Fashion design How can the fashion industry protect its designs?

Nuria Basi Moré President, Armand Basi Fabio Angelini ECTA Law Committee Susan Scafidi Professor and Academic Director, Fashion Law Institute at Fordham Chair: Verena von Bomhard Partner, Hogan Lovells

Fabio Angelini De Simone & Partners Fashion and Design rights How an empirical/economic approach may change the way the law sees them

"Fashion is a form of ugliness so intolerable that we have to alter it every six months." Oscar Wilde

Two scenarios 1) Someone says: “I have a registered /unregistered design right and some else is copying me”. OR Someone saying “that is accusing me of copying”. 2) Someone says: “I do not have a registered/unregistered design right and someone else is copying me”. OR Someone saying “that is accusing me of copying”. Please note I do not mention copyright, but one may add even that, if applicable!

The real problem: is “it” (copying, recycling or taking inspiration) bad? Let’s face it: however you want to call “it”, it is a common phenomenon, widely accepted. Large retailers survive by doing “it”. Who can deny that “fashion” is a trend and there is very little new under the sun. Most importantly does anyone have empirical evidence that “it” is bad?

Actually … “it” might not be that bad: cf. The Piracy Paradox: Innovation and IP in Fashion Design (Kal Raustiala and Christopher Sprigman, Virginia Law Review (Vol. 92:1687) 2006

The starting point is in the concept of “low-IP equilibrium”: “the three core forms of IP law – copyright, trademark, and patent – provide only very limited protection for fashion designs, and yet this low level of legal protection is politically stable.” The lack of design protection in fashion is not especially harmful to fashion innovators, and hence they are not incentivized to change it … this low-IP system may paradoxically serve the industry’s interests better than a high-IP system. Beware, the above conclusion is empirically proven valid for both the US market and for the EU market which differs for the kind of protection which is afforded to designs.

Anecdotal economic assessment of “its” impact on the industry as a whole It helps those who spend less and thus performs an economic and social function. Stricter IP protection might create monopolistic positions, thus slowing the fashion cycles leading to less innovation and higher prices due the lack of demand for new trends. Licensing costs resulting from stricter IP protection may increase prices and decrease innovation. Compares to other industries (music/film), there is a less negative impact from the low IP-equilibrium. Two reasons: “Induced obsolescence” and “Anchoring”.

A.Induced Obsolescence Positional Goods Fashion is not only tied to our personal taste. Fashion is now more than ever a status-conferring good: “Most forms of apparel above the commodity category… function as what economists call “positional goods...These are goods whose value is closely tied to the perception that they are valued by others.” These goods are “positional goods” defined by economists as “…bought because of what they say about the person who buys them. They are a way for a person to establish or signal their status relative to people who do not own them: fast cars … clothes from trendy designers.” Basically, the concept works in reverse to the famous quote…

Or, if you want a more “serious” quote: “Art produces ugly things which frequently become more beautiful with time. Fashion, on the other hand, produces beautiful things which always become ugly with time.” Jean Cocteau

Anchoring If the fashion industry successfully wants to maintain a cycle of induced obsolescence by introducing new styles each season, it must somehow ensure that consumers understand when the styles have changed. This happens in many ways, but “it” helps. The fashion industry itself does not always really know what will become “fashionable” and a new trend. Basically, when the market becomes suddenly saturated by “it”, one latest fashion becomes a “trend”. Therefore “it” helps to anchor the new season to a limited number of design themes, which are more or less freely workable by all firms in the industry within the low-IP equilibrium.

A regime of low IP protection, by permitting extensive and free “inspiration”, enables emerging trends to develop and diffuse rapidly, and, as a result of the positionality of fashion, to die rapidly. Induced obsolescence and anchoring are thus intertwined in a process conducive to quick design turnover. This turnover contributes to, though it does not by itself create, a market in which consumers’ purchases are at a level well beyond that necessary simply to clothe themselves. Together, induced obsolescence and anchoring help explain why the fashion industry’s low-IP regime has been politically stable.

The Seventies are back!!!! Great. But, in my view, there is a missing factor. Fashion is cyclical, and fashion itself recognizes that most of the time the inspiration is drawn by looking back at … past fashion.

The missing factor is the déjà-vu. Perhaps because I have been around for longer than I care to admit, I find myself thinking time and again that today’s fashion is oh-so-similar to … what we used to wear when I was younger. Here is a clue: the greatest consumers of fashion are the youngest. Because they do not, cannot remember. So, who is the greatest designer? Perhaps the one who notices first when it’s time to … look back to the past?

How does all of this fit from a legal perspective? In my view, it should guide Courts in correctly interpreting existing laws as well as IP owners in correctly deciding their strategies. Since I’ve been on both sides (sometimes I was a plaintiff’s lawyer, some other times a defendant’s lawyer), I’m really wary of militant (i.e. one-sided) IP law practice. Do you want an example? Let’s play a game: WHO IS THE “COPIER”?

Yves Saint Laurent or Chewy Vuiton

Wrong. Ask Louboutin …

Even those who pride themselves in being the leaders, not the followers, sometimes are on the wrong side of the equation. In practice, the paradox of fashion means that we ought to use IP rights, that is design rights, wisely, so as not to suffocate the cycle of innovation and still guarantee adequate ROI for those who create. Therefore, designers should choose among the different instruments that current laws provide keeping in mind what is the end result…

Registered designs should never be used for fledgling, seasonal fashion. Use them for fashion items that might last longer, such as handbags or perhaps shoes. Beware though: since there is nothing new under the sun, a skilful lawyer will often be able to find something in the past which may deny the individual character. Conversely, the Court should decline to expand the scope of protection of a design and treat with suspicion any attempt to do so.

Rely instead on unregistered design rights to protect seasonal fashion against real knock-offs, but beware that anchoring needs the existence of “inspired fashion” – if no-one follows you, no trend will ever be established. You’re going to be a freak. Conversely, Courts should narrowly interpret what “copying” means, and should not treat as interchangeable the concept of no different overall appearance with that of copying. Meaning that those who take inspiration and are “followers” should be left free to do so for the system to function.

In conclusion, it is my view that the interaction of IP rights (i.e. designs) and fashion is an uneasy one, which nonetheless has found its balance and it seems to work! Nonetheless, there is a problem for a restricted number of fashion designers, who thrive by the “allure” and profit so long as they are capable to restrict access to their product to extremely few customers. However, the nature and the cost of these products is often such that it is not even possible to talk about competition. There is no competition between an original and most times unique dress by a celebrated designer in super exclusive boutiques and the “inspired” dress sold at large department stores. Perhaps a balance can be struck, maybe with the adoption of “low cost” brands and /or with other models of distribution, but the question remains: if it ain’t broken, why fix it?

Re-Fashioning Intellectual Property Susan Scafidi Professor and Academic Director, Fashion Law Institute at Fordham

Susan Scafidi Professor and Academic Director, Fashion Law Institute at Fordham No authorization for distribution to attendees

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