Fashion Apparel Law Blog : Fashion Apparel Law Lawyer & Attorney : Sheppard Mullin Law Firm : Fashion Legal Issues

Multi-level marketing plans ("MLMs"), also known as "network" or "matrix" marketing plans, can be an effective way for the "little guy" or the "entrepreneur" to achieve financial success in the cosmetics or apparel industry.[1] By promoting individual autonomy and embracing the concept that the independent sales person is the main driver of success, it's no surprise that MLMs are attracting considerable talent. In fact, the Direct Selling Association, a trade group that includes the leading multi-level marketing firms, reports that the industry employed more than 15 million U.S. salespeople in 2007, and had an estimated $30 billion in U.S. direct sales. Further, the clothing, cosmetics, and personal care segment represented almost a third of all domestic sales, the highest of any major product group.
 

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Last month, the European Parliament approved new rules that will increase cosmetic safety and simplify regulatory procedures in the European Union. The legislation, which resulted from a compromise negotiation between Parliament and Council representatives, will take the form of a single regulation that applies to all member states simultaneously, and will replace the patchwork of 27 sets of national rules and 55 amendments that comprise the EU Cosmetic Directive of 1976. 
 

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Please join us for our upcoming 

Fashion & Apparel Confab-ulous
Networking Event

When: June 9, 2009, 5:30 p.m. - 7:30 p.m.

Where: Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza, Suite 2400, New York, NY 10012

Our Confabs are informal networking events where you can "meet and greet" your peers in the industry followed by a short "hot topic" presentation by various industry experts.

5:30 – 6:30 Networking, Networking, Networking – Hors d’oeuvres and drinks

6:30 – 7:00 The Design Piracy Prohibition Act: Change Fashion Needs Copyright and Fashion Design at the Crossroads in 2009

In April, designers Jason Wu, Narciso Rodriguez, Maria Cornejo and Thakoon Panichgul –- all of whom have been worn by First Lady Michelle Obama –- traveled to Washington for one day to lobby Congress for support of the bill. On April 30, 2009, the "Design Piracy Prohibition Act" was officially reintroduced in U.S. House of Representatives. This bill, if enacted, would amend Chapter 13 of the U.S. Copyright Act and grant fashion designs a three-year term of protection, based on registration with the U.S. Copyright Office. Currently, fashion design does not receive explicit protection under U.S. copyright law and protection of certain types of apparel designs can only be found through trademark and patent law. This confab will discuss the proposed bill and its impact on the fashion industry both positive and negative.

Questions? Contact Amy Romaker at aromaker@sheppardmullin.com or 858.720.7403

To RSVP please click here.

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From Coco Chanel to Zac Posen, many fashion designers' personal names (and personalities) have become synonymous with the fashion houses they represent. Anything associated with a famous designer's name often becomes more coveted due to the reputation, history, and recognition that the designer carefully built around it over time. As a result, designers' personal name trademarks often become their most valuable assets. The Joseph Abboud case illustrates some of the issues associated with selling, assigning, or licensing all of a designer's names and trademarks to someone else, and designers should take note of its implications. 
 

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Diminish fine lines.” “Regenerate your skin.” “Stimulate cell renewal.” These days, a number of cosmetic products claim to do more than just hide blemishes. Rather, they promise “age-defying” results with ingredients that influence and enhance the skin’s biological function. These products, aptly termed “cosmeceuticals,” are a hybrid between cosmetics and pharmaceuticals. For instance, while cosmeceuticals are applied topically as cosmetics, they also contain pharmaceutical ingredients such as alpha and beta-hydroxy acids, copper peptides, or retinoids. And accordingly, behind each active ingredient lies an even more active product claim.

With cosmeceutical performance claims becoming more daring, and with cosmeceutical sales soaring in the billions, federal legislation is making sure that cosmeceutical manufacturers and advertisers are putting their money where their mouth is.
 

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Reduced retail revenue and omnipresent debt is causing many fashion companies to tremble in their stilettos; particularly as they watch their stock take a pounding on the market. Conspicuous spending tends to lose its luster as the market plummets and the fashion and luxury sector is being heavily penalized during this economic downturn. A quick recovery seems unlikely as analysts predict luxury revenues will drop in 2009 for the first time in more than a decade at constant exchange rates. Lowered valuations and slipping stock prices in the luxury sector present ripe buying opportunities for the fashion savvy investor. Deal makers in the fashion field predict that minority investments in fashion companies will be a prevalent trend in 2009.
 

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In response to widespread criticism that the original deadline of February 10, 2009 set an unrealistic timetable for compliance, the Consumer Products Safety Commission deferred the deadline for companies to test children's products for lead content for one year.  Lawmakers plan to introduce legislation exempting some small businesses from CPSIA and requiring the Commission to clarify the confusion created by the law.

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In August of 2008, President Bush signed into law the Consumer Product Safety Improvement Act ("CPSIA") which, among other things, mandated implementation of a certification protocol for all consumer products subject to safety rules under the jurisdiction of the Consumer Product Safety Commission ("CPSC").  Broadly, "consumer products" are defined as any product used in a residence, school, or for recreational or personal use (subject to enumerated exceptions).  Various CPSC bans and standards already in place will now operate in conjunction with CPSIA, such as the Federal Hazardous Substances Act ("FHSA"), the Flammable Fabrics Act ("FFA"), the Poison Prevention Packaging Act ("PPPA") and the Refrigerator Safety Act ("RSA").  While, for the most part, the CPSIA does not alter pre-existing safety standards for products, it does require that all such consumer products now certify compliance. Products not certified must be refused entry into the US and destroyed unless permission is given for re-shipment.  The CPSIA expands independent, state-level enforcement activities authorizing State Attorneys General to initiate proceedings in federal courts.  The CPSIA also imposes stricter civil penalties up to $100,000 per violation, with an overall cap on penalties of $15 million.  One area in which the safety standards have been changed is with regard to children's products, discussed in more detail here.
 

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The Consumer Product Safety Improvements Act ("CPSIA") imposes new requirements on manufacturers, importers and retailers of children's products beginning February 10, 2009.  The CPSIA defines "children's products" as a "consumer product designed or intended primarily for children 12 years of age or younger," which includes children's clothing.  A General Certificate of Conformity (""GCC") is required for goods starting November 12, 2008.  Under the new requirements, children's products cannot be sold if they contain more than 600 parts per million (ppm) total lead.  Those that resell products or continue to sell products in existing inventory in violation of the limit could face civil and/or criminal penalties. 

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