The Australian Fashion and Textile Industry includes design, textile, manufacturing, retailing, marketing, events, and education activities. It is a valuable contributor to the Australian economy and it is also an important contributor to Australia’s creative and cultural fabric. In 2021, according to a report released by the Australian Fashion Council, the Australian fashion industry contributed more than $27 billion to Australia’s economy. The Industry employs more than 489,000 people, 77% of whom are women.
1 . What are the main intellectual property legal tools available to protect fashion products?
1.1. Trademarks and non-traditional trademarks
Definitions. According to the Trade Marks Act 1995 (Cth) (the Act), a trade mark is taken to be applied to any goods, material or things if it is woven in, impressed on, worked into, or affixed or annexed to, the goods, material or thing.
Section 17 of the Act defines a trade mark as “a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person”. The Act also includes a definition of “sign” as including “the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent”.
Requirement of Distinctiveness. Section 41(1) of the Act states that “an application for registration of a trade mark must be rejected if the trade mark is not capable of distinguishing the applicant’s goods or services in respect of which the trade mark is sought to be registered”.
In deciding whether a trade mark is capable of distinguishing, the question needs to be asked to what extent the trade mark is inherently adapted to distinguish the Applicant’s goods or services. A trade mark will either:
- be inherently adapted to distinguish and therefore capable of distinguishing;
- have limited inherent adaptation to distinguish and therefore not capable of distinguishing; or
- have no inherent adaptation to distinguish and therefore not capable of distinguishing.
Validity and Non-Use. A trade mark registration is valid for a period of 10 years calculated from the filing date of the application and can be renewed indefinitely every 10 years. A trade mark will become vulnerable to removal for non-use if the trade mark has not been used for three years on, or in connection with, the goods/services for which it is registered.
According to Section 93(2) of the Act, the non-use removal application cannot be made until:
- 5 years have passed from the filing date of the application for registration filed before 24 February 2019; or
- 3 years have passed from the date the particulars of the trade mark were entered into the Register and the application was filed on or after 24 February 2019.
Traditional trade marks. Many of the trade marks on the Register in classes relating to fashion goods are traditional in the sense that they consist of word marks, logo marks or device marks, including patterns.
A registration for a trade mark in black and white provides protection for the mark for all colours and colour combinations. This is even the case if a colour representation of the logo is used when filing the application. Protection for the trade mark will be limited, only if the application is endorsed to limit protection for the trade mark to the colours shown.
Non-traditional trade marks. The following non-traditional trade marks can be registered for goods and services related to fashion and must include a description of the trade mark as per these examples:
- Single colour or a combination of colours. “The trade mark consists of three stripes applied to goods with the three stripes being parallel and contiguous and with the two outer stripes being coloured green and of equal width and the central stripe being coloured red, as shown in the representation of the trade mark attached to the application form.”
- Shape trade marks. “The trade mark that is the subject of this application consists of the three-dimensional configuration applied to a shoe toe cap consisting of a series of lines arranged radially as shown in the representation attached to the application form.”
- Sound marks. “The trade mark consists of the sound of a sustained single musical chord followed by the sound of a whip cracking and the spoken words "GET BEHIND" whilst the chord fades, as provided in the sound file or musical score attached to the application form.”
- Movement marks. “The trade mark is a visual representation of a red 3D rectangular prism rotating whilst the word ‘LAVAN’ in the middle of the prism remains static as shown in the video file attached to the application form.”
Section 40 of the Act requires that a trade mark be represented graphically. Sub-regulation 4.3(8) of the Trade Marks Regulations 1995 (Regulations) states that the representation of a trade mark must clearly demonstrate the nature of the mark and show each feature clearly enough to permit proper examination.
Distinctiveness of non-traditional Trade Marks.
- Shapes. Shapes may be capable of distinguishing unless they:
- are common to the trade; and/or
- have significant functional features, such as the shape is essential to the use or purpose of the article; it is needed to achieve a particular technical result; has an engineering advantage resulting in superior performance and, results from a simple or cheap method of manufacture.
Most relevant to fashion is that a shape trade mark should not be objected to simply because it is attractive or aesthetically pleasing, and therefore other traders might wish to use it. The test for whether a shape mark is capable of distinguishing is the same as for any other sign, namely, whether the shape is one that other traders would wish to use in the ordinary course of their business and without improper motive (F. H. Faulding & Son Ltd v Imperial Chemical Industries of Australia and New Zealand Ltd. (1965) 112 CLR 537 at 555).
If a shape mark is not considered capable of distinguishing, the trade mark owner will need to provide evidence of use of the trade mark to show acquired distinctiveness through use. If the shape mark has no inherent distinctiveness, the evidence of use will need to be before the filing date of the application and will need to demonstrate that the relevant level of distinctiveness has been acquired at the filing date of the application.
- Colour. In addition to clearly and concisely describing a colour mark in a trade mark application, a pictorial representation of the colour claimed should be provided. There is no requirement to define the colour by reference to a recognised colour matching system, (such as Pantone) but this is usually helpful to avoid any confusion about the exact colour for which protection is being claimed. The same comments regarding evidence of use as detailed above for shape marks, applies to colour marks.
- Other. Although there are other types of non-traditional marks that can be registered such as feel, hologram, position or taste, the question remains whether the sign is capable of distinguishing the trader’s goods from those of others and whether the non-traditional mark is one that another trader would wish to use in the ordinary course of their business and without improper motive.
- Domain name. To register an .au domain name, it is necessary to have an ‘Australian presence’, such as an Australian company, or an Australian trade mark registration or an application for a trade mark. If a person is relying on an Australian registered trade mark to satisfy the ‘Australian presence’ requirement, the domain name must be an ‘exact match’ to the words which are the subject of the Australian registered trade mark (excluding punctuation, articles including “a”, “the”, “and” or “of”, and ampersands).
1.2. Design as an alternative or addition to TM registration
Designs protect the overall appearance of a new and distinctive product including the visual features of shape, configuration, pattern and ornamentation. Design protection is a registrable right obtained for a maximum of 10 years from the filing date. Australia also does not have unregistered design rights.
Registered designs can be particularly useful in protecting clothing, jewellery, luxury goods, headwear and printed textiles.
Certification of a registered design is optional and does not need to be requested at the time of registering the design. However, to be enforced, a design must be certified. A common strategy is to request certification when the design rights need to be enforced.
Designs are critical in Australia and need to be filed before being publicly disclosed. A 12-month grace period for self-disclosure is in the process of being introduced in 2021 or 2022.
In Australia, dual protection under copyright and design law is not allowed. Copyright protection is lost once a three-dimensional design embodying the artistic work is mass-produced or a design is filed. A narrow exception to this rule is made for “works of artistic craftsmanship”. Generally, copyright protection in Australia doesn’t apply to the appearance of a product that is going to be commercialised (i.e., more than 50 made).
1.3. Copyright as an alternative or addition to TM registration
Copyright is a bundle of rights which protects certain subject matter, such as artistic works, from being reproduced, published, or communicated to the public without the copyright owner’s permission. In Australia, copyright protection is automatic – there is no requirement of, or provision for, registration. In the case of artistic works, copyright protection lasts for the life of the author plus 70 years. An artistic work must be original and reduced to material form to be protected by copyright, that is, it must emanate from the author and not merely be copied from another work. Categories of artistic works which are of relevance to the fashion industry include sketches, photographs, patterns, paintings and works of artistic craftsmanship. For example, the pattern used on an item of clothing, such as a bikini, may be subject to copyright protection and it will be an infringement of copyright in that artistic work to reproduce the pattern (or a substantial part of the pattern) on another article of clothing. Copyright protection does not extend to artistic works that are “industrially applied” (as noted in the ‘Design’ summary above). Moral rights are personal rights that also arise automatically under the Copyright Act 1968 (Cth) and include:
- the right of attribution;
- the right against false attribution; and
- the right of integrity.
Moral rights cannot be transferred; however, the author of a work may consent to an act or omission that would otherwise infringe their moral rights. In Australia, it is not necessary to ‘assert’ one’s moral rights.
1.4. Any other pertinent IP rights?
The fashion industry is entirely built on intellectual property. Making informed decisions about intellectual property early will maximise opportunities and help make a business strategy proactive rather than reactive. This includes a considered use of both registrable and non-registrable IP rights.
Patents. Patents are beneficial and provide broad protection as they protect functions or features of a device, product, method or process that are new, inventive and useful. However, the types of product and processes commercialised by the fashion industry are not always patentable.
Protection may be relevant to the fashion industry for new and inventive products such as Internet of Things inventions (for example, smart watches), innovative sustainable clothing, innovative footwear with a functional aspect, or a new manufacturing process.
Patent protection in Australia is a registrable right obtained for a maximum of 20 years from the filing date.
Innovation patent protection may be more relevant to protect fashion products as the threshold for patentability is lower. Innovation patents require an innovative step rather than an inventive step. The term of protection is 8 years.
However, this form of protection is being phased out and new innovation patents must be filed no later than 25 August 2021. A standard application can be converted to an innovation patent after 26 August 2021 as long as the standard patent application was filed on or before 25 August 2021. By August 2029, all innovation patents will have expired.
Artistic creations or business schemes are not patentable.
Designs provide a straightforward way of obtaining protection for the visual appearance of a product. There are no unregistered design rights or a grace period for self-disclosure (yet). Designers can get caught out publishing their products before obtaining design protection and then they lose the opportunity to do so. Further design protection in Australia does not include partial protection for key features of designs or graphical user interfaces.
Trade marks provide strong brand protection and are an essential tool in the fashion industry. However, if a competitor wants to copy a particular garment or product, a trade mark may provide limited protection as the competitor may reproduce everything except for your trade mark.
Copyright is automatic and does not require registration. Copyright is extensive in that it covers a bundle of rights, including artistic works. However, in order to prove infringement, the copyright owner must be able to show that the infringer “copied” their work and did not produce the alleged infringing work in their own right. Further, copyright does not apply once the product has been “industrially applied” (i.e., more than about 50 products).
Trade secrets are protected as long as they are kept a secret. Trade secrets are not a registrable right. Active measures need to be taken to keep them a secret. For example, provisions in contracts expressly specifying confidentiality with relevant personnel, and limiting access to the confidential information through electronic and physical barriers. Ex-personnel leave the trade secrets vulnerable to losing their confidentiality.
A comprehensive intellectual property strategy is integral at the outset and important to revisit and revise. It may give business the edge it needs to distinguish itself in the market, and protect the risk and investment put into developing the business.
1.5. Summary of additional IPRs
See Question 1.4. Any other pertinent IP rights?
2 . Beyond intellectual property: what contractual arrangements are useful in manufacturing, distributing and advertising fashion products?
2.1. Manufacturing fashion products
License agreements and Non-Disclosure Agreements (NDAs). A licence agreement is a contract under which the holder of intellectual property grants permission for the use of its intellectual property to another person, within the limits set by the provisions of the contract, while retaining ownership of the IP. It is important to consider the following issues when negotiating a licence agreement:
- whether an exclusive, non-exclusive or sole licence is being granted;
- the term of the licence and options for renewal;
- royalties and reporting obligations;
- whether it is assignable or sub-licensable;
- whether it is geographically limited; and
- termination by the licensor.
It is advisable that the rights holder enters into a Non-Disclosure Agreement (NDA) in respect to any confidential information that it may need to disclose to the contracting party during the negotiation process. A NDA should state for what purpose the confidential information is being shared, and it should restrict the use of the confidential information to that purpose. For example, the rights holder may need to disclose confidential information to a potential manufacturer to ascertain whether it has the capability to manufacture goods on its behalf to a certain standard.
Subcontract agreements / in-house manufacturing. It is important to ensure that any IP that is created for, or on behalf of, your company is owned by your company and that ownership is transferred in writing. In the fashion industry, it is common to use contractors, for example, photographers or graphic designers. It is therefore important to ensure that IP ownership is provided for, and transferred as needed. It may also be appropriate for such an agreement to provide for a waiver of moral rights, although the anticipated use should be contemplated, in lieu of a request for a general waiver.
Furthermore, employment contracts will ordinarily provide that the employer owns the IP that is created by an employee in the course of their employment. Accordingly, it is the employer that will own the IP the subject of the fashion designs that a designer creates in their role as a designer. It is best practice to confirm the assignment, to avoid ownership conflicts in the future. This is especially important when an employee is the named inventor on a patent.
2.2. Distributing fashion products
Agency agreement. An agency agreement sets out the agreed relationship between one party (the principal) who authorises another party (the agent) to engage third parties in legal relationships for the benefit of the principal. Such an agreement should always be reduced to writing and attention should be paid defining the obligations and expectations of each party, including the extent to which the agent is authorised to act on the principal’s behalf, whether the agent is exclusive, which territories the agent is responsible for, the term of the arrangement, and how and when the agent will be paid and on what basis. Agents are usually paid by commission, and the entitlement to a commission can continue after the agreement has been terminated.
An agency agreement gives rise to a fiduciary relationship, which means that the agent is obliged to act in the best interests of the principal at all times.
Selective distribution online in high-end fashion and trademark protection. It is important to ensure that selective distribution agreements do not breach Australian Consumer Laws. It is also worth noting that in Australia, ‘parallel’, also known as ‘grey’ or ‘direct’ imports, are permitted under the Trade Marks Act 1995 (Cth). Distribution agreements are a tool that brand owners can use to exercise a degree of control in relation to the territories in which their goods are distributed and at what price.
Co-branding and co-marketing. Collaboration lines with other brands and designers offer the opportunity to reach a wider audience and to create hype and anticipation over the line or product that is being produced.
For example, the Supreme x Louis Vuitton capsule collection has been called the ‘ultimate brand collaboration’, bringing together two of the most sought-after brands in the world, and giving to each what the other does not have. For Louis Vuitton, the collaboration allowed them to tap into the goodwill of one of the world’s coolest streetwear brands, and for Supreme, the opportunity to align themselves with one of the most prestigious, high quality brands in the world.
As with any business endeavour, the terms of the collaboration need to be set out in an agreement which deals with cross-licenses for the use of existing IP, ownership of the intellectual property arising out of the collaboration, the term, the territory, the stores in which the goods will be available for purchase, the obligations on each brand/the designer to promote the range, royalties, payment reporting obligations and termination. It is also important to choose carefully which designers and collaborators your brand wishes to align themselves with. An agreement not to damage or disparage each other’s brands should be included.
2.3. Advertising fashion products
Employing fashion models. It is important to ensure that all of the relevant parties to a photo shoot or similar production activity (including the models, the photographer, the hair and makeup artists, the production crew, etc.) understand their rights and obligations in relation to the production. These rights and obligations should therefore be agreed in writing prior to the production taking place. In addition to model release forms, a location release may need to be obtained, as well as insurance, and, of course, IP ownership will need to be provided for within the agreement. For example, if the brand owner who organised the photoshoot does not consent to the model or the hair and makeup artists using any of the photographs which it owns, it should say so in the terms of an agreement, in order to avoid future conflict.
Social media, influencers and brand ambassadors/celebrities. These arrangements will often be dealt with by way of a Services Agreement. Often, a brand will not be contracting directly with an influencer or brand ambassador, but with that person’s agency. It is important that the agreement includes:
- Clauses relating to the ownership and use of intellectual property rights that are created by or on behalf of the influencer and the supplier.
- A limited licence to the influencer or the supplier to use the brand IP and vice versa. It is important that the brand has a degree of control over the promotional content that is being generated under the agreement.
- Final approval of content before it goes live and power to amend it.
- An undertaking from the influencer to comply with the Australian Consumer Law and the Influencer Marketing Code of Practice.
Advertising standards, relevant authorities and advertising practice. In line with the requirement under the Australian Consumer Law to refrain from engaging in conduct that is likely to mislead or deceive consumers, anyone working in the Australian Influencer Marketing sector must abide by the Influencer Marketing Code of Practice. Advertising disclosure is required when there is a contracted agreement and the required minimum disclosure is to use #Ad or #Sponsored.
3 . What regulations govern online marketing and how are the rules enforced?
- Online marketing in Australia is primarily regulated under the Australian Consumer Law (Schedule 2, Competition and Consumer Act 2010 (Cth)) (ACL), which prohibits misleading or deceptive conduct, or conduct likely to mislead or deceive, in trade or commerce.
- The Spam Act 2003 (Cth) governs the sending of ‘commercial electronic messages’ (e.g. email or SMS) and places responsibility on a business owner wishing to promote its goods and services to comply with the following:
- consent (either express or inferred of the recipient);
- identification of your business in the commercial electronic message; and
- provide a method to unsubscribe from receiving any further communications.
- The Australian Privacy Principles, which are governed by the Privacy Act 1988 (Cth), govern the collection and use of personal information and will apply to an organisation with an annual turnover of more than AU$3 million.
3.1. Consumer protection regulations
The Australian Consumer Law (ACL) provides consumers with rights and guarantees which broadly protect consumers from unfair sales and business practices and unsafe products. For example, the ACL provides protection to consumers against unfair contract terms and it provides consumers with the right to refunds and consumer guarantees.
3.2. Physical store and online store layout
It is technically possible to register a store layout (as trade dress, for example). However, such a mark will face the same test of distinctiveness as any other mark, namely whether the shape is one that other traders would wish to use in the ordinary course of their business and without improper motive. It is unlikely that such marks would be considered to be inherently distinctive and they are likely to be difficult to register without significant and substantial evidence of use demonstrating that the store layout operates as a trade mark, being a badge of origin for the owner’s goods.
4 . What are the most relevant unfair competition rules for fashion businesses and how do the Courts interpret and enforce these rules?
The fashion industry, including retailers and manufacturers, must ensure that they do not engage in conduct in trade or commerce that is misleading or deceptive or is likely to mislead or deceive. The Australian Consumer Law (ACL) also prohibits the making of certain false and misleading representations about goods and services in connection with the supply or possible supply of those goods. Furthermore, the ACL prohibits conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any good.
Trade secrets regulations. The protection of ‘trade secrets’, which are considered a form of confidential information, may be achieved by the bringing of a claim for breach of contractual and/or statutory obligations. In addition, trade secrets may be protected by bringing an equitable action for breach of confidence. The following elements must be established:
- the information must have the necessary quality of confidence about it;
- the information must have been imparted in circumstances importing an obligation of confidence; and
- there must have been an actual or threatened unauthorized use or disclosure of that information.
Remedies include injunctive relief, damages or an account of profits.
5 . Is there any regulation specifically addressing sustainability or ESG (Environmental, Social and Governance) in the fashion industry?
There is no legal definition of what kind of products or practices qualify as ‘sustainable’. However, the fashion industry is responding to the call from consumers worldwide to adhere to more sustainable practices. Such practices are often managed and promoted by brands on their own. The following certification options are also available in Australia.
- The Australian Fashion Council (AFC) has secured a grant from the Australian Federal Government to support the growth of the Australian fashion industry by promoting demand creation and increased recognition of the innovation and design capabilities in Australian fashion. The investment is to fund the development of an Australian fashion certification mark, which is aimed at promoting the high quality of locally designed and produced products to key overseas markets. This announcement was made in May 2021.
- Ethical Clothing Australia (ECA) is an accreditation body who works collaboratively with local textile, clothing, and footwear businesses to protect and uphold the rights of Australian garment workers.
- The Woolmark trade mark was established by the Australian Wool Research and Promotion Organisation. The Woolmark trade mark denotes that the products bearing the mark are made according to guidelines set out by the Australian Wool Research and Promotion Organisation that include the material content, mode of manufacture, treatment, quality, technical performance, style or other characteristics.
- The Australian Made, Australian Grown logo certification mark can be used on products that are registered with the not-for-profit Australian Made Campaign Ltd, and which meet the criteria set out in the Australian Consumer Law and the AMAG Logo Code of Practice.
- The Modern Slavery Act 2018 (Cth) requires entities based, or operating in Australia, which have an annual consolidated revenue of more than AU$100 million, to report annually on the risks of modern slavery in their operations and supply chains, and actions to address those risks.
ISO certification. There are several ISO certifications available for the Australian fashion industry. Common ISO certifications include:
- ISO 14001: the international standard for an environmental management system.
- ISO 9001: the international standard for a quality management system.
6 . Customs monitoring: do any special import and export rules apply to fashion products?
Import provisions under the Copyright Act 1968 (Cth), Trade Marks Act 1995 (Cth) and Olympic Insignia Protection Act 1987 (Cth) allow the Australian Border Force (ABF), under certain circumstances, to seize goods that infringe trade marks, copyright and protected Olympic expressions.
The above provisions give rise to Australia’s Notice of Objection Scheme. The scheme is an important and cost-effective tool for rights holders to prevent infringing goods from entering the market in Australia. A Notice of Objection is a legal document, which can be lodged by the rights holder or their legal representative, which allows the ABF to seize suspected infringing goods on entry into Australia. Understandably, the ABF does not inspect every shipment that comes into Australia, however, if the rights holder has knowledge of the arrival of an infringing shipment, the ABF can be notified in advance. When goods are seized, the importer and the rights holder will each be notified. The importer may forfeit the goods, or, if the importer makes a claim for the release of the seized the goods, the rights holder has 10 days to commence legal action. In that case, the goods will be held by the ABF pending final determination by the courts.
7 . Frequently Asked Questions