who, despite a pending sexual harassment lawsuit, has already been welcomed back into the fold) or executives like Topshop owner Phillip Green.

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