Tag Archives: Fashion Law

Low cost luxury? Judgment comes down on imitations of a Longchamp handbag

Summary of commentary on judgment No. 401/2017 of 15.9.2017 by the Provincial Appellate Court of Madrid (ECLI:ES:APM:2017:14041), published in the “Revista de Derecho de la Competencia y de la Distribución” [Competition and Distribution Law Magazine]

The conflict arose as the result of the sale on the GROUPON website of some vouchers that could be exchanged for handbags from the company SARASWATI (doing business as PRISAUK), whose design was reminiscent of LONGCHAMP’s 1623 LE PLIAGE model (hereinafter “LE PLIAGE) and the offering of which was accompanied by promotional phrases such as “dale un toque francés a tu outfit con un bolso plegable de estilo Longchamp” [give your outfit a French touch with a Longchamp style foldable handbag] or “bolso plegable de estilo Longchamp, lujo asequible con un toque francés” [Longchamp style foldable handbag, affordable luxury with a French touch].

Shown below is a comparative image with Longchamp’s LE PLIAGE handbag model and the handbags sold by SARASWATI on GROUPON and on its PRISAUK website:

Top left: Red LE PLIAGE handbag / Top right: “BENZI” handbag sold on the website www.groupon.es

Bottom left: Beige LE PLIAGE handbag / Bottom right: “PRIASUK” handbag sold on the website www.priasuk.es

In view of the above sale of goods, CASSEGRAIN, as the owner of the intellectual and industrial property rights in the LONGCHAMP handbags and trademarks, and LONGCHAMP, as the manufacturer and exclusive distributor of the handbags, instituted proceedings against SARASWATI and GROUPON on the grounds of trademark and copyright infringement and unfair competition.

Specifically, the complainants claimed that the LE PLIAGE handbag warranted protection as an applied work of art and that the model sold by SARASWATI was a reproduction of said handbag.

Furthermore, they considered that the use on the GROUPON website of the LONGCHAMP trademark and of expressions such as “lujo asequible con un toque francés” [affordable luxury with a French touch], made reference to the origin and position in the marketplace of the LONGCHAMP trademark and constituted an infringement of said trademark, which is, moreover, well known in its sector.

Finally, the complainants considered that the use of promotional phrases such as “estilo LONGCHAMP” [LONGCHAMP style] constituted an act of imitation, exploitation of another party’s reputation, unlawful advertising and misleading acts capable of generating confusion or association, as referred to in the Unfair Competition Act.

In turn, the defendants disputed the well-known character of the LONGCHAMP trademark and that the LE PLIAGE handbag could be considered a work. Moreover, GROUPON tried to assert the exemption from liability provided for under the Law governing e-commerce, claiming that they had simply reproduced the description provided by SARASWATI and that they were unaware of the unlawful nature of the information on their website.

  1. Findings of the first-instance judgment.

On 18 November 2015, Madrid Mercantile Court No. 9 handed down a judgment dismissing the claims concerning exclusive rights, intellectual property rights in the handbag and trademark rights in LONGCHAMP, but accepting the claims concerning acts of imitation and misappropriation of another party’s reputation.

Specifically, the judge of the lower court held that it had not been demonstrated that Longchamp’s LE PLIAGE handbag model had the sufficient degree of originality and creativity to be considered a work under the Copyright Act and that since the LONGCHAMP trademark had not been used on the product but rather in the advertising, there had been no trademark infringement either, but rather acts of imitation and misappropriation of another party’s reputation, pursuant to Articles 11 and 12 of the Unfair Competition Act. The judge also concluded that GROUPON could not benefit from exemption from liability under the Law governing e-commerce, given that it had been proven that the design of the advertising of the handbags in dispute had been undertaken jointly between SARASWATI and GROUPON.

  1. Summary of the findings of the judgement of the Provincial Appellate Court of Madrid and commentary synopsis.

The judgment of the Mercantile Court, appealed both by the complainants and by GROUPON, led to the judgment of 15.9.2017 by the Provincial Appellate Court of Madrid, which overturns the Mercantile Court’s judgment almost in full, finding that the sale of the handbags on GROUPON’s website infringed the copyright in the LE PLIAGE model and the well-known trademark LONGCHAMP.

The full commentary, which may be accessed in issue number 22 of the Revista de Derecho de la Competencia y de la Distribución [Competition and Distribution Law Magazine], offers a detailed analysis of the main findings of this judgment, dealing with important issues for the fashion sector (“Fashion Law”), such as the protection of creations in this field under copyright (in this case Longchamp’s “Le Pliage” handbag model), the possible infringement of a well-known trademark when used in advertising accompanied by expressions such as “estilo”, “tipo”, “imitación” [style, type, imitation], the principle of the somewhat complementary relationship between the regulations governing exclusive rights and Unfair Competition law, and the liability of information society service providers in relation to such possible infringements.

  Author: Cristina Velasco

Visit our website: http://www.elzaburu.es/en

Fashion Law. Licensing (XIII)

ELZABURU has had the pleasure of working together with the publisher Thomson-Reuters Aranzadi on Fashion Law, a pioneering work in Spain on the subject of fashion law, which was presented on 16 April.

In these short weekly summaries, the professionals at ELZABURU who participated in the work offer us a brief outline of their contributions:

Licensing

A licence is an instrument available to holders of intangible assets that enables them to permit third parties to use their assets subject to a series of conditions. Unlike an assignment, a licence does not transfer ownership of the asset but simply grants an opportunity to use it in a given territory for a limited period of time.

Licences enable licensors to exploit assets in territories or markets which might otherwise hold out little interest for them or which they might be unable to enter on their own.

It should be noted that licences may be issued both for rights that depend on registration at a patent and trade mark office and for rights that arise without formal registration, such as copyright or trade secrets, though in this last-mentioned case it would be wise to put in place procedures to protect the asset and systems for monitoring its use. Various intangible assets may be licensed in a single agreement, a common practice in franchising agreements, in which trade marks, designs, know-how, and the like may all be licensed.

The basic instrument used to issue licences is the licence agreement, which can be worded by the parties to stipulate whatever terms they deem suitable as a framework for the licence. In any event, licence agreements ordinarily contain a series of clauses aimed at consolidating and enhancing the consistency of the contract.

Thus, clauses specifying the object, duration, and territorial extent of the licence help shape the content of the licence.

It is advisable to include both an intellectual property clause (specifying the owner of the assets, which party will take charge of their defence in the event of third-party infringement, and whether sublicensing is permissible as well as prohibiting registration by the licensee) and a supervision and audit clause (setting up mechanisms for monitoring use of the assets by the licensee, compliance with the terms of the licence, and proper reporting of the profits obtained through use of the assets) in the interest of further protecting the asset.

In terms of payment for the licence, where a consideration changes hands, the arrangements most commonly stipulated basically number four:

  • (i) payment of a fixed amount for the entire lifetime of the licence.
  • (ii) payment of an amount for the licence each year.
  • (iii) payment of a percentage of the profits earned through commercial use of the asset concerned.
  • (iv) payment of an initial fee plus a percentage of the profits obtained. Any combination of these arrangements is of course feasible, or any other scheme agreeable to the parties may be used.

Other clauses – such as early termination or applicable law and jurisdiction – are essential to ensure the legal certainty of the agreement and avert further difficulties in the event of a dispute.

Lastly, it should be noted that for licence agreements to have effect vis-à-vis third parties, they must be recorded on the relevant registers, such as registers kept by industrial property offices (the Spanish PTO) or intellectual property registers.

Author: Martín Bello y Alba María López

Visit our website: http://www.elzaburu.es/en

 

Blog entries in the series Fashion Law:

1.Trademark protection in the fashion sector (23.04.2018)

2.Design protection in the fashion sector (30.04.2018)

3.Patent protection in the fashion sector (07.05.2018)

4.Protection of fashion through copyright (21.05.2018)

5. Image rights in the fashion sector (28.05.2018)

6.Fashion Law. Data Fashion (04.06.2018)

7.Counterfeiting in the fashion sector (11.06.2018)

8.Exhaustion of rights in the fashion sector (18.06.2018)

9.Corporate reputation in the fashion sector (25.06.2018)

10. Protection of the commercial imagen of a fashion brand (04.07.2018)

11. Websites, Apps & Social Networks (13.07.2018)

12. Valuation of intangible assets (17.07.2018)

13. Licensing (06.09.2018)

Fashion Law. Valuation of intangible assets (XII)

ELZABURU has had the pleasure of working together with the publisher Thomson-Reuters Aranzadi on Fashion Law, a pioneering work in Spain on the subject of fashion law, which was presented on 16 April.

In these short weekly summaries, the professionals at ELZABURU who participated in the work offer us a brief outline of their contributions:

Valuation of intangible assets

As time goes on, intellectual assets are accounting for an ever greater share of the value of fashion companies, and the most valuable companies worldwide are those holding trade marks, patents, or designs valued in the many millions.

Valuation of intangible assets in the fashion sector poses a challenge because of the incorporeal nature of these assets, since they consist of a number of features that are hard to evaluate using traditional methods of appraising property, better suited to tangible assets.

Knowing how to value a company’s intangible assets is as important as knowing how to value a company’s tangible assets, since the former may contribute very significantly to a company’s value.

Valuations of this kind may be needed for many different reasons: accounting of a company’s intangible assets for legal and tax purposes, contributing assets to a company, licensing the assets, compensation in contentious proceedings, use of assets as a security interest, and other operations.

Valuation of intangible assets can also be relevant in the context of corporate due diligence or audits. Valuation approaches ordinarily involve the following steps: identifying the intangible assets to be appraised, ascertaining what rights are held in them, verifying their status and checking to see whether they are subject to any third-party rights, and, finally, performing the actual valuation of the intangible assets themselves.

Professionals practicing in different fields should take part in the valuation with a view to producing an estimate as close as possible to the true value in light of existing circumstances.

There are two main approaches, both of which need to be taken into account when appraising intangible assets: the quantitative approach (numerical and economic data) and the qualitative approach (quality and external factors).

The reason for performing the valuation must be clearly established before valuation is undertaken in order to be able to select the approach or approaches to be used. Basically, the main approaches are:

  • Cost approach: the cost needed to create or replace the asset.
  • Income approach: the present value of the profits anticipated over the lifetime of the right.
  • Market approach: the price other buyers have paid for similar rights in the marketplace.

Where different types of intangible assets are to be appraised, these approaches may be differently suited to each type, and sometimes one or another may be more advisable depending on the circumstances in each case.

Author: Cristina Espín

Visit our website: http://www.elzaburu.es/en

 

Blog entries in the series Fashion Law:

1.Trademark protection in the fashion sector (23.04.2018)

2.Design protection in the fashion sector (30.04.2018)

3.Patent protection in the fashion sector (07.05.2018)

4.Protection of fashion through copyright (21.05.2018)

5. Image rights in the fashion sector (28.05.2018)

6.Fashion Law. Data Fashion (04.06.2018)

7.Counterfeiting in the fashion sector (11.06.2018)

8.Exhaustion of rights in the fashion sector (18.06.2018)

9.Corporate reputation in the fashion sector (25.06.2018)

10. Protection of the commercial imagen of a fashion brand (04.07.2018)

11. Websites, Apps & Social Networks (13.07.2018)

12. Valuation of intangible assets (17.07.2018)

13. Licensing (06.09.2018)

Fashion Law. Fashion 4.0: Websites, Apps & Social Networks (XI)

ELZABURU has had the pleasure of working together with the publisher Thomson-ReutersAranzadi on Fashion Law, a pioneering work in Spain on the subject of fashion law, which was presented on 16 April.

In these short weekly summaries, the professionals at ELZABURU who participated in the work offer us a brief outline of their contributions:

Fashion 4.0. Websites, Apps & Social Networks: protection and Defence

The digital age has had a profound effect the world of fashion, transforming the way it designs, sells or communicates. No one can now operate solely through traditional channels and must reach out to consumers via online media.

Therefore, it is crucial to limit the risks and protect the intangible assets of the business.

In this regard, holding the exclusive rights to a domain identifying the business is extremely important, particularly with a view to preventing its use by third parties. To obtain exclusive rights, the domain must be registered before the corresponding body, depending on the domain of interest, which may be national (.es, .us, .uk, etc.) or generic (.com, .net, .biz, etc.).

The content, appearance and layout of a website can also be protected. Any original content included on the website (images, text, videos, illustrations, etc.) are protected by the Copyright Act. This protection also extends to the content uploaded to social networks, as it is considered equivalent to that included on corporate websites. Similarly, websites from which data and information are extracted or compiled can be protected as databases, either as a work or as a sui generis database right, provided that the investment made by the owner is duly accredited, the latter form being the more usual.

All this must be supported by a contractual protection strategy, with website use policies being an ideal tool to restrict the reuse of the intangible assets of the business.

The protection of mobile apps has a similar structure to that of websites with regard to their content, the main difference being that an app may additionally be protected as a computer programme or software, in accordance with the provisions of the Copyright Act.

Finally, it is important not to overlook the registration of those trademarks used to identify the business on online platforms.

The reality is that this digital revolution is constantly evolving, posing new challenges and strategies focussed on improving the customer’s experience, in adapting physical shops to new technologies, experimenting with chatbots, customising garments through technical developments in the materials used, as in the case of sportswear, whose technical features are adapted to the requirements of top-level athletes, or the design of clothing whose colours depending on the weather conditions, while adapting business models in line with new sustainability objectives or targeted improvements in environmental conditions, for instance, through the use of renewable energies in the manufacture of garments or that of new, low-impact means of production.

Author: Martín Bello Castro

Visit our website: http://www.elzaburu.es/en

Blog entries in the series Fashion Law:

1.Trademark protection in the fashion sector (23.04.2018)

2.Design protection in the fashion sector (30.04.2018)

3.Patent protection in the fashion sector (07.05.2018)

4.Protection of fashion through copyright (21.05.2018)

5. Image rights in the fashion sector (28.05.2018)

6.Fashion Law. Data Fashion (04.06.2018)

7.Counterfeiting in the fashion sector (11.06.2018)

8.Exhaustion of rights in the fashion sector (18.06.2018)

9.Corporate reputation in the fashion sector (25.06.2018)

10. Protection of the commercial imagen of a fashion brand (04.07.2018)

11. Websites, Apps & Social Networks (13.07.2018)

12. Valuation of intangible assets (17.07.2018)

13. Licensing (06.09.2018)

Fashion Law. Corporate reputation in the fashion sector (IX)

ELZABURU has had the pleasure of working together with the publisher Thomson-Reuters Aranzadi on Fashion Law, a pioneering work in Spain on the subject of fashion law, which was presented on 16 April.

In these short weekly summaries, the professionals at ELZABURU who participated in the work offer us a brief outline of their contributions:

Corporate reputation

Corporate reputation could be likened to the concept of prestige or fame and defined as the image or perception that both the general public and the fashion company’s customers, as well as the company itself, have of the company.

If we consider that the decision-making process of consumers is no longer governed by objective factors such as the quality of materials or the price of a product but by the values and experiences transmitted by brands (e.g., modernity, design, etc.), we can conclude that corporate reputation is a valuable asset for a company, which has an influence on the value and price of that company’s products in the marketplace.

The reputation of fashion companies and brands is the result of a carefully devised communication strategy, creating and maintaining value for the brand beyond the product, and recognition of the brand in the marketplace (by existing or potential consumers, competitors, the general public).

The following are generally the cornerstones of this strategy:

  • Creating and maintaining a reputation in the fashion market, by selecting a niche in the market and working on positioning.
  • Designing communication policies and developing marketing initiatives.
  • Implementation of policies for management of any potential reputation crisis.

For when such actions prove to be insufficient, fashion companies and brands need to be familiar with the regulatory framework which guarantees legal protection of their reputation and establish a plan of action against any unlawful attack against the same, from a communication and legal standpoint.

The options offered by the legal system may by divided into two areas: civil and criminal.

1.Civil

Within the first area, there are two options depending on the legal asset affected: protection of the right to honour and unfair competition.

Provision for the protection of the right to honour is made in Organic Act No. 1/1982 of 5 May 1982, affording civil protection to the right to honour, personal and family privacy, and one’s own likeness. This right is recognized in respect of legal persons in the references to “good name” or “reputation”.

Moreover, the Unfair Competition Act, Act No. 3/1991 of 10 January 1991, aims to ensure the proper functioning of the market and punish acts of unfair competition in the marketplace. Attacks against the reputation of a fashion company can sometimes fall within the category of unfair conduct (e.g., acts of denigration), and the company can seek to protect its rights through this option.

Additionally, it is important to consider the right of rectification, as regulated by Act No. 2/1984, which permits a (natural or legal) person to “correct information on facts related to him broadcasted by the mass media, which he considers untrue and the dissemination of which may cause him damage”.

2. Criminal

Finally, when the attacks against the fashion company’s or fashion brand’s reputation are particularly serious, protection may be sought under criminal law.

Specifically, if the act against the corporate reputation of the fashion company or brand consists of an action or expression which is harmful to its dignity, damages its reputation or undermines its self-esteem, it could constitute insult or defamation, as regulated by Articles 208 to 210 of the Criminal Code.

If said act consists of accusations of having committed an offence, made in the knowledge that they are false or display a reckless disregard for the truth, it could be considered false accusation of an offence, as regulated by Articles 205 to 207.

Author: Alba María López

Visit our website: http://www.elzaburu.es/en

Blog entries in the series Fashion Law:

1.Trademark protection in the fashion sector (23.04.2018)

2.Design protection in the fashion sector (30.04.2018)

3.Patent protection in the fashion sector (07.05.2018)

4.Protection of fashion through copyright (21.05.2018)

5. Image rights in the fashion sector (28.05.2018)

6.Fashion Law. Data Fashion (04.06.2018)

7.Counterfeiting in the fashion sector (11.06.2018)

8.Exhaustion of rights in the fashion sector (18.06.2018)

9.Corporate reputation in the fashion sector (25.06.2018)

10. Protection of the commercial imagen of a fashion brand (04.07.2018)

11. Websites, Apps & Social Networks (13.07.2018)

12. Valuation of intangible assets (17.07.2018)

13. Licensing (06.09.2018)

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