The Rise of Non-Traditional Trademarks in the Fashion Industry

10/2/2019

PARIS FASHION LAW AND INNOVATION CONFERENCE

The Five Sense: The Rise of Non-Traditional Trademarks in the Fashion Industry

Céline Bondard, Principal, Cabinet Bondard (Moderator) Nathalie Dreyfus, CEO & Founder, Dreyfus Olivera Medenica, Partner, Dunnington, Bartholow & Miller LLP Maria Vathis, Of Counsel, Bryan Cave Leighton Paisner

Access Materials – www.fedbar.org/ParisFashion19-materials #FBA #FABA 1

Any word, slogan, scent design, or combination thereof, that identifies the symbol source of your goods and services and distinguishes them color from the goods and services of another product design party.

word

WHAT IS A TRADEMARK? TM® #fashionlaw #teamdunnington

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WHAT IS A TRADE DRESS?

Trade dress is not defined in e.g. the Lanham Act. The Supreme Court has found that:

(1)Trade dress constitutes a symbol or device within the Trade dress protection can serve an important function in fashion Lanham Act definition of a design. trademark. and

(2)A symbol or device means almost anything that can carry meaning.

Trade dress is the total image of a product, which may include features such as size, shape, color or color combinations, textures, or graphics.

DISTINCTIVENESS NOT FUNCTIONAL

In order to obtain trade dress Feature is functional if it “is protection, the trade dress must be: essential to the use or purpose of the article or [the feature] affects the • Inherently distinctive; or cost or quality of the article.” • Have gained secondary meaning over time.

Standards for Trade Dress Protection

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Secondary meaning occurs when the particular TM transcends public awareness such that people, in Secondary general, do not associate it with the product Meaning category, but rather with the specific company/brand.

Factors to consider: • Amount and manner of advertising; • Volume of sales; • Duration of use; • Consumer surveys.

#FASHI ONLAW

TWO PESOS, INC. V. TACO CABANA, CA 505 U.S. 763, 112 S.CT. 2753 (1992) SE #fashionlaw #trademark infringement

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QUALITEX CO. V. JACOBSON PRODUCTS CO., INC., CA 514 U.S. 159 (1995) SE #fashionlaw #trademark infringement

WAL‐MART STORES, INC. V. SAMARA BROS., CA 529 U.S. 205(2000) SE #fashionlaw #trademark infringement

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PRODUCT PACKAGING

e.g.

PRODUCT DESIGN

e.g.

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#FASHI ONLAW

FUNCTIONALITY & AESTHETIC FUNCTIONALITY

Madden's Shipper bag (left) & Cult Gaia's Ark bag (right)

Trade Dress PRODUCT PACKAGING & Functional‐ PRODUCT DESIGN No Registration Non‐Functional

Product Product Design Packaging

Secondary Meaning

Inherently Secondary Distinctive Meaning

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France & Fashion Law

The center of haute couture 2019 Fashion week’s figures  1,2 billion € of benefits for the Paris fashion industry per year  400 shows per year, 50% of which being foreign brands  27 trade fairs welcoming 14 000 exhibitors  300 manufacturing workshops  100 000 individual visitors per year to fashion shows

Protecting fashion by trademark

Art 15(1) TRIPS Agreement “Any sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark”.

Directive (EU) 2015/2436, December 16, 2015 : extends the protection to non traditional trademarks.

Article L711-1 of the IP French Code : “Signs may include: (a) denominations in all forms, such as: words, combination of words, surnames and geographical representations, pseudonyms, letters, numerals, abbreviations; (b) audible signs such as: sounds, musical phrases; (c) figurative signs such as: (…) shapes, particularly those of a product or its packaging, or those that identify a service; arrangements, combinations or shades of colour.”  February 22, 2019 : suppression of the graphical representation requirement (“Loi PACTE”)

 L’Oréal v Bellure, ECJ, June 18, 2009 (C- 487/07)

 Iron & Smith v Unilever, ECJ, September 3, 2015 (C-125/14)

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Protecting fashion by trademark

 ECJ, Arsenal Football Club Plc  Guarantee of indication v Matthew Reed, C-206/01, of origin November 12, 2012.  Guarantee of quality

 Paris Court of Appeals, n° 13/02902 September 16, 2014.

 Paris Court of Appeal, Sté Shanghai Ylangting, December 21, 2012, n° 12/07836

Abandon of the graphical representation requirement

“clear, precise, self-contained, easily accessible, intelligible, durable and objective”

 Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trade marks

 Regulation (EU) 2015/2424 of the European Parliament and of the Council of 16 December 2015

 A sign should be able to be represented with generally available representation methods rather then necessarily in a graphical way. Opens the door to non traditional trademarks.

 Now possible to represent the mark in MP3, MP4, GIF But still difficult for scent trademarks, as there is no technical or technological ways to represent scent marks.

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Non traditional trademarks in fashion

“Non traditional marks” generally covers Position Motion Trademark marks, other than word, figurative or Trademarks complex marks, that are used to identify products or services.

2 categories : • visible signs (colors, motions, shape) and • non-visible signs which relate to all of the five senses (sounds, smells scents, Colour Pattern tastes and textures). Trademark Trademark

Only around 1,400 out of nearly 300,000 applications filed as EU trademark since October 1st, 2017 are non-traditional trademarks !!

French Case Law

TGI of Paris, 3rd chamber, 2nd section, May 16, 2014, n°13/00860 - Wrangler

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French Case Law

Tribunal of grande instance of Paris, 3rd chamber 4th section, March 15, 2012, n°11/06508 - Burberry “the consumer in front of a pair of Charentaises, quite usually decorated with a Scottish decoration, will perceive it as a whole without distinguishing structure and combination of colours and will therefore not be led to consider that because of the particular layout of the lines, the product presented to him has as its origin the company Burberry ltd”

French Case Law

• French High Court, May 30, 2012, • French Court of Appeals Paris, May 15, n°11-20724 - Louboutin v. Zara 2018, n°17/07124, SAS Kesslord Paris c/ SAS Christian Louboutin  Christian Louboutin registered trademark representing a "red sole of a shoe" in 2001

 The French Supreme Court held that the Louboutin’s trademark registration was invalid and rejected the argument of confusion.

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European Union Case Law

3D TRADEMARK ECJ, Christian Louboutin v van Haren Schoenen BV , C-163/16, June 12, 2018 This was not only a question of a shape combined with a color, but it was more a question of protecting the application of a color to a specific part of a product.

“a sign consisting of a colour applied to the sole of a high-heeled shoe, such as that at issue in the main proceedings, does not consist exclusively of a ‘shape”

ECJ, Textilis Ltd v Svenskt Tenn AB, C-21/18, March 14, 2019 If a motif is applicable to a form, it does not mean that it is imposed by the form of this product.

European Union Case Law

POSITION TRADEMARKS ECJ, Deichmann SE c. EUIPO and Munich SL, June 6, 2019 (C-223/18) : the black cross.

TUE, Adidas AG and Marques c. EUIPO and Shoe Branding Europe BVBA, June 19, 2019 (T-307/17) : the three stripes trademark.

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No trade dress in France

Trade dress is a type of trademark law that extends to the configuration (design and shape) of a product itself. It “may include features such as size, shape, color or color combinations, texture, graphics or even particular sales techniques.” (Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 765 (1992))

Conditions : 1- The trade dress does not serve a "functional" purpose 2- It is "distinctive"

Alternative to trade dress in France ?  Copyright  3D trademarks  Design

Interpretation of the European Court of Justice

ECJ, Colloseum Holding AG v Levi Strauss & Co, C-12/12, April 18, 2013 Preliminary ruling

Mark n°3 Mark n°6

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LITIGATION: A PERSPECTIVE FROM THE UNITED STATES

SAMPLE LITIGATION BUDGET

1. Pleadings/Motions $25,000 - $50,000 2. Injunctive Relief $50,000 - $100,000 3. Written Discovery $25,000 - $100,000 4. Oral Discovery $25,000 - $75,000 5. Expert Discovery $25,000 - $125,000 6. Summary Judgment $25,000 - $50,000 7. Trial $100,000 - $1 million+ 8. Post-Trial Motions $25,000 - $50,000 9. Appeals $25,000 - $75,000

Range: $325,000 - $1,625,000+

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FACTORS THAT IMPACT THE TOTAL COST OF LITIGATION

-Size of Case -Number of Experts -Size of Company -Opposing Counsel -Number of Motions -Court Rules -Amount of Discovery -Court Schedule -Electronic Discovery -Length of Trial -Number of Depositions -Appeal

THE LANHAM ACT

Monetary Damages Recoverable Under the Lanham Act: • Lost Profits • Actual Damages • Treble Damages • Statutory Damages

Plaintiff Can Recover: • Defendant’s Profits • Any Damages Sustained By Plaintiff • Costs of the Action

The court has a great deal of discretion to fashion relief based on the totality of the circumstances. In assessing damages, the court may enter damages for any sum above the amount found as actual damages, not exceeding three times that amount. The court may award reasonable attorney fees to the prevailing party. The plaintiff can also elect to recover statutory damages instead of actual damages in an amount not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or services sold or as the court considers just; or (2) if there was willful useof a counterfeit mark, not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale or distributed.

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LITIGATION FUNDING

• Gaining popularity in the United States as a way to afford the costs of litigation

• Changing the way a case is litigated in the United States

• 95% of cases that are pitched to litigation funders are declined.

TYPES OF FUNDING ARRANGEMENTS

1) Funding directly to an individual plaintiff who need money to live and who cannot obtain a loan

2) Funding directly to individual and corporate plaintiffs who cannot afford the legal fees and expenses associated with complex litigation

3) Advances made directly to laws firms secured by the law firm’s accounts receivable

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FACTORS CONSIDERED BY LITIGATION FUNDERS

What makes a case attractive to litigation funders? • Probability of Winning . Typically, funders are looking for a 70% chance of prevailing (or higher). • Settlement Value. Funders want the value to be 50% higher than what they would recover upon resolution of the case. • Legal Issues/Causes of Action. Funders want a diverse portfolio. If the funder is already funding another trademark infringement case, it may not be interested in another. • Facts of the Case • Judge • Jurisdiction

HOW IT WORKS

A decision to accept or reject the case will be made in approximately 4 – 6 weeks. If the case is selected, the litigation funder will front the money for the litigation. A written agreement will be signed by the parties.

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“HANDS-OFF” APPROACH

Once the funding come through, the funder typically takes a “hands- off” approach and leaves the litigation strategy to the lawyers. The funder may check in periodically and typically asks for written status reports.

DISCOUNTED HOURLY RATES

The funding agreement will typically require lawyers to discount their hourly rates.

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BUSINESS LOGIC V. MORNINGSTAR

-Breach of contract & misappropriation of trade secrets case -A small software company developed software relating to retirement accounts. The allegations are that the larger company took the intellectual property and the clients. -The case was financed in order to let the company continue to operate. -The lawyers discounted their hourly rates by 30%. -The case proceeded through fact discovery. -The case settled for $61 million. -The litigation financing company was paid first by receiving its initial investment and then an amount based on a specific calculation. -Legal fees were also paid.

PITFALLS IN LITIGATION FUNDING

• Funding Agreement is important.

• What happens when the funding is depleted?

• Consider any conflicts that litigation funding may create for counsel.

• Are communications with litigation funders privileged?

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How to win a case ?

 Paris Court of Appeals, December 4, 2013, n° 2013/13722, Seven

 Cass. civ. 1, May 15, 2015, n° 13-28.116, F-D

 A comparison has to be done between the similarities of the distinctive characteristics of the bag, not between some other characteristics, and neither between the differences.

Litigation financing

In France, a plaintiff may have access to a Third Party Funding (TPF) But it is still a confidential process than only a few people are aware is available

Compensation of prejudice : “the entire prejudice, but the prejudice only”  Negative economic consequences  Infringer’s profits  Cumulative damages

Court of Appeal of Paris – December 18, 2018: Céline vs. Forever 21

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CA ADIDAS‐AMERICA, INC. V. PAYLESS SHOESOURCE, INC. SE #fashionlaw

ADIDAS AMERICA, INC., ADIDAS AG, AND ADIDAS CA INTERNATIONAL MARKETING B.V., V. SKECHERS USA, INC. SE #fashionlaw

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CA ADIDAS V. MARC JACOBS SE #fashionlaw

Adidas (left) and Marc Jacobs (right)

ADIDAS AMERICA, INC. ET AL V. ATHLETIC CA PROPULSION LABS, LLC SE #fashionlaw

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ADIDAS AMERICA, INC. ET AL V. CA ECCO USA, INC. ET AL SE #fashionlaw

ADIDAS AMERICA, INC ET AL V. CA JUICY COUTURE, INC. SE #fashionlaw

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CA ADIDAS V. FOREVER 21 SE #fashionlaw

Forever 21’s Teenage Mutant Ninja Turtles and Looney Tunes Sweatshirts

FOREVER 21 V. ADIDAS AMERICA INC. CA #fashionlaw SE

Forever 21 garments that Adidas has threatened to sue over

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EVOLUTION OF A MARK? TOMMY HILFIGER

STREETWEAR: OFF‐WHITE

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Brand strategies in Fashion

 Paris Court of Appeals, Tournesol c/ Chanel, 1st ch, January 29, 2019, n°17/11182

 TGI Paris, Chanel c/ AEFFE, 3rd ch, 1st section, 20 Dec 2018, n°15/16014

 ECJ, Eden SARL v OHIM, Judgement of 27-Oct-2005, T- 305/04/00

Non-traditional trademarks in the European Union

3D TRADEMARK ECJ, Apple Inc v DPMA ,C421/13, July 10, 2014

Layout of Apple’s flagship store

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European Union Case Law

In the UK – First Multimedia motion trademark, registered on May 3, 2019 N°UK00003375593

 ECJ, November 13, 2018, C-310/17

“the taste of a food product cannot be classified as a 'work' and consequently is not eligible for copyright protection under the directive“.

 Same problem for olfactory trademarks.

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Designs in Fashion Law

ECJ, Crocs/EUIPO, n° T-651/16, September 14, 2016

LITIGATION TIPS

• Register your trademark. • But scent trademarks can be difficult to obtain. • Examples of scent trademarks recognized by the U.S. Patent office:

• Monitor your trademark to protect your company’s marks. • Be proactive. Send cease and desist letters.