In addition to the par-for-the-course slew of lawsuits filed this year, there have been a number of legal trends and developments within the fashion sphere that warrant some attention. Whether it be the continued reliance on design patents within the U.S. or the rise in intellectual property infringement cases being pursued in China, there has been no shortage of noteworthy legal happenings in 2016. Here is an overview of the top 10, and be sure to stay tuned for a more in-depth look at the landscape of the fashion industry in terms of the law to come in early 2017.
In the past year or so, Yves Saint Laurent has been issued 27 design patents. Louis Vuitton has been issued at least 17, and Balenciaga 10. Since Raf Simons took the helm of Christian Dior (and subsequently left 3 and a half years later), Dior was granted 17 garment/accessory-specific patents; this number does not take into account patents issued in connection with its fragrance collection. Bottega Veneta has been issued 8 in recent years; Celine, 5.
The use of design patent protection is certainly not a new tactic, as brands have been utilizing such protection for decades. However, it seems that many have begun to rely significantly on this form of protection, which extends to the “new, original, and ornamental design for an article of manufacture,” only in relatively recent years.
And speaking of design patents, a key decision – the one handed down by the supreme Court in the Apple v. Samsung case, while not as earth-shattering as most media outlets are making it out to be – stands to impact the status quo for design patent protection.
Earlier this month, the Supreme Court told a lower court to take another look at a $399 million award won by Apple Inc. from rival Samsung Electronics Co. for copying the design of the iPhone. The unanimous decision extends a legal battle that dates back to 2011 and at one point spanned the globe and engulfed every major maker of smartphones.
Not the death knell for design patents that many have suggested, the Supreme Court decision is actually very narrow. Writing for the court, Justice Sotomayor explicitly noted the limited nature of the ruling, stating: “The only question we resolve today is whether, in the case of a multi- component product, the relevant ‘article of manufacture’ must always be the end product sold to the consumer or whether it can also be a component of that product.”
The eight Justices unanimously held that damages for design patent infringement may be based only on the part or parts of the product that infringed the patents, not necessarily on the entire product. In the court’s words, a patent protected article of manufacture “need not be the end product sold to the consumer but may be only a component of that product.”
The case will now return to a lower court which will determine how – exactly – the damages amount will be calculated for the infringing elements at issue. More broadly, the court will fashion a new test that judges can rely on in future cases to determine pay outs in connection with the infringement of design patents.
The law is creeping on to the runway. We saw it in February, when Gucci tapped Brooklyn-based artist GucciGhost to put his mark on its garments and accessories. One of the bags from the Italian design house’s Fall/Winter 2016 bears a graffiti-tagged “REAL” situated just above a Gucci logo. On a jacket, the © symbol, which denotes a federal copyright registration. Another includes an ®, the equivalent trademark notation.
One looming trend in fashion has nothing to do with the clothing and accessories themselves but concerns the names that adorn their labels. In July, we saw Italian design house Salvatore Ferragamo file suit against Vince Ferragamo, claiming that the former football star is infringing its trademarks by using the Ferragamo name in connection with his Southern California winery. This is just one of a growing number of similar name-based actions, most of which are met with fury from legal outsiders as to the need for brands to so aggressively police their marks.
Good news for brand owners, China may no longer be the place where legitimate trademarks go to die. A number of recent revisions to Chinese law, especially the ones that address bad faith applications, have served as significant lifelines for designers and design houses, many of which have been subject to extensive trademark infringement schemes. It is exactly these provisions that brands are citing in their motions to fight the Chinese holders of their trademarks.
Speaking of China, the number of intellectual property lawsuits filed in Chinese courts is steadily growing, and nearly one in six are being filed by non-Chinese entities. According to a report compiled by the Shanghai Intellectual Property Court, which reflects on the cases it oversaw in 2015, the majority of lawsuits were based on claims of trademark or patent infringement. The plaintiffs have included luxury brands like Burberry, Louis Vuitton, and Gucci, and Fortune 500 companies, such as General Electric, Hewlett-Packard and Microsoft.
In April, the House of Representatives voted and passed the Defend Trade Secrets Act on the heels of it being unanimously passed by the Senate earlier this month. Having been approved by both bodies, the legislation – which aims to create uniform standards for what constitutes trade secret theft – is awaiting President Obama’s signature at which point it will become a federal law.
While trade secrets (any confidential business information that provides an enterprise with a competitive edge) are commonly viewed as manufacturing processes, formulas, computer algorithms, and industrial designs, they also encompass business strategies and customer lists – the latter couple of which heavily affect the workings of the fashion industry.
8. Divided U.S. Supreme Court Turns to Less Sensitive IP Cases
Shorthanded and ideologically divided, the U.S. Supreme Court has yet to take up any cases on politically sensitive social issues in its Fall, instead showing a keen interest in more technical cases of importance to business such as disputes over intellectual property. In addition to four intellectual property cases it has already agreed to hear, the court could as soon as next week take up a trademark battle that pits an Asian-American rock band and the Washington Redskins football team against the U.S. Patent and Trademark Office.
Ralph Lauren, Payless Shoes, and the Kardashian’s store, DASH, were each slapped with separate civil rights lawsuits in October, claiming that they have violated (and continue to violate) a federal civil rights statue in connection with their websites. According to Andres Gomez’s lawsuits – which were filed in the U.S. District Court for the Southern District of Florida, a federal court in Miami, and cite violations of the Americans with Disabilities Act (42 U.S.C. § 12181) (“ADA”) – the defendants “denied visually impaired plaintiff [Andres Gomez] from having full and equal access to their website[s] due to their failure to have screen reader software on it.”
Over the past year and a half, Gomez has filed nearly identical lawsuits against H&M, Lacoste, Jo Malone, Coach, Giorgio Armani, Gucci, Wet Seal, Versace, Vera Wang, Valentino, Urban Outfitters, Tory Burch, Bally, Hugo Boss, Louis Vuitton, Perry Ellis, New Balance, Nike, and J. Crew, among others. It appears that Nike, H&M, Tory Burch, Louis Vuitton, and Perry Ellis – in addition to other brands – have settled their matters with Gomez out of court.10. The FTC Issues Order Concerning Influencers’ Disclosure Practices
The U.S. Federal Trade Commission (“FTC”) issued a final settlement in its proceeding against Warner Bros Home Entertainment Inc. in November, highlighting the regulatory body’s increasing focus on internet advertising by so-called influencers or online personalities. Warner Bros. has settled charges that it deceived consumers during a marketing campaign for the video game Middle Earth: Shadow of Mordor, by failing to adequately disclose that it paid online “influencers” thousands of dollars to post videos on YouTube and social media. Over the course of the campaign, the sponsored videos were viewed more than 5.5 million times.
While the FTC has yet to take direct action in terms of celebrities and fashion industry influencers – aside from the Lord & Taylor matter – a number of non-profit organizations have filed complaints with the government body in connection with undisclosed sponsored posts by influencers. With the momentum created in 2016 in mind, 2017 very well may be the year that the FTC finally takes action.