The fashion and legal worlds are seeing stripes as Forever 21 is embroiled in down-right bitter battles with both Gucci and Adidas over their famous striped trademarks. While the cases shed light on the important — and often very valuable — role that trademarks play in fashion, they also indicate a change in approach for Forever 21, which is no longer hiding behind quick and quiet settlements.
Meanwhile, President Trump has made good on his word to crack down on intellectual property infringement in China, authorizing a probe into the Asian nation’s treatment of U.S.-held IP.
Three Stripes and You’re Out
Much has been made of the protectability of stripes over the past several weeks, especially given the latest update in the trademark case that Forever 21 filed against Gucci in June. Earlier this month, Gucci filed its answer to Forever 21’s suit, calling the Los Angeles-based fast-fashion giant’s action a “legal assault” against its brand “built on undermining the very notion of trademark protection.”
In addition to attempting to set the stage for the court by calling out Forever 21 for “brazenly” masquerading as a “victim of unfair competition in search of legal redress in the courts,” Gucci filed a handful of claims of its own, including trademark infringement and dilution, and unfair competition. In short: Gucci is making good on the multiple cease-and-desist letters it sent Forever 21 over the past year, in which it alleged that an array of the U.S.-based retailer’s garments bearing three red and green, and three red and blue stripes were infringing and diluting its own famous striped marks.
It is difficult to say at the outset who will come out on top in this case if it does, in fact, go to trial, largely due to the fact that it is unclear if consumers are likely to be confused as to the source of the Forever 21 goods bearing the Gucci trademarks. There is another interesting takeaway at play in this budding intellectual property war and it centers on the value of a brand’s IP — namely, its trademarks.
As Gucci noted in its response to Forever 21’s suit, the purpose of its counterclaims “is standing up to assert its commitment to its customers that it will protect the value and quality of Gucci products.” Given that this is — most centrally — a trademark issue, the value that Gucci is referring to is derived not from the actual designs at issue — the bomber jackets, sweaters, etc. No, it is almost exclusively from Gucci’s trademarks, what the Italian design house refers to as “some of the most famous marks in the fashion world.”
This is frequently the case when it comes to high fashion and/or luxury goods: The presence of a brand’s trademarks is what garners the most value and what consumers are, essentially, paying for, which is exactly why brands spend exorbitant amounts of resources policing unauthorized uses of their marks, as Gucci is doing in the case at hand.
If Gucci were to be lax with unauthorized uses of its well-known marks, they would, at least in theory, become far less exclusive and less valuable, and the prices that Gucci could demand for logo or striped-covered garments and accessories — and sunglasses, fragrances and many other products — would drop significantly.
Do Not Forget Adidas
The same can be said of Adidas, which is embroiled in a rather similar lawsuit with Forever 21. Much like how the Gucci case got its start, Forever 21 filed a declaratory judgment action against the German activewear giant, arguing that it is “tired of operating with a cloud over its head with regard to its right to design and sell clothing items bearing ornamental/decorative stripes” and asking the U.S. District Court for the Central District of California to determine that it is not infringing Adidas’ trademarks.
In both the Gucci and Adidas cases, the retailer seems to be indicating that a new legal tactic is emerging from its wheelhouse. Instead of handling potential legal matters before they can get to court or settling them quickly thereafter, as Forever 21 has been known to do for the past decade or more, it is looking to litigation to fight what it deems to be overly aggressive “bullies.”
Given the size of all three companies involved, these are fights worth watching and assuming they do not settle before trial, we can expect some noteworthy finding that will likely impact how expansive Adidas and Gucci’s trademark rights in stripes really are.
Trump Takes on China
As expected, Trump signed a memorandum early this week authorizing an investigation into China’s alleged “theft” of American intellectual property. In the memo, which was signed by the President on Monday, U.S. Trade Representative Robert Lighthizer is now under orders to carry out a probe to determine whether China is utilizing practices “that force U.S. companies operating in China to turn over intellectual property.” This includes utilizing “all available options at [Lighthizer’s] disposal,” Trump said.
Trump is authorized to take such actions thanks to the Trade Act of 1974’s Section 301, which states that the president may unilaterally impose tariffs or other trade restrictions to protect U.S. industries. It is unclear whether the investigation will, in fact, result in trade sanctions against China.
White House officials noted in connection with the memo that “China’s unfair trade practices and industrial policies, including forced technology transfer and intellectual property theft harm the U.S. economy and our workers.” The memo comes after at least a few reports in recent months alone, including the USTR’s 2017 “Special 301” Report and a study by the European Union Intellectual Property Office and Europol, which have indicated that China is failing to adequately protect the intellectual property of other nations.
In response to the initiation of the U.S. probe, China’s Ministry of Commerce responded, saying that it “will resort to all proper measures” to defend its rights “if the U.S. disregards multilateral rules and hurts bilateral trade ties.”
The statement from the ministry went on to note, “The U.S. should cherish the current good trade ties and rapport with China, and any protectionist move will certainly damage bilateral economic relations and hurt the business interests of companies in both countries.”
Julie Zerbo is the founder of The Fashion Law.