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This article is written by Nabira Farman pursuing Certificate Course in International Commercial Arbitration and Mediation from LawSikho

Introduction

India is the world’s second-largest clothing and apparel manufacturer. In Indian fashion industries, there is a paradigm shift seen due to solid growth in a large number of raw materials like cotton, wool, silk and jute, combined with the professional labour force. It represents 4% of the country’s gross domestic product (GDP) as 14% of the industry’s industrial output comes from the textile industry itself. Almost 45 million employees are engaged in this industry and it alone represents a 12-per-cent share of India’s overall exports. Indian textiles and clothing are projected to grow in potential size to USD 223 billion by 2021.

The Indian client’s rising buying power and ever-developing mode (partly due to its global travel and media outlet) and the relaxing retail foreign investment policies of the Indian government gave the fashion magnets worldwide much-needed impetus for the business. In particular, the Indian film industry and “Bollywood” were the evergreen mascot for the promotion of Indian fashion wear and designers on and off the screen. Millions of Bollywood fans in India serve as a captive audience for their favourite theatre and television stars’ new trends. India seems to have become a major fashion destination and is part of several fashions and apparel companies’ business plans.

The street markets around the country flourish on the first and second copies of the most sought-after brands like ‘Nike,’ ‘Gucci,’ ‘Armani,’ ‘Louis Vuitton’, ‘Zara’ ‘Woodland,’ ‘Raymond,’ etc. Whether they be Delhi’s Chandni Chowk, Mumbai’s Linking Road, Bangalore’s Brigade Road or Kolkata’s Vardhaman market, the internet penetration has allowed consumers in every section of society to access the ‘duplicate products.’

With the rise in cases of trademark infringement, different ways in which designers can settle their claims should be discussed. This article suggests that alternative dispute resolution may be a viable choice, because of the existence of trademark disputes in the fashion industry, discussed in more detail below.

Kinds of dispute in the fashion industry

The fashion sector is an emerging industry in the world with even more than $500 trillion worldwide market capitalisation. The innovative and new ideas that continue to come daily are the main factor for this industry. These developments keep this sector alert with regard to its rights, in particular its IP rights. Products are developed and marketed by means of IP security. Although, because of less efficient checks and balances, security always seems to be in vain. In defending their intellectual properties, the smaller and local industry is more neglected; hence infringement and piracy materials are on the market that confuses the buyer.

In relation to the security provided and its successful compliance, IP law faces many challenges in this field. If an applicant may demonstrate that the invention is new and inoffensive and commercially applicable, IP law protects content by copyright, trademark and even to a certain degree patent. While copyright does not safeguard the physical features of the products per se, it does protect the design of the printed pattern. The company logo, although not all content, is preserved by the trademark. Because of this influx of IP into the fashion industry, the problems faced by IP in the sector must be understood.

Challenges faced in the fashion industry

The main challenge faced by the fashion industry is the threat to protection. The creation of style must be protected. Each fashion outlet distinguishes them by the label, which is subject to protection, from other products and services. This defence must include protecting not only the designer and the fashion house but the subject. Some questions such as the degree of interpretation of the models as an artist and the rights of the actor remain controversial. The recent case of Star Athletica LLC in the United States, which focuses on design rights in the cheerleader uniform, demonstrates the relevance and profundity of IP in the fashion industry.

Another problem is compliance or the enforcement of IP laws. The arrival of swift fashion defines the designs of clothing that rapidly travel from the catwalk to the shops to meet new developments. Successful compliance has become difficult in such a situation. The trademark owner knows clearly how far the security of the sign should go in another jurisdiction. When it comes to implementation the challenge of innovation cannot be denied. The current rights holder and cultural importance of such groups are effectively protected by an IP regime, but these protections have not had the power to deter its non-compliance. 

Importance of protection of intellectual property rights in the fashion sector

Creative expression should be covered by intellectual property (IP) rights in the constantly changing fashion industry. The importance of any industrial design asset and the consumer brand is the intellectual capital that reinforces a business role within the trendy industry. The most significant obstacle in considering IP in the fashion industry is the seasonal security of many designs. This covers the defence of the industrial design and the quest and creation of appropriate and exciting names for each design of each object.

Many fashion houses can endeavour, but the prestige and popularity that accompanies such reputation practically always come with a price. There are undoubtedly a number of normal, routine legal issues and problems that any industry that has achieved this level of social significance will create. As designers succeed, imitators will be able to take their innovative work on a free ride unless they have adequate security. The rule of intellectual property is most directly involved in this social dynamic of creativity and continuity. 

Disputes over the rights of the label in the fashion business have naturally arisen as businesses are constantly investing time and money to build and defend their rights and to retain a good image for their goods. The features of the fashion industry and the increasing complexities of both the industry and its laws have led managers to need to be more informed about and more mindful of the law when competent legal advice is required. The law is increasingly complex. At the same time, increasing lawsuits by fashion companies and a rising legal profession are turning the fashion industry into a source of opportunity for legal firms.

Trends, findings, and re-discoveries are inevitable in the fashion industry because of the intrinsic existence of rapid growth. The cumulative efforts of designs, fashion stores, celebrity styles etc. are also responsible. This application must be effectively interpreted, and in any case, the imagination of the industry which constitutes the backbone of the same must not be constrained. In recent years, IP owners have been defending their assets more aggressively and making every effort they can to gain a competitive advantage in the market. Creativity and intellectual capital are the engine of the fashion industry. 

Protecting IP resources as IP assets would enhance profits by selling, licencing, and marketing new goods, expand the market participation and increase profit margins and decrease the risk of pillaging other IP rights. In the view of investors and funding agencies, good management of IP property in a business/marketing strategy helps increase enterprise value. A company’s economic health is dependent, in part, on the strength of its intellectual property in the market-driven economy today. Needless to say, the Indian economic strength and vitality depend directly on efficient structures to safeguard innovation and creativity ideals and investments.

IP laws in India that protect fashion designs

1. Copyright protection

The Copyright Act of 1957 recognises the copyright for a given term of the original literary, dramatic, musical, and artistic work; provides for protection exceptions such as “fair use” and “compulsory licence.” Provides safeguards against unauthorised copying/use and redress if copyright violations occur. Thus, as soon as the works are made, artistry is protected under the copyright act of 1957. However, copyright in any design that may be registered pursuant to the Designs Act, 2000 ceases as soon as an industrial process reproduces more than 50 times any article submitted to the design.

2. Patent protection

Such innovations that could be incorporated into goods were guaranteed by patents. For the fashion industry, the technology used to produce CROCS shoes, fabrics free of wrinkles, UV filtering textiles that are fireproof and water-repelling textiles are a variety of examples in which patents were issued. Note that art designs cannot be patented, and fashion designers, therefore, do not want to be protected according to the Patents Act, 1970 as such. Fashion trends are diverse and quickly changing, so the patent is not the safest choice for fashion designers.

Patents provide safeguards to such inventions that can be integrated into products. With respect to the fashion industry, various examples wherein patent’s protection has been granted include the technology used to manufacture CROCS shoes, wrinkle-free fabrics, UVfiltering textiles that are resistant to fire and water-repellent textiles13. 

It must be noted that artistic creations cannot be patented and thus, fashion designers do not opt for protection under the patents law as such. The trends in fashion are dynamic and change rapidly, therefore getting a patent is not the best option for fashion designers. Patents may also be extraordinarily expensive before a fashion design is available that is replicated annually. However, technological inventions can provide a great boost in a highly competitive market for a fashion company. The designer is granted the legal right of the fashion patent to defend his invention, be it a fashion design product or procedure. Thus, an inventor will protect his intellectual property rights by obtaining a patent on a novel invention.

3. The Design Act, 2000

Provide security for designs that are new, and which may be applied to any article in the two-dimensional or three-dimensional, or in both types, by any industrial method in the nature of formal, configuration, pattern, ornament or composition of lines/colours. The design should be such that the finished article appears to and is judged exclusively by the eye; remedies are available in the event of a design violation. Thus, designs that are only attractive to the eye (such as pattern designs) and which are more than 50 times likely to be replicated by the industrial process are covered under the Design Act, 2000.

4. Trademark protection

With advances in technology, the need to protect the customers, the credibility and the image of brands have become more and more relevant and a greater demand for protective marking legislation has been achieved. Trademarks play a vital role in defining the source of goods and services and in providing a reliable quality indicator to the customer. As a result, businesses spend more on creating strong brands, as they know that customers often respond better to a logo or slogan than to product quality. The brands have not the only perception of consumers, but also a perceived level of quality, loyalty to customers and many associations. This pattern is no exception for the fashion industry.

The Trademarks Act, 1999 protects name, title, term, letter, graphical artwork, product shape, word, and colour combination. Provides redress in the event of a trademark violation. Thus, under the Trademarks Act, 1999, brand name and trademark are protected.

As fashion companies start to recognise, in comparison to the time-scale protection available through patent and copyright law, trademark law is the best choice among intellectual property rights, they are more involved in seeking this protection, leading to increased registration of trademarks.  In turn, these increased registrations can lead to substantial costs because companies must make legal and defence expenses in trademark protection proceedings.

5. Geographical indication protection

India is a country of traditional modem riches, which carry great economic value not only on the national market but also on the international market, from Pashmina of Kashmir to Kancheepuram Silk in Tamil Nadu and from Surat Zari in Gujarat to Muga Silk in Assam. The Geographical Indication (GI) has characteristics that effectively meet the requirements of indigenous and local weavers, knitters and designers for the preservation of traditional fashion. It means that a product is produced or originates in a particular country, area or location and contains certain particular characteristics, attributes or reputation that are due to this place of origin or production.

These special characteristics can be caused by different factors, such as environment and geography, manufacturing processes, the concentration of similar businesses in the same area or the specialisation, and respect of certain quality requirements, in the preparation or manufacture of certain goods. The GIs belong to the same communities working in the same area and emphasise the link between human initiatives, practices, culture, land resources and the environment. 

Mainly they perform three main functions: 

  • To classify fashion products originating in or produced in a given territory, region or locality, 
  • To educate consumers about fashion products’ quality standards, belonging to their geographical origins, and 
  • To foster sales of fashion products in a specific sector. 

As GIs provide their owners with economic gain for 10 years that is sometimes renewable without limitation on the number of renewals, it allows them to generate revenue for additional investments that are crucial for the continuation and promotion of conventional mode businesses. 

Some prominent case laws in the fashion world

Star Athletica, LLC v. Varsity Brands, Inc.

The US Supreme Court determined in what conditions aesthetic elements of “useful articles” could be limited by copyright legislation. In order to ensure a copyright on a different identity and independent life circumstances, the Court set up a two-part test for “separability.” In other words, aesthetic elements must be considered art if they are mentally removed from the usage of the article and must, if they are represented in any medium, qualify copyrightable pictorial, graphic, or sculptural works.

The case involved a dispute between Star Athletica and Varsity Brands, two apparel companies. Star Athletica started to create cheerleading uniforms, similar to those manufactured at Varsity at a much lower price point, with stripes, zigzags, and chevron. Varsity sued Star Athletica for a breach of copyright. Star Athletica argued that clothes designs should not be given copyright, since their aesthetic designs have had their utilitarian uses as uniforms tied so closely with and led. This claim was dismissed by the Court in a close reading of the law and it was found that the clothing design could be copyrighted as an aesthetic feature of the useful clothing article.

The Court has concluded that aesthetic elements of useful items and therefore elements of clothing design can be patented by excited designers and scientists in the field of intellectual property. Some people liked the decision because they saw copyright applying to clothes as parity with other creative industries that have had even more copyright. Other parties denounced the Court’s view on ambiguities in the way the new rules are enforced and its ability to end patterns in general apparel.

Rajesh Masrani v. Tahiliani Designs Pvt. Ltd

In the present case the issue that arose before the court was whether the pattern printed on a fabric qualifies or does not qualify artistic work. The respondent argued that the Design Act should also cover patterns printed on the cloth rather than copyright protection accorded to designs drawn for manufacturing. The present case was an appeal, as in previous judgement Rajesh Mashrani’s textile was not allowed to be produced, sold or published.

The Court ruled that such designs are only covered by copyright if no more than 50 such products are made for commercial use. In the present case, there were only 20 parts with a specific design that provided justified security and prohibited similar prints, sales or advertisements with a similar template.

Louis Vuitton v. My Other Bag

This case is quite interesting, the company created a mock tote bag with the name “My Other Bag” in which the popular image of the bags of Louis Vuitton is written. The Court held that the parody product must express two simultaneous and inconsistent messages at the same time that the printed product is both original and unoriginal. 

My Other Bag was sued for the violation of copyright and design theft. My Other Bag contended that Louis Vuitton consistently behaved as a trademark bully within the industry by the look of his past actions. On the other hand, Louis Vuitton claimed that his conduct supported the strategy of the aggressive defence of his intellectual property. The Court ruled that such an approach cannot be accepted every time and that some kind of independence to the brands must be given in the context of their products, especially in this case, when it was a parody, the charges were disapproved.

Puma v. Forever 21

In the present case, Puma has filed a lawsuit for the copyright and design violation of the sneakers made by them by the names Creeper Sneaker, Fur Slide and Bow Slide, which became part of Rihanna’s Fenty series. The fact that the case differed from the others was that the question of the right to copy was addressed here because it was specifically designed by a famous person and therefore publicly accepted by its name. The Court noted that the name of Rihanna was not listed or was included in the suit within the copyright application.

Concluding, the Court ruled that in the case of the plea of infringement of trade-dress it was legitimately rejected claiming that merely because a particular celebrity had connected or endorsed the product, it could not reasonably be granted the copyrights, however, it was duly granted on the basis of design uniqueness. An additional plea was also granted concerning the operation breach.

Why is litigation not a suitable option for the fast-moving fashion industry?

An inconvenience of contentious fashion industrial disputes is the rapid rise in fashion, which continuously refreshes product stocks. The fashion industry combines quick response production with enhanced product development capabilities, which are called by some experts as a ‘fast fashion method’ in the form of ‘hot’ products which capture current consumer trends and use minimum production times. The objective is to manufacture fashion items in relatively limited amounts as quickly as possible.

The key component of fast fashion is the capability to recognise and track clothing trends and combine this information into the supply chain, delivering new items in a short span of time. For example; Zara, a fast-mode retailer based in Spain, houses its head office, factories and distribution centre all in one space, making it simpler to respond to customer demand and replace its inventory only in a few weeks. Today’s fashion industry can be rapid, but the court system is running much slower. Since such disputes may last months or years, at the moment of settlement the design of the dispute isn’t really necessarily the same. As the trends are still evolving, the decision of courts can have a limited effect on the industry by the time the matter has been litigated and resolved.

Disputes over trademarks can also interfere with corporate ties in business in the industry. The fashion industry has now become relatively fluid, with the constant recirculation of talent, ideas, individuals and aesthetics in a relatively small field. Fashion operates in a globalised artistic culture that thrives on the continuous flow of ideas and the extraction of creative commons. ADR provides unlimited opportunities for parties to develop a solution themselves and to evolve and work together. As ADR appears to be a more constructive and less confrontational way of solving, the process is even more attractive. For fashion designers and the industry as a whole, this solution is extremely important.

How ADR is a viable option for conflict settlement in the fashion world?

Due to the special features of fashion disputes, ADR can provide fashion corporations and designers with significant benefits in resolving disputes that cannot be achieved by litigation. The dangers of a conventional judicial litigation approach are far greater than any ADR-related vulnerability or weakness.

ADR may restrict the reach of discovery while reducing the costs by providing cost control, a versatile process that allows the parties and the neutral to formulate their own form of relief.  The cost of discovery can be important in deciding the “confusion probability” criterion. Since the trademarks are so important for the fashion industry, the plaintiff is likely to spend substantial money on survey evidence and market details to ensure a defendant’s trademark is confusingly identical to its own which is its sole form of legal protection.  ADR may reduce the amount, scope or costs of the discovery permitted. 

Secondly, since legal safeguards at the moment do not cover all types of clothing or design, it is necessary to find persons familiar with substantive law who can adjudicate the matter.  This discretion is allowed by ADR. Since the parties can pick a neutral arbitrator and draw up the credentials criteria for their neutral arbitrator, they can ensure that they are aware of the industry and intellectual property of their inventor. The arbitrator can comprehend technical information from experts more often.

Since legal safeguards at the moment do not cover all types of clothing or design, it is necessary to find persons familiar with substantive law who can adjudicate the matter.  This discretion is allowed by ADR. Since the parties can pick a neutral arbitrator and draw up the credentials criteria for their neutral arbitrator, they can ensure that they are aware of the industry and intellectual property of their inventor. The arbitrator can comprehend technical information from experts more often. The effect is more effective hearings with fair results.  Parties are usually comfortable with choosing at least one arbitrator or mediator with the experience and skills to help them understand the problems involved. 

Thirdly, long trials and probable appeals take a long time before a final judgement can be issued by the court which can adversely affect an enterprise’s rapidly growing sector. The most common ADR approaches, however, can deliver a solution within less than a year, unlike litigation. In trademark disputes, this time-saving advantage is particularly important because the early resolution of the dispute will enable the parties to make changes to their mark or to the territories in which they make use of it. Since marks are usually employed in ads, a quick resolution is needed to avoid business losses and financial setbacks for parties. If a business is not allowed to use a certain label, sales may be lost due to customers lost. So, in contrast to waiting for a longer trial, the rapid settlement of ADR trademark conflicts seems to be a much better option for a business that is reliant on a good mark.

Moreover, with the rapidly progressing nature of the fashion business, which continually creates new and old trends, it can be difficult for the public to identify an article with the creator in order to develop a secondary context where that designer or enterprise was ordered to use his or her trademark. The sooner a forum solves the issue, the sooner a designer will use these source identification marks.

The individual parties themselves address another significant benefit of ADR in fashion trademark disputes. Disputes in the fashion industry can occur between friendly parties not involving lies and distortions in which the injured party is unlikely to reach a settlement with an infringing party. ADR works to preserve these commercial links between parties that already have an existing partnership. In such cases, the absence of incontrovertible disputes saves time and costs and prevents the conflict from scaling into a solely hostile solution, which could kill all hope for future cooperation. Disputes in the fashion industry can occur between friendly parties not involving lies and distortions in which the injured party is unlikely to reach a settlement with an infringing party. ADR works to preserve these commercial links between parties that already have an existing partnership. In such cases, the absence of incontrovertible disputes saves time and costs and prevents the conflict from scaling into a solely hostile solution, which could kill all hope for future cooperation. ADR acts as a more proactive, less confrontational way of conflict resolution, providing flexibility for future relationships. These practises that aim to establish a dialogue between the parties tend, as opposed to those enforced by the court, to lead to a more suitable compromise for the future. 

Conclusion

The defence provided by the Indian legal system is deficient because fashion designs and designers are not recognised formally. It is important that they be included in the legislative requirements to safeguard their rights against any kind of violation. The COVID-19 pandemic has furthermore decreased market purchasing power, which can easily fuel knock offs and other copies of luxury designers’ designs. Therefore, the sanctions levied should be strengthened to ensure that the interests of the original authors are protected in order to reduce the effect of this probability. Because of the progress in the fashion sector in terms of VR shows, photoshoots or influencer-driven ads, infringer transparency must be fixed and evaluated by effective resolution mechanisms. 

Furthermore, the increase of e-commerce platforms’ user base adds to the crucial necessity of a structured piracy and infringement rule. Thus, fashion players should dedicate themselves to preserving creativity in a long-term way by creating an ADR process for dispute management. The confusion caused by the law may therefore be reduced. Already, in several countries around the world, the preferred form of dispute settlement in the fashion industry is international arbitration because it usually offers a privately held solution so that the parties can continue their business relations.

References


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