From counterfeiting to validation of unique forms of protection, the fashion industry is a microcosm of the larger world economy. It is important to stay current on legal trends and issues in fashion, which shift and change with remarkable frequency.

This article covers my views on some of the most important aspects of today’s industry and, where relevant, includes commentary on the issue in India.

Counterfeiting

Counterfeiting is widely prevalent, but the world of fashion is affected by it the most. The thin line between imitation and flattery is beginning to cease. One effective anti-counterfeiting play is to make the intermediary liable. The most effective approach is to target the infrastructure and means used by counterfeiters to supply their products internationally. In this regard, counterfeiters often act through third parties that might not be aware that their services are used for illegal activities. This third-party engagement renders the liability of intermediaries a cutting-edge matter in intellectual property law worldwide. Intermediaries may include both principal groups such as online e-commerce websites and offline intermediaries.

For example, three years ago, Alibaba’s inaction dragged it to court. Gucci and Yves Saint Laurent didn’t spare Alibaba, which hadn't been taking active steps to curtail the counterfeit menace on its website. The lawsuit cited, in part, an alleged fake Gucci bag offered for $2 to $5 each by a Chinese merchant to buyers seeking at least 2,000 units. Authentic Gucci bags retail for thousands of dollars.

One of the landmark cases on this front, where certain ground rules were put forth vis-à-vis liabilities of e-commerce platforms and exemptions thereof, was handled by our firm, Anand & Anand. This case was initiated by Christian Louboutin against the online marketplace platform www.darveys.com on which unauthorised and counterfeit Louboutin products were being sold. In November 2019, the Hon’ble Delhi High Court in Christian Louboutin Sas vs. Nakul Bajaj & Ors recognised the intermediary liability of these platforms in counterfeiting cases, in line with the provisions of the Information Technology Act, passing a favourable order for Louboutin. 

The court also established guidelines for e-marketplaces including disclosing information about sellers, showcasing approval of sale from brand owners and putting other allied checks in place to ensure the authenticity of products being sold on the platform.

Cultural appropriation or misappropriation

In the world of fashion, appropriation occurs when a designer or fashion house takes elements from another culture and incorporates them into their work, often under the guise that they are unaware of doing so.

For example, Gucci was called out for offering a floral embroidery organic linen kaftan, which looked a lot like a kurta and was being sold for thousands of dollars. Louis Vuitton was also called out for selling a Kaffiyeh-inspired scarf recently. American singer Nick Jonas came under fire for wearing a Solapur Chadar-based jacket.

While borrowing from cultures is definitely a part of the creative process, when any brand or designer is inspired by traditional craftsmanship, the spirit of cultural appreciation must be championed and acknowledged. I strongly believe that consent, compensation and credit go a long way in cultural appreciation.

Understanding any culture must always precede its commercial usage. This ensures accuracy in representing the specific culture and avoids hurting any cultural sentiments. Especially in cases of protected GI (geographical indication) products coupled with the advent of the digital era, the rights of the registered proprietor must never be overlooked as it may create issues of misrepresentation as well as misappropriation. At a minimum, it might lead to bad publicity.

A culturally sensitive designer or brand acknowledges the heritage behind their designs and duly credits the culture bearer, both financially and otherwise. The best practice to ensure creative authenticity is to have permission before using any cultural element, be it a motif, silhouette or so forth, as part of your design or collection.

Damages culture

In India, the so-called damages culture is a recent trend and one to watch closely. The general principle here is that a plaintiff has to establish the quantum of loss to be entitled to damages. Indian courts are moving away from this in recent cases and their decisions suggest an attempt to establish new principles to assist trademark proprietors in protecting their valuable marks and to deter infringers and counterfeiters. In fact, courts are increasingly awarding damages to aggrieved parties, paving the way for a more innovation-led ecosystem in the country.

In some cases, bank guarantees are being made along with damages. Moreover, there are examples of damages beyond statutory damages by exemplary means.

Dichotomy between design and copyright law in India

A very interesting legal technicality exists in India between the protection provided by the design and the copyright legislations. Any article that has the capability of securing a registration under the design law and of which, 50 copies are sold, loses its ability to be protected under the copyright law and also the design law.

In my assessment, this dichotomy needs to be resolved. In this regard, many submissions have been made to the relevant bodies in India. In fact, my firm is currently handling a writ filed in the Hon’ble Supreme Court of India to address this.

A change in the current legislative provisions would very strongly protect fashion designers and provide them with the due protection their creative work deserves.

Harassment

Recently, the co-founder of Guess was accused of multiple counts of sexual harassment. Fashion designer Alexander Wang also faced similar accusations of harassment from trans and male models. The fashion industry has taken notice.

Education and sensitisation efforts notwithstanding, it becomes vital for organisations to have policies to control predatory behaviour. Structuring termination clauses in contracts is one way to foster and ensure more responsible behaviour.

Incentives to SMEs and MSMEs

To facilitate the intellectual property ecosystem in India, the government has reduced the requisite fee by half for securing intellectual property protection if an entity is able to submit a certificate of its designation as an SME (small and medium-sized enterprise) or an MSME (micro, small and medium-sized enterprise).

This is a very progressive step because many designers are wary of securing protections for their entire collections due to cost implications as well as their inability to know which artworks could be a commercial success at launch time. This will facilitate an increased number of filings as it creates an incentive to file.

Labour and employment

Another issue that has surfaced from time to time is the disregard some fashion houses have for their workers. A recent example was when designer Manish Arora suffered financial constraints and failed to pay salaries to his employees.

It is vital that employees read and clarify the appointment letters they sign. Often these letters only detail salaries but have no termination clauses or are poorly structured to distinguish between an employee and a contractual employment.

An easy recourse is to complain to the Labour Commission (for unpaid wages and salaries under the Misuse of Wages Act) and to an Employee Provident Fund officer. I often advise employees to even write to venture capitalists who fund these businesses for payment clearance, if possible. A brand can't just wash its hands of unpaid dues in cases of bankruptcy or insolvency. If there are cash flow issues, there are legal ways to liquidate companies, such as mortgaging a company.

Social media influencers

Earlier this year, consumer rights in India were allowed to be statutorily protected against false or misleading advertisements on the basis of the Consumer Protection Act, 2019. The Act indicated that making false or misleading advertisements would be considered as an unfair trade practice. To this effect, the Act mandated the establishment of a Central Consumer Protection Authority (CCPA) to oversee false or misleading advertisements.

As a result, CCPA then notified detailed guidelines titled ‘Guidelines on Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022’.

To keep a check on misleading or false advertising practices, the guidelines allowed for levying penalties to the tune of INR 10 lakhs on manufacturers, advertisers and endorsers. In cases of subsequent violations, the penalty could go up to INR 50 lakhs. The guidelines also indicate that an endorser can be prohibited from making advertisements for up to one year which can extend to three years if there is subsequent violation.

Recently, the Department of Consumer Affairs provided guidelines that detail the diligence celebrities must exercise while endorsing brands. Previously, the Consumer Protection Act had included clauses which made celebrities liable for misleading claims.

The new guidelines require celebrities are required to put their money where their mouth is – saying that celebrities should only endorse ads which are a reasonable reflection of their opinions.

Now the Indian government has also announced guidelines to rein in social media influencers to keep misleading advertisements in check. Similarly, the US Federal Trade Commission released guidelines for social media influencers. One of the prominent expected changes in India is that social media influencers must mandatorily disclose if their promotions are sponsored. In the US, the guidelines go a step further and the influencers are also mandated to declare if, over and above any monetary exchange, the influencer has any ‘material connection’ with the brand or product such as if the brand has gifted any discounted products or other perks that may incentivise mentions or promotions.

The Competition and Markets Authority in the UK also has similar guidelines in place to curb instances of misleading advertising by influencers.

Sustainability

Sustainability is one of the current buzzwords in the fashion and luxury space. There is an increased social consciousness, for example, of the volume of used clothes being dumped in developing countries as well as the need to rectify this situation.

The fashion industry is responsible for a large amount of global carbon emissions and water mismanagement. Recognising this, brands like Gucci launched the Gucci Equilibrium, focusing on sustainability and transparency.

Many brands are also aware and are either pledging to manage their products in the second-hand market or manage their production in a manner which is the least harmful to the environment.

Well-known declarations

Declaring trademarks as ‘well-known’ is another bit of progressive legislation in India. A ‘well-known’ declaration can be established by placing material evidence on record. When this is done, the trademark is protected across all categories of goods and services and is also enforceable against third parties who may be using an identical or similar trademark for unrelated products. Cartier, Dunhill, Louis Vuitton, Omega and Puma are examples of trademarks that have already been declared as well-known in India, thereby enhancing their ability to have a higher brand equity.

Validation of unique forms of protection

With the world focusing on distinctiveness, protecting unique forms of intellectual property is also the new norm.

India, in the recent past, had a slew of unique protections such as the ‘Red Sole’ protection for Christian Louboutin shoes, as well as Louis Vuitton EPI pattern.

Accredited as one of India’s Top IP lawyers, Safir Anand is a senior partner at Anand and Anand and head of  the firm's trademarks, commercial and contractual IP practice. With more than 25 years of experience in providing inputs on strategy, business models, marketing and commercial insights, blended with an astute understanding of IP law, he can be reached at [email protected].