October 26, 2016
A high-quality photo of a new art object taken at the London Fashion Week may turn into a massive set of first-class copies delivered to the market by the end of the following week. Such knockoffs may be a perfectly legal competition tactic in the fashion industry, especially in the fast fashion segment. It is not surprising that designers and brand owners are seeking ways to protect their products by resorting to intellectual property (IP) instruments. IP protection is a particularly valuable asset in emerging markets, where the growth potential may be significant. Russia is one of such markets, where traditional IP instruments are ever more frequently used to protect a brand’s uniqueness.
This introductory article lays out the basic IP framework guarding the fashion industry borders in Russia. Overall, local companies more often find themselves on the abusing side, whereas their foreign competitors are usually more cautious and well-prepared to protect their IP. In terms of IP assets, most of the battles concern trademarks (TM) and design patents, while disputes over copyrightable fashion designs and know-hows are rarely seen.
When discussing brand protection, the first thing that comes to mind is a trademark (TM). Word, image, three-dimensional and other marks can be TMs. A mark becomes protected from the date of its registration with Rospatent, the Russian office for patents and trademarks. The person who files for protection first has priority. Protection provided by a TM is not unlimited: the monopoly of its holder extends only to certain classes of goods for which the TM is registered.
A TM registration for goods of another class may constitute unfair competition
In 2009, the Swiss watchmaker Vacheron Constantin discovered that an identical word mark had been successfully registered in Russia as a TM for Class 25 (clothing, shoes) goods with priority dating back to 2003. The Swiss company’s TM applies only to goods in Class 14 (watches). The Swiss watchmakers were unsuccessful in disputing the registration of the competing TM with Rospatent. They were also denied relief by courts in three instances based on the dissimilarity of the goods. They only managed to annul the disputed TM in the High Commercial Court of the Russian Federation, which agreed with arguments that registration of an identical TM for goods of a different class amounted to unfair competition in this case.
Traditionally, a TM protects the mark itself (logo, phrase, slogan, etc.) – it does not apply to the type of product or design of an article. This limits the bounds of TM protection to rather obvious infringements such as logo copying, but does not include protection for the design of the creative elements of fashion articles. This approach was changed and brought in line with international practices when in 2014 the Russian Civil Code was amended to allow protection of otherwise unprotectable elements (including shape, packaging, or color), provided such elements become distinctive as a result of their use.
Registration of a signature color as a TM in Russia
In February 2016, the Russian media actively discussed the news regarding registration by some large Russian companies of their signature colors as TMs. Gazprom registered the color blue, MTS – the color red, and Sberbank – the color green. Naturally, these color marks were limited by the classes of goods and services for which they had become distinctive and were therefore registered.
In the US, the shape of an article and its packaging may be protected as a trade dress, a type of TM, as a result of the passage of the Lanham Act in 1946. Among the more famous examples of TM registrations for the appearance of an article itself or its packaging are the Tiffany blue box, the Hermès Birkin bag, and the Christian Louboutin red-sole shoes. Such registrations are yet to be seen in Russia.
TM registration in Russia may take from 12 to 18 months. In the world of fast fashion, such terms decrease the importance of TM registration for seasonal names, such as the names of collections. But TM registration is absolutely required if there are reasons to fear that counterfeit goods are being shipped from abroad and (or) distributed via online stores.
Are article’s design, measurements, and appearance subject to copyright protection? This issue remains one of the most contentious questions in the fashion industry. First and foremost, this is because protection granted to copyrightable works does not require registration or compliance with any formalities, and the duration of their protection is far longer than that of industrial designs, totaling 70 years from the death of an author.
Copyrightable works include works of science, literature, and art regardless of their merits or purpose, expressed in any objective form, including written, oral, visual, sound or video recording, or three-dimensional or spatial form. A non-exclusive list of copyrightable works is contained in Article 1259 of the Russian Civil Code and includes, among others, graphical works, designs, and other works of visual art and of design and applied art.
Such a wide definition and variety of copyrightable works make it possible to conclude that the design of clothing or an article (bag, jewelry, eyeglass frame) may also be considered a copyrightable work and thus be subject to the appropriate protection. Currently, however, there have only been a few instances in Russian case law testing this conclusion.
The design of patterns on bedding is protectable under copyright law
In 2013, a Russian court granted relief to a company that filed suit against its competitor on the grounds that the competitor distributed bedding bearing a design that was similar to a work copyrighted by the plaintiff. The protectable work in this case was the “croquis” (images) made on plaintiff’s order by a design studio. What is interesting is that the respective article in this case (bedding) was manufactured and delivered to Russia by a Chinese company. Most probably the defendant was not even aware that the fabric design had been copied.
The rules on this issue differ around the world. In the US, there is a principle that clothing is a functional article and is therefore not copyrightable under the laws that apply to creative works. There is, however, protection for unique patterns on fabric (Prince Group v. MTS Prods.), jewelry designs (Yurman Design, Inc. v. PAJ, Inc.), and original-style belt buckles (Kieselstein-Cord v. Accessories by Pearl, Inc.). At the other end of the spectrum is the European Union, where a special law – the Community Design Protection Regulation of 2002 – directly recognizes protection for designs and affords protection for both registered and unregistered designs.
The design of toys enjoys copyright protection in Russia, even when designed by foreigners
In 2016, the Intellectual Property Court of the Russian Federation handed down two similar judgments relating to the design of well-known toys for children. In both cases, international corporations were successful at claiming that local companies infringed their copyrights by selling toys, which were designed by the claimants’ foreign employees. These were some of the first cases where the courts had to grapple with the concept of design as copyrightable work.
In anticipation of clear guidance from the courts, fashion designers and brands in Russia always have ab argument that their articles are protected as copyrightable works.
You have an idea of making a leather jacket with a sherpa? Be careful. Designers from the Stavropol Region of Russia have already acquired a patent to a “men’s leather jacket with removable mutton sherpa.” It is true that, as in the majority of other countries, the appearance of an article may be protected by a patent for an industrial design. To obtain protection, the article’s appearance in its essential features must satisfy two criteria: be (1) new and (2) original.
Requirements for the patentability of an industrial design
Novelty. An industrial design is new if the entirety of its essential features reflected in the images of the article’s appearance are not evident from information that became publicly accessible to the world before the priority date of the industrial design
Originality. An industrial design is original if its essential properties are defined by the creative character of the article’s features. Namely, when there is no similar appearance in the world making the same general impression on an informed consumer as does the industrial design reflected in the illustrations of the article’s appearance.
Far from every article can satisfy the above requirements. Moreover, the fashion industry has a century-old history, and truly new designs are few and far between, notwithstanding the fact that new collections appear every season. Seeking a patent, therefore, is appropriate for articles that have a truly unique appearance. Also, because acquiring a patent takes no less than 18 months, a good candidate for protection as an industrial design is an article that has the potential to be trendy over the course of several seasons. Among items regularly receiving industrial design protection are bags, eyeglass frames, perfume bottles, and jewelry.
An industrial design patent allows its owner to practically prohibit competitors from using the protected appearance of an article. The term for protection of exclusive rights to an industrial design is 5 years with the right to extend it multiple times for 5 years for a total of up to 25 years. The patent application must be filed no later than 12 months from the date of disclosure of information about it (for example, at a trade fair or fashion show).
Frequently, a competitive advantage, including in the fashion industry, comes in the form of confidential information, which does not fall under any particular type of IP rights described above. This may include, for instance, a special method of fabric processing, a list of key clients, or a methodology for structuring a supply chain. As an example of a manufacturing secret in the context of the fashion industry, the World Intellectual Property Organization cites the IT system of ZARA, which allows the company to bring down the manufacturing cycle (the time between the discovery of a new trend and the supply of articles to the stores) to 30 days. Meanwhile, competitors may spend from 4 to 12 months on this process.
Manufacturing secrets (or know-how) under Russian law
Information of any kind […] about the results of intellectual activity in the science and technology sector and on the methods of undertaking professional activity that has actual or potential commercial value as a result of not being known to third parties, if the third parties lack ready access to such information on lawful grounds and the holder of this information takes reasonable measures to maintain their confidentiality by such means as instituting a trade secret regime.
As follows from the definition of a manufacturing secret, for information to be protected, it must satisfy three criteria: (1) have a commercial value as a result of not being known to third parties, (2) be unavailable to third parties, and (3) the owner has undertaken reasonable measures to maintain its confidentiality.
Louis Vuitton’s manufacturing secrets were brought to Coach along with the former vice president of the French fashion house
In 2014, the company Louis Vuitton filed a suit against its former vice president responsible for Canada and Bermuda. According to the company’s statement, the former employee breached his obligations of non-competition and non-disclosure when he came to work for the American brand Coach. Moreover, the company sought to collect over $500,000 from the defendant as damages.
Similar cases, albeit for smaller amounts, regularly appear before Russian courts. The main problem for Russian owners of know-hows is proving the existence of measures taken for ensuring the confidentiality of secret information. Unfortunately, companies start thinking about this only after a problem has already arisen. Notably, in some cases, a written non-disclosure agreement would be sufficient. To ensure full protection, companies should take care to institute a full-fledged trade secret regime at their facilities. This requires taking some simple measures of organizational and technical nature, such as introducing a company-wide policy and making employees aware of which pieces of information are under protection.
The same article or a combination of its elements may be simultaneously protected by several legal means described above. Such a strategy is sometimes called “multilayered” protection.
“Multilayered” protection of jeans
A jeans brand is protected as a trademark. The unique fabric production method may be protected as a manufacturing secret on the condition that measures for maintaining the confidentiality of this method are taken. Depending on the circumstances, the original design may be protected either as a copyrighted work or an industrial design.
“Multilayered” protection of sunglasses
Just as in the first example, a sunglass brand may be protected as a trademark. The unique material from which the sunglasses are manufactured (for example, a superlight material), may be protected by a utility patent. The original pattern on the resting hooks may be protected as a copyrighted work.
Multilayered protection is a viable strategy in Russia, and in fact used from time to time by industry players, even if sometimes not intentionally.
The Birkin and Kelly bags by Hermès are registered in the US as trademarks. Such vigilance has allowed the French fashion house to collect damages from over thirty websites selling counterfeits in the amount of $100 million in 2012. That same year, the designer Tory Burch accused her ex-husband of violating the regime of trade secrets to which he gained access while working for her company, Tory Burch LLC, and being married to her at the same time. That was around the time when the famous court battle between Christian Louboutin and Yves Saint Laurent began over the right to sell shoes with red soles.
The fashion industry is rich with curious legal stories, which usually revolve around the issue lying at its foundation – intellectual property. With the development of the fashion industry and the law, it should be expected that Russian designers and foreign brands present in Russia will more actively resort to legal mechanisms for protecting their unique designs.