All About Fashion Law
Fashion law, a concept that fuses the dynamic world of fashion with the complex web of legal rules and regulations, has become an indispensable part of doing business in the fashion industry. From intellectual property issues such as trademarks, copyrights and patents, to bodily harm resulting from dodgy labor practices, fashion law is fed by all things fashion.
While the area of fashion law is developing, its underpinnings consist of various areas of traditional law, including intellectual property law, employment law, corporate law, contract law, finance law, immigration law and others, some of which you will have heard of and some you might not . A few of these areas of law cross over in the fashion realm and in some instances, they coalesce in regard to the same subject matter; for example, a photography contract may require some intellectual property considerations and data privacy issues.
In the fifth part (and our last) in our fashion law series, we will look at the specific role of fashion law, including which particular areas of law it consists of, and then turn to the merchandiser’s business and the world of intellectual property.
Fashion Intellectual Property
Fashion law, much like any other contemporary legal discipline, draws its vitality, depth, and vibrancy from its composite parts. Among those parts is a rich world of intellectual property. Intellectual property rights represent a the core legal framework that governs, and promotes, creativity. Intellectual property laws are designed to protect the fruits of a creator’s labor: the original ideas, artistic expression, and groundbreaking innovation that each individual brings to the table.
For fashion designers, whether new to the industry or barely emerging from the mid-level echelon, the question of how to protect their creations, and their brand, must be addressed with utmost diligence. Typically, the Intellectual Property component that gives designers the most vexation, and inspiration, is the complex world of branding. Brand distinctions, as we have already seen in other sections of this site, are an invaluable aspect of the business of fashion. On the manufacturing end, the designer’s name or logo, and well-known tag lines, can all be significant forces in a fashion label’s sales profile. On the retail end, product brand is what consumers respond to, and in order to elicit goodwill with the consuming public, and stave off infringement claims, they must be protected just as vigorously as an original design. The last few years has seen the fashion industry adopt an increasing sophistication in its understanding, and appreciation, of trademarks. A good trademark strategy, whether defensive, or offensive, can go a long way in protecting a fashion design house’s most valuable assets.
As for copyright protection, the fashion design industry is, unfortunately, plagued by the tension that exists between copyright law and fashion. In the absence of a federal clothing design act, which would confer copyright protection on fashion clothing, designs of clothing still fall under Copyright’s coverage of "two-dimensional pictorial or graphic works." Protection, however, is limited, and unable to enjoin knock-off fashions absent an accompanying design that can be protected. Some aspects of fashion designs are still open to copyright protection, so long as they are incorporated into an accompanying fabric print, textile, or embroidered design. Famed fashion designers have taken to the courts over the Copyright issue, and generally fashion designers have been able to protect some of their works through combinations of 2D and 3D designs with logos and trademarks. But, the history of litigation over the Copyright issue reflects a general desire on behalf of courts to avoid the question unless absolutely required, and will favor the lower standard of design patent and common law trade dress where possible. Thus, while copyright does have its place in fashion design law, it is not, nor should it be, the designer’s primary focus.
Of course, where copyright is lacking, or too tenuous a legal foundation, a design patent can, and does, step in to take its place, granting the same 14 year protection period that copyright permits. Unfortunately, the design patent, while it may offer more substantive protection than copyright, has its own limitations in the fashion context: novelty in fashion designs is rare, and finding a design that is novel enough to warrant a design patent is similarly rare. Yet, even though design patents are costly, and hard to come by, for those designers fortunate enough to develop, and maintain, a style that is truly unique, a design patent may be the answer to their protection needs.
Fashion Related Contracts and Licensing
An essential aspect of fashion law is the presence of contractual agreements that govern a wide range of issues, including licensing, manufacturing, distribution, franchising, and copyright assignments.
Licensing agreements are contracts in which the owner of a brand (licensor) allows another entity (licensee) to use the brand’s intellectual property for a mutually agreed upon period in exchange for a fee or royalty. Licensing agreements are a lucrative option for IP owners to expand and profit from their intellectual property. This option is especially desirable when an IP owner does not have the financial means or expertise to manufacture, distribute, and market a product. It also benefits the licensee by allowing it access to industry experience, established brand, and investments into marketing and advertising that would not otherwise be available. Licensing agreements are short-term fixes to branding problems such as diversifying catalog of products, entering new markets, quickly increasing market share, and lowering marketing costs. Without licensing, creation of this catalog would require significant investments into research and development. However, secondary markets, such as luxury perfumes and nonalcohol beverages, do not create much long term value as proven by the high failure rate of their product lines. Licensing deals are common in fashion and usually fall within three major categories: trademark licensing, copyright licensing, and patent licensing. They can also fall within two varieties being exclusive licensing and non-exclusive licensing. Exclusive licensing provides the licensee with the exclusive right to sell a product that includes the licensor’s trademark. Their exclusivity can also extend to territory, time, and product line. Non-exclusive licensing provides the licensee with the option of creating similar products. The licensee would pay the licensor for using his/her trademark and will benefit from the goodwill of the brand, but the licensee will not have exclusive proprietary rights to the product.
Employment and Labor within the Fashion Industry
The current global trend of outsourcing production outside the U.S. and into foreign countries, where tax, labor and employment laws may not be as stringent as stateside, has the potential to create liability for the manufacturer and designer, said A. Kimberly Hodkinson, a partner in Barnes & Thornburg’s Los Angeles office. "The employment and labor laws of the country in which the product is produced have to be kept in mind at all times to avoid harsh penalties on the designer/employer for violations," she said.
In addition, class actions and lawsuits filed by independent contractors for misclassification are increasingly common in today’s changing economy makes it essential for owners of art and fashion institutions to evaluate their employee classifications.
"The misclassification of employees has become a big issue in the fashion and entertainment industries. Many fashion designers or independent artists in one of these industries feel that they are independent because they work on a contract or freelance basis only. However, in view of the economic factors associated with being an independent contractor, employers and employees should closely scrutinize this classification to ensure that it is appropriate," said Hodkinson.
The Fair Labor Standards Act (FLSA) provides a broad definition of employment, and the minimum wage and overtime sections of the FLSA apply to anyone who works for an employer and is covered by the statute. So even a highly paid stylist or make-up artist who has an agreement with the photographer designating them as an independent contractor may not be an independent contractor under the law, said Elizabeth R. Ferrell, managing partner of the Jacksonville office of Jackson Lewis LLP.
There is also a more narrow definition of employee used in the Internal Revenue Code. Many of the penalties associated with misclassification stem from misreporting of income on the company’s taxes. Owners of art and fashion institutions should be aware of this issue when granting independent contractor status to stylists and other nondesign positions.
Workers’ compensation exemptions are another employment issue for fashion and arts employers. Some states, such as California, exempt artists from workers’ compensation requirements. Directors, producers, choreographers and fashion designers should investigate the laws of the state where they do business to determine whether they are required to carry workers’ compensation insurance for employees, technicians, day players and others.
Labor relations issues also abound in the fashion and arts industries. The primary union representing actors, singers, dancers, models and background performers is Screen Actors Guild (SAG), which branches out to include separate unions for actors, singers and dancers (e.g., SAG, American Federation of Musicians, Screen Extras Guild). Members of any one union are typically not allowed unless first joining the first union, which further invites labor relations scrutiny from state and federal agencies. Employees in the fashion and art industry may also be represented by the Communications Workers of America, United Farm Workers of America (which claims to represent models), unions affiliated with the Teamsters or IATSE (International Alliance of Theatrical and Stage Employees), or unions local to a particular non-acting profession (e.g., the American Guild of Musical Artists).
Counterfeiting and Brand Protection in Fashion
Of course, this raises the obvious question:
So what can I do to protect my brand from counterfeiters?
Once you find out that a counterfeit or knock-off of your product has surfaced, there are a number of steps you could take. Consider the following:
Web takedown requests: Most retailers have a policy against selling counterfeit goods via their e-commerce websites, and as a content host, they will remove counterfeit listings upon request.
Website blocking the ISP address of the offending website: Once a counterfeit website has been identified, its ISP will block it upon request.
Breach of contract.
Arbitration .
Legal proceedings including injunctions, damages, and seizure of counterfeit goods.
Providing notice to law enforcement authorities.
Trade partners – retailers, distributors, and manufacturers — should all be educated about the risk and consequences of working with purveyors of counterfeit goods.
While enforcing your intellectual property rights may seem like an arduous task, it’s imperative to fight against counterfeiting. Counterfeit goods not only destroy brand identity, they also diminish the quality and reliability of the goods in question. Brand protections signal quality and exclusivity to consumers, and so it’s important to protect this critical asset.
Digital Presence and Fashion Law
The emergence of online sales and digital marketing has fundamentally transformed the fashion industry. E-commerce presents a number of legal issues that are unique to fashion designers, manufacturers, and retailers. Online sales and the development of online communities and social media have opened up an entirely new way to interact with consumers. While this presents many opportunities for fashion brands to cultivate customer loyalty and boost their bottom lines, reliance on e-commerce also opens a host of concerns in regards to consumer privacy. The market power exerted by online giants such as Amazon and Google prompts more questions than answers when it comes to issues of competition and fairness. The new feasibility of online marketplaces for independent designers and retailers further complicates the issue. The dynamic nature of the fashion industry means that many aspects of e-commerce are constantly evolving; the law is often not far behind.
Sustainability, Efficiency and Fashion Law
One of the most significant ways in which fashion law aims to maintain sustainability and ethical practices in the fashion industry is via regulatory frameworks, legislation, and industry standards that promote environmentally-friendly and socially-responsible activities in the industry. These can take the form of incentive regulations and direct regulations focused on the fashion industry and the materials used in the manufacturing process.
Several countries like China, Bangladesh, and India that are known for producing a significant portion of the world’s textiles and garments have passed legislation aimed at improving working conditions and workforce capacity, increasing wages and assuring benefits to avoid instances of repetitive stress injuries and debilitating work injuries among their workforces. In response to existential factors such as these, many Western nations have imposed tariffs on textile and fabric imports that do not meet sustainability or ethical manufacturing guidelines. These factors, among many other factors, are all considered while drafting bills and resolutions and developing laws tithed to the fashion industry.
The Next Trends in Fashion Law
As the fashion industry continues to evolve, so too do the laws that seek to regulate them. In the coming years, we can expect to see emerging areas of law related to the use of technology in the fashion industry, such as digital copyright protection for virtual fashion items and the protection of trade secrets in the context of e-commerce and technology development. These may include: Further developments related to the protection of artificial intelligence. Artificial intelligence is at the forefront of transforming the way we conduct business, especially within the fashion industry. Investors and other fashion businesses can expect to see many technology-based innovations from AI-driven copyediting tools to new ways of marketing and merchandising.
Increasing regulation of fair labor practices in fashion supply chains. Laws incentivizing transparency in the fashion industry and regulations preventing unfair labor practices are likely to become more widespread and sophisticated globally . The recent focus on supply chain optimization and resilience is likely to drive many fashion companies to enact more ethical business practices that are likely to involve changes in their supply chain.
A stronger focus on mental health in the fashion industry. A number of organizations and movements have brought attention to the mental health issues prevalent in the fashion industry, including the Model Alliance. This increased awareness may drive legislation that seeks to promote and protect the mental wellbeing of fashion industry professionals.
Continued focus on environmental sustainability and climate change. As climate change grows in importance to society, legislation regulating fashion brands’ carbon footprints and energy consumption patterns as well as ensuring greater sustainable business practices is likely to increase.