Fashion Law is a growing and emerging legal category that encompasses several other and more traditional legal specialties.
Fashion companies protect their brands by filing for state or federal trademark registration. After filing for federal registration, the fashion company owns the exclusive right to use the trademark in the U.S. and the right to use the official registered trademark symbol ®.
If a fashion company believes that its designs are being copied, to prevail in court, the fashion company would need to prove consumer confusion due to a source-identifying secondary meaning of its brand.
Often, fashion brands contract with a third-party manufacturer. One of the key provisions in such agreements is a license to the manufacturer to use the fashion company’s I.P. in manufacturing the items. This provision should state that the right to any and all use of the fashion company’s I.P. by the manufacturer is limited to the fashion company’s benefit; and that all I.P. does not cease to remain the fashion company’s property.
If a fashion brand is collaborating with influencers and celebrities to market a product, “Rights of Publicity” is another relevant I.P. consideration. When using a famous person’s name or image, companies should be mindful of the influencers and celebrities’ rights to control their identity’s commercial exploitation. Therefore, fashion companies should obtain a license of these rights from the influencer/celebrity before publicly launching any collaboration. Suppose a company fails to obtain an assignment or license of publicity rights. The influencer/celebrity may seek injunctive relief, monetary damages, an award of the infringer’s profits, and/or punitive damages for willful violations.
Selling through an independent network of sales representatives in a specified territory is one of the most common fashion brands’ strategies. In these cases, fashion companies should enter into a sales representative agreement with the person or company that they would like to use as their agent. Some of the most significant and negotiated sections are the breadth of the exclusivity clause, the mechanics of the commissions, and the sales agent’s status as an independent contractor.
Another popular option in the fashion industry is by branching out its operations through franchising, which occurs when a company grants a licensee the right to use the franchisor’s business name, related trademarks, the business method with a certain degree of control by the fashion company franchisor, advertising, and marketing materials/content. The fashion company should pay great attention when drafting the franchise disclosure document and in observing all the formalities of each U.S. state where the company operates.
E-commerce has become the most important sales channel for brands. Companies should be aware of the increased risk of online payment fraud and errors, online privacy, and data security when selling online. Additionally, when collecting customers’ personal information, a fashion company must comply with several federal laws and guidelines.
Commercial Real Estate
The majority of fashion companies lease their retail stores. When negotiating a commercial lease, these are some of the most significant clauses to negotiate:
- The principals should contract legal protections from personal liability;
- Real estate taxes, insurance costs, and other common areas maintenance costs should be fairly apportioned between landlord and tenant;
- Build-out costs for the leased space should be covered by the landlord;
- If the leased premises are in a shopping mall, a co-tenancy clause will provide compensation for a potential loss of consumer traffic caused by changes in the shopping center. In contrast, an exclusivity clause will limit the mall’s ability to lease nearby spaces to competitors.
Most fashion companies are multinational corporations selling their brands in several countries through different fashion weeks. A foreign fashion company would typically be able to establish a subsidiary in the United States by applying either for an E-1 trader visa or for an E-2 investor visa or an L-1A new office visa. Some of the most important requirements to satisfy are the substantiality of the investment or of the stream of commerce and the job opportunities created in the United States.
Several professional profiles engaged in the fashion industry, such as models, designers, and photographers, might qualify for an O-1B extraordinary ability visa if the individual sponsored can show a record of distinction within the field of expertise by means of press coverage, awards, and recommendation letters.
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Compliments of CEA Legal P.C. – a member of the EACCNY.