Author: Marsha S. Cadogan | Canaan Bridges Consulting Inc. | long read
This is the final article in a three part series on practical uses of intellectual property strategies as part of everyday business operations.
Consumer preferences are instrumental in building brand values in the fashion industry. These preferences are often driven by consumer tastes, values and perceptions about a particular fashion brand, their affordability and price point. In 2020, the global fashion industry was valued at approximately US$300 billion (Statista, Jan 22. 21). A major part of this valuation is driven by the significance that consumers’ attach to particular brands, the quality (whether perceived or in actuality) of the brand, and the strategies used by rights holders to build and sustain growing consumer interests’ in their brands. Fashion lines usually commit significant resources to distinguish their brands from that of their competitors, with intellectual property protection often central to these outlays. What is the significance of intellectual property to the fashion industry? In reconciling the bitter-sweet relationship between the fashion industry and intellectual property protection, this article looks at two considerations : (i) using intellectual property to augment fashion innovations, or innovative takes on traditional conceptualizations and, (ii) the importance of brand reputation to goodwill in the age of consumer consciousness.
Augmenting Fashion Innovations through Intellectual Property Protection
The central tenet of an intellectual property system is to promote innovation, incentivize right holders and build growth within and across economies. In support of this vision of the intellectual property system, most economies give legal recognition to specific types of proprietary rights, based on the expression and characteristics of the interests protected. In this context, design rights (industrial designs) and non-traditional trademarks are two types of intellectual property that can be useful in leveraging innovations in fashion designs.
When used as part of a soundly executed intellectual property strategy, design rights allow fashion entrepreneurs to highly distinguish their product from others in commercial markets, and even from similar products within their own fashion lines. Design rights can be applied to a specific aspect of a finished article, such as the shape of a shoe heel and/or its sole, the shape of the front part of a shoe, the configuration of buttons on a jacket, the pattern on the outer part of a traveling bag or the ornamental design on the bottom side sections of a sneaker. Along with more traditional forms of intangible rights, several fashion and accessory lines have incorporated design rights as aspects of their intellectual property portfolio. Rights holders are given exclusive right over the features of the shape, configuration, pattern or ornament that form part of or, is in the finished product (clothing apparel, handbags, purses, footwear, eye-wear and so on). The design must have aesthetic qualities and be novel. Designs that are functional – that is, relate to how the product functions – cannot be registered. If the design is publicly disclosed before its filing date, it will likely become unregistrable. Many countries allow registrants a grace period during which disclosure will not prejudice the registration.
Once registered, the fashion brand has the exclusive right to the design. What does this mean? No other entity or individual can make, sell, rent, offer for sale, distribute, import for the purposes of trade, or deal in or with the design without the consent of the fashion brand. This exclusive right ranges from between 10 to 25 years in most countries, with most countries having 10 to 15 years as the duration of protection.
If registered, non-conventional trademarks such as color, smell and sound marks are innovative tools for building brand distinctiveness in the fashion industry. Eligibility criteria for registering these types of marks usually require that the mark has acquired distinctiveness within a specified geographic area or territory. While non-traditional marks are registrable in many countries, the successful registration rate of these marks (especially smell, single color and sound marks) is not always forthcoming as distinctiveness must be proven as a prerequisite to registration. However, these hurdles should not deter prospective registrants with a sound basis for registration from pursuing registration. For example, single color trademarks such as Christian Louboutin’s color red on the sole of shoes, although highly attacked on the grounds of non-registrability for years, was validated as a single color trademark in 2018.
Human Welfare, Public Morals and Fashion Brands-Managing Trademarks (Brand reputation)
The fashion industry is already in a vulnerable market position – an issue that COVID-19 has exacerbated. Despite market volatility, the value of goodwill is ever more important to fashion brands. Goodwill is helpful in leveraging brand longevity in consumer markets. A brand’s reputation may be influenced by the quality and price of their products, marketing strategies, and increasingly by their corporate social responsibility strategies and positions on moral issues.
A trademark that is used in association with a particular fashion product conveys specific commercial information about the product and its source. Negative or disparaging information about a brand, especially when it is likely to be believed by the consuming public, impacts the reputation of the brand. For example, major fashion labels who use clothing and footwear sweat shops in developing and least developing countries to manufacture their wares have come under intense scrutiny from consumers and civil society organizations. Calls for changes, whether by threats of boycott or lobbying initiatives, are slowly causing a shift in how clothing factories in developing and least developing regions operate. This impacts brand reputation and goodwill in both the short and long term.
While consumers may choose to be loyal to established fashion brands who have become conscious of factory workers’ rights and/or environmental standards, recent years have also witnessed the emergence of ‘‘sustainability brands”. These brands include clothing, footwear and fashion accessories that are marketed as manufactured under fair labor standards, or as environmentally friendly, (such as vegan shoes and clothing) are steadily gaining popularity in consumer markets. Well executed concept and marketing strategies will likely contribute to the success of these fashion brands, even if the success is short-lived (bearing global market volatility considerations in mind). In this context, the relationship to goodwill is positive.
The recently settled law suit between Nike and MSCHF over the latter’s re-design and sale to the public of sneakers containing drops of human blood, shows that protecting goodwill (and thereby the value of their trademark) is important to fashion labels. No trademark holder wants to be associated with initiatives that the concerned public perceives to be morally reprehensible.
The current sneaker revolution is marked by redesigns of footwear from major labels to create sneakers that resonate with specific elements or trends in pop culture. Without adequate resources or sufficient legal grounds to challenge these ventures, the value of right holders’ marks can be compromised. At the same time, these emerging ventures seek recognition of their footwear brand, albeit the possibility that their appeal to consumers is partially based on the popularity of the original design.
When used as part of a brand’s business strategy, a well executed intellectual property strategy is likely to leverage the goals of fashion lines. This point does not negate challenges such as those posed by counterfeit fashion and the release of limited edition fashions trends which use established brands as the base of their designs. However, IP can be useful in mitigating the occurrence and impact of these challenges to brand reputation and values.