In one of the uglier lawsuits of the past couple of years, the MTO Shahmaghsoudi School of Islamic Sufism took on Roberto Cavalli, after the Italian design house reportedly used the school’s trademarked logo in one of its Just Cavalli fragrance campaigns. The MTO Shahmaghsoudi School filed a trademark-based lawsuit in federal court in Los Angeles in July 2014 and on the heels of filing, it staged an array of worldwide protests in connection with Cavalli’s use of its sacred symbol.

The school alleged in its complaint that in addition to trademark infringement, the Italian design house, which was founded in Florence in 1970, exploited its “Sacred Emblem in advertising campaigns in which the symbol appears to have been tattooed onto unclothed models … and recreating the shape of the Sacred Emblem out of intertwined snakes, suggesting a reference to the iconography of original sin. This is completely opposing the [MTO’s] beliefs and goodwill symbolized by the Sacred Emblem.”

A month later, Cavalli was named in an unrelated lawsuit filed by a group of Northern California-based graffiti artists, who sued the fashion house for allegedly copying one of their famed murals and incorporating it into the brand’s “Graffiti” collection. Jason Williams, Victor Chapa, and Jeffrey Rubin (who go by Revok, Reyes and Steel, respectively) filed suit in the Central District of California court, claiming that Roberto Cavalli infringed their copyrights and violated the Lanham Act, stemming from a work they completed in San Francisco’s Mission district in 2012.

Their complaint states that in March 2015, “Just Cavalli introduced a clothing and accessories collection in which every square inch of every piece (including clothing, bags, backpacks, and shoes) was adorned with graffiti art.” The court documents go on to state: “If this literal misappropriation was not bad enough, Cavalli sometimes chose to do its own painting over that of the artists — superimposing the Just Cavalli name in spray-paint style as if were part of the original work. Sometimes, Cavalli added what appears to be a signature, creating the false impression that Roberto Cavalli himself was the artist.”

Well, according to the docket for the U.S. District Court for the Central District of California, where the two lawsuits were filed, Cavalli has settled both matters out of court. Graffiti artists Revok, Reyes and Steel filed to voluntarily dismiss their suit against the Italian design house in January and the MTO Shahmaghsoudi School filed to voluntarily dismiss their case late last month and Judge Christina Synder ordered for its dismissal this month.

While the settlement terms are confidential, we do know that in terms of the MTO Shahmaghsoudi School’s case, it seems that Cavalli has learned its lesson. On the heels MTO’s lawsuit, Cavalli refrained from using the “sacred symbol” in one of its subsequent ad campaigns. The “Just Gold” fragrance’s campaign, which was released several months after the MTO filed suit, features the same models and employs the same general look and feel as the problematic “Just Cavalli” ad, but the brand very noticeably does not utilize the MTO-looking trademark in the campaign at all. So, that is a win for the MTO.

Ugly Lawsuits Bring Bad Press

Unfortunately for Cavalli, while these matters were quietly settled before a messy trial could occur in either case, quite a bit of damage was already done when the lawsuits went public, particularly given the strongly-worded nature of both parties’ complaints and the widespread attention that the MTO drew to its lawsuit, in particular. Negative press in fashion – like any field – can be derived from an array of circumstances, from creative directors acting out to accusations of unethical labor practices. Interestingly, lawsuits, including accusations of copying, as we have at issue here, also tend to be a frequent source of bad PR for fashion brands.

While brand executives do not often automatically view the role of negative press as a harm that is as detrimental as a supply chain problem or a violation of law, it is, in fact, a serious business risk that must be taken into consideration on a consistent basis – particularly given the frequency with which information is widely disseminated on a large scale by way of social media.

Why is this so important in high fashion? Well, businesses with favorable reputations are perceived as providing more value, which often allows them to charge a premium. In the upper echelons of fashion, where consumers are largely buying into a brand’s image and where bags cost at least $1,000 and dresses even more, maintaining a positive brand image is absolutely essential.

With this in mind, it is in a brand’s best interest to manage reputational risk in order to avoid the actual fruition of such risks whenever possible. A company’s overall reputation is a function of its reputation among its various stakeholders (investors, customers, suppliers, employees, regulators, the communities in which the brand operates, etc.) in specific categories (think: product quality, corporate governance, employee relations, customer service, intellectual property, financial performance, handling of environmental and social issues). A strong positive reputation among stakeholders across multiple categories will result in a strong positive reputation for the company overall, and vice versa, which is clearly linked to sales and revenue. And right now, with sales growth at a low and the level of consumer fatigue at a relative high, brands simply cannot afford a bunch of bad press.