WASHINGTON — The board of the American Apparel & Footwear Association has rejected a compromise deal struck with the Council of Fashion Designers of America on proposed federal legislation that would provide copyright protection for fashion designs.

The move, announced Monday, is a setback for the CFDA, which championed the bill, and dampens prospects for Congressional consideration of the bill this year.

The two powerful industry groups had a deal in the works to break an impasse over the legislation, but the AAFA’s 60-member board voted at its annual meeting last week to turn down the compromise reached between the staffs of both associations.

“When we considered the risk and reward ratio, the unintended consequences were untenable,” Peter Gabbe, AAFA’s chairman, who is also chief operating officer of Carole Hochman Designs, said Monday.

But the CFDA is not giving up.

“We have invested a lot of energy and time into this. We are not abandoning this legislation,” said Steven Kolb, executive director of the CFDA. “We’re going to continue to champion what designers want, which is to protect their creativity and be thoughtful as an industry. We are comfortable and glad that we went through the process because we have a tighter and stronger bill.”

Among the unresolved sticking points cited by Gabbe were:

l Inadequate provisions ensuring that only truly original designs receive protection.

l A potential for a major disruption in trade and new liabilities with U.S. Customs in the form of civil detentions or criminal penalties.

l Added costs associated with anticipated lawsuits and research of copyrighted designs.

l Stifling the speed to market for legitimate companies.

There has been widespread opposition among apparel brands and vendors to the legislation — the Design Piracy Prohibition Act — that was introduced in the House and Senate last year.

As written, the bill would allow companies and designers to register their fashion designs for three years of copyright protection. Apparel, handbags, footwear, belts and eyeglass frames would be covered, but designs that are already part of the public domain would not. The measure would also establish penalties for designers or companies knocking off designs. The fine would be $250,000, or $5 for each copied item, whichever is greater.

This story first appeared in the March 11, 2008 issue of WWD. Subscribe Today.

Industry opponents have argued that the bill would open the door to numerous frivolous lawsuits, stifle their ability to pick up trends without being sued and place an enormous cost burden on companies trying to verify whether a design they might want to use had been approved for copyright protection.

On the other side of the debate, designers said they needed the protection to fend off ubiquitous knockoffs that diluted the value of their designs and often led to millions of dollars in losses.

Gabbe would not say whether his board has ruled out any future attempts at a compromise.

“It is fair to say our membership has indicated their position to the current proposed legislation — they cannot support it in its current form,” he said.

Kolb said the AAFA’s remaining concerns “seemed not that difficult to come to a consensus on” and he left the door open to further negotiations on a compromise.

But he stressed that his group plans to move forward with the bill without the support of AAFA, even as it incorporates AAFA’s recommendations into proposed changes it plans to submit to lawmakers.

“They had a lot of valid input and we thought everything strengthened the bill,” said Kolb. “For whatever reason they decided not to continue the negotiations, so we will work with the co-sponsors of the bill to incorporate [the new proposals], regroup and figure out how to move forward. When we have a bill that goes to committee for a markup, it will be a bill that includes a lot of [AAFA] input and we hope our co-sponsors will recognize that and will continue to support us.”