Legal Issues Faced In Fashion Industry

27th August, 2024 - 9:53 am Categories: Fashion Law labour Law 0 Comments

INTRODUCTION

Being a stand-alone industry which is very dynamic and fast, fashion faces many legal challenges.

The fashion industry functions within a complex and evolving legal framework. Renowned for its creative and impactful progressions and this blog explores the complex legal challenges that fashion companies encounter in the present day, including Intellectual Property Rights, Employment Regulations, International Trade Laws, Consumer Rights, and Sustainability issues. Comprehending the legal consequences of fashion is essential to stay competitive and maintain ethical standards in a dynamic market shaped by digital progress and environmental issues. Let’s explore the main legal obstacles and new developments influencing the future of the fashion industry.

Intellectual Property Rights

1. Copyright

A copyright is a property right granted to an author to protect his or her work. The original, artistic works of authorship are availed copyrights, including part of or full fashion designs. Indeed, it falls within the Copyright Act of 1957, but the scope of protection for fashion is very narrow. For instance, if they do not contain separately identifiable artistic features, garment designs per se in the United States are not protected under the copyright system. For example, in Star Athletica, L.L.C. v. Varsity Brands, Inc the court ruled that designs on cheerleading costumes are copyrightable if they can be distinctly separated from the costume’s useful aspects.

2.Trademarks

Trademark protection is given to names, logos, and other marks which have the ability to indicate the source of the product in the market.

In India, the Trademarks Act, 1999 governs the trademarks. Trademarks have, however, largely been applied in the fashion industry to protect brand identification and other graphic marks identifying the company while at the same time fighting piracy. One famous legal case is Christian Louboutin S.A. v. Mr. Pawan Kumar, wherein Louboutin prevailed on its claim of secondary meaning acquired by its red-soled shoes and hence their protectability as a trademark.

3. Design

Indian fashion designers’ designs are protected under the 2000 Designs Act. Fashion Designs that register the ornamental design of an article of manufacture deemed helpful, such as helpful articles in the United States are secured for a time of 15 years.

These Designs furnish a way of securing unique design of fashion; however, the procedure to obtain them is long and extremely costly.

Apple Inc. v. Samsung Electronics Co went to prove the might of design patents in its ability to sue off Samsung over a few of its Smartphone designs that bore implications others such rights in fashion.

4. Trade Dress

This refers to the visual appearance of a product or its packaging if it has source-identifying mark of the product vendor’s and the stamp is not functional. This was evidenced in Tiffany & Co. v. Costco Wholesale Corp., wherein Costco sold rings that it termed as “Tiffany” rings, after which Tiffany & Co. filed a suit. The court thereafter made a ruling in favor of Tiffany, which asserted that trade dress protection should be observed in the fashion industry.

Contracts and Licensing

1. Licensing Agreements

Licensing agreements relating to use of trademarks, designs, and other intellectual property are very important in fashion. Of course, such contracts have to be finely drafted so as to spell out the extent of use, time duration, royalty payments, quality control measures, etc. One such notable agreement is that of Michael Kors with Luxuttica wherein the latter has been licensed to produce eye-wear under the brand Michael Kors.

2. Contracts of Employment

The fashion industry employs hundreds of thousands of people, from the designers to the models to the staff in the stores. All of these are issues that directly relate back to a contract of employment. Issues from wages and working conditions to non-compete agreements and who owns the intellectual property over the designs must all be settled within the course of an employment contract. More than that, the very public non-compete dispute found in designers at labels such as Louis Vuitton underlines the tightrope that must be walked between protecting company interests and those of staff who seek to further their careers.

[Image Sources: Shutterstock]

Employment Law

1. Labour Practices

For many years, work practices in the fashion business, and more specifically in production of the clothes, remain condemned. The legal and ethical problems are represented by low wages, horrible working environment, and employment of child labour. It is only after the case of the Rana Plaza accident in Bangladesh that eyes opened toward how perilous the working environment in clothes manufacturing factories really is, with efforts increased toward gaining better labour legislations and heightened emphasis on corporate social responsibility.

2. Discrimination and Harassment

The fashion industry has levelled allegations of discrimination and harassment practice on grounds of the working environment and the world advertisement. Some models and workers have raised their voices and alleged racial discrimination, sexual harassment and body shaming by the organization. #MeToo movement raised the question over cases filed, of which some are pending in courts, thus request for organic anti-discrimination laws.

International Trade and Regulations

1. Regulations Relating to Imports/Exports

Of course, fashion is an international business operation in a sense—sourcing of raw materials supplies and production, and the final product sales take place across different geographical regions. Therefore, compliance with rules and regulations relating to import, export, tariffs, and trade agreements is of importance now more than ever. Recent trade developments, like the US-China trade war, have impacted the fashion business through its affected supply chain, which hurts and increases the cost.

2. Piracy and Counterfeiting

Counterfeiting is one of the critical issues the fashion industry faces today. Along with counterfeited products entry into the markets, its brand image is at stake. At worst, their earned money is at stake. The counterfeiters and current ones always take the issue to court and brands like Gucci and Louis Vuitton are ever ready to expend millions in anti-counterfeiting activities. Hence, inter-country cooperation and intellectual property protection are solutions to the situation.

Consumer Protection

1.Advertising and Promotion

The law on advertising should be paid attention to by fashion brands operating. Deceitful advertisements are rejected, either on the quality of the product or its pricing, or even hidden sponsored content. The supervisory departments and those filed in court acted on complaints of fake claims on quality, purporting low prices, and secret sponsored content. On top of the prior cases of law action, the Federal Trade Commission, for instance, made it clear in demanding, that in USA, influencer marketing in America needs candor in American support.

2. Product Safety and Labelling

Products should be properly labelled and safe for use in all markets. Each country has a different set of safety and labelling requirements. Non-compliance results in product recalls, penal ties, and even the threat of litigation. For example, in North America, where the United States of America has passed the CPSC Consumer Product Safety Improvement Act, we have quite stringent regulations regarding children’s apparel and specified levels for lead content, flame retardants, etc.

The Sustainable Environment Regulations

1. Environmental Impact

One of the largest environmental pollution wastes is the waste left by the fashion industry, mainly from textiles and chemical contamination. The rising pressure due to legal provisions, coupled with voluntary measures, is fast-tracking the fashion industry toward sustainable output. For example, the European Union’s Circular Economy Action Plan is placing itself under an obligation to ensure more sustainable fashion through increased recycling and reduced generation of rubbish by clothes at the end of their life.

2. Corporate Social Responsibility

CSR practices are fast being forced upon as a legal compliance and a reputational need for companies in the fashion sector. It is the company that is answerable to how its business affects the environment and society. Legislation, therefore, is forcing these companies to come out clear on information and steps they are making to ensure there is no slavery and human trafficking within the supply chains; more specifically, this is true to the UK Modern Slavery Act.

Emerging Issues

1. Digital Fashion and NFTs

In fact, it is at this nascent digital fashion and NFT dawn, which has opened a heap of new legal questions about ownership, authentication, and IP undefined in the digital space. Now, with brands like Nike and Gucci trying their hand at NFTs, questions of how classic regulations apply to these digital assets seem to raise more questions than provide answers.

2. AI and Technology

From design to personalised buying, AI is changing the face of fashion. But application also raises issues concerning both data privacy and algorithmic bias and most recently the question of ‘who owns AI creations?’. The GDPR from the EU makes a very strict regime, and it extends hand in the way fashion brands are handling consumer data.

Conclusion

Business-wise, the fashion business is actually hosted in a very complex legal framework that includes all of those main areas related to intellectual property rights, international trade, consumer protection, environmental sustainability, and developing technology related to issues on labour standards. Years that go by and ever-changing trends in fashion will ensure that the evolution of the ruling legal systems is the case. The following rules can help one stay at the helm and let a brand flourish in the competitive market without bringing harm to its reputation.

Author: Arushi Goel, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.