Elite Knockoffs and Nascent Designers

By David H. Faux*

A pdf version of this article may be downloaded here.

I.    Introduction

The current debate over increased protection for fashion design is largely focused on a dichotomy: whether additional protection is necessary or if it is actually counter-productive for the industry. This dichotomy is false. The proper contrast is between protection of authorship versus protection of reputation. In short, while elite design houses enjoy some tools for protecting their reputations, beginning designers need legislation that will enable them to enforce rights based on notions of authorship.

Underlying this article is the assumption that fashion designs deserve copyright protection. Each design has a unique “character,” [FN1] and expresses a point of view. [FN2] Combine these original expressions with the fact that clothing is a tangible form, and it seems obvious that fashion designs are copyrightable material.

II.    The Current Debate

The current debate over design protection revolves around two main writings: the Design Piracy Prohibition Act (the “DPPA” or the “Act”) and “The Piracy Paradox: Innovation and Intellectual Property in Fashion Design.” While the detailed pros and cons of each document are beyond the scope of this article, it is important to give a brief overview of their positions and terms, since they define so much of the current debate.

A. The DPPA

The DPPA is currently in committee. If passed, it will give copyright protection to designs for three years after first made public. [FN3] This is long enough to conceive, develop, produce, market, and sell a design, perhaps with time left over for brief subsidiary licensing. [FN4]

The Act also allows for substantial damages. Recovery for finally adjudicated infringement would amount to “$250,000 or $5 per copy,” giving fashion designers a significant prospect for the lawyer who accepts cases on contingency. [FN5]

While each part of the DPPA has its share of controversy, probably the most universal concern is over the definitions of “fashion design” and “apparel.” “Fashion design” is defined as “the appearance as a whole of an article of apparel, including its ornamentation.” [FN6] “Apparel” is defined as “(A) an article of men’s, women’s, or children’s clothing, including undergarments, outerwear, gloves, footwear, and headgear; (B) handbags, purses, and tote bags; (C) belts; and (D) eyeglass frames.” [FN7]

B. The Piracy Paradox

“The Piracy Paradox” is a 2006 article essentially arguing that “free appropriation” in fashion does not stifle innovation, but “may actually promote innovation and benefit originators.” [FN8] This is accomplished through “induced obsolescence” and “anchoring.”

“Induced obsolescence” is where “free appropriation speeds diffusion and induces more rapid obsolescence of fashion designs,” causing a need for more frequent innovation. [FN9] “Anchoring” refers to a process whereby rampant copying within a season helps to define that season’s trends. Consumers follow the trends until another innovation occurs. At this point, rampant copying takes place and a new trend is born. [FN10]

Like the DPPA, “The Piracy Paradox” has been quite controversial.  In her article, “The Double-Edged Scissor: Legal Protection for Fashion Design,” Emily S. Day sets forth what have become the major critiques of the Piracy Paradox.[FN11] Namely, she states that Raustiala and Sprigman assume incorrectly that “all fashion designs are ‘status goods’ whose brand name is commonly recognized.” [FN12] Second, they also make the false assumption that “the designers themselves could not generate the same economic benefits through intellectual property protection and their own production of ‘copies’ through the use of lower-priced bridge lines.” [FN13] Third, they do not address the problems created when the counterfeits and knockoffs supposedly benefitting the economy are actually “counterfeits and knockoffs of clearly inferior quality.” [FN14]

These critiques should be expanded to include another: proponents of the Piracy Paradox assume inferior quality knockoffs of elite-house designs to be qualitatively the same as the design theft by more established, “legitimate” corporations against beginning designers. The significance of this assumption is that if they are not qualitatively the same, then these different offenses likely require different responses. That is to say, elite design houses have established reputations and, thus, can fend for themselves under existing intellectual property law. They already have the resources (relative to what start-up houses have) to pursue those claims. Of course, established houses will not be precluded from the benefit of any legislation that bolsters protection for fashion design. In contrast, the beginning designers require more; they require protection not based exclusively on reputation.

This implies a focus wherein fashion design protection should not rest on cheap knockoffs of established brands. Like in the DPPA, protection should address quality knockoffs of designs stolen from the anonymous hopefuls, the nascent designers.

III.      Different Infringements

A. The Policy Against Reputation Infringement

The policy against knockoffs is predominantly trademark-based. Trademarks “foster competition and the maintenance of quality by securing to the producer the benefits of good reputation.” [FN15] They help “assure a producer that it (and not an imitating competitor) will reap the financial reputation-related rewards associated with a desirable product.”[FN16]

At its most basic level, the significance of a positive commercial reputation is that it makes a market more efficient.[FN17] To wit, consumers need not take too much time shopping for, e.g., tissue paper if they know they will purchase decent quality from Kleenex®. Similarly, when an elite fashion house discovers inferior quality knockoffs of its brands, its main concern is about damage to its good will with the consumers. This reputation-based protection does not address situations where the design is stolen from one prior to establishing her reputation as a nascent designer.

Of course, established designers still have whatever copyright, patent, or other laws at their disposals. And because they are established, they not only have reputations, but cash flows superior to nascent designers. In other words, these elite houses are already better situated within existing law to address the infringements that concern them the most.

Probably one the most famous court cases of fashion infringement is fifteen years old and took place in France. In Société Yves Saint Laurent Couture S.A. v. Société Louis Dreyfus Retail Mgmt. S.A., Yves Saint Laurent successfully sued Ralph Lauren for infringement of its tuxedo dress. [FN18] But even in the States, the larger names are able to choose their moments to engage civil actions. For instance, Diane von Furstenberg, LP and Ann Sui Corp. have both sued Forever 21, Inc. for various replications of their designs. [FN19]

B. The Policy Against Authorship Infringement

A nascent designer, by definition, has no reputation. Therefore, the policy behind such protection must arise from a different perspective. The most common foundations for protecting copyrightable work are the “incentive theory” and “natural rights” theories.

The “incentive theory,” which, while “the immediate effect . . . is to secure a fair return for an author’s creative labor,” has the ultimate aim of “by this incentive, to stimulate artistic creativity for the general public good.” [FN20] More explicitly, the purpose of copyright law, then, is not to reward the individual artist for her contribution, “not to reward the labor of authors, but ‘to promote the Progress of Science and useful arts.’” [FN21] As such, one significant component of copyright protection is that it lends itself to public benefit rather than market efficiency.

The “natural rights” theories have the ultimate aim of fairness towards an originating innovator, in this case the artist. This notion of connecting copyright to an individual’s innovation upon nature comes from John Locke’s Two Treatises of Government. [FN22] Specifically, it is rooted in the notion that when someone applies personal labor to a thing in nature, that thing becomes her property. [FN23] In this way, the Lockean component infuses copyright law with natural rights and fairness, rather than market efficiency.

C. The Specific Problem of Authorship Infringement

As stated above, the elite fashion houses have recourse against pirates by protecting their reputations through trademark litigation, making their situations remarkably different from the plight of nascent designers. Yet, this difference appears to have been lost on proponents of the Piracy Paradox: they only consider the elite designer’s perspective.  Indeed, proponents describe the fashion industry as “a school of fish moving first this way and then that, [wherein] fashion designers follow the lead of other designers in a process that, while bewildering at times, results in the emergence of particular themes.” [FN24]

Specifically, though, these proponents state that piracy drives the elite fashion houses towards evermore innovation.[FN25] Supposedly, a trend only “trickles down” from the elite houses to the “less expensive retailers.” [FN26] This belief is flushed out by these proponents’ examples. They quote Miucci Prada as stating, “We let others copy us.  And when they do, we drop it.” [FN27] They point out that the Chanel label, though unable to stop other firms from copying its designs, is doing fine as a business. [FN28]

Established houses, though, often find innovation among nascent designers. [FN29] It is these designers that need protection through additional legislation. Certainly such instances are well-documented. [FN30]

For example, designer Narcisco Rodriguez designed a dress for Carolyn Kennedy that was famously copied before he could make copies of the original designs for himself. [FN31] Day also recounts the story of Ananas, a handbag label whose design by “a young wife and mother working from home, was knocked off. An identical design was offered at a lower price on the Internet. As a direct result, a buyer cancelled his wholesale order and an independent customer bought the cheaper counterfeit version online instead.” [FN32] Clearly, the elite houses and nascent designers have different concerns.

IV.    Different Reactions

Without increased protection for nascent designers, protection will be available only to those who can prove they have purposefully built reputations: trademark holders with the resources available to support a civil suit. This means only established houses currently enjoy protection, at times to the exclusion of their younger competitors.

By allowing the established houses the advantages of “free appropriation” while allowing them to defend claims based on reputation, the current law prioritizes an efficient economy over innovation and fairness. Not only does this stunt industry advancements, but it also leads to a facile monopoly. The general consensus states that monopolies, while efficient, [FN33] are outweighed by their imperfections. [FN34]

For example, certain industries such as oil, steel, and the railroads, can be best run by monopoly due to the limited nature of the involved resources. Even President Theodore Roosevelt—the grand trust-buster himself—had distinguished between “bad trusts, which gouged consumers, and good trusts, which offered fair prices and good service.” [FN35] Nevertheless, the United States specifically chose a sense of fair competition over efficiency through the Sherman and Clayton Acts, even in the face of finite resources. [FN36]

With an industry like fashion design, where the main resource—creativity—is unbounded, it makes even less sense to allow a monopoly, actual or facile. Efficiency aside, a worse economy results when established houses hoard innovation, allowing their influences to trickle down upon the anonymous designers from whom they may have stolen these copyrightable expressions in the first place.

Others argue that increased protection via legislation like the DPPA will not have any positive effect on the fashion industry. For example, some say that where better protection exists, such as in the European Union, the fashion designers do not use it. [FN37] One scholar goes further to state that “there is no indication that such protections successfully hinder design piracy.” [FN38]However, any copyright lawyer can relay story after anecdote about clients learning the hard lesson that having rights and enforcing them are two entirely different animals. [FN39] [FN40] If frequency of use were a criterion for enacting a law, the entire Copyright Act would be jeopardized.

V.    Conclusion

Ideally, there would be easier ways to protect fashion designs from piracy. For example, the Copyright Office could have a registry of fashion designs with imagery and a similar keyword/search structure to that used by the Trademark and Patent Office. Perhaps we could determine the exact statutory rewards that would perfectly balance against the risks and upfront costs of litigation. Maybe the correct minimum statutory damages awarded would maintain a low number of weak actions, while allowing the maximum number of bona fide disputes. Whatever the solution, it must involve better access to the courts for nascent designers.

In that way, the DPPA is a step in the right direction. Placing increased protection for designs in the realm of copyright opens recourse to those with little to no assets in terms of reputation or finance. Adjusting the typical $150,000 of statutory damages per infringement to $250,000 or $5 per copy may balance the rewards and risks of litigation enough to bring forward bona fide disputes. Thus, both “inferior” and “elite” pirates will be on notice that there is more to success in a good economy than having and using an innovative piece of intellectual property—that property must also be owned by them through authorship or a proper license.

***

*David  H. Faux practices Intellectual Property, Entertainment, Art, and Business/Commercial Law.  His past and present clients include individuals and organizations involved in the fashion, sports & fitness, fine arts, photography, and graphic design industries.  In addition to his private practice, he serves as Director of Business Affairs at the Dramatists Guild of America, Inc.

Prior to becoming an attorney, Dave spent several years as a music journalist and, then, a publicist in the Northwest. He holds both a Master of Science and Master of Arts degree. He also spent a year in South Korea as a Fulbright Scholar.  He is the co-chair of the Fashion Law Committee for the New York State Bar Association’s Entertainment, Arts, and Sports Law Committee.

[FN1] See Shelley C. Sacker, Art Is In the Eye of the Beholder: A Recommendation for Tailoring Design Piracy Legislation to Protect Fashion Design and the Public Domain, 35 AIPLA Q.J. 473, 474 (2007) (confirming that it is “well understood that the chief value of  a ‘quality’ of dress lies not so much in the quality of the materials as in the smartness and originality of design”).

[FN2] MARY GEHLHAR, THE FASHION DESIGNER SURVIVAL GUIDE, 60, Kaplan Publishing (2008), (instructing that a “designer needs a signature point of view to differentiate his line from others and make it special”).

[FN3] H.R. 2196, 111th Cong. § 2(d) (2009).

[FN4] GEHLHAR, at 36 (stating that a designer should, in October of 2008, “[b]egin designing and ordering fabrics for Fall 2009”); Labels for Less, N.Y. POST, Sept. 2, 2006, at 10 (suggesting designers require eighteen to twenty-four months to express their ideas in sketches and move them to final manufacture).

[FN5] H.R. 2196, at § 2(g).

[FN6] Id., at § 2(a).

[FN7] Id.

[FN8] Kal Raustiala & Christopher Sprigman, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, 92 Va. L. Rev. 1687, 1691 (2006).

[FN9] Id., at 1722.

[FN10] Id., at 1729.

[FN11] Emily S. Day, Double-Edged Scissor: Legal Protection for Fashion Design, 86 N.C.L. Rev. 237 (2007).

[FN12] Id., at 260.

[FN13] Id.

[FN14] Id.

[FN15] Park ‘N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 198 (1985).

[FN16] Qualitex Co. v. Jacobson Products Co., Inc., 514 U.S. 159, 164 (1995).

[FN17] William M. Landes & Richard A. Posner, Trademark Law: An Economic Perspective, 30 J.L. ECON. 265, 275 (1987).

[FN18] Société Yves Saint Laurent Couture S.A. v. Société Louis Dreyfus Retail Mgmt. S.A., [1994] E.C.C. 512, 514 (Trib. Comm.) (Paris).

[FN19] Complaint of Plaintiff, Diane von Furstenberg v. Forever 21, No. 07-CV-2413 (SDNY Mar. 23, 2007); Anna Sui v. Forever 21, 2009 U.S. Dist. LEXIS 33044 (SDNY 2009).

[FN20] Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975).

[FN21] Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 349 (1991) (quoting U.S. Const. art. 1, § 8, cl. 8).

[FN22] Nimmer, on Copyright, §2.02 The Subject Matter of Common Law Copyright.

[FN23] JOHN LOCKE, TWO TREATISES OF GOVERNMENT (1690), Chapter V. (Of Property), §27, stating, “Whatsoever then he removes out of the state that nature hath provided and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property.”

[FN24] Raustiala & Sprigman, at 1721.

[FN25] Anya Jenkins Ferris, Real Art Calls for Real Legislation: An Argument Against Adoption of the Design Piracy Prohibition Act, 26 CARDOZO ARTS & ENT. L.J. 559, 579 (2008); Trademark Law: An Economic Perspective, 30 J.L. ECON. 265, 275 (1987) (asserting that “the fashion industry overall continues to profit and to produce new original lines of apparel”) (emphasis added).

[FN26] Laura C. Marshall, Catwalk Copycats: Why Congress Should Adopt a Modified Version of the Design Piracy Prohibition Act, 14 J. INTELL. PROP. L. 305, 313 (2007).

[FN27] Raustiala & Sprigman, at 1722 (quoting “The Look of Prada,” IN STYLE MAGAZINE, Sept 2003 at 213).

[FN28] Raustiala & Sprigman, at 1723.

[FN29] Susan Scafidi, Design Piracy Prohibition Act: Historical Regression, http://www.counterfeitchic.com/2008/03/design_piracy_prohibtion_act_h.php (affirming, “Some big companies have grown wealthy by copying small-scale creative designers, and they don’t particularly want to stop”).

[FN30] See Marshall at 306 (stating that “designers at all levels of renown have seen their designs replicated by large companies before the originals even make it onto the retail market” (emphasis added).

[FN31] Rosemary Feitelberg, “Schumer Tours Plan to Fight Design Theft,” WOMEN’S WEAR DAILY, Aug. 9 2007, at 12.

[FN32] Day, at 2; Marshall, at 313.

[FN33] See Mark Cooper, Ph.D., Perspectives on Antitrust Law: Anti trust as Consumer Protection in the New Economy: Lessons from the Microsoft Case, 52 Hastings L.J. 813, 822 (2001) (discussing the theory that monopoly “does not lead inevitably to a bad economic outcome for society.  Sometimes an industry develops in such a way that monopoly is not only a likely outcome but a desirable one”); F.M. SCHERER & DAVID ROSS, INDUSTRIAL MARKET STRUCTURE AND ECONOMIC PERFORMANCE, 4, Chicago, Rand McNally (1990) (arguing that “firms need protection from competition before they will bear the risks and costs of invention and innovation, and a monopoly affords an ideal platform for shooting at the rapidly and jerkily moving targets of new technology”).

[FN34] See Sidney A. Shapiro and Joseph Tomain, Realizing the Promise of Electricity Deregulation: Article: Rethinking Reform of Electricity Markets, 40 Wake Forest L.Rev. 497, 507-08 (2005) (discussing the problems of utility monopolies as requiring government intervention despite their benefits).

[FN35] RON CHERNOW, TITAN: THE LIFE OF JOHN D. ROCKEFELLER, SR. 433 (Vintage Books 1999) (1998); see BRUCE BRINGHURST, ANTITRUST AND THE OIL MONOPOLY: THE STANDARD OIL CASES, 1890-1911 121 (Greenwood Press 1979).

[FN36] SHERMAN ACT § 1 et seq. (1890); CLAYTON ACT § 1 ET SEQ. (1914).

[FN37] Day at 12-13; Raustiala & Sprigman, at 1740.

[FN38] Sacker, at 480.

[FN39] E.g., Kimball Tyson, The Illegal Art Exhibit: Art of Exploitation? A Look at the Fair Use Doctrine in Relation to Corporate Degenerate Art, 9 Comp. L. Rev. & Tech. J. 425, 453 (2009) (describing how even corporate lawyers “agree that lawsuits against” potential infringers are rare); Emily Cunningham, Protecting Cuisine Under the Rubric of Intellectual Property Law: Should the Law Play a Bigger Role in the Kitchen?, 9 J. High Tech. L. 21, 41 (2009) (characterizing as rare suits among authors of cookbooks even “in instances in which professional cooks publish recipes that are blatant copies”).

[FN40] Julie P. Tsai, Fashioning Protection: A Note on the Protection of Fashion Designs in the United States, 9 LEWIS & CLARK L. REV. 447, 449 (2005).