IP Rights Get A Good Look At Fashion Law Conference

NEW YORK – A daylong event on fashion law devoted significant time to ways intellectual property rights are increasingly providing protection in the fashion world – including with the advent of 3D printing.

The 2015 Fashion Law Conference of the Federal Bar Association was held on 20 March.

3D Printing

“Mass manufacturing does not deliver,” said Charlie Maddock, director of business development at Shapeways, the “world’s largest 3D printing community and marketplace.” “We believe there is a lot more room in the world today for mass customisation.”

The use of 3D printing is taking off in the fashion industry, he said. Products can be produced in a range of materials such as gold, silver, brass, bronze, porcelain, plastic, and platinum. His company works by the customer uploading a digital 3D file to its website, where they will see the cost of printing a run of the product. Then they click to print and Shapeways will ship it anywhere in the world.

With this development, shop owners can get away from the old need to stock up on inventory, and can instead produce products on demand. And design and fashion people find it easier than using overseas manufacturers, he said. At the recent New York Fashion Week, attendees could order pieces direct from the runway.

Big distributors like Target and retailers such as toymakers also are getting on board, using the option to allow customers to personalise their products in an infinite number of ways. They are able to set limits on the range of changes that can be made, preventing misuse. There is no additional cost to the producer to customise or personalise as any variation can be printed. Designers also have begun making 3D clothing.

Maddock said IP rights holders are getting behind the idea, seeing it as an opportunity.

“Imagine if we live in a world where we can get products exactly as we want them. I think this is the future,” Maddock said. The customer is a “co-creator” involved in getting what they want rather than just what is off the shelf.

Wearable Tech

Wearable tech is in, said Olivera Medenica, principal at Medenica Law PLLC. Now there’s tech watches, glasses, gloves, jewellery (like a ring that can send signals), and even clothing. The fashion industry is partnering with the tech industry, which is good, she said, because, for instance, “I don’t think Google Glass is sexy at all, and I don’t think anybody would disagree with me.”

Other examples of wearable tech could be a surgeon with a special glove that guides him, a stylish ring that buzzes when special person calls, a way to see inside the structure of a building, or a jacket that tells you which way to go to your destination.

A legal issue that she raised is collecting data from users and possible third parties. She worked through legal questions, such as what data is being collected, where is it being stored (eg, US, EU), and what safeguards there are for it. Also to be asked is whether the data is public, who owns the data, can the data be sold or shared with third parties, and whether the US Health Information Portability and Accountability Act (HIPAA) applies, which can involve stiff penalties for sharing protected data.

Giving an example of issues that can arise, Medenica noted that Google Glass was pulled from shelves or faced fines over privacy concerns in some locations in Europe.

She highlighted the status of data policy in the US and Europe, such as the December 2013 US Food and Drug Administration guidelines on portable health data, which has an exception if it is for medical purposes. Wearable tech might have difficulty fitting under that, she noted. There is no US federal law to protect the sharing of data; it is up to the states, she said.

The European Union Data Protection Directive is expected to be replaced in 2017 with a uniform General Data Protection Regulation, she said. Under the directive, each member state is required to set up a supervisory authority or data protection authority. Many member states require controllers to file annual summaries.

With wearable tech, the intellectual property rights discussion is not that different from a regular piece of jewellery or clothing, said Medenica.

There is a variety of ways to protect wearables, same as other items. The product configuration is a factor. As usual, it is not allowable to trademark something that is functional, one has to find a design that is distinctive so it acquires secondary meaning, which requires lots of evidence that users recognise the source of the product, she noted. There also are the other types of trademarks possible, such as colour (like yellow Post-It notes, or red-soled Louboutin shoes). But these again have to show secondary meaning, such as advertising expenses, unsolicited media coverage and so on. Also sound can be used, for instance turning on a phone has a particular sound. And they might use a motion mark, for instance, when turning on wearable, there is an interface and a certain motion happens, such as a certain character that appears.

Things you can protect under IP include the actual wearable items, the apps that go with the wearable, or the downloadable software that goes with the wearable, she said.

Scent marks, meanwhile, are not very common, though she cited one for a certain yarn with a scent. Usually these do not go to the primary register but rather the secondary register.

Another concern she raised is labour issues, such as the use of technology like Google Glass in the workplace, where there might be concern that you could record a conversation, and what might you do with it (eg, post it on Facebook).

Meanwhile, with 3D printing, she said there are two ways to do it: CAD files or scan it to a CAD file. Either way it’s an electronic file that can be loaded on a computer or other storage device. She said it is not automatic that just because you have the file for printing, that there is copyright protection for the file or the product it is creating. It is important to look at how the file was created and what it is printing.

The same analysis that goes into regular fashion or jewellery items applies, Medenica said. For instance, one cannot copyright protect a useful article. An example is a shirt, which cannot be protected unless it has a fancy distinctive design on it. A 3D CAD file will not have copyright protection unless it has added independent artistic elements to the file rather than just the useful object. One has to ask if it is conceptually separable from the whole, as in traditional copyright analysis.

Medenica said that if you have a creative object and scan a copy to create a CAD file, you do have a copyright in the CAD file, but you have created a derivative work of an original copyright. If do not have the copyright in the original file, then it may be infringement and permission is needed with a licence, she said.

Other questions are about contributory infringement, and who is liable, she said. Is it the person who printed? The maker of the figurine? The designer? Supplier of the materials? Who had the ability to control the infringement, who profited from it, who made a substantial contribution, who had knowledge of it, are all questions to be answered.

This is not unlike what happened in the music industry, she said. She referred to copyright law, specifically the landmark Betamax and Napster cases which found users could copy for their own use but large-scale and promoted platforms were infringing. But just because you know about the potential for infringement, does not mean you are liable, she said.

Nevertheless, we have moved past that phase, she said. Content owners don’t want to sue but rather want to engage audiences and create new materials. That will be the solution for all, she said.

Questions to answer, said Medenica, include: who owns the design – the person who created the file, or uploaded it, or person who did the 3D printing; is it a joint work; does the file have open source elements (may lead to difficulty in asserting complete ownership); is the design eligible for patent protection: and what are the implications for trademark or trade dress. In the past, counterfeit products were created through limited skills of labour. But now with 3D printers, all that is needed is the file. So if someone wants to create counterfeit products it is very easy to do.

Patents and 3D Printing

Megan Bussey of Kilpatrick Townsend & Stockton talked about patents, and how they can be used in the case of 3D printing. Protection options available include utility patents, which protect the functional aspect, design patents, which protect the appearance, and trademarks and copyright.

In the US context, utility patents can take a long time and be expensive (approximately $10,000+), she said. Design patents by comparison are economical (approximately $4,000) and typically issue within a year. With designs, the patent is valid for 14 years with no maintenance fees due. Design patents will soon be valid for 15 years in May when the United States becomes a member of the Hague System for the International Registration of Industrial Designs. This will also allow up to 100 designs to be within each international application, she noted. Currently, for US, each individual variation has to have its own application, she said.

With utility, enforcing rights can be expensive and time-consuming, she said, costing approximately $3 million from start to finish in a US district court. Designs meanwhile are good at protecting rights, and historically less likely to go to trial due to pre-trial settlements.

Bussey also raised issues on how to find infringement. Who is infringing, the person who is printing, hosting the website, or making the file? Is it people who have printers in their homes, and if so how will you find all of them?

And she raised questions such as who is liable, who pays the damages, noting that it might be difficult to get the target you want (the one with the deeper pockets). The entity that hosted the file might be harder to get than the person who is printing, for example.

She described dress technology design, showing for example how a dress can be printed differently to make the dress lay on or open on the wearer. Also, design patents can be on the whole item or on an aspect of an item (e.g., the whole chair or an arm of the chair). And there also can be design patents on graphical user interfaces, how users interact with technology.

Bussey discussed offensive and defensive reasons for patent protection. Patents can be used offensively to help prevent others from marketing and selling a product that infringes your patent. Alternatively, patents can be used defensively, for example as a settlement or negotiation tool if approached about another company’s patents covering your product. Patents can also be used to negotiate mutually beneficial patent cross-licensing agreements between companies.

A patent prohibits making, using, selling, importing of an item. With patents and 3D printing, an item might be infringing even if it is printed and put on a shelf, and not sold, she noted.

Types of infringement vary, such as direct infringement, for example making the protected design. In indirect infringement, there might be an inducement that encourages infringement, or it might be contributory, for instance providing instructions on how to infringe. And what about the person who created the printable file or hosted it, she asked.

For contributory infringement, it is necessary to show that there is no non-infringing use for that object, so might be difficult to go after the 3D printer company for all of the people using that printer to make infringing products. She also noted that an older product should be safer to print as the patent is more likely to be expired. And she noted that if for instance someone is looking to print a replacement part of a product, like a piece for their broken sunglasses which are still under patent, they will need to consider whether they have authorised repair rights.

She recommended not putting an item on the internet before filing for a patent, and separately said the patent has to be marked on the product.

Anti-Counterfeiting and Fashion

Another panel at the event dealt with the issue of counterfeiting. The issue was discussed by two veteran enforcers in New York: Heather McDonald of Baker Hostetler and Raymond Dowd, director of investigations at Global Security and Investigative Services and a former policeman.

The speakers told some eye-opening real-life tales from their experiences in New York. For instance, just a block or two from the courthouse McDonald unearthed an operation deep in a bleak abandoned building basement. She described the filthy, rat-infested alley, staircase and passageways she had to go through to get to a makeshift plywood room, inside of which a man was selling counterfeit handbags and other knockoff luxury items. When she and the team arrived, they called out demanding to be let in, and the man reacted by turning out the light and was heard to tell his customers to be silent. But under threat of breaking down the door, they were ultimately let in and found a couple of suburban New Jersey mothers and their teenage daughters making purchases in the dank underground room. Everyone tried at first to say they did not know they were doing wrong (despite having had to pass through those conditions to get there), and McDonald said a mother argued that they would not going to give up the shopping bags they were carrying, even when told everything on site was being collected for evidence. In the end, however, after McDonald told a “brutal” story of grim child abuse overseas by counterfeiters, the New Jerseyites not only agreed to give up their things but invited McDonald to come speak at their school to educate students about the issue, which she later did.

There were also stories about a gift shop at a fancy Westchester County country club offering counterfeits, and a well-to-do wife of wealthy doctor who was running an open counterfeit operation complete with identity plates on her Mercedes. Often authorities hear about illegal activities by word of mouth or observation, including by competitors, McDonald added.

The speakers said it takes a trained eye to distinguish counterfeits but said it is usually not difficult to find flaws and differences. McDonald described how many ways trademarks can be copied or mimicked, with slight variations such as spelling Rolex as Polex, Rollex, or even Rolodex. Retail store staff need to be trained to recognise possible fakes that might be brought in as returns.

McDonald said ordinary criminals, organised crime and terrorists have taken up counterfeiting vigorously because there is less chance of getting caught and it has lower penalties than say, drugs.

McDonald also had an answer for the question that some have raised that if goods, especially luxury goods, were priced more reasonably, it would undermine the market for cheap fakes. She said a person who is prevented from spending, say, $40 on a counterfeit Louis Vuitton bag would not have spent $800 on a genuine one. But they might have spent the $40 on an alternative legitimate bag.

A deterrent that has gained some traction is third party liability, they said. In New York, a landlord, leaser of space or property owner can be held liable if they had knowledge and failed to take remedy.