The Elephant on the Runway (part 2 of ?)
Our jumping-off point for today's post comes not from fashion news, but from the ever-fraught music industry, where the content distribution platform Limewire has settled a lawsuit brought by music publishers, but continues to battle record labels.
The story of the Music Industry versus The World hardly needs to be recounted, but here's the last decade in a nutshell: 1) Internet connections grew in number and speed, 2) people figured out how to compress music files and "share" them online, 3) services like Napster and Kazaa sprouted up and provided an organized platform for "peer-to-peer" ("P2P") file-sharing, 4) copyright owners like the Recording Industry Association of America ("RIAA") noticed that sales were dropping, and attributed the drop to file-sharing, 5) the RIAA et al. started suing both "end users" (the actual students/working adults/living and deceased grandmothers transmitting the offending files) and P2P intermediaries like Napster for copyright infringement, 6) content owners achieved some notable victories against these intermediaries in federal court and eventually decided the user-by-user litigation strategy was ill-advised, 7) content owners began to recognize that the industry would have to change in a dramatic way in order to remain viable in the Internet era, 8) the content industries, venture capitalists, and other "stakeholders" put their heads together to figure out just what that "dramatic change" should look like, and 9)
they figured it out, and the music industry lived happily ever after [update forthcoming.]
Let's linger on numbers 5 and 6 in my quick-and-dirty history. The reason it was possible for content owners to sue intermediaries like Napster was because of a longstanding doctrine in copyright law called secondary liability. Way back in 1929, for example, the U.S. Court of Appeals for the Seventh Circuit held the owner of a dance hall liable for copyright infringement committed by an orchestra that played there. Why? According to the court, in a charmingly antiquated passage, this result was fair "if the playing be for the profit of the proprietor of the dance hall."
To be precise, the courts refer to this first type of secondary liability as "vicarious liability," a very old legal principle grounded in the notion that a "master" should not be allowed to profit from wrongdoing by his "servant" merely by turning a blind eye to that wrongdoing. To grossly oversimply (this is just a blog, after all), "right to control the infringement + profit = vicarious liability."
Another type of secondary liability in copyright arises from so-called "contributory infringement," which occurs when "one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another[.]" The formula here might be best oversimplified (oxymoron?) as "knowledge of the infringement + assistance = contributory infringement."
A contributory infringement theory of liability sufficed for nailing Napster. But content owners had a tougher time with Grokster, which disavowed knowledge of infringement by end-users, while allegedly taking "affirmative steps" to foster those users' infringing acts. The "Grokster question" made it all the way to the U.S. Supreme Court, which in 2005 ruled that "one who distributes a device with the object of promoting its use to infringe copyright . . . is liable for the resulting acts of infringement by third parties."
The post-Grokster legal landscape is decidedly anti-intermediary; perhaps as a result, some copyright owners now have their sights set on the ultimate "gatekeepers" in the 21st Century: Internet Service Providers, or "ISPs."
So how does all of this relate to fashion? Well, as an initial matter, secondary liability is a major arrow in the quiver of trademark owners as well as copyright owners -- and as we've seen, when it comes to fashion designs, trademark protection is where it's at. As a result, lawsuits have already been brought -- albeit with mixed results for trademark owners -- against intermediaries like eBay that have (whether knowingly or not) provided a platform for selling counterfeit versions of luxury goods.
But if Senator Schumer's "Innovative Design Protection and Piracy Prevention Act" becomes law, one might naturally wonder whether a whole new batch of intermediaries (for instance, department stores who stock infringing clothing designs) will find themselves on the hook -- not for trademark, but rather for copyright[-like] infringement. (The bill would actually create sui generis, copyright-like protection for certain "unique" fashion designs -- not "copyright" protection, per se.)
[N.B. Any views expressed here are solely those of the writer, and are not stated in the writer's capacity as Co-Chair of the American Bar Association's Subcommittee on Fashion Design Legislation.]
The Schumer bill clearly contemplates secondary liability for intermediaries in some circumstances, noting, for example, that a piracy plaintiff would be required to allege specific facts establishing that "the protected design or an image thereof was available in such location . . . and for such duration that it can be reasonably inferred from the totality of the . . . circumstances that the defendant saw or otherwise had knowledge of the protected design."
Furthermore, the Schumer bill would actually tack on its proposed fashion-specific provisions to the existing "Vessel Hull Design Protection Act" (a chapter that immediately follows but is not technically part of the U.S. Copyright Act), which likewise assumes the possibility of secondary liability. That assumption is evidenced by the VHDPA's safe harbor for retailers and distributors that have dealt in infringing goods, but haven't 1) "induced" or "colluded" to make or import the infringing article, 2) withheld the source of the infringing article, or 3) reordered the infringing article after having been notified of its illegality.
What exactly suffices for a "notification" under number 3? There is (perhaps unsurpringly) a small body of case law on vessel hull design infringement, so LOF can't say for sure. But as an unidentified Wikipedia contributor has observed, a somewhat analogous "notice-and-takedown" provision in the Copyright Act "has been criticized for making it too easy for copyright owners to encourage website owners to take down allegedly infringing content and links which may in fact not be infringing."
Just as an exercise, put yourself in Barneys' place for a moment: if you received an official, scary letter from the law firm representing, say, Polo Ralph Lauren, claiming that a handful of garments by, say, upstart designer Greg Lauren were infringing, would you keep the goods in question on the shelves while you conducted a thorough investigation? Would you conduct an investigation at all? What if you weren't Barneys, but rather a small boutique without a savvy attorney on retainer? You'd probably just take the stuff off the shelves, wouldn't you?
As any reader who has made it this far in the post has likely gathered, secondary liability is a legal principle largely defined by case law. Case law results from litigation. Litigation is expensive. That doesn't mean the Schumer bill shouldn't become law -- or that it should -- but to echo LOF's last post discussing the legislation, anyone who wishes to have an informed view about the bill's merits must consider the possibility that a number of expensive disputes may have to be litigated before the contours of retailer and/or distributor liability for fashion design infringement are clearly delineated.
[One more time: this post is not legal advice or a substitute for legal advice; no attorney-client relationship has been formed as a result of this post; views expressed herein are not necessarily those of the ABA, or of any individual or entity besides the author; insert any other necessary disclaimers here; actually, you would be better off never having read this post at all; you should probably just leave; now.]