FL_Module_8

MODULE 8: REDRESSAL MECHANISMS

ANTI PIRACY AND ANTI COUNTERFEITING ACTIONS

"What I make is picked up and copied by everybody," Coco Chanel once said. The
iconic fashion designer - who is also famous for saying that "if you want to be original,
be ready to be copied" - often smiled approvingly when she passed women on the street
wearing collarless jackets inspired by her coveted tweed suits. But she never tolerated
outright theft of her designs.

In 1930, Chanel joined fellow designer Madeleine Vionnet in suing Suzanne Laneil, a
copyist who was caught selling Chanel and Vionnet knockoffs. A French court ruled
against Laneil in a landmark case that recognized original French fashion designs as
"real works of art [...] entitled to the same protection accorded authors and copyright
holders."

Many decades later, American fashion designers are still clamoring for similar
safeguards. After heavy lobbying from the Council of Fashion Designers of
America, among other parties, in 2006, Congress heard one of the first of a number of
bills aimed at amending the Copyright Act to include protections specifically for fashion
designs. The most recent version, the Innovative Design Protection Act, which was put
forth in 2012, has made little traction since its introduction. 1

Piracy is the unauthorized copying of another designer or manufacturer’s work.It is an
instiutionalized practice in the apparel industry. It burgeons within the United States, in
part, because intellectual property rights do not adequately protect clothing designs
(Women’s Wear (now Women’sWear Daily) described design piracy as the “copying

1 http://www.thefashionlaw.com/home/fashions-piracy-paradox-are-there-benefits-to-the-practice-of-knockoffs, Last visited on
02/11/2018 at3:07 pm

evil.” Since the early nineteen hundreds, over eighty bills were submitted to Congress to
limit piracy. Based on their failure to gain legislative approval, industry groups such as
the Fashion Originators’ Guild of America (FOGA) were created during the 1930s, in
part, to end the practice.

In recent years, The Council of Fashion Designers of America (CFDA) and the
American Apparel and Footwear Association have taken up the fight to curb piracy. First
introduced to the U.S. Congress in 2006 as the “Design Piracy Prohibition Act” and then
reintroduced in 2010 as the “Innovative Design Protection and Piracy Prevention Act”

These bills proposed to give fashion design short term protection Some in the apparel
industry believe that the practice of piracy “provide good value and style,” while others
suggest the possibility that at least some apparel firms producing pirated apparel “fund
organized crime and terrorism”
The speed of fashion change, and the apparel industry’s reliance on repetition of ideas at
various price points makes design protection difficult.2

ANTI COUNTERFEITING

Counterfeiting (the practice of manufacturing, importing/exporting, distributing, selling,
or otherwise dealing in goods, often of inferior quality, under a trademark that is
identical to or substantially indistinguishable from a registered trademark, without the
approval or oversight of the registered trademark owner) is one of the fastest growing
economic crimes worldwide. In fact, according to the World Customs Organization,
clothing and fashion accessories account for a significant share of counterfeiting, with
over 10% of world trade in fashion estimated to be counterfeit. The International Anti

2 https://lib.dr.iastate.edu/cgi/viewcontent, Last visited on 2/11/2018 at 2:06 pm

Counterfeiting Coalition reports that nearly 20% of the counterfeit products seized by
U.S. Customs each year are made up of fashion-related items.3

Fashion brands have begun jumping on the anti-counterfeiting bandwagon with
increasing frequency. Sure, there are the traditional anti-counterfeiting efforts that brands
have relied upon for years, such as allocating resources to bring enforcement efforts in-
house, employing anti-counterfeiting professionals to develop educational materials and
travel to various ports, and training U.S. Customs officers to spot counterfeits before
they enter into commerce. Brands have also utilized custom manufacturing techniques to
ward off copyists (Paris-based design house, Hermès, for instance uses mouline linen
thread coated in beeswax, for all of the stitching on its coveted handbags, which serves
as a distinguishing factor, as synthetic threads have a markedly different appearance).
However, as the market for fakes grows, fashion brands are supplementing these efforts
with additional technology-driven anti-counterfeiting mechanisms.

Innovative technologies, particularly from the fast growing RFID sectors, have enabled
brands to adopt global anti-counterfeit packaging technologies programs. Electronic
Product Code-enabled RFID allows brand owners to assign a unique serial number to
each item, which is then stored in a common database for purposes of tracking shipments
and detecting authentic versus counterfeit goods, and also for increasing inventory
efficiencies.

Prada, for instance, began experimenting with RFID by attaching tags to clothing and
accessories in its Soho, New York store in 2002. That did not last very long, though, as
in 2003, amid howls from privacy advocates, Prada quietly dismantled the system. And
high fashion houses aren’t the only ones adopting such technology – middle market
brands want in, too. Levi Strauss & Co. announced last year that it is equipping all items
in its San Francisco flagship with RFID tags, and using Intel gateways, Intel-powered

3 http://www.thefashionlaw.com/home/counterfeits-are-on-the-rise-and-so-too-are-anti-counterfeiting-technologies, Last visited
on

sensors, and cloud-based analytics to gain visibility into what’s on the shelf or what
might be running low, making the process of inventory management more effective.
Such tags also serve the dual purpose of distinguishing between the real thing and fakes.
Burberry, American Apparel, Bloomingdale’s, Macy’s, Zara, New Balance, and Nine
West, among other brands, have adopted similar technologies.

RFID technology has advanced quite a bit in recent years: there are now RFID tags that
can be woven directly into a textile or fabric product, something that several industrial
linen companies in the United Kingdom and France have been testing for a few years
now.

But anti-counterfeiting techniques do not stop at RFID. The inclusion of extremely
difficult to remove hologram stickers with serial numbers has proven a popular tactic for
brands, including (but certainly not limited to) Fendi, Dolce & Gabbana, Roberto
Cavalli, Chanel, Canada Goose, Rolex, and Moncler. According to eBay’s legal counsel,
holograms have proven to be a very effective way to fight fakes because they're
extremely difficult to reproduce with significant accuracy.

Along with advancements in anti-counterfeit technologies, tougher government
legislations for protecting intellectual properties, as well as stronger collaboration of
organizations and manufacturers for protecting brand integrity, will further support the
anti-counterfeit packaging technologies market in the developing and emerging markets.4
France, one of the countries most impacted by counterfeiting since French companies
had such a large market share in the luxury and fashion sectors, and which benefits from
strong lobbying institutions such as the Comité Colbert and the Union des Fabricants,
was the first country to react against counterfeiting, passing the Longuet law in February
1994. Through these new rules, France made counterfeiting a more serious criminal

4 http://www.thefashionlaw.com/home/counterfeits-are-on-the-rise-and-so-too-are-anti-counterfeiting-technologies, Last visited
on 03/11/2018 at 5:36 am

offence, widened the scope of action of customs officials at French borders and extended
the cases in which the confiscation of counterfeit products was possible.

According to the French law passed in March 2004, the prison sentence for the crime of
counterfeiting was increased from 2 to 3 years and the fine from 150,000 euros to
300,000 euros, with more serious criminal sanctions of a 5 years’ jail term and 500,000
euros’ fine in case counterfeiting was carried on as part of a criminal enterprise with
others. At the European level, the European institutions became so concerned with
counterfeiting, in particular because it can affect the health and safety of consumers, that
they adopted two sets of rules to foster harmonisation in the fight against counterfeiting
among European member-states, as well as international cooperation, in particular with
intellectual property rights owners. Thus, regulation 1383/2003/EC entered into force on
1 July 2004, and was later replaced by regulation 608/2013/EC that entered into force on
1 January 2014. This new European regulation relating to the intervention of custom
authorities towards products suspected of being counterfeits, substantially extends the
powers of customs services, offering a better protection against counterfeiting. In
particular, the regulation widens the scope of protected intellectual property rights, as
well as the right of information of companies or individuals requesting the confiscation
of these counterfeit products. It also simplifies the process of destroying counterfeits.In
addition, the directive 2004/48/EC, relating to the measures and processes aiming at
better protecting intellectual property rights, was passed in April 2004. This directive
was transposed in each member-state of the European Union and created new tools for
right owners to fight against counterfeiting.5

INFRINGEMENT SUITS

▪ Star Athletica v. Varsity Brands

5 https://crefovi.com/articles/fashion-law/efficiently-fight-counterfeiting-fashion-luxury-sectors/, Last visited on 03/11/2018 at 6:17
pm

The principal question in this case was whether the stripes, zigzags and chevrons
characteristic of cheerleader uniforms can be copyrighted, or are so fundamental
to the purpose of the garment that they should not get such legal protection. It was
argued by the Plaintiff that without such adornments, a cheerleader’s uniform
would look like any other dress.

The Supreme Court issued its decision, clarifying the test for “separability” in
connection with creative elements that are part of a useful article (such as a
garment), the case is not over yet. In fact, one critical decision is still up for grabs:
Whether the uniforms at issue are original enough to actually be subject to
copyright protection, which will be decided by the lower court.6

▪ Forever 21 Slaps Gucci with Strongly-Worded Trademark Lawsuit. In something
of a role reversal, Gucci has been slapped with a lawsuit by notorious copycat
retailer Forever 21. According to the Los Angeles-based fast fashion giant’s
lawsuit, which was filed this week in the U.S. District Court for the Central
District of California, Gucci has repeatedly threatened to sue Forever 21 for using
an array of its registered trademarks. As a result, Forever 21 is taking the matter to
court to wage war against the famed Italian design house. 7

▪ Puma Files Patent, Copyright, Trade Dress Suit Against Forever 21 Over Rihanna
Shoes. On the heels of reports that Forever 21 is offering lookalike versions of
footwear from Rihanna’s Fenty line for Puma, the German sportswear giant has
slapped the copycat retailer with a design patent, trade dress, and copyright
infringement lawsuit. According to Puma’s suit, which was in the U.S. District

6 http://www.thefashionlaw.com/home/5-lawsuits-that-stand-to-impact-the-fashion-industry, Last visited on 04/11/2018 at
11:05am
7 http://www.thefashionlaw.com/home/fashion-law-in-2017-this-years-top-10-lawsuits, Last visited on 04/11/2018 at 11:15am

Court for the Central District of California, the Los Angeles-based fast fashion
brand has copied three of the most prominent footwear designs from Rihanna’s
collection for Puma in attempts to “trade on the substantial goodwill of Puma,
Rihanna, and the Fenty shoes.”8

▪ Chanel’s Suit Against What Goes Around Comes Around

According to Chanel, which filed a strongly-worded lawsuit against What Goes
Around Comes Around in March, the well-known vintage retailer is selling a
significant array of second-hand Chanel goods, some of which were fake. Maybe
even more troubling for the 109-year old Paris-based brand: The way in which
What Goes Around Comes Around is allegedly piggybacking on the reputation
and appeal of Chanel, one of the most esteemed fashion houses in the world, for
its own financial gain.

Chanel alleges in its recently-filed lawsuit, What Goes Around Comes Around’s
business model relies heavily on the leveraging of the appeal and esteem of the
world’s most famous luxury brands and their valuable intellectual property,
including brands’ trademark-protected names and logos, which fashion’s most
established brands have spent over a century and hundreds-of-millions (if not
billions) of dollars in marketing costs and legal fees to establish and maintain.The
outcome of this lawsuit could serve to shed some light on the 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.

8 http://www.thefashionlaw.com/home/fashion-law-in-2017-this-years-top-10-lawsuits, Last visited on 04/11/2018 at 11:25am

▪ Hermès filed a complaint against Southern California-based brand, Thursday
Friday, Inc. this week, stemming from the company's production of its “Together
Bag," a canvas tote adorned with a screen printed Birkin bag (minus the
traditional Hermes logo markings). Hermès' trademark infringement complaint is
being backed by their allegation that the $35.00 Thursday Friday bag is creating
consumer confusion. Thursday Friday has had quite a bit of success since the
launch of the "Together Bag" The bag was noted in the New York Time's Style
Magazine in January of this year, and likely as a result, the bags were backordered
for months.

Because the Thursday Friday bag lacks any “Hermès-Paris” markings, Hermès
can likely only bring a successful trade dress claim, as a trademark infringement
case requires that the infringing party utilizes to a trademark (or logo) without the
authorization of the trademark owner. By bringing a trade dress complaint,
Hermès would be able to claim that even though Thursday Friday did not print the
Hermès logo on its "Together Bag," the Birkin bag is so iconic that its appearance
alone signifies the source of the product to consumers. In essence, that an
unmarked "Birkin bag" is famous enough to signify its source.

Thursday Friday settled the lawsuit brought by Hermès after their motion to
dismiss was denied .In addition to permanently removing the Birkin version from
their site.

PRODUCT LIABILITY AND CONSUMER PROTECTION

The various European Union Directives have been enacted over the years, first
establishing strict liability, and then providing more specific safety directives.

Interestingly, this proliferation of product safety and product liability laws and standards
has not really resulted in significant amounts of new litigation in Europe.

In fact, for U.S. manufacturers selling in Europe, the greatest risk appears to be that they
either may not be allowed to sell into one or more countries, or customers will not buy
their products if they fail to comply with these directives and additional technical
standards. Similarly, with the passage of the Consumer Protection Law in Taiwan, the
Toys and Children's Product Safety Ordinance in Hong Kong, and product liability and
quality legislation in Japan and China respectively, Asian countries have taken major
steps toward ensuring that only safe products are sold within their borders.Like Europe,
the rise of product liability standards in Asia means that manufacturers and retailers must
pay even more attention to quality, product safety and product liability than in the past.
In addition, all manufacturers who sell in the U.S. must consider the effect of compliance
with foreign safety laws and standards on U.S. litigation. To the extent foreign sold
products are or may be considered safer, the manufacturer runs the risk of providing the
plaintiff with proof of an alternative design that can be used in a U.S. court.

The Product Liability Directive

The Product Liability Directive, the oldest and most significant European Union
directive, established the modern concept of product liability. This directive was signed
in 1985 and imposed an August 1, 1988, implementation deadline. Fourteen of the
sixteen European countries who are part of the European Union have passed the Product
Liability Directive. Only France and Spain have not. The directive only applies, in each
respective country, to products put into circulation after the directive's effective date.

Producer Liability. The Product Liability Directive provides, in Article 1, that "The
producer shall be liable for damage caused by a defect in his product." Producers include

manufacturers, component part suppliers, importers and anyone using a trade name or
trade mark. A product is defective when it "does not provide the safety which a person is
entitled to expect," considering all circumstances, including:

• the presentation of the product;
• the product's reasonably expected uses; and,
• the time the product was put into circulation.
The directive also requires the consumer to prove defect, causation and damages, but
leaves the specific burden of proof to individual member states9

9 https://corporate.findlaw.com/litigation-disputes/international-product-liability-laws.html, Last visited on 04/11/2018 at 7;11 pm.