Trademark, Design and Copyright Update for Fashion Brands Susan Kayser, Friederike Von Brühl, Serena Totino, Anaïs Ligot, Simon Casinader, Savannah Hardingham

Luxury & Fashion Webinar Series – Facing the Future March 21, 2019 Trademark, Design and Copyright Update For Fashion Brands Susan Kayser, Friederike von Brühl, Serena Totino, Anaïs Ligot, Simon Casinader, Savannah Hardingham

Washington DC Berlin London Susan Kayser, Partner Friederike von Brühl, Partner Serena Totino, Associate

Paris London Melbourne Anaïs Ligot, Associate Simon Casinader, VIA RECORDING: Sr. Associate Savannah Hardingham, Partner

klgates.com 2 OVERVIEW OF TOPICS

– U.S. Issues and Cases . Proving Irreparable Harm Continues To Evolve . Blurring The Line In Using Celebrity Names Or Images . Parody Or Infringement - How Funny Does It Need To Be? . U.S. Supreme Court Weighs in on IP Issues – EU Directive 2015/2436 – EU Issues and Cases – Brexit – Australia Issues and Cases . Copyright protection for clothing . Google Ads and trade mark infringement

klgates.com 3 OVERVIEW OF TOPICS

klgates.com 4 U.S. ISSUES AND CASES – “PROVING” IRREPARABLE HARM

Irreparable Harm Needed for Injunctive Relief ‒ May 2006 – eBay v. MercExchange – U.S. Supreme Court rejects “presumption” in patent cases – 2014 . Ninth Circuit – Herb Reed Enterp. v. Florida Entertainment Mgmt. – plaintiffs in trademark actions must show irreparable harm (no presumption) . Third Circuit – Groupe SEB USA Inc. v. Euro-Pro Operating LLC – “permissable inference” of irreparable harm . Supreme Court did not accept cert in Herb Reed – 2014 – 2018 . Continued split requiring “proof” of irreparable harm, “inferences”, or middle ground – some “proof”

klgates.com 5 U.S. ISSUES AND CASES – PROVING IRREPARABLE HARM CONTINUES TO EVOLVE

adidas v. Skechers* 9th Circuit

adidas asserted trade dress for Stan Smith design: – three perforated stripes on the body of the shoe, – prominent heel tab, and – "a particularly flat sole," among other elements

 Adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747 (9th Cir. 2018)

klgates.com 6 U.S. ISSUES AND CASES – THE STAN SMITH v. THE SKECHERS ONIX adidas* proved irreparable harm: 1. Consumer surveys 2. Extensive marketing efforts 3. Controlled supply of Stan Smiths available for purchase

 Adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747 (9th Cir. 2018)

klgates.com 7 U.S. ISSUES AND CASES – THE STAN SMITH v. THE SKECHERS ONIX

adidas built a specific reputation around the Stan Smith with “intangible benefits” – Extensive and targeted advertising – Unsolicited media – Survey – Controlling Supply

 Adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747 (9th Cir. 2018)

klgates.com 8 U.S. ISSUES AND CASES – THREE STRIPE MARK v. SKECHERS CROSS COURT adidas failed to show irreparable harm

Three-Strip Mark The Skechers Cross Court

 Adidas Am., Inc. v. Skechers USA, Inc., 890 F.3d 747 (9th Cir. 2018)

klgates.com 9 U.S. ISSUES AND CASES – THREE STRIPE MARK v. SKECHERS CROSS COURT

Evidence of Loss of Control over Business Reputation and Damage to Goodwill = Irreparable Harm

Provided “Concrete Evidence” in the Record

Post-sale confusion and “value” brand arguments not sufficient – Not sufficient evidence that Skechers had less favorable reputation – No evidence of consumer perception

klgates.com 10 U.S. ISSUES AND CASES – THREE STRIPE MARK v. SKECHERS CROSS COURT

Judge Clifton’s Dissent:  Lesser quality imitator could harm value of prestige brand

Record evidence to support irreparable injury – Employee testimony: adidas is “premium sports brand” and Skechers is “value brand” – Value of adidas’ mark – Investment – Quality control

klgates.com 11 U.S. ISSUES AND CASES – TAKEAWAYS ON PROVING IRREPARABLE HARM

– Venue matters – “Prestige” v. “Lower Quality” – Employees ≠ Consumer Perception – Advertising – Unsolicited media – Controlling Supply – Surveys

klgates.com 12 U.S. ISSUES AND CASES – BLURRING THE LINE IN USING CELEBRITY NAMES OR IMAGES

Use of celebrity’s name might be legal even when clearly chosen to capitalize off famous singer’s name

– Feyoncé Inc. selling T-shirts and other goods featuring “Feyoncé” – References Beyoncé’s 2008 “Single Ladies” track

 Knowles-Carter et al. v. Maurice et al., 1:16-cv-02532 (S.D.N.Y.)

klgates.com 13 U.S. ISSUES AND CASES – BEYONCÉ v. FEYONCÉ

– Use of letter “F” in “FEYONCÉ” was a play on words to sound like “fiancé” – A pun the court found could dispel consumer confusion – SJ and a permanent injunction denied – Case dismissed – Number of FEYONCÉ items currently for sale by third parties

 Knowles-Carter et al. v. Maurice et al., 1:16-cv-02532 (S.D.N.Y.)

klgates.com 14 U.S. ISSUES AND CASES – PARODY OR INFRINGEMENT - HOW FUNNY DOES IT NEED TO BE?

 Louis Vuitton Malletier SA v. My Other Bag Inc., 1:14-cv-03419 (S.D.N.Y.)

klgates.com 15 U.S. ISSUES AND CASES – PARODY OR INFRINGEMENT - HOW FUNNY DOES IT NEED TO BE?

klgates.com 16 U.S. ISSUES AND CASES – LOUIS VUITTON v. MY OTHER BAG

A parody must convey two simultaneous and contradictory messages: – that it is original – but also that it is not the original and is instead a parody – MOB met this standard

 Louis Vuitton Malletier SA v. My Other Bag Inc., 1:14-cv-03419 (S.D.N.Y.)

klgates.com 17 U.S. ISSUES AND CASES – LOUIS VUITTON v. MY OTHER BAG

– “My Other Bag is a…” = a designation of source . Makes clear that MOB’s tote bag is not a LV-branded bag but merely a parody – LOC = extremely low – MOB's parodic use of LV's designs: . produces a “new expression [and] message” . constitutes transformative use

klgates.com 18 U.S. ISSUES AND CASES – TAKEAWAYS

– Parody part of initial confusion assessment – Play on Words – Merely co-opted the mark? Or repurposed it? – Third Party Use – Negative Press / “Bullying” Charges Against Big Brands

klgates.com 19 U.S. ISSUES AND CASES – U.S. SUPREME COURT RESOLVES CIRCUIT SPLIT ON COPYRIGHT REGISTRATION REQUIREMENT

– Supreme Court unanimously held: copyright owners must obtain a registration from the U.S. Copyright Office prior to filing an infringement action – Impact: likely to be a flood of copyright applications at the U.S. Copyright Office . low cost to file . average seven-month wait time to receive registration

 Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 586 U.S. __ (slip op., March 4, 2019).

klgates.com 20 U.S. ISSUES AND CASES – FOURTH ESTATE PUBLIC BENEFIT CORPORATION v. WALL-STREET.COM

Brands in the luxury goods and fashion industries should routinely file copyright applications – Fashion companies regularly create seasonal designs used on handbags or clothing (floral prints, animal designs, and other pictorial features/arrangements) – Packaging designs may be protectable through copyright – Notorious infringers frequently create replicas of designs, and brands need to be armed and ready with copyright registrations for immediate action upon learning that the brand’s design has been copied – Registration = prerequisite for statutory damages and attorneys’ fee

 Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 586 U.S. __ (slip op., March 4, 2019).

klgates.com 21 U.S. ISSUES AND CASES – DEFINING RECOVERABLE COSTS IN COPYRIGHT LITIGATION

The Supreme Court recently determined that “full costs” under § 505 of the Copyright Act did not authorize the appellate court to award litigation expenses beyond those specified by Congress in the general costs statute – Not included: expert fees, consultant fees, and electronic discovery costs – Included: 1. clerk and marshal fees 2. transcript fees 3. printing and witness fees and costs 4. exemplification and copying fees 5. docket fees 6. compensation of court-appointed experts and interpreters

 Rimini Street, Inc. v. Oracle USA, Inc. 586 U.S. ___ (slip op., March 4, 2019).

klgates.com 22 OVERVIEW OF TOPICS

klgates.com 23 EU DIRECTIVE 2015/2436 – HARMONIZATION OF EU TRADEMARK REGISTRATION PRACTICE

EU Directive 2015/2436

Aims . Strengthening TM owners’ rights . Harmonization of EU TM systems

Timing . Implementation deadline: January 14, 2019 . Almost half of the member states have not implemented yet!

klgates.com 24 EU DIRECTIVE 2015/2436 – HARMONIZATION OF EU TRADEMARK REGISTRATION PRACTICE

German Trademark Modernization Act (14 January 2019)

New registration options . Before: only graphic display; now: any form of display! . Licenses

New technical framework . QR-Code on TM certificate . Use of key words for TM research

New TM types . Sounds, animations, holograms . Certification marks

klgates.com 25 EU DIRECTIVE 2015/2436 – HARMONIZATION OF EU TRADEMARK REGISTRATION PRACTICE

Certification Mark

Guarantee for certain characteristics of the goods/services . Applicants provide a statute . Reliability

Relevance for fashion industry . Guarantee for standards of material, fabrication, quality . e.g. Fair Trade Rules and Environmental Protection

klgates.com 26 OVERVIEW OF TOPICS

klgates.com 27 EU ISSUES AND CASES – CJEU – JUDGMENT C-163/16 LOUBOUTIN

Description of Trademark Registration EU 008845539:

“The trademark consists of the color red (Pantone 18.1663TP) applied to the sole of a shoe as shown (the outline of the shoe is therefore not part of the trademark but serves to show the positioning of the trademark).”

Notion of “shape”, Article 3(1)(e)(iii) Directive 2008/95:

”A set of lines or contours that outline the product concerned.”

klgates.com 28 EU ISSUES AND CASES – FERRAGAMO v. RIPANI & VAL VIBRATA

FERRAGAMO’S TRADEMARK RIPANI & VAL VIBRATA

 Italian Supreme Court – 2018

–klgates.com –29 EU ISSUES AND CASES – COURT OF MILAN

Ferragamo filed a lawsuit agaist Ripani and Val Vibrata claiming: – Infringement of its iconic «omega» trade marks – Unfair competition

The Court of Milan decided in Ferragamo’s favour

klgates.com 30 EU ISSUES AND CASES – COURT OF APPEAL

2013 – The first instance decision was overturned:

– Similarity does NOT imply likelihood of confusion in the market – Ripani & Val Vibrata’s signs held an instrumental function, while the Ferragamo trade mark has an ornamental function

klgates.com 31 EU ISSUES AND CASES – THE ITALIAN SUPREME COURT

Marks with reputations should be protected: ‒ Independently from the likelihood of confusion of the relevant public ‒ If the infringing mark takes unfair advantage of, or is detrimental to, the distinctive character or repute of the earlier mark

STAY TUNED… Court of Appeal will have to decide the case taking into account the reputation of the earlier mark

klgates.com 32 EU ISSUES AND CASES – LANDOLL v. MECS SRL

LANDOLL’S TRADE MARK MECS SRL

Unauthorised reseller of NASHI SELECTIVE DISTRIBUTION products on its website and on a AGREEMENT third party online marketplace

PRINCIPLE OF EXHAUSTION

 Court of Milan – 2019

klgates.com 33 EU ISSUES AND CASES – PRINCIPLE OF EXAUSTION

A trade mark owner may not oppose the further commercialization of its branded goods that are distributed in the EEA with its consent

unless there are LEGITIMATE REASONS:

– Conditions of the goods are changed or impaired – Legitimate selective distribution agreement in place

klgates.com 34 EU ISSUES AND CASES – COURT OF MILAN

PRELIMINARY INJUCTION:

‒ Principle of exahustion does not apply ‒ Selective distribution agreement may be a «legitimate reason» – Infringement of Nashi Trade mark – Withdrawal of Nashi’s products from the market within 3 days + legal costs – Publication of the preliminary injuction on the the reseller’s homepage for 30 days

Will the Court of Milan uphold this decision? Will this decision be persuasive for other EU Courts?

klgates.com 35 EU ISSUES AND CASES – WHAT IS A SELECTIVE DISTRIBUTION SYSTEM?

“A distribution system where the supplier undertakes to sell the contract goods …, either directly or indirectly, only to resellers selected on the basis of specified criteria and where these resellers undertake not to sell such goods …to unauthorized resellers within the territory reserved by the supplier to operate that system…”

Article 1(e), EC Regulation No. 330/2010 (“Vertical Block Exemption Regulation”)

klgates.com 36 EU ISSUES AND CASES – HOWEVER…

Many luxury brands already operate a “DE FACTO” selective distribution system BUT unless structured in accordance with EU laws: – May not be legally enforceable – so of little/no protective value to brand – May include terms or practices which expose the company to significant legal risk (see Guess case) . Cross-sale restrictions? . Territory restrictions? . Online sales restrictions? . Resale pricing pressures?

klgates.com 37 EU ISSUES AND CASES – LIONEL MESSI v. EUIPO & J.M.-E.V. E HIJOS SRL

Are these trademarks similar?

Trademark Action Opposed by registration filed by

Party Messi J.M.-E.V. e hijos SRL’s prior trademark

Word trademark Word trademark Trademark “MASSI” No “MASSI” No 3436607 414086

9 9 Classes 25 25 28 28

 Court of the EU – 26 April 2018 No T-554/14

klgates.com 38 EU ISSUES AND CASES – LIONEL MESSI v. EUIPO & J.M.-E.V. E HIJOS SRL

Are these trademarks similar? – According to the Court of the EU: . Visually: Average degree of similarity . Phonetically: Strong degree of similarity . Conceptually: Different since Lionel Messi is famous for any average consumer of sports goods

– Decision of the Court of the EU: . No likelihood of confusion . The relevant public will associate the term “Messi” with the name of the football player, not with the trademark “Massi”

 Court of the EU – 26 April 2018 No T-554/14

klgates.com 39 EU ISSUES AND CASES – CROCS v. EUIPO AND GIFI DIFFUSION

“Unluxury” shoes – Take 1

Design registration Declaration of Action filed by invalidity by

Party Crocs Gifi Diffusion

Design 

 Court of the EU – 14 March 2018 No T-651/16

klgates.com 40 EU ISSUES AND CASES – CROCS v. EUIPO AND GIFI DIFFUSION

“Unluxury” shoes – Take 1

– Considering the three disclosure events: The Crocs’ design had been made available to the public prior to the 12-month period preceding the date of priority claimed – No demonstration by Crocs that three disclosure events could not: . reasonably have become known . in the normal course of business . to the circles specialized . in the sector concerned . operating within the EU – Decision: Lack of novelty

 Court of the EU – 14 March 2018 No T-651/16

klgates.com 41 EU ISSUES AND CASES – BIRKENSTOCK v. EUIPO

“Unluxury” shoes – Take 2

Trademark Action Refused by registration filed by

Party Birkenstock EUIPO

Trademark 

 Court of the EU – 13 Sept. 2018 No C-26/17

klgates.com 42 EU ISSUES AND CASES – BIRKENSTOCK v. EUIPO

“Unluxury” shoes – Take 2

Criteria for distinctive character for surface patterns – Criteria for trademarks that coincide with the appearance of the goods is applicable to surface patterns trademarks. . When the use of a pattern is unlikely in the light of the nature of the products at issue -> no coincidence with the goods and services = distinctive trademark . When the use of a surface pattern for fashion items is made up of elements which are repeated regularly and can be extended ad infinitum, it lends well to being used as a surface pattern -> it coincides with the goods and services = no distinctive trademark

 Court of the EU – 13 Sept. 2018 No C-26/17

klgates.com 43 OVERVIEW OF TOPICS

klgates.com 44 BREXIT – WHAT DOES IT MEAN FOR IP?

–… . …

klgates.com 45 BREXIT – WHEN?

klgates.com 46 BREXIT – DESIGNS

– No loss of rights in UK due to Brexit . UK registered and unregistered designs  Unchanged . EU registered designs  Equivalent rights to be created in UK . Pending EU design applications  Priority for UK applications . Continuing Unregistered Designs . Supplementary Unregistered Designs – Inability to rely on UK rights in the EU post Brexit

klgates.com 47 BREXIT – DISCLOSURE OF DESIGNS

klgates.com 48 BREXIT – TRADE MARKS

– No loss of rights in UK due to Brexit . UK registered and unregistered trade marks  Unchanged . EU registered trade marks  Equivalent rights to be created in UK . Pending EU trade mark applications  Priority for UK applications – Inability to rely on UK rights in the EU post Brexit

klgates.com 49 BREXIT – ENFORCEMENT/OPPOSITIONS

– UK proceedings based on UK rights  Unchanged – EU proceedings based on EU rights  Unchanged – UK proceedings based on EU rights  Will proceed on basis of newly created rights – EU proceedings based on UK rights  Terminated  Possibility for new UK proceedings if relevant – Existing EU wide injunctions will still apply in UK – New EU wide injunctions from UK Courts or including UK not possible

klgates.com 50 BREXIT – IP AGREEMENTS

– “Future proofing” required – License Territory – EU, Europe, country list – Governing law and dispute mechanism – Diligence existing material settlement and co- existence agreements before Brexit day – Have Brexit as a live issue for all new agreements and term sheet discussions

klgates.com 51 OVERVIEW OF TOPICS

klgates.com 52 AUSTRALIA ISSUES AND CASES – COPYRIGHT PROTECTION FOR CLOTHING IN AUSTRALIA

– No unregistered design right in Australia – Copyright cannot generally be relied upon to protect garment cut – Copyright can be relied on to protect fabric prints & other 2D designs applied to garments

klgates.com 53 COPYRIGHT PROTECTION FOR CLOTHING IN AUSTRALIA – INFRINGEMENT OF COPYRIGHT

– Works that reproduce the whole or a “substantial part” of a copyright work, without authority, will infringe – Two elements: . Reference/ copying – Established by evidence of direct copying or inferred if access to the copyright work was possible and designs are similar . Substantial part – Quality rather than the quantity of the part taken – no “safe” amount to copy – Is the part taken an ‘essential’, ‘material’ or ‘recognisable’ part of the copyright work?

klgates.com 54 COPYRIGHT PROTECTION FOR CLOTHING IN AUSTRALIA – SEAFOLLY v. FEWSTONE (CITY BEACH)

 City Beach found to have infringed copyright in two original Seafolly fabric prints and an embroidery design

klgates.com 55 COPYRIGHT PROTECTION FOR CLOTHING IN AUSTRALIA – PRINTS

Seafolly’s English Rose City Beach’s Rosette/ Rosario

klgates.com 56 COPYRIGHT PROTECTION FOR CLOTHING IN AUSTRALIA – PRINTS

Seafolly’s Covent Garden City Beach’s Sienna

klgates.com 57 COPYRIGHT PROTECTION FOR CLOTHING IN AUSTRALIA – EMBROIDERIES

Seafolly’s Senorita City Beach’s Richelle

klgates.com 58 COPYRIGHT PROTECTION FOR CLOTHING IN AUSTRALIA – FINDINGS

– City Beach infringed copyright in all 3 works

– Ordered to pay damages – AU$250,000 – Injunctions – cease making/selling the garments

klgates.com 59 COPYRIGHT PROTECTION FOR CLOTHING IN AUSTRALIA – WHY WAS SEAFOLLY SUCCESSFUL?

– Seafolly kept design files – Evidence of direct copying by City Beach – Generous approach to “substantial part” (although many differences) – Once copying proven, difficult to avoid “substantial part” and infringement

klgates.com 60 AUSTRALIA ISSUES AND CASES – GOOGLE ADWORDS & TRADE MARK INFRINGEMENT

Keyword search

Sourced from: https://www.sharetribe.com/academy/get‐started‐google‐adwords‐marketplace/

klgates.com 61 GOOGLE ADWORDS & TRADE MARK INFRINGEMENT – VEDA ADVANTAGE LTD v. MALOUF GROUP ENTERPRISES (2016)

TM Infringement Not TM Infringement

Use of the trade mark in the text of a Merely selecting and bidding on a trade sponsored link as a badge of origin and mark in Google Ads on its own, or in in relation to the same or similar combination with another word or in any goods/services for which the trade mark format is registered Descriptive search terms or descriptive use of a TM

klgates.com 62 GOOGLE ADWORDS & TRADE MARK INFRINGEMENT – ACCC v. TRADING POST AUSTRALIA (2011)

Use of a competitors’ business name as an Adword can constitute misleading and deceptive conduct

– When Internet users conducted a search for “Kloster Ford”, the following sponsored link appeared:

Kloster Ford

www.tradingpost.com.au New/Used Fords – Search 90,000 + auto ads online. Great finds daily!

klgates.com 63 GOOGLE ADWORDS & TRADE MARK INFRINGEMENT – GOOGLE v. ACCC (2013)

– Google itself is not liable – Liability rests with AdWords subscriber (need to sue subscriber) – Google will no longer remove keywords at trade mark owner’s request

klgates.com 64 GOOGLE ADWORDS & TRADE MARK INFRINGEMENT – KEY TAKEAWAYS

– Conduct regular Google searches of your trade marks – You may use descriptive terms or use a trade mark in a way that is descriptive – Do not use another’s trade mark (or similar mark) in the Google Ad or sponsored link of a Google Ad

klgates.com 65 PLEASE DO NOT HESITATE TO BE IN TOUCH!

Susan Kayser Friederike von Brühl Washington DC Berlin T +1.202.778.9421 T +49.(0)30.220.029.415 [email protected] [email protected]

Serena Totino Anaïs Ligot London Paris T +44.(0)20.7360.8145 T +33.(0)1.58.44.1529 [email protected] [email protected]

Simon Casinader Savannah Hardingham London Melbourne T +44.(0)20.7360.8256 T +61.3.9205.2043 [email protected] [email protected]

klgates.com 66