The decision by Trovata and Forever 21 to settle Trovata’s lawsuit alleging the fast-fashion retailer knowingly copied its designs ended two years of litigation in a case that had been viewed as a potential linchpin in clarifying intellectual property rights.

This story first appeared in the October 13, 2009 issue of WWD. Subscribe Today.

But in announcing the settlement on Friday, just as a second trial was set to begin today, there was no admission of liability, and terms of the settlement were not disclosed.

Trovata alleged in a federal lawsuit that Forever 21 turned out near-identical copies of pieces worn on the runway or published in magazines — in one instance with labels inside a hoodie that were unique to Newport Beach, Calif.-based Trovata.

Intellectual property experts said this case and others like it are closely watched for the implications on both sides: protecting fair competition and protecting unique creative property.

“A ruling against [Forever 21] could have [had] a dampening effect on the willingness of people to make on-trend garments that resemble items from other apparel makers,” said William Levin, a trade dress and copyright attorney. “You don’t want to keep competitors — and can’t — from entering the marketplace, and the law has to allow fair competition, but you don’t want anyone to cross the line into knocking off unique and special things.”

Trovata’s suit specifically charged Forever 21 with trade dress infringement, the legal term for the visual appearance of a product that links it to a particular brand in consumers’ minds. It is a different intellectual property concept than copyright violation. U.S. copyright laws do not protect the basic design, silhouette or form of a garment. Under existing law, only original artwork, such as graphics or prints, on clothing can be copyrighted.

At the core of the case was whether Forever 21’s combined use of design elements such as evenly spaced four-hole buttons, a round zipper pull or alternating stripes in contrasting colors were identified in customers’ minds as unique to the Trovata brand, and therefore trade dress violations.

The suit covered seven Trovata pieces, including cardigans, hoodies, shirts and a jacket from fall 2005 to early 2006.

“I just think after two long years of litigation it was time to bring the curtain down on this,” said attorney Frank Colucci, who represented Trovata.

Trovata had been seeking a multimillion-dollar judgment for actual and punitive damages from Los Angeles-based Forever 21, which will ring up $2.3 billion in sales this year. However, a mistrial was declared in May when the jury deadlocked. Seven jurors sided with Trovata and one juror with Forever 21, according to interviews with them.

The trial was significant because it was the first time Forever 21 faced a jury after being sued more than 50 times in alleged design infringement cases over the previous four years. The retailer settled all those cases out of court.

During the trial, Forever 21 conceded the similarities between its garments and those of Trovata, but insisted it broke no laws because the disputed designs were not unique to Trovata.

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