By Sindhu Sundar
with contributions from Evan Clark
 on September 30, 2019
A Forever 21 store.

Forever 21 and its fast-fashion cohorts built their place in the retail ecosystem by selling affordable styles for less than $20 to teenagers and young shoppers still early in their careers. But to designer and other brands that continually dragged the retailer into court, it was a business model based on churning out knockoffs of their runway looks and trademarks. 

Forever 21’s Chapter 11 filing late Sunday night shines a spotlight on just how much traction the retailer gained with its often too-close-for comfort model.

Clearly, the company’s approach wasn’t enough to save it from its lenders, although it might have helped it gain some currency with shoppers, who flocked to the stores in the early days to get the latest looks at rock-bottom prices.

“Forever 21 is part of a long-standing trend in the fashion industry of businesses [seen as] borrowing trends and doing everything they can to get competitive products in front of consumers as quickly as possible,” said Howard Hogan, partner at Gibson Dunn & Crutcher LLP, who chairs the firm’s fashion, retail and consumer products group. 

“There is a debate happening among academics, judges and business leaders about what kind of copying is acceptable and how much, and under what circumstances,” he said. 

Representatives for Forever 21 did not respond to a request for comment Monday.

Part of the phenomenon of alleged copying and the resulting litigation over ownership of intellectual property against fast-fashion retailers in the U.S. may be a function of the law. Where the European Union provides rights for fashion designs, the law is murkier in the U.S. Forever 21 is based in California, unlike its Swedish counterpart H&M, and Spain-based chain Zara. 

Copyright protections in the U.S. for fashion are still contested, having evolved in recent decades from a time when almost nothing in fashion could be protected by copyright law.

Wherever the line between design inspiration and outright theft is, Forever 21 regularly tiptoed up to it, legal experts said.

For more than a decade, Forever 21 has faced off with challengers of all stripes, including Gucci, Anna Sui and Puma, and it was still facing litigation with Adidas and Ariana Grande at the time of its bankruptcy. Most ongoing civil suits against a company are usually paused when it files for Chapter 11 protection.

The thrust of Forever 21’s seemingly endless legal battles with so much of the rest of the fashion industry was that the retailer allegedly operated as a serial imitator that was willing to go on the legal offensive when targeted; for instance, challenging Gucci’s trademarks.

Kering-owned Gucci likely summed up the feelings of many in the industry after being challenged by Forever 21 in court.

“Not content just to continue knocking off famous fashion brands and then settling with those who complain — all the while profiting handsomely by flaunting the law — Forever 21 now brazenly masquerades as a victim of unfair competition in search of legal redress in the courts,” Gucci wrote. “Specifically, despite Gucci America’s repeated warnings to Forever 21 to cease and desist its piracy of some of Gucci America’s most iconic and renowned trademarks, Forever 21 not only continues to market and sell clothing and accessories that blatantly copy those marks, but responded to Gucci America’s assertion of its rights by bringing suit to cancel some of the most famous marks in the fashion world.”

That case, which was settled last year, was just one of many designer tussles for Forever 21.

Anna Sui Corp. sued the retailer in 2007, making copyright infringement claims around what the designer described as a pattern of selling clothes with a “striking similarity” to Anna Sui runway designs since 2005. 

Alleged imitations of those designs could be found at Gadzooks, a now-shuttered retailer owned at the time by Forever 21, the designer company claimed. Forever 21 settled that case in 2009, like others it would resolve in the years to come.  

Some observers viewed this approach as a calculated risk baked into the business of navigating the sped-up shelf lives of fast-fashion apparel.  

“[They] clearly knock off what they see in the marketplace all the time, and have built that into their business model and cost-benefit analysis, and figured that at least the small players won’t go after them,” said Brian Igel of Bellizio + Igel PLLC.

At the time it filed for bankruptcy, Forever 21 was still battling Adidas, an aggressive enforcer of its trademark three stripes. The sportswear company had accused Forever 21 of selling apparel with stripes on it, some with similar placement of lines, including along the sides of track pants and the sleeves of track jackets. 

Some allegations in the case went further — the sportswear company also accused Forever 21 of selling counterfeits bearing the Adidas name and stylized triangle logo on them. Adidas has said that it neither has a licensing arrangement with Forever 21 nor made those items of clothing, which it has claimed Forever 21 allegedly marketed on its web site as “Repurposed Adidas.”

“For well over a decade, Forever 21 had a reputation for copying designs and settling, which amounts to paying a licensing fee on the back-end,” said Susan Scafidi, academic director of the Fashion Law Institute at the Fordham University School of Law. Scafidi has also testified as an expert witness for Adidas in the company’s Forever 21 litigation. 

Forever 21 actively fought back. As recently as September, the company argued to the Oregon federal court overseeing the case that it showed Adidas once again indiscriminately trying to own stripes, and referred to the sportswear giant as a “stripes bully.”

This type of sparring could become less heated and less frequent if U.S. courts continue to clarify which elements of fashion can be protected.

The law in the U.S. has begun to recognize design elements such as embroidery, belt buckles and fabric designs as protectable, though the Copyright Act of 1976 had restricted so-called “useful articles” — products with practical functions from being copyright protected. 

The Supreme Court’s 2017 ruling in Star Athletica LLC v. Varsity Brands Inc. advanced that debate by allowing copyright protection for certain design features on “useful articles” under some conditions. Its implications are still being litigated in court. 

“In the U.S., fashion designs have been seen as harder to protect, [whereas] almost all other major industrial countries have a distinctive protection for fashion that doesn’t have a direct analogy in the U.S.,” said Hogan of Gibson Dunn, who also coauthored the industry manual “Fashion Law and Business: Brands & Retailers,” the second edition of which was released in September.   

“[But] litigation is also expensive and risky,” he added. “And at some level, it’s a game of playing the law of averages in who’s going to bother to sue you, and how you can get yourself out of it.”

Read more from WWD: 

Social Media Is Buzzing Over Forever 21’s Bankruptcy

Forever 21 Is the Latest Victim of the Changing Retail Landscape

Think Tank: Lessons From Forever 21’s China Exit

WATCH: What Makes a Fashion Brand Successful? 

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