By  on August 21, 2014

WASHINGTON — As new technologies come into play in the fashion world, so do new legal woes.

The U.S. International Trade Commission patent infringement case aimed at 17 American and European brands and retailers could stir alarm in the industry, according to legal experts, raising concerns it could set a precedent for greater litigation against the technologically advanced products it makes abroad and imports to the U.S.

The ITC case filed Monday is one of the largest ever against apparel retailers and brands. The petitioners, RevoLaze LLC and TechnoLines LLC, filed a complaint accusing such well-known companies as Levi Strauss & Co., VF Corp., Guess Inc., Gap Inc., Abercrombie & Fitch Co. and American Eagle Outfitters Inc. of patent infringement on certain imported laser-abraded denim garments and seeking a ban on those imported products.

RevoLaze is a laser-technology firm based in Westlake, Ohio, claiming to hold 29 worldwide patents for laser-inscribing methods that apply graphics and patterns on a variety of materials. It claims that a significant portion of its intellectual property uses the laser-scribing technology for fabrics such as denim. The technology is an alternative for controversial sandblasting or costly washing processes and is used in distressed denim jeans.

In its ITC complaint, RevoLaze asserted that the 17 brands and retailers are violating six technology patents covering several denim products. The company has also filed 17 lawsuits in U.S. District Court against each brand and retailer named in the ITC case. Other companies cited in the complaint include Diesel SpA of Italy, Eddie Bauer LLC, H&M Hennes & Mauritz AB, Roberto Cavalli, The Buckle Inc., Koos Manufacturing, Lucky Brand Dungarees, BBC Apparel Group LLC, Gotham Licensing Corp. and Fashion Box Group SpA.

Several of the brands and retailers declined to comment due to the pending litigation.

RevoLaze claimed it has developed the technology and associated equipment over the past 15 years through licensing with garment manufacturers, including VF Corp. (a named respondent), Sights Denim Systems, Taylor Togs Inc., Gear for Sports Inc. and Final Finish Laundry. But those licenses are no longer in force, the company claimed. RevoLaze also said it at one time, through subsidiaries, operated two denim jeans companies named Fractal Jean Co. and Fins Denim Co. that used the patented technology.

The filing seeks an ITC Section 337 patent infringement investigation. These cases can cut both ways for fashion companies — provide protection for intellectual property owners while putting brands at risk of legal action.

For patent and trademark holders, they can provide an effective tool for the industry to use in intellectual property protection. Louis Vuitton Malletier SA and Louis Vuitton Manufacturing Inc. won a trademark infringement case at the ITC in 2012 against an enterprise of U.S. and Chinese companies that was counterfeiting and importing large quantities of its products.

While Section 337 cases have been widely used in the electronics industry for decades, they have rarely been used by or against fashion companies. But several trade and intellectual property lawyers said they expect the cases to become more common because of advancements in technologies in the industry.

David Spooner, an international trade attorney at Barnes & Thornburg LLP, said the case “certainly raises concerns in the industry for no other reason than it is a statute that the industry has [virtually] no experience with.”

Spooner said he expects these types of cases to become more common in the industry due to more high-tech developments such as wearable technology coming onto the market and advances in fiber innovation.

“If you are the developer of those products, a 337 can be a tool to help you but it is also a blunt hammer,” he said. “So I’m sure most of the industry is living in fear of unwarranted 337 cases and having their containers stopped at the ports.”

Alan Behr, an attorney at Phillips Nizer LLP who chairs the firm’s fashion law practice and is a partner of its intellectual property law practice and corporate and business law department, said section 337 cases could become another “hidden cost” or collateral damage for sourcing apparel abroad.

“The fact that most garments are now sourced overseas, especially if you look at casualwear such as in this case, you know that you are putting yourself in the line of fire of 337 complaints if certain things occur,” Behr said. “If you import garments from overseas, you have this risk, especially if you are using technology ‘au currant’ and someone complains you are using their technology.”

He said distressed denim has become a big seller in the last few years, at the same time sustainability and the green movement have grown in the industry, spurring the search for alternatives to highly toxic and sometimes dangerous technologies or manufacturing processes.

“Sandblasting has been considered unsafe and several companies have pledged to not use it because it causes lung problems,” Behr said. “So companies have looked around for an alternative and RevoLaze claims it has that alternative with patents on the technology that use lasers to distress jeans.”

Shara L. Aranoff, a former ITC chair who is an international trade attorney at Covington & Burling LLP, said there have been about 930 section 337 cases brought before the commission over the past several decades, covering a range of products, of which fashion items are a small percentage.

“I would say if you look at the type of goods we see [in the few fashion-related cases], they do seem to be these sort of products that have had big popularity surges or fads,” she said, pointing to a case involving acid-wash denim and another involving Crocs shoes.

The ITC has jurisdiction over goods that “cross the border into the U.S.,” but not over goods made in the U.S., Aranoff said. If a company alleges patent infringement of a product made in the U.S. and decides to pursue a legal remedy, it must file a lawsuit in federal court.

She said the RevoLaze case is somewhat “unusual” because all of the named respondents are importers and retailers in the U.S., “not the actual companies that are producing goods or operating the equipment that is practicing the technology covered by the patents.”

She said that puts the 17 brands and retailers in a “somewhat difficult position.”

“It is harder for them to argue noninfringement because it is information they don’t personally have,” she said. “They will have to rely on information coming from their contract manufacturers or whoever is making the product…it makes it harder for them to defend themselves because they have to depend on facts coming from third parties not named in the litigation that don’t have the same incentive to cooperate.”

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