During an online lesson about fashion branding in the Fashion Business Essentials program, Douglas Hand, fashion lawyer and partner at Hand Baldachin & Associates LLP, shared insights about some of the legal considerations when rolling out a new brand or when naming a company or collection.
It’s an exercise that needs to be part of a larger, more detailed discussion on brand strategy, which is covered in the more than 30 lessons of the fashion branding course. Fashion Business Essentials is offered by Parsons and WWD, and is powered by Yellowbrick.
Here, Hand explains some of the legal considerations along with risks associated with brand collaboration and protecting a brand from intellectual property theft.
WWD: From a legal perspective, what should be considered when launching a fashion apparel brand?
Douglas Hand: There are three “must-dos” from a legal perspective when launching. First, the formation of a legal entity (or legal entities) to house the company is essential. This provides insulation from personal liability for the founders as well as a platform to issue equity to investors to fund growth.
Trademarking the brand name, not only in the U.S. but also in other jurisdictions (notably China) is also imperative.
Then, appropriate treatment and documentation of employees and consultants with, in the case of design workers, work-for-hire provisions in place must be done lest the brand risk not actually owning any of the created IP these workers produce.
WWD: If a brand owner is looking to forge collaborations with other brands, what are some of the risks from a legal POV?
D.H.: The written collaboration agreement needs to be very clear on how the collaboration partner may use the brand owner’s trademark. Tarnishing the brand is obviously not the goal of the collab and that can be done in a number of ways that are seemingly innocent — such as using off-brand marketing, influencers or distribution channels.
Exclusivity and length of term is also important to consider. If a brand does a collab with, say, an eyewear partner that provides that the brand cannot go into the eyewear business for the duration of a longer-term collab, they could miss out on a much more lucrative license or ownership of that product category.
WWD: What are some of the basic steps brand owners can take to protect against IP theft or trademark infringement?
D.H.: Registering the brand’s trademark is certainly an important step and needs to be done not only in the U.S. but in all jurisdictions relevant, and even potentially relevant, to the brand’s business. China is a notable example as it is still, what is referred to as, a “first to file” jurisdiction.
This means that an enterprising trademark troll in China can (and in my experience, will) file and register the same name as a brand’s trademark without any legitimate intent to actually use the name in commerce (as is required under U.S. law). Then the troll will simply force the brand to pay them off to relinquish the registered mark or the brand will not be able to sell in China (a massive, massive consumer market).
Registration is the first step, but enforcing one’s rights to the registered trademark is also critically important. This requires that a brand budget to police the mark and have their legal counsel send out cease and desist letters to infringers which are backed by the real threat of being taken to court. Without having a budget to enforce trademark rights the C&D letter is toothless and could lead to even more brazen IP appropriation.