Design Piracy Bill Faces Legal Hurdles

Legal experts say a bill aimed at providing three years of copyright protection to “unique and original” designs could create legal chaos.

WASHINGTON — Legal experts said a new bill aimed at providing three years of copyright protection to “unique and original” designs could create years of legal chaos and would be difficult to enforce.

This story first appeared in the August 9, 2010 issue of WWD.  Subscribe Today.

The Innovative Design Protection and Piracy Prevention Act, introduced in the Senate late Thursday, faces opposition from some retailers, no support from retail trade groups and an uphill battle in Congress. While the legislation would provide three years of copyright protection to new “unique and original” designs, those created in the public domain before enactment of the bill would be exempt.

Under the bill, only “deliberate copies that are substantially identical to the protected design” will be prohibited. One provision of the bill already has come under dispute among legal experts over whether consumers and retailers can be held liable for buying or selling “illegal” copies.

The legislation would create three new legal standards, including an “originality” standard that provides protection if designs are proven to “provide a unique, distinguishable, nontrivial and nonutilitarian variation over prior designs;” an infringement standard, defined as “substantially identical,” and a “heightened pleading standard” that requires a plaintiff in a lawsuit to prove the design is “protectable, substantially identical” and that the defendant had access to, or was aware of, the “protected design.”

The bill’s passage this year seems unlikely because of a congressional calendar shortened because of the midterm elections. If it does eventually become law, prosecuting it will be problematic, legal experts said.

“The big question is whether there is such a thing as originality in clothing, and lawyers and scholars are arguing that every day,” said David Erikson, an attorney who represents fashion designers in Los Angeles. “The bill doesn’t end that argument. It attempts to with the originality standard, and the House bill was silent on that. The [Senate] bill does provide a definition of originality, but if you read it closely, I’m not sure that it advances the understanding of what is supposed to count as originality.”

Erikson, who has fought on behalf of designers against knockoffs and supports the legislation, said if the bill passes, there will be a lot of “uncertainty” in the courts for at least a decade.

Jeremy D. Richardson, partner at Phillips Nizer, noted that the bill has set some well-thought-out procedures. Still, some phrases used, such as “substantially identical,” might need some interpretation by the courts.

Richardson said even if the bill defines them, “courts will still have to interpret it to a set of facts so designers and manufacturers of apparel will really know what it means.”

He said he believes the bill has a “fair chance” of getting through Congress, particularly since it was crafted as a compromise with the Council of Fashion Designers of America and the American Apparel & Footwear Association. In the House version of the Design Piracy Prohibition Act, the AAFA was in opposition, while the CFDA backed it.

Marc Misthal, partner at Gottlieb, Rackman & Reisman, said he was not sure how “unique and original” will be interpreted by courts. “I believe that there’s going to be some litigation as to what ‘unique and original’ means,” Misthal said.

The bill could run into opposition from retailers and apparel vendors if it advances in Congress.

The two major retail trade and lobbying associations, the National Retail Federation and Retail Industry Leaders of America, have not taken a position on the legislation.

“We will probably not take a position on it,” a spokesman for the NRF said. “We have retailers selling couture designs, and we have retailers who sell inspired designs, so there is not a consensus within the industry. It is simply a matter that the retail business has companies that come down on both sides of the issue.”

The NRF spokesman said the stores that sell high-end couture generally would be protected by the legislation, but companies that sell clothing that is “inspired” would not want to be put into a position of being sued over a product.

Ilse Metchek, president and executive director of the California Fashion Association, said her board has yet to make a decision on the Senate bill, but it will either “fight the whole thing tooth and nail” or endorse it based on two conditions — that the word “substantially” be removed from the originality standard and that plaintiffs’ costs be equal to that of defendants’ costs in a lawsuit.

A law professor who has taken a strong stance in opposition to the bill argued that it would have a chilling effect on competition among young new designers.

“There are a couple of dangers here,” said Christopher Sprigman, associate professor at the University of Virginia School of Law, who teaches intellectual property and antitrust law. “If this bill becomes law, it will give the wealthy, established players in the fashion industry a new lever to use against upstarts and new entrants. So now they can threaten them with legal liability and make it difficult for any new, young player in the industry who doesn’t have the resources to hire a lawyer to defend themselves even against a weak claim of copyright infringement.”

Sprigman also challenged claims that the bill would not hold retailers or consumers liable for selling or purchasing “illegal” designs.

“The secondary liability provisions in this bill mean the guy running the boutique could be held secondarily liable for infringement by the designer who puts clothes in the boutique,” he argued. “A boutique owner will be more likely to buy from big clothing players than small clothing designers because of potential liability.”

David Wolfe, creative director at Doneger Creative Services, said such legislation if it went into effect, could actually hurt fashion.

“It will stop fashion dead in its tracks, and the evolution and growth of fashion, because creativity in fashion is built on what has preceded it,” he said.