The role of IP rights in the fashion business: a US perspective

By John Zarocostas, freelance journalist

In recent years, intellectual property (IP) rights have played a pivotal role in the growth of the highly competitive global fashion industry, which generates more than USD 2 trillion per year. Amid breakneck advances in information and communication technologies (ICTs), supply-chain logistics, social media and an evolving buyer culture, IP rights and their protection are likely to become ever more central to the fashion industry.

Julie Zerbo, founder and Editor-In-Chief of The Fashion Law (www.thefashionlaw.com) in New York, a leading publication for fashion law news and analysis, discusses the growing importance of IP rights for the fashion industry, the significance of recent landmark rulings relating to copyright and trademarks and some of the challenges and opportunities ahead for fashion law in the digital age.

How are IP issues affecting the fashion industry?

IP law has played an enormous role in the proliferation of fashion. Take runways, for example; very few designs on display are sold in stores. The runway is an opportunity for designers to display their creative talent, attract media attention and build awareness of their brand. They also provide an opportunity for a brand to sell more affordable items, such as perfumes, cosmetics or T-shirts, with brand names prominently displayed on them. So much of the fashion industry thrives on this type of IP licensing. IP is a core asset of the fashion business. In the United States, we talk a lot about copyright law as the main source of protection for designs and its interaction with fashion. But trademarks are really the most widely used means by which fashion brands protect themselves in the United States.

The recent landmark case – Star Athletica, LLC v Varsity Brands, Inc. – is likely to have an impact on the fashion industry in the United States. The case, which went to the US Supreme Court, centers on the copyrightability of designs on the surface of cheerleader uniforms and the concept of “separability,” which is a pre-requisite for a garment or other useful article to be protected under US copyright law. As copyright law does not seek to protect or create a monopoly over useful articles, and as garments, dresses, shoes, bags and so forth are considered useful items, they don’t qualify for copyright protection as a whole. Only design features that can be separated from a garment or other utilitarian or useful item, so to speak, qualify for copyright protection in the United States. The whole issue has been a major source of frustration for designers in the United States for some time because it means that only certain aspects of their garments, and not the garment as a whole, are protectable.

With that as a baseline, fashion businesses in the United States are using IP in interesting and creative ways. For example, we now see growing reliance on design patent protection, even though it is more expensive and time-consuming to obtain than copyright protection. More businesses are also relying on trademark protection to protect their brands and trade dress (i.e.  the appearance and packaging of their products). 

What IP and fashion trends are emerging on both sides of the Atlantic and in emerging economies?

As I mentioned, in the United States, there is now much greater reliance on design patent protection, particularly among more established brands with deep pockets. These brands tend to protect their staple products – those that will be sold in more than one season – in this way. In these cases, design patent protection is seen more as an investment. The re-introduction of logos on bags and garments is also on the rise. This is a way for brands to meet the demands of Instagram-happy millennials and Gen-Z consumers, who want to make it known what brand they are wearing. It also gives brands a way to legally protect aspects of their garments and other utilitarian items that might not otherwise be protectable.

What are the key differences between the IP laws governing fashion in Europe and the United States?

One of the main differences is that the European Union has registered and unregistered Community design rights that provide protection for garments and accessories as a whole. That simply does not exist in the United States, and is a big advantage that European designers have over US designers.

European fashion markets significantly predate the US fashion industry. This explains why IP law for fashion and textiles has existed for much longer and is more expansive in Europe. That is a plus for European designers. New York’s fashion industry got started thanks to licenses from Parisian designers to produce lower-cost garments and accessories. That’s how New York effectively became the home of fashion licensing.

So much of the difference between Europe and the United States with respect to the laws governing fashion comes down to history. France was one of the first places to turn out original creative designs. Design protection has been a priority in France since the 15^th century, when the “fabrication of textiles” was granted protection. That was just not on our radar in America at that time. Design-specific protection was confirmed in French national law by the Decree of the National Convention of July 19, 1793, and further refined by the special design laws of 1806 and 1909, which provide French designers with significant levels of protection.

Is anything being done to bring US fashion law into line with Europe?

Over the past decade, three different copyright bills have been proposed to Congress: the Design Piracy Prohibition Act (introduced in 2009), the Innovative Design Protection and Piracy Prevention Act (introduced in 2010), and the Innovative Design Protection Act (introduced in 2012). Each bill proposed amendments to the US Copyright Act to provide sui generis protection for fashion designs. In particular, the bills sought to remove the “separability” requirement so that designers would no longer have to derive protection from individual creative elements of the design of their garment. Unfortunately, none of the bills gained sufficient traction in Congress and they were not passed. Those are the three most significant recent attempts to close the gap between US and European laws governing fashion.

Was the lack of legislative success largely due to insufficient lobbying power?

There was definitely lobbying. But the bills themselves weren’t strong enough. There was a lot of enthusiasm to protect garments and accessories as a whole, but there was no consensus on the specifics of exactly how to do that. 

Tell us about some of the recent landmark cases that have had an impact on the US fashion industry.

As I mentioned earlier, Star Athletic, LLC v Varsity Brands, Inc. was a landmark case that went before the Supreme Court in 2017. The case centered on the protectability of cheerleading uniforms. Specifically, it examined whether certain creative elements of the design of a cheerleader’s uniform – such as the stripes of a chevron – could be protected under US copyright law. In other words, could these elements be separated specifically or conceptually without taking away the purpose of the design, namely to be a cheerleading uniform?

In its decision, the Supreme Court clarified the standard for separability, saying that, in general terms, certain creative elements – whether two-dimensional or three-dimensional – of a garment may be protected by copyright law. However, it refused to speak to the protectability of, or the level of creativity inherent in, the specific uniforms in question.

The case has to go back to the lower court to determine whether the cheerleading elements were sufficiently original to warrant protection. While it is not yet clear what the practical impact of the decision will be on the US fashion industry, it does offer designers some hope of being able to use copyright law to make a case for defending at least some creative aspects of their garments.

The recurring cases involving French luxury footwear designer Christian Louboutin are also interesting. They raise the issue of whether it is possible to protect a single color in the fashion industry, in this case red. In 2008, Christian Louboutin acquired trademark rights in the United States over the bright-red lacquered sole featured in much of the footwear he produces. US trademark law (the Lanham Act) allows for the registration of a trademark that consists of a color. In 2011, when French fashion house Yves Saint Laurent (YSL) released its monochrome footwear collection in a range of colors, including red, Louboutin filed a lawsuit against YSL claiming infringement of his so-called red-sole trademark. In response, YSL challenged whether Louboutin’s color trademark qualified for trademark protection in the first place, claiming it lacked distinctiveness and was purely ornamental. The upshot of the legal wrangle is that, in the United States, Louboutin’s red-sole trademark is limited “to uses in which the red outsole contrasts with the color of the remainder of the shoe” by decision of the United States Court of Appeals for the Second Circuit. These cases have led to a number of cases in other countries where Louboutin is seeking to protect his signature red-soled shoes.

There have also been a number of interesting cases in the European Union. For example, a landmark decision resulted from the case involving luxury cosmetics manufacturer Coty and third-party online platforms like Amazon (Coty Germany GmbH v Parfümerie Akzente GmbH). Here, the Court of Justice of the European Union (CJEU) held that in order to protect the luxury nature of their goods, luxury brand owners are able to restrict the sale of their goods by their authorized distributors to online third-party platforms, such as Amazon. The original purpose of the case was to determine whether such restrictions ran counter to European competition laws. But is it also very much an IP-related case in that it centers on the ability of trademark owners to protect the value of their luxury brands when their products are sold by authorized distributors to third-party online platforms that the brand owners would not normally engage with. In this instance, the CJEU essentially held that Coty, which holds the licenses for a huge array of branded fragrances like Calvin Klein, Prada and Marc Jacobs, can block brands from selling their products on the third-party internet retail sites.

Is fashion-related IP litigation concerning social media and e-commerce on the rise?

Today, so many people and so many brands are using social media platforms to post content over which they don’t necessarily hold the rights. This is giving rise to a significant number of copyright infringement cases. Beyond that, it is clear that cybersquatting – when someone hijacks a trademark and registers it as a domain name in bad faith – and trademark squatting are not going away anytime soon.

In 2017, there was an interesting trademark lawsuit in China involving US sports apparel manufacturer New Balance. The Suzhou Intermediate People’s Court (near Shanghai) ordered three Chinese shoemakers to pay more than RMB 10 million (around USD 1.5 million) in damages to New Balance for infringing its signature slanted “N” trademark. While small by international standards, the damages are reported to be among the highest to have ever been awarded to a foreign company in a trademark dispute in China.

What about sustainable fashion and IP law?

Sustainability is a big trend and will become the norm. The production and manufacture of the huge range of products we have in the world today are taxing the environment, so sustainability is only going to grow in importance. Organizations like the Federal Trade Commission in the United States and the Advertising Standards Authority in the United Kingdom will give greater attention to the labelling of “sustainable products” in the future.

Right now, for lines to be sustainable is a trendy selling point. We don’t yet really have a measure for gauging what sustainability means or what “all natural” means. So, at some point, I think we will see a regulated legal standard emerge that will require anyone who uses it to meet a range of criteria.

Looking ahead, what will be the impact of 3D printing and artificial intelligence (AI) on the fashion sector?

As 3D printing becomes more accessible, there are potential risks of infringement, such as the unauthorized reproduction of copyright-protected patterns and trademarks; for example, when logos are recreated in a 3D version of a product without authorization. But until 3D printers are cheap enough for individuals to have them in their homes (which I think is still some way off), this is mostly conjecture.

What I find particularly interesting at the moment is blockchain and its potential both to assist right holders in recording and managing their IP rights and to fight against fakes. Tackling counterfeit goods, particularly online, is a costly, time-consuming and unending process for brands. I am optimistic that blockchain and other emerging technologies can help provide more efficient and affordable ways of dealing with that problem.