Four months after filing for bankruptcy protection, Forever 21 has reached a tentative deal. According to a filing with a U.S. bankruptcy court in Delaware, the fast fashion giant is seeking approval to name Simon Property Group, Brookfield Property Partners, and Authentic Brands “as the lead, stalking-horse bidders in an auction” for its assets, per CNBC. The deal, which is subject to rival bids until Friday, will see the three retail-centric companies pay $81 million in exchange for assets, including those of Forever 21 subsidiary brands, such as Riley Rose, and its e-commerce platforms.  

The consortium of companies vying for Forever 21 – two of which, Simon Property Group and Brookfield Property Partners, are Forever 21’s biggest landlords and among its largest creditors – is certainly an interesting one. CNBC notes that in 2016, Simon Property Group and mall owner General Growth Properties, which is now owned by Brookfield Property Partners, “teamed up to rescue embattled teen apparel retailer Aeropostale” after it filed for bankruptcy. “The two were part of a group that ultimately won an auction to buy the Aeropostale brand out of bankruptcy court, salvaging its real estate.” 

Meanwhile, Authentic Brands – the brand management firm that maintains a wide roster of fashion and apparel companies, ranging from Juicy Couture and Judith Leiber to Jones New York, Volcom, and Aeropostale – made headlines recently when it won a battle for the assets of ailing department store chain Barneys New York. As part of a $270 million-plus deal in October 2019, Authentic Brands and B. Riley Financial Inc. acquired Barneys New York’s assets, and entered into a subsequent arrangement in furtherance of which Hudson’s Bay Co. agreed to license the iconic Barneys name and other intellectual property for use in connection with its Saks Fifth Avenue business.  

Launched in 1984 by Korean businessman Do Won Chang, Forever 21 helped pioneer the early wave of fast fashion, bringing trendy, runway-inspired garments and accessories to consumers for cheap. The privately-held Los Angeles-headquartered company swiftly transformed into a retail force, with a sweeping real estate footprint – i.e., more than 800 stores – in the U.S. and beyond, and annual revenues reaching $4.4 billion at its peak in 2015.  

However, as of last year, the reality for the once burgeoning fast fashion titan was starkly different. In its September 2019 filing with a bankruptcy court in Delaware, Forever 21 revealed that both its assets and liabilities are in the range of $1 billion to $10 billion in light of the rise and steady dominance of online shopping, which has significantly cut foot traffic to malls and brick-and-mortar stores. 

“High debt levels and rent costs have burdened traditional retailers” like Forever 21, CNN stated in September. While CNBC noted that an emphasis on more sustainable shopping habits has “caught on with the younger generation, who put increased focus on the impact of the clothes they buy on the environment.” 

Still yet, as we have noted in connection with Forever 21’s fall from grace, a handful of newer online fast fashion retailers, such as digitally native entities like Fashion Nova, Missguided, and Boohoo, have been beating the early fast fashion giants at their own game. Manchester, UK-headquartered Boohoo, for instance – which is known for “always bringing something new with over 100 new products dropping on the daily, bringing you the latest looks for less,” according to its website – revealed this fall that its annual revenue was growing faster than it anticipated, while fellow British brand Missguided also pointed to rising sales.  

Since its bankruptcy filing in September, Forever 21  has “struggled to raise money to exit bankruptcy,” per Bloomberg, “with potential lenders and buyers balking because of poor sales and the founding Chang family’s insistence on maintaining control.”

In a statement on Monday, a rep for the retailer said, “Once approved, the agreement [with Simon, Brookfield, and Authentic] will allow Forever 21 to come out of bankruptcy, keeping its headquarters, stores and E-commerce operations open, providing fashions and trends that customers know and love for years to come.”

In July 2019, just a month after Virgil Abloh sent his Spring/Summer 2018 collection for Off-White down a dimly-lit runway at the Pitti Palace in Florence, complete with all of its usual trademark touches (zip ties, quotation marks, logos, etc.), Helly Hansen filed suit against Off-White. The Norwegian sportswear brand, which has operated in the U.S. for more than 40 years, argued in its complaint that Abloh’s wildly popular brand had “adopted a logo that is confusingly similar to its HH Stripe Logo,” and had been using that logo on goods that are “the same and/or similar to the goods/services offered by Helly Hansen.” 

Far from being a coincidence, Helly Hansen claimed that Off-White adopted a lookalike striped logo that mirrored the one that Helly Hansen has been putting on its famed outdoors gear for decades “with knowledge of, and the intent … to create a false suggestion of an affiliation or connection between [itself] and Helly Hansen, where none exists.” Alternatively, Hansen argued that Abloh’s brand adopted a lookalike pattern in order “to trade off the goodwill of Helly Hansen and its HH Stripe [mark],” which consists of “parallel striping of white and another contrasting color that appears on the shoulder and sleeve of shirts and on the outer seam of the pants.”

Setting the stage in an amended complaint in February 2019, Hansen pointed to Off-White and Abloh’s alleged “history of infringement and unfair business practices.” These allegations took the form of a laundry list of instances in which Abloh and Off-White have been accused of hijacking others’ designs. For instance, Hansen asserted that “in March 2018, [Abloh] was accused of ‘knocking off the shoe designs of Amsterdam Warehouse co-founder, Elisa van Joolen.” After that, in May 2018, “the Off-White founder was ‘in the spotlight for copying a chair design that is part of [his collaboration] with IKEA.’” 

Hansen continued: “In June 2018, in an article entitled, ‘Another Day, Another Stolen Design by Virgil Abloh,’ [Abloh] was accused of ‘copying a triangular hoodie design’ from Japanese label ANREALAGE.’” Moreover … “less than a month later, Mr. Abloh was accused of ‘swiping’ “the ‘crossed arrows’ logo used by Off-White [from a logo] . . . designed in 1965 by Kinner, Calvert & Associates, a UK-based design group.” And still yet, Hansen asserted that “in August 2018, [Abloh] was also accused of ‘copying graphic designer AG Fronzoni’s work from 1966’ in his menswear collection.”

Still going, Hansen claimed that “Abloh has even confirmed that his first solo foray into fashion” – which came by way of Off-White’s predecessor company, Pyrex Vision – “was shuttered because ‘[he] legally can’t use the name ‘Pyrex’ anymore [due to trademark issues].’”

Against that background, Hansen argued that Off-White “adopted a logo that is confusingly similar to Helly Hansen’s HH Stripe Logo,” and was using it on the same types of products that Hansen sells. As a result, the 144-year old outdoor apparel maker set forth claims of trademark infringement, and unfair competition against Off-White, and accused the brand of violating the Illinois Uniform Deceptive Trade Practices Act, all while seeking monetary damages, and preliminary and permanent injunctive relief, which would serve to bar Off-White from using the allegedly infringing logo. 

Now, a year and a half after Hansen first filed suit, counsel for the two parties have told an Illinois federal judge in a joint notice and motion that they have “agreed in principle to settle” the case, and “are in the process of preparing a Settlement Agreement and Stipulated Dismissal,” which they intend to finalize in the near future.

The settlement – which will almost certainly remain confidential – will serve to put the lawsuit to bed. However, there is more to the parties’ fight than that: also in the mix are separate but related trademark proceedings underway before the U.S. Patent and Trademark Office’s Trademark Trial and Appeal Board (“TTAB”). 

Shortly after Helly Hansen filed suit against Off-White in July 2018, counsel for Abloh’s brand initiated a proceeding with the TTAB in an attempt to cancel one of Helly Hansen’s federal trademark registrations. According to its December 2018 filing, Off-White asserted that Hansen’s registration for “parallel striping of white and another contrasting color [that] appears on the shoulder and sleeve of shirts and on the outer seam of the pants” for use on clothing – should be “partially cancelled or restricted” because it is “ambiguous, vague, and overly broad.”  

In its filing, Off-White pushed for the TTAB to force Helly Hansen to amend the description of its trademark as reflected in the registration to consist exclusively of “parallel horizontal striping of white and another contrasting color [that] appears on the shoulder and sleeve of shirts and on the outer seam of pants.” Such a modification would “obviate” the likelihood of confusion claims that Hansen made in its lawsuit against Off-White, counsel for Off-White asserted.

A few months later, Helly Hansen responded by filing a cancellation proceeding of its own, taking issue with Off-White’s trademark registration for “fifteen alternating parallel diagonal lines of varying sizes forming the shape of a rectangle” for use in connection with “retail store services featuring apparel, footwear, fashion and clothing accessories,” among other things. According to Hansen, Off-White’s striped trademark “so resembles [Hansen’s] marks as to be likely, when used in connection with [Off-White] goods and services, to cause confusion, mistake, or deception [among consumers] … therefore, creating a confusingly similar commercial impression.” 

Ultimately, both TTAB proceedings were suspended pending the outcome of the lawsuit that Helly Hansen had filed against Off-White. While it is not yet clear whether the terms of the parties’ impending settlement agreement in the infringement case will extend to their rival TTAB proceedings, if the outcomes in similar cases are any indication, they very well might. 

* The case is Helly Hansen AS v. Off-White LLC, 1:18-cv-04755 (N.D. Ill).

For nearly 25 years, adidas and H&M have been locked in a legal battle over stripes. Back in 1997, the Swedish fast fashion giant caught the eye of the German sportswear titan thanks to its offering of blue, marigold, and rust-hued athletic wares emblazoned with two parallel vertical stripes on the sleeves of t-shirts and the sides of shorts and pants legs. Thanks to its use of the stripes, H&M was running afoul of its exclusive rights in its famous three-stripe trademark, adidas would argue in a lawsuit initiated in the Netherlands. 

At the heart of adidas’s suit was its argument that Defendants H&M, Marca Moda, C&A, and Vendex infringed its Benelux trademark registrations, as their use of stripes on clothing was likely to confuse consumers about the source of the non-adidas products. In response, H&M and the other defendants claimed that the stripes on their clothing were not meant to serve as trademarks and indicate the source of the clothing in the same way as a brand name or traditional logo. Instead, they asserted that their use of stripes was purely decorative, and thus, protected against infringement liability, particularly as certain common signs, including striped patterns, should be available for anyone to use in a decorative capacity. 

Adidas’s suit would turn out to be anything but an open-and-shut infringement case; it would take the form of a lengthy battle, one that has forced Dutch courts – as well as the European Union’s highest court, the Court of Justice (“CJEU”) – to help determine whether the sportswear company can legally bar H&M and other retailers (the latter of which ultimately ended up settling out of court, leaving H&M as the sole defendant) from using “identical or similarly” striped marks on their apparel offerings.

Following several rounds before lower courts in the Netherlands (the first of which, the District Court in Breda, sided with adidas and ordered the fast fashion brand to stop selling the stripe-bearing clothing at issue), the Dutch Supreme Court looked to the CJEU for guidance. The CJEU was tasked with a technical question: should H&M’s argument about the requirement of availability of generic patterns be taken into account when “assessing the scope of protection of a trademark that is inherently non-distinctive or descriptive, but registrable as a result of distinctiveness acquired through use”? 

In an April 2008 decision, the CJEU sided with adidas. The court concluded that while a trademark holder cannot prohibit a third party “from using descriptive indications in accordance with honest practices,” H&M’s argument that common patterns must be available to all retailers is not one of the relevant factors that should be taken into account in the assessment of the likelihood of confusion, which is the core element in a trademark infringement inquiry. “The answer to that question,” the court held, “must be based on the public’s perception of the goods [bearing adidas’s trademark] on the one hand and the [defendants’ striped] goods on the other.”  

The court did not decide “whether the average consumer may be mistaken as to the origin of [H&M’s] sports and leisure garments featuring stripe motifs in the same places and with the same characteristics as the stripes motif of adidas.” That would be for the lower court to determine.

H&M’s “Work Out” collection

Speaking at the time, adidas’s associate general counsel Tim Behean revealed that at least some of the danger in H&M’s striped offerings stemmed from the fact that adidas’s three-stripe trademark is one of the most famous marks in the world. “The thing about famous trademarks is that they make strong images in people minds,” he told the New York Times, “but when consumers see imitations without the ability to compare products side by side, there is a resonance, there is a recognition: ‘Oh, is that Adidas?’“

Back before the district court for The Hague in November 2017, adidas landed another win in its fight over stripes. According to the court, its use of a two-stripe design infringed on adidas’s three-stripe mark, which it stated is a well known trademark among a significant portion of the consuming public. 

The court’s decision was significantly criticized at the time by brands and lawyers, alike, with Baker & McKenzie lawyer Michael Hart, for instance, telling the New York Times that “the seriousness of this issue is that with a ruling like that there may be companies that put a stripe or two stripes and get a warning letter from adidas and don’t have the resources or will to get involved in a legal battle.” A spokesman for adidas asserted, however, that the company was “not seeking to prevent the use of decoration but the use of striped markings that confuse consumers, or cause them to make a link with our company and its famous trademark.”

As for the duration of adidas’ victory, it was relatively short-lived. In light of an appeal by H&M, The Hague Court of Appeal overturned the decision, pointing to differences between the two parties’ usages of stripes. According to the court, initially adidas sought to prohibit “the use of two color-contrasting parallel vertical stripes.” In response to pushback from H&M, which argued that such a prohibition was too broad, adidas amended this so that it only claimed the right to prevent “the use of stripes of equal width that run parallel to each other at a distance that visually looks more or less as wide as the width of the stripes themselves.”

With this in mind, the appeals court held that it is “of the opinion that H&M has not infringed [adidas’s mark] by way of its ‘Work Out’ clothing.”

More than that, the court stated that the results of market research reports produced in connection with the case “are not sufficient reason to assume that there is a likelihood of confusion” among consumers as to the source of H&M’s striped apparel. One report, for instance, which was provided by H&M (and contested by adidas) revealed that “only 10% of [the consumers who were surveyed] named adidas after [viewing] H&M’s [striped] Work Out clothing.”

With such a lack of consumer confusion in mind, and given that “there must be a real likelihood of confusion on the part of the average informed, circumspect and observant ordinary consumer of the goods or services in question, in this case, now that it concerns (sports) clothing, the general public, The Hague Court of Appeal sided with H&M and has ordered adidas to pay €80,745 to cover the retailer’s legal costs for a portion of the proceedings. While adidas “has lodged an objection against the costs claimed by H&M for the appeal,” according to the court, it is unclear as of now whether it will appeal the merits of the court’s decision.  

The parties’ fight is one in a long line of global efforts by adidas to police allegedly infringing uses of its valuable three-stripe trademark, which have seen it initiate trademark infringement lawsuits (and opposition proceedings) against Shoe Branding Europe, football club FC BarcelonaItalian fashion brand Ballyfellow footwear brand ECCOSkechersMarc Jacobs, and Elon Musk’s Tesla, among others, a pattern that has prompted outrage from trademark scholars, practitioners, and brands, alike.

A handful of the buzzy products of Peter Thomas Roth are at the center of a strongly-worded lawsuit, one that accuses the New York-based skincare company – which boasts about its “richly nourishing and technologically advanced” offerings – of peddling “pseudoscience” and falsifying the effectiveness of its hyaluronic acid-soaked skin creams and rose stem cell-formulated face masks in an attempt to stand out in the “fiercely competitive” $135 billion-plus skincare market and cater to the rising demand for anti-aging products among consumers. 

According to the complaint that Peter Thomas Roth, LLC (“Roth”) customers Kari Miller and Samantha Paulson filed in a California state court in December 2018, Roth is running afoul of the law by “making false claims about the capabilities of [its] products,” at least some of which are among its best-selling products on Sephora’s website. The plaintiffs assert that “even in an industry known for hype,” Roth’s “outrageous marketing practices stand out among those of their competitors,” as Roth’s “claims about their [products] are not just hype; rather, they are demonstrably false.” 

Specifically, Miller and Paulson state that two of Roth’s product lines, the influencer-endorsed “Rose Stem Cell” line and the “Water Drench” line, are at the center of their suit, as both lines have allegedly been marketed and sold in conjunction with “false and deceptive representations [about their] active ingredients” – rose stem cells and hyaluronic acid, respectively – that have enabled Roth to “profit enormously … while its customers are left with overpriced, ineffective skin care products.” 

For instance the plaintiffs assert that in connection with its “Water Drench” line of products Roth “represents that the active ingredient, hyaluronic acid, will draw moisture from the atmosphere into the user’s skin, and will hold 1,000 times its weight in water for up to 72 hours.” This is impossible, they claim, as “hyaluronic acid is incapable of absorbing anywhere near 1,000 times its weight in water, even when it is in its anhydrous (i.e., waterless; completely dry) form.” 

The judge notes that Roth “softened the claim with the words ‘up to’” in connection with the absorption power of the hyaluronic acid, but he also claims that “subtle qualifications do not overcome the thrust of the ad,” which is that “the ad was one thousand times its weight in water.”

As for Roth’s line of “Rose Stem Cell” products, which the brand claims are “are capable of repairing, regenerating, and rejuvenating human skin” and “stimulating cellular turnover” as a result of the inclusion of rose stem cells, the plaintiffs argue that “there is absolutely no evidence that rosestem cells can provide such benefits.” They allege that Roth is clearly “attempting to capitalize on the recent media attention that has been given to medical research of human stem cells, with the goal of confusing consumers and causing them to erroneously believe that they will receive significant health benefits by using the Rose Stem Cell Products.” 

Such “pseudo-science” has enabled Roth to sell “over-priced products to a growing market for skin care products,” while enjoying an “unlawful advantage over [its] competitors,” the plaintiffs assert in the suit, which has since been transferred from California state court to federal court. 

In a couple of recent developments in the case, Judge William Alsup of the U.S. District Court for the Northern District of California denied the plaintiffs’ bid for class action approval, a move that would enable other individuals who have purchased the allegedly misrepresented products to join in their suit and any ultimate settlement sum. According to Judge Alsup’s January 22 decision, “The plaintiffs can obtain their requested liability determination [for their false advertising claims] and statewide injunction against Roth’s challenged ads without certifying a class.”

Meanwhile, in a separate January 22 order, the judge decided on Roth’s motion for summary judgment, refusing (for the most part) to issue a final decision resolving the plaintiffs’ claims ahead of trial because there are still issues of fact to be determined, namely whether Roth’s marketing claims are deceptive. 

According to Judge Alsup, it is unclear how a reasonable consumer might view the marketing claims that Roth uses in connection with its Rose Stem Cell Mask – namely, the labels, “rose stem cells,” “cutting edge bio-technology,” “bio-repair,” “regenerates,” and “rejuvenates.” While “some reasonable consumers might interpret this [language] as mere puffery,” and thus, not objective, actionable statements, “others could sensibly conclude that rose stem cells actually repair human skin,” which the plaintiffs argue is untrue, thereby, making the marketing claims deceptive. 

In terms of Roth’s “Water Drench” line of products, the judge states that the plaintiffs “contend the reasonable consumer would believe that hyaluronic acid actually can attract and retain one thousand times its weight in water,” and in fact, “a jury could find that, based on the ad, reasonable consumers would expect that hyaluronic acid absorbs and retains about one thousand times its weight in water.” As such, these issues must go before a jury, which, Judge Alsup says “will look forward to an in-court demonstration in which a certain amount of hyaluronic acid is placed in a beaker, one thousand times that weight in water is placed in another beaker, and the contents are combined, all watching to see if all the water will be absorbed.” 

*The case is Kari Miller, et al., v. Peter Thomas Roth, LLC, et al., 3:19-cv-00698 (N.D.Cal.)

Several years after LVMH Moët Hennessy Louis Vuitton chief financial officer Jean-Jacques Guiony told investors that there is “no way we can do business with [Amazon] for the time being,” stating that the “business of Amazon does not fit with LVMH full stop and it does not fit with our brands,” which include fashion houses like Louis Vuitton, Dior, Givenchy, Celine, and Fendi, among others, the Paris-based luxury conglomerate’s chairman drove that point home on Tuesday without mincing words about it. “If they change the business model, I don’t know, but with the existing business model, there is no way we can do business with them for the time being.”

In an earnings conference call on the heels of the release of LVMH’s “record” fourth quarter and full year results, LVMH chair Bernard Arnault said that it is “absolutely right” that his sweeping luxury goods venture will not be part of the high-end platform that Amazon is said to be readying, and pointed to the prevalence of “counterfeits” as a key part of the issue.  

Speaking specifically to Amazon, which he called “an outstanding company,” Arnault asserted that where the $1 trillion e-commerce giant makes money is its vast third-party marketplace of products, in which “they don’t own the stock, [and] they don’t own the inventory.” Instead, “They use their database to provide customers to other merchants that take a commission, and that … is how they sell counterfeits.” 

The sale of counterfeit goods – i.e., products that bear a trademark that is “identical with, or substantially indistinguishable from” another party’s registered trademark and which is used on the same type of goods as the rightsholder’s mark is registered – creates “a connection to organized crime,” Arnault went on to assert, “because when you have a site selling counterfeit products, this is always financed either by organized crime or it ends up the pockets of terrorism.” 

“So, is it right that big websites should make money being associated with organized crime?,” he asks. “I don’t know what you think. I find this shocking. And so there’s – we have to do a lot if we want to avoid the sale of counterfeit product.” 

Arnault’s strong comments are hardly the first time that Amazon has faced pushback over the saturation of its marketplace with counterfeit or otherwise infringing goods. Just this month, Peter Navarro, the Director of the National Trade Council at the White House, speaking on the heels of the signing of the first phase of the U.S.-China trade deal, stated that sites like “Amazon and eBay” are “making a bunch of money … selling this counterfeit stuff,” without “accepting [their] full responsibility” for such sales.

Even more recently, the U.S. government released its highly-anticipated report on the massive global trade in counterfeit goods. While it does not call out Amazon by name, the 54-page document drafted by the U.S. Department of Homeland Security (“DHS”)’s Office of Strategy, Policy, and Plans places significant blame on “online third-party marketplaces” that sell counterfeit goods “alongside authentic products,” and that “must take a more active role in monitoring, detecting, and preventing trafficking in counterfeit and pirated goods.” 

As for whether there is any merit to speculation that LVMH – fresh from its acquisition agreement with Tiffany & Co. – might be looking to add Prada to its arsenal of brands, “as the Italian press seems to indicate,” as a reporter from French publication Le Monde asked on the call on Tuesday, Arnault revealed that “the Italian press lends me many ideas,” but failed to confirm such reports.