Mar 2024

United States

Law Over Borders Comparative Guide:

Fashion Law

Introduction

The fashion industry in the United States is governed by a diverse set of rules and regulations at both the federal and state level. Intellectual property and similar rights, including trademark, copyright and design patent, are largely governed by federal law, and one or many of these rights may be used to protect a particular product. As both brands and artists increasingly experiment with fashion industry norms and incorporate fashion into other forms of artistic expression, a number of unresolved issues remain at the intersection of intellectual property and free speech. The contracts governing relationships and business arrangements among companies and individuals in the fashion industry, meanwhile, are dictated by state law. To avoid disputes and clarify each party’s rights, it is imperative to agree on detailed and robust contractual terms and to stay informed on how states respond to cutting-edge issues such as online advertising, privacy rights, and ESG.

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1 . What are the main intellectual property rights available to protect fashion products?

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1.1. Summary of IPRs

IPR in the USDurationTime and modalities for grantPros and cons in the fashion sector
TrademarksCan last indefinitely as long as the mark is in use.Registration through the United States Patent and Trademark Office (USPTO); application processing usually takes between 12-18 months.

Pros: can be used to protect brand names, designers’ personal names, logos or distinctive trade dress – in general a strong tool focused on preserving the company’s reputation.

Cons: fashion designs generally cannot be trademarked; trade dress protection is possible but requires secondary meaning and non-functionality.

DesignN/AN/AN/A
Trade secretsCan last indefinitely as long as they are kept secret and are commercially valuable.No registration or other procedural requirements. 

Pros: can be used to protect a broad range of valuable information, including manufacturing methods, lists of suppliers and distributors and advertising strategies.

Cons: limited scope – under US law, information is eligible for protection only if: 

  • its secrecy has economic value; 
  • it is not generally known; and 
  • the owner has taken reasonable measures to keep the information secret.
Domain namesMust be renewed every 1 to 10 years, depending on the registrar.Registration with domain registrar; activation usually takes between 24-72 hours.

Pros: 

  • Registration of a domain name that includes the brand’s name makes the company easier to find online and reinforces brand identity. 
  • If goods or services are sold on an associated website, this can constitute use of the mark in commerce for trademark protection.
  • Can prevent cyber squatters from registering official domains.

Cons: cyber squatters can easily register similar domains that can confuse consumers; brands must actively monitor.

Patents

Utility patent: 20 years after application filing date. 

Design patent: 15 years from date of grant (if filed on or after May 13, 2015).

Registration with the USPTO; approval usually takes about 22 months.

Pros: 

  • Can protect design features themselves, as well as functional innovations like zippers and types of synthetic fabrics. 
  • Offers strong protection, including against inadvertent copying.

Cons: patents require the innovation to be new and non-obvious, and the registration process can be lengthy and expensive — especially for utility patents.

CopyrightIf created after January 1, 1978, 70 years after death of the author (except for anonymous, pseudonymous, and for-hire works).Registration with the United States Copyright Office; processing and issuance of registration certificate usually takes between 3 and 9 months.

Pros: can be used to protect certain graphic designs on the surface of fashion items or in sketches, textile designs in or on fabric and certain logos.

Cons: protection is limited because copyright cannot be used to protect ideas, colors, cuts, common patterns, geometric shapes, alphabetic or numerical characters, simple arrangements or useful articles (i.e., articles with utilitarian function).

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1.2. Trademarks and non-traditional trademarks

A trademark is a brand name, logo, style name or other source-identifying feature of a brand or design. A strong trademark, in a single word, symbol or design, may convey a wide range of attributes about a product to consumers. For example, when consumers see the “LV” monogram on a handbag, they immediately recognize the Louis Vuitton products and can quickly make a reasonably informed decision about whether to purchase them. Trademarks are among a fashion company’s most important assets. They allow a business to distinguish its goods from goods produced by others and to police other companies that take advantage of its goodwill. Unlike other IPRs, trademark rights last indefinitely, so long as the marks are being used. Protection attaches as soon as the mark is used in commerce, even if the mark has not been registered, although the rights are limited in scope without registration; companies with concrete plans to use a mark may also seek an “intent to use” registration. 

Several types of trademarks are relevant to fashion: 

  • House Marks identify the provider of a wide variety of goods, such as KATE SPADE. When federally registering a house mark, this intention must be expressly indicated in the application, and examples of use as a house mark and indication of the goods encompassed must be included.
  • Product Styles range from the names of specific fashion lines, to products, to design elements, to sub-brands. Companies should weigh the benefits of registering each of these and remember to clear all of them regardless. 
  • Personal Names are often used to identify brands, such as TORY BURCH. Before these names can be registered, they must achieve acquired distinctiveness, i.e., be recognized by consumers as source-identifying to the business. Use of personal names for a brand may later impair designers’ ability to use their name in connection with separate ventures if they leave the company that holds the rights. 
  • Foreign Names are often used as brand identifiers. To register these, companies should ensure that the translation (as well as the mark itself) does not conflict with other already existing marks.
  • Trade Dress is particularly important because it is one of the few mechanisms to protect the overall appearance of designs and packaging and the visual features incorporated into clothing and other goods. It protects unique design elements, such as color, shape and patterns, including Louboutin’s red-soled heels, Burberry’s plaid and Hermés’ H-shaped fixtures. Trade dress must be non-functional and distinctive. For product design, acquired distinctiveness is necessary. Relevant evidence may include unsolicited media coverage, advertising examples, sales/advertising figures and consumer surveys. Proving acquired distinctiveness can be challenging and resource consuming. 

Trademark monitoring and enforcement is critical:

  • Enforcement typically occurs in federal court, and causes of action include infringement, dilution and counterfeiting. Infringement occurs when there exists a likelihood of confusion between marks. 
  • Dilution occurs when a famous mark is used in a manner that weakens its uniqueness through “blurring” or “tarnishing” the reputation of the trademark’s source. 
  • Counterfeiting occurs through use of an identical or substantially indistinguishable trademark in a spurious manner (i.e., fake goods). 

Enhanced damages are available for counterfeiting, willful infringement and dilution.

Fashion brands should be aware that, even when a mark is registered, creative expression, including expressive content, art and parody, may impact the ability to enforce. See Jack Daniel’s Properties, Inc. v. VIP Prods. LLC, 559 U.S. 140 (2023); Nike v. MSCHF, 21-1679 (E.D.N.Y. 2021). The right to free speech was “paramount” in the case where Nike sought to prevent shipments of “Satan Shoes”. Another issue mark holders may encounter is ornamental or functional use: if a mark does not signify the source of the goods, but rather expresses decoration or affiliation (such as a sweatshirt bearing a university’s name and colors), the mark holder may not be entitled to protection. See Pennsylvania State University v. Vintage Brand, LLC, 21-CV-1091 (M.D. Pa. 2021).

Another developing area of law concerns customizations and recycling: while trademark holders normally cannot control resale of their goods, some have brought suit to prevent others from reselling customized or repurposed goods. See Nike, Inc. v. Custom by Ilene, Inc., 21-1201 (C.D. Cal. 2021) (customized Nikes); Louis Vuitton Malletier S.A.S. v. Sandra Ling Designs, Inc., 21-352 (S.D. Tex. 2021) (repurposed Louis Vuitton products). Though many of these cases ultimately settled, they pose important, largely unanswered questions about the degree of a brand’s control over its products once they have been sold. 

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1.3. Design as an alternative or addition to TM registration

The US does not recognize design as an independent cause of action, but features of a product’s design may be protected through trademark, copyright or patent. 

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1.4. Copyright as an alternative or addition to TM registration

Copyrights are another important tool to protect fashion, but because they do not protect “useful articles” the protection is limited to certain fashion elements. Under this rubric, mechanical, functional or utilitarian characteristics of an object (including shape, contours, dimensions, specific cuts) are not protected, but original features that can be separated and exist independently may be. Examples of protectable elements include fabric prints, images placed on clothing, embroidery, lace and sculpted features. Copyright protection typically lasts for the life of the author plus 70 years; for anonymous or pseudonymous works, or works made for hire, it lasts 95 years from first publication or 120 years from creation, whichever expires first. 

Copyrights are available only if the work was independently created and original, i.e., possesses a minimal degree of creativity – a low threshold. Even where the independent elements of a design are not sufficiently original, the specific arrangement or combination of elements may merit protection, such as a unique combination of lace patterns. As with trademark, copyright claims are subject to a number of expression-protecting defenses, including fair use, de minimis use and scenes a faire (i.e., the copied element is a classic or unavoidable element in a given genre). 

Enforcement typically occurs in federal court. Infringement occurs when a valid copyright has been copied. The exact test for infringement varies by jurisdiction so it is important to research the law, but most jurisdictions require actual copying (i.e., the copier did not accidentally arrive at the same expression) and copying of the core original, expressive elements of the work. Copyrights may be registered at any time, but registration is a prerequisite for enforcement in federal court. Statutory damages are available if an owner registers its work either within three months of publication or before the infringement occurs. This is an important benefit because actual damages (in both the copyright and the trademark context) can be very difficult to prove. 

Fashion companies need to pay attention to copyright ownership issues. Where a work is prepared by two or more authors with the intent to collaborate, a joint work is created. Joint owners cannot sue each other for infringement and cannot grant an exclusive license to the work but are otherwise free to use the work as they please. When employees within the scope of their employment create an original work, the works are considered “works made for hire” and the employers are the “author” of the works. But when contractors create works, without a special agreement stating otherwise, the contractors are the authors and owners. 

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1.5. Any other pertinent IP rights

Patents. US fashion companies are increasingly turning to patents as an alternative and additional means of protection. The same product or design can be simultaneously protected by multiple patents, trademarks and copyrights. 

Utility patents protect underlying inventions – the way something is used or works. Fashion examples include innovative fabrics or processes, such as for manufacturing, securing/fastening or “slenderizing” appearances. Protection lasts for 20 years from the date of patent application filing.

Design patents, which are generally less expensive and easier to obtain than utility patents, protect the ornamental design (i.e., look and feel) of an article of manufacture. A functional design (i.e., a design whose appearance is dictated by the use of the article) is not entitled to protection. The Federal Circuit (the federal court that specializes in patents) decided to consider whether the standard regarding an invention being “obvious” (and thus unprotected) should be merged for design and utility patents; its decision may have serious consequences for design patents and the case has already received considerable attention. See LKQ Corp. v. GM Glob. Tech. Operations, 22-CV-1253 (Fed. Cir. 2022). Similar to utility patents, a patented design must be novel or a non-obvious modification of prior art. Protection lasts for 15 years after the patent grant date. 

Patents are primarily enforced through infringement actions in federal court. Infringement occurs when a party makes, uses, offers to sell, sells or imports the patented invention or design without authority; unlike with copyright, actual copying is not required for a patent action. Accused infringers often defend against infringement claims by alleging non-infringement, trying to limit the scope of the patent based on prior art, or seeking to invalidate the patent. Invalidation is a fact-specific inquiry and accomplished only by proving a specific defect, such as lack of novelty, obviousness, disclosure more than a year prior to patenting or, for design patents, functionality. 

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2 . Beyond intellectual property: what contractual arrangements are useful in manufacturing, distributing and advertising fashion products?

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2.1. Manufacturing fashion products

License agreements 

Licensing agreements allow for use of another’s infrastructure and resources to produce products. They may involve different services, such as design, sourcing or production. Contracts are governed under state law according to standard contractual interpretation principles. Companies should pay close attention to choice of law provisions and, above all, ensure the terms are clear and unambiguous.

Key components of a licensing agreement include: the scope of the license; term and termination; compensation; buy-out rights and rights of first refusal/negotiation; confidentiality and trade secret protection; representations and warranties; and indemnification and insurance. Contracts should carefully set out the production process and quality controls, including: the roles and responsibilities of each party involved; approval rights; any expected collaboration; and rights to leftover goods/materials to prevent counterfeits. Terms governing the licensee’s code of conduct are also important, such as compliance with best industry practices for manufacturing and laws and regulations impacting labor, employment, non-discrimination, health, safety and environment.

IPR clearance remains critical. In Gucci America, Inc. v. Guess?, Inc., 843 F. Supp. 2d 412 (S.D.N.Y. 2012), Guess was ultimately found liable for trademark infringement related to designs created and manufactured by Marc Fisher Footwear under a license. Stronger clearance processes required through the license – and by Guess itself – may have changed this result. Companies that do not monitor and control the goods produced under their IPRs may even lose their rights altogether; in trademark, this is referred to as “naked licensing”. 

Non-disclosure Agreements (NDAs)

NDAs protect disclosure of confidential information. They should unambiguously specify: which parties are bound; the information to remain confidential (especially IPRs like patterns, designs, sketches and samples; business information like branding, marketing and business plans; financial information; customer lists; creative processes and other know-how and/or trade secrets); all ways the protected information may be used; and steps to prevent and remedy accidental disclosure. Some manufacturers may be reluctant to take on the liability of an NDA if they produce items for several different brands; mutual NDAs may help alleviate the concern. 

Subcontract agreements with suppliers/in-house manufacturing

Supply contracts and/or individual purchase orders with vendors for materials are essential. These are generally governed by state law, including the Uniform Commercial Code (discussed below). Companies sourcing goods internationally must be familiar with international law on commercial sales, such as the UN Convention of Contracts for the International Sale of Goods, as well as with import and customs issues. 

Standard terms include: product description; pricing and payments; delivery and shipping; quality controls and inspection rights; workplace standards; ownership of IPRs; seller warranties; and governing law and dispute resolution. Like with licensing, vendor compliance with all applicable laws is essential to avoid later liability. 

Fashion companies should clearly set out in their contracts when and under what terms subcontracting is permissible. Many fashion companies require approval rights over the selection of subcontractors. Provisions governing ownership of all IPRs created and trade secrets relied on are particularly important in these agreements. For instance, subcontracting arrangements are not automatically classified as works for hire, which may mean the subcontractor owns any copyrightable works created. 

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2.2. Distributing fashion products

Agency agreement 

An agency agreement authorizes an agent to conduct business on its behalf. Such agreements are typically governed by state law according to standard contractual interpretation principles. As with the other agreements discussed in this chapter, the parties should set clear and specific terms governing all aspects of the agreement, including, for example: the scope of the agent’s authority; the IPRs and other rights maintained by the principal; and confidentiality and trade secret protection and indemnification.

Selective distribution online in high-end fashion and trademark protection

Fashion companies should be aware of specific considerations for licensing in the sales and retail context. Brands may choose to control their reputation and exclusivity by preventing licensees from selling through certain distribution channels, such as discount stores or on the Internet. Failure to include clear terms specifying permitted retailers or categories of retailers, pre-approvals for retailers and/or limitations on where a distributor may sell and ship may lead to litigation. For example, Calvin Klein sued to terminate a licensing agreement with Warnaco after learning that its jeans were for sale in Costco, alleging breach of contract, trademark infringement and dilution. Warnaco countersued for breach of contract, and the high-profile litigation settled only on the eve of trial.

Other distribution provisions to consider include clauses that set out: specific territories for sales (and prevent gray market goods); locations of retail stores; guidelines for store design and staffing; management of excess inventory; product recall rights; and advertising and marketing requirements and approvals. 

In general, once a product is sold to a customer, brands have little control over when and how it may be resold. As noted above, a company may bring a trademark infringement action if the reseller materially altered the product. Companies should also pay attention to misuse of their IPRs in online resale markets. For instance, in Chanel, Inc. v. The RealReal, Chanel accused a resale marketplace of selling counterfeit Chanel bags. The court found that the marketplace could potentially be liable for direct trademark infringement because it exercised some degree of control over whether and how the goods were sold. See Chanel, Inc. v. The RealReal Inc., 449 F. Supp. 3d 422 (S.D.N.Y. Mar. 30, 2020).

Co-branding and co-marketing 

Fashion collaborations are increasingly common, necessitating governing agreements. Brands should expressly identify the relevant IPRs to be used, as well as the parties’ respective rights to use the IPRs of the other. For blended marks (combining aspects of both brands), the permitted uses by each brand should be clarified to avoid confusion, including where the blended mark may appear and through what channels (e.g., websites, social media, domain names, hashtags and marketing campaigns). Brands should also set clear durations for use and termination rights, including whether remaining inventory may be retained or used outside of the collaboration period. 

Franchising and alternative sales model agreements 

In a franchise agreement, the franchisee is given access, via a limited license, to the franchisor’s IPRs and products and authorized to do business under the franchisor’s name. Consignment, meanwhile, is a unique arrangement allowing brands and individual owners to maintain ownership over products while granting retailers the right to display and sell those products for a set period. For brands, both types of agreements should clearly define the term of the agreement, the percentage of revenue each party receives upon sale, distribution of liability for lost or damaged goods and the effects of non-sale. For franchise arrangements in particular, many of the same concerns animating manufacturing agreements will apply.

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2.3. Advertising fashion products

Advertising agreements can take many forms, including agreements with advertising agencies, photographers, artists and content providers and production companies. Like other US contracts, advertising agreements are governed by state law and should be put into writing and executed.

Licenses are necessary for use in advertising of all content that the fashion company does not own, such as music, props, locations and images. If such rights cannot be secured, brands can work to retouch third-party IPRs from the advertising campaigns before they are released. Brands and agencies should carefully set out who is responsible for clearing these rights. Even if the responsibility contractually falls to an outside agency, fashion brands still face potential reputational risk, so it is best for brands to conduct their own reviews to ensure necessary licenses, permissions and releases are in place. 

Ownership of all advertising should be contractually specified, including whether photographers, artists and other content creators retain any rights in the content (e.g., for use in a professional portfolio). If more than one party has a right to use the underlying content, the parties should set specific parameters (e.g., restrictions on the timing and placement of use to avoid premature leaks). 

Employing fashion models 

Written agreements with talent appearing in advertising are necessary in light of state Right of Publicity laws, which require companies to seek permission to use an individual’s name, image, likeness, voice or persona. The laws vary by state, with some – such as California – being much more expansive than others. The location in which the talent resides or is domiciled (or, in the case of deceased talent, died) will generally govern what state law applies, though a few states provide broader rights regardless of location.

Specific termination and warranty provisions protect fashion companies that rely on talent in advertising. Morality clauses protect a brand’s image in case the talent behaves in a way that may harm the company’s reputation by providing a termination right. Talent may protect themselves by requiring other provisions, such as “pay or play” terms that will ensure payment even in the event the company decides not to use advertising in which the talent was supposed to appear. 

Talent agreements must also take into account labor laws, particularly when minors are involved. Some states, such as New York, require companies to obtain permits before engaging minors, as well as regular breaks, the presence of chaperones and/or tutors or the provision of trust accounts for earnings. Representations and warranties should be obtained from all talent regarding their age and appropriate documentation. When a company contracts with a minor, the parent or guardian should be the signatory.

Unions and collective bargaining agreements may also impact wage and working conditions. The Screen Actors Guild is an actors’ union that requires certain working conditions and wages for members. Even if not a signatory to a SAG contract, a brand may be subject to the requirements if, for instance, the production company is a signatory or a licensing agreement for music or content to be used in connection with the advertisement, requires the brand to assume its union obligations. 

Social media, influencers and brand ambassadors/celebrities 

In a world where social media is increasingly important for advertising, fashion companies must pay close attention to their contractual arrangements with anyone speaking on their behalf. To avoid legal backlash (described below in Question 3), contracts must require all influencers, brand ambassadors and other endorsers to clearly and unambiguously disclose the relationship to their followers. Good practice includes setting out when and where disclosures must be used and providing the exact language of disclosures (e.g., specific hashtags or use of sponsorship labels). Brands should also include representations and warranties mandating that all endorsements and testimonials reflect honest views and experiences. 

Other important contract terms to consider are advance approval rights for content, brand take down rights and how the endorsers will be compensated (e.g., fixed fee per month, per post, per number of followers). 

Brands must also pay attention to how they themselves may use posts created by influencers and ambassadors, for instance through boosting, whitelisting or putting paid media behind the posts. Organic social media posts are meant to be just that – organic. When they are boosted, whitelisted or transformed to paid media, the influencers may require approval rights to ensure the character of the posts (and credibility of the authors) are not impacted. Some influencers may demand clauses prohibiting this conduct all together. 

Advertising standards, relevant authorities and advertising practice

See Question 3 below for a full discussion of the regulation of advertising and marketing in the United States. 

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3 . What regulations govern online marketing and how are the rules enforced?

Advertising, both online and offline, is regulated through many avenues, including both federal and state law. All agree: advertisements that are false or deceptive, i.e., likely to mislead and to affect consumers’ behaviors or decisions, are prohibited. Advertisers are responsible for all reasonable consumer interpretations of their ads, even if a takeaway was not intended or not explicitly stated. All claims made must be substantiated, and unqualified claims that cannot be supported should be avoided. Qualifiers or disclaimers are allowed, but they must be clearly and prominently displayed in close proximity to the claim(s) they modify and cannot contradict the main message of the primary claim.

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3.1. Consumer protection regulations

The Federal Trade Commission (FTC)

The FTC is a federal agency with broad authority to regulate marketing and product labeling that is unfair, deceptive or fraudulent, including unsubstantiated advertising claims about the safety of a product. 

In recent years, the FTC has increasingly focused on online advertising, including regulating undisclosed sponsorships, often occurring in “native advertising” – advertising that does not look like advertising. These ads are considered deceptive if endorsement relationships are not properly disclosed. FTC guidelines make clear: 

  • The company and endorser must disclose that they have a material relationship.
  • Disclosures must be clearly presented and not be buried. 
  • Endorsements must be truthful and not misleading.
  • Endorsers must be bona fide users of the product or service at the time of endorsement.

Congress also recently passed the INFORM Consumers Act, which requires online marketplaces with “high-volume third-party sellers” to disclose certain information about those sellers in order to prevent the sale of fraudulent, counterfeit or unsafe goods. The law gives the FTC and the states authority to enforce and impose a monetary penalty on violators.

Failure to comply with FTC rules may lead to enforcement actions, which include injunctions, fines and other penalties. Lord & Taylor was the first fashion company targeted by the FTC for deceptive advertising involving influencers. The FTC alleged that the retailer provided influencers with a free dress and paid them to post pictures of themselves on social media wearing it, without requiring them to disclose the sponsorship arrangement. The parties ultimately settled, with the retailer agreeing to a consent decree prohibiting it from failing to disclose sponsored content in future promotional campaigns and monitoring of future marketing.

State laws

States have individual consumer protection statutes that authorize enforcement by state Attorneys General and provide private rights of action to injured consumers and, in many cases, competitors for false advertising. The standard for bringing claims varies by state: some require direct consumer interests to be implicated, while others have a “public interest” requirement, meaning a pattern of conduct or other factors that suggest a broader societal interest in the practice. These claims are often brought in the context of class-action litigation, on behalf of large numbers of plaintiffs, which can both be expensive to defend against and lead to massive amounts of damages and negative publicity.

State laws also govern online privacy. The California Privacy Rights Act, for example, places restrictions on the ability of businesses to “share” personal information of California residents. This may impair companies’ ability to engage in cross-context behavioral advertising.

The Lanham Act

Advertising is also regulated at the federal level through the Lanham Act, which allows competitors to bring actions against each other for false or misleading advertisements. A successful plaintiff can obtain an injunction mandating the competitor remove the false advertising, as well as damages. 

The National Advertising Division (NAD)

The NAD, a self-regulatory bureau that resolves complaints involving the truth or accuracy of national advertising, is another forum for advertising disputes. A quicker and less expensive option than federal court, it includes monitoring actions brought by the NAD itself, as well as challenges by competitors. Once a challenge is initiated, it is the advertiser’s burden to substantiate the accuracy of its claims. Unlike federal litigation, there is no discovery, and under the NAD’s new SWIFT process, certain disputes can be decided within 20 business days. 

Compliance with NAD decisions is voluntary, and injunctive relief and damages are unavailable. Should an advertiser refuse to comply with the NAD’s recommendations, the matter may be referred to the FTC for further proceedings. A competitor may also then choose to bring a court proceeding, and many class-action lawsuits have also spawned from unfavorable NAD decisions.

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3.2. Physical store and online store layout

Physical store layouts are protectable through trademark, trade dress, design patents or a combination. The layout of Apple Inc.’s retail store, for example, is protected by trade dress. 

Online store layouts or online store elements are also protectable through design patents for graphical user interfaces (GUIs). GUIs are the visual aspects of an online store, such as icons, pull-down menus, pointers, buttons, windows and transitional animations. 

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4 . What are the most relevant unfair competition rules for fashion businesses and how do the courts interpret and enforce these rules?

Unfair competition laws

The US has a robust set of laws to protect consumers and businesses from unlawful, unfair, fraudulent or deceptive practices – otherwise known as unfair competition. Various state laws, such as California’s Unfair Competition Law and Common Law of Misappropriation and New York’s Unfair Competition and Misappropriation laws, prohibit deceptive behaviors. The Lanham Act also makes unfair competition a federal offense when trademarks or false advertising are involved. For instance, “passing-off” occurs when a defendant makes a false statement or representation that goods or services are affiliated with the plaintiff, and “reverse passing-off” occurs when a defendant purchases a competitor’s product and then removes or obliterates the competitor’s mark and replaces it with the defendant’s own mark. 

Trade secret protections

Federal and state laws protect trade secrets, which can include: supplier and customer lists; proprietary technology for fashion design, order fulfillment and logistics management; marketing strategies; and strategic business plans. 

Trade secret protection is available when information is not generally known or ascertainable, the owner derives economic value or business advantage from the information not generally being known and the owner makes reasonable efforts to preserve its secrecy. While trade secrets are traditionally protected under state law, the Defend Trade Secrets Act of 2016 created a federal civil remedy for trade secret misappropriation. Under both state and federal law, companies must take reasonable steps to guard their trade secrets in order to be protected.

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5 . Is there any regulation specifically addressing sustainability or ESG (Environmental, Social and Governance) in the fashion industry?

ESG and sustainability efforts are becoming increasingly important, with respect to both reputation and legal liability. There are several laws and regulations that govern the environmental impact of aspects of the fashion industry already, and a number of states are considering additional legislation. A sample includes:

  • Environmental Protection Agency regulations govern air and water quality and contain rules for fabric printing, coating and dying, as well as leather tanning and finishing. See 40 C.F.R. § 63; 40 C.F.R. § 425.
  • The Securities and Exchange Commission requires companies to disclose their use of conflict minerals from the Democratic Republic of the Congo or adjoining countries. See “Disclosing the Use of Conflict Minerals”, Securities and Exchange Commission (Mar. 2017), www.sec.gov/opa/Article/2012-2012-163htm---related-materials.html
  • California’s Transparency in Supply Chain Act requires disclosure of efforts to ensure that supply chains are free from slavery and human trafficking. Cal. Civ. Code § 1714.43.
  • New York’s proposed Fashion Sustainability and Social Accountability Act, if passed, would require fashion brands to publish a social and environmental sustainability report, document and disclose their supply chains and attempt to remediate supply chain practices with negative human rights impacts. N.Y.S.B. S4746 (2023). 
  • California’s Safer Clothes and Textiles Act, taking effect at the start of 2025, will place limits on the amount of PFAs permitted in textiles manufactured, sold or distributed in California. Cal. A.B. 1817.

Fashion companies, quick to highlight their ESG activities in marketing, must also guard against “greenwashing,” which occurs when a brand intentionally or unintentionally misrepresents or exaggerates its ESG activities. Greenwashing has led to FTC enforcement actions and lawsuits from consumers and competitors. To avoid greenwashing, companies should review regulations, identify and assess express and implied claims, substantiate all claims and consult counsel when necessary. There are also a variety of tools that can help ensure companies avoid greenwashing, including the FTC “Green Guides” and certain product certifications.

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6 . Customs monitoring: do any special import and export rules apply to fashion products?

The US Customs and Border Patrol (CBP) is authorized to seize merchandise that Customs officials reasonably believe is illegally imported into the US, including counterfeit apparel and accessories. The CBP maintains a recordation system for registered copyrights and trademarks through which it monitors imports for infringing goods. Copyrights and trademarks can be registered by filling out an online form and paying a fee through the CBP electronic portal. Federal legislation has been introduced to add design patents to this list. See Counterfeit Goods Seizure Act of 2019, S.2987, 116th Cong. (2019). IPR owners can also prevent the unauthorized importation of so-called “gray market” goods if the imported goods materially differ from the authorized US goods sold under the trademark or trade name. If owners can state the basis of their claim “with particularity” and provide “competent evidence” that one or more material differences exist, the CBP will seize the gray market goods. 19 C.F.R. § 133.2(e). 

In addition, § 337 of the Tariff Act prohibits the import and sale of infringing goods within the US and gives the International Trade Commission authority to adjudicate claims of infringement and unfair competition in connection with imports to the US. 19 U.S.C. § 1337. Section 337 investigations are available to IPR owners if they meet the domestic industry requirement (i.e., demonstrate that they have made significant investment in the US with respect to the goods and marks at issue). These are fast-moving cases to obtain injunctive relief, cease and desist orders and powerful exclusion orders directing the CBP to prevent infringing goods from entering the US. But unlike federal litigation, monetary damages are not available.

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7 . Frequently Asked Questions (FAQs)

Are trademark, copyright or patent registrations required to enforce IPRs in the US? 

Though registration with the US Copyright Office is not required for a party to own a copyright, registration is a prerequisite for enforcement and entitles the copyright holder to greater damages. Registration with the USPTO is not required to enforce trademark rights, but registration offers a number of advantages, including a presumption that the enforcer’s mark is valid, proof that other parties were on notice of the mark and more expansive remedies. Registration with the USPTO is required to enforce patent rights, and these rights do not exist without registration.

When can I use someone else’s IPR as part of my work in the US?

While copyright, trademark and patent offer strong protections to rights holders, they do not prevent all uses by other parties. In the copyright context, other parties are allowed to copy a work if the copying is de minimis (i.e., they use only a small portion of the protected work or the work comprises only a small portion of the new work) or of scenes a faire elements (i.e., elements of a work that are common to, or unavoidable in, a given genre). Parties accused of infringement can also raise a fair use defense, arguing that they incorporated the protected work into their own work in a way that transformed it and put it to a new purpose. For trademark, a plaintiff must show likelihood of confusion; if consumers are unlikely to be confused by the use of a mark, there is no infringement. Use of another’s trademark may also be permitted if the copier does not use the mark as a source identifier (e.g., if it appears decorative or ornamental) or if the mark is incorporated into a larger expressive work. Patent enforcement is limited by the terms and limits of the patent claimed: though others are strictly prohibited from making, using or selling the patented design or a product that incorporates it, they are free to make, use or sell a similar design, or even to “design around” the patent.

What risks do I need to be aware of when doing business in a resale context? 

Resale of goods is generally allowed under the “first sale” doctrine. Resellers who materially alter goods that still bear the trademark owner’s mark, however, may face infringement actions. Operators of resale platforms may potentially be liable if counterfeit goods are sold on their platforms, under either an indirect or a direct theory of infringement.

EXPERT ANALYSIS

Chapters

Australia

Derek Baigent
Ellen Baker
Jennifer Wyndham-Wheeler
Shannon Fati

Belgium

Christine De Keersmaeker
Katrijn Huon

Brazil

Flavia M. Murad-Schaal
Isadora Schumacher Jeong

Finland

Hilma-Karoliina Rozell

France

Floriane Codevelle
Karina Dimidjian-Lecomte

Germany

Ariane Hettenkofer
Gina Maria Ziaja

Greece

Alexandra Varla
Maria G. Sinanidou

Hong Kong

Hank Leung
Harry Wong

India

Radha Khera
Ashwin Julka

Ireland

Patricia McGovern

Italy

Alice Fratti
Beatrice Cazzanelli
Carlo Colaci
Francesca Ferrero

Mexico

Erik Pérez Caballero
Luis Pavel García Costinica

Nigeria

Annie Oti

Singapore

Lorraine Tay
Cheryl Lim

Spain

David Fuentes Lahoz
José Miguel Lissén Arbeloa

Taiwan

Cathy Wang
Huan-Yi Lin
Matthew Lee

Thailand

Chanya Veawab
Michelle Ray-Jones

United Kingdom

Gary Assim

Vietnam

Chi Lan Dang
Diep Thi Bich Le
Hien Thi Thu Vu
Tu Ngoc Trinh

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