The Elephant on the Runway (part 3 of ?) (in new and improved Q&A format!)

Posted by Charles Colman

You might recall that several weeks ago, Canadian fashion lawyer Ashlee Froese gave us a northern perspective on fashion law.  This week, the tables are turned.  In the spirit of U.S.-Canadian exchange -- after all, this year's American Bar Association Annual Meeting is taking place in Toronto for that very purpose -- Ashlee asked me, one Charles Colman of Charles Colman Law, PLLC, some questions about fashion law's state... stateside.  You can visit Ashlee's blog to see how the Q&A went down, or just keep on reading:


AF: You have participated in the Fashion Design Legislation Subcommittee of the American Bar Association. What were the major themes of debate between the advocates of legislative change and those that objected?


CC: In true lawyer form, I’m going to begin with a disclaimer: I’m not authorized to speak on behalf of the ABA, or any subdivision thereof.  The ABA’s official resolution on the Innovative Design Protection and Piracy Prevention Act should be released to the public fairly soon.  In the meantime, however, I can say that the Intellectual Property Section of the ABA has actually been on the record as supporting some type of additional IP protection for fashion designs since 2008, when the apparel industry and its lawyers were focused on the now-defunct “Design Piracy Prohibition Act.”  As a result, when I first became involved with the ABA in late 2010, my Fashion Design Legislation Subcommittee wasn’t starting with a blank slate; from our perspective as a subdivision of the ABA, it was no longer a question of whether some type of legislative change in this area was desirable – though that’s certainly a discussion many others are still having.  Rather, the Subcommittee engaged in a more granular evaluation of the merits and flaws of specific provisions in the latest iteration of the protection-for-fashion bill, the “Innovative Design Protection and Piracy Prevention Act.”  To give you some sense of our discussion, certain Subcommittee members felt it was important to provide further clarification on the scope of immunity for “innocent retailers” under the proposed law.  Some members were troubled by language in the bill – “likely to be mistaken” – that seemed to pull the infringement inquiry back toward trademark law, contrary to its apparent purpose.  We also spent a lot of time examining what might be considered the “core” language of the bill – the threshold requirement that a qualifying design display “a unique, distinguishable, non-trivial and non-utilitarian variation over prior designs” – and whether that requirement was too stringent… or not stringent enough.


AF: I understand that there was initially some serious objection from some within the fashion industry (i.e., the American Apparel and Footwear Association.)  Why?  How were their concerns addressed?


CC: I wasn’t involved in the debate at that time, but my understanding is that the AAFA was primarily concerned about frivolous lawsuits.  (Of course, this is a point of controversy anytime proposed legislation would create a new cause of action.)  The bill’s advocates eventually managed to get the AAFA on board, in large part by changing the required showing for liability from “substantial similarity” (the standard applied in copyright infringement lawsuits) to a higher standard that would require a plaintiff to prove that an alleged knockoff is “substantially identical” to her design.


AF: How do you think the protection of fashion designs under copyright law will impact the fashion industry in the U.S.?  How will it affect the consumer?  Will we see any economic impact?


CC: I wish I could answer that question with any degree of certainty.  But as I’ve stated in the past, I think it’s very difficult to make meaningful predictions about the impact of the bill – either on the industry or on consumers.  With that said, I have to imagine that the law would have some prophylactic effect on unabashed knockoffs of original designs.  This could be very beneficial for small designers, who frequently can’t make the necessary evidentiary showing to prevail in so-called "trade dress" lawsuits.  But of course, even if the bill passes, it will be just as expensive to bring a lawsuit as it is now, so startup designers may remain vulnerable, even if they have a potentially meritorious claim.


Some feel the impact of the law will be minimal, speculating that the required showing for liability has become so demanding that only a trivial number of designs will qualify for protection.  Interestingly, this point has been made by both advocates and opponents of the bill: at a House of Representatives subcommittee hearing last Friday, the CFDA (a longtime champion of additional IP protection for fashion designs) and its allies simultaneously stressed that the proposed law is desperately needed and that relatively few designs – only those “that are truly original” – will receive protection, even if the bill passes.  As some observers have pointed out, there’s an interesting tension there.


AF: You recently championed the creation of a Fashion Law Committee at the New York City Bar Association.  Why was this necessary?  What is the role/function of the Committee?


CC: Every bar association has a trademark law committee, a copyright law committee, a real estate law committee, and so on.  But I felt that a central forum was needed in which attorneys serving apparel and beauty clients could come together and share their expertise on fashion-specific issues arising in their respective practice areas.  To illustrate, the pending, highly controversial Christian Louboutin v. Yves Saint Laurent lawsuit raises legal issues that are, at least arguably, unique to fashion.  So the members of a conventional trademark law committee would have a much less compelling reason to devote extensive time and attention to the case, while every self-professed “fashion lawyer” is watching it like a hawk.  The new Fashion Law Committee can explore and evaluate legal developments of particular concern to fashion industry clients in a way that a more general committee never could.  Because the Committee is still in its infancy, I don’t think anyone knows for sure what it will evolve into, but for now, it is – at the very least – an excellent forum for discussion.


AF: Are there any key cases/developments in the U.S. that we should be watching for?

 

CC: The most important issue on the legislative agenda right now, at least for IP-oriented practitioners, is the “Innovative Design Protection and Piracy Prevention Act,” which we discussed earlier.  For decades, it’s been gospel that items of apparel are, by and large, “useful articles” and thus ineligible for copyright protection in most instances.  So any change to this legal landscape, even if the real-world impact does turn out to be minimal, would represent a major doctrinal shift.

 

Certainly the most “colorful” fashion-related case being decided right now is the Louboutin v. YSL dispute mentioned above.  But for reasons I’ve addressed before, the case could also have major repercussions for the fashion industry more generally.  YSL seems to have taken the position that trademark protection is never appropriate for “a single color on a portion of an article of apparel.”  If the district court agrees with this argument, there will undoubtedly be an appeal – perhaps all the way to the Supreme Court – and the outcome could be very significant for fashion design and branding.

 

While less accessible than the Louboutin case, many intellectual property lawyers are closely watching a case called Omega v. Costco Wholesale, currently pending in California federal court following a long round of appeals.  This case involves “gray goods” – here, luxury watches – that are sold outside the United States through authorized channels, but find their way back into the U.S., where they are often sold for far less than the brand would like to charge American customers.  The case made it all the way up to the U.S. Supreme Court on a fairly esoteric copyright law issue involving the “first-sale doctrine,” where the Court was poised to declare whether brand owners can exercise border control over gray goods on the basis of copyright.  But the Court ended up in a 4-4 tie (Justice Kagan having recused herself), so we don’t yet have a definitive answer on the key issue.  Because Costco lost at the Ninth Circuit (a federal appellate court) on the first-sale question, it’s emphasizing a different argument on remand: that Omega’s use of copyright to control the importation of otherwise non-copyrightable goods is a form of “copyright misuse.”  It will be interesting to see how this specific dispute plays out, and also to see whether other appellate courts side with the Ninth Circuit on the first-sale question.  Though the relevant legal issues are quite legalistic and inaccessible, their resolution has major ramifications for the fashion industry (and for many other industries, as well.)

 

[This post is for entertainment and informational purposes only, and does not constitute legal advice or create an attorney-client relationship among any individuals or entities.  Any views expressed herein are those of the writer on the particular date of this post, and should not necessarily be attributed to his law firm, its clients, the ABA or NYC Bar Association, or any subdivisions or members thereof.]