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

Fur was a number one pick this winter season, as seen in magazine editorials, designer ads and fashion shows, showcasing its popularity in collections around the world. Whether jacket, purse, parka or boots, the Federal Trade Commission (“FTC”) mandates that all fur products within its jurisdiction comply with the labeling requirements under the Fur Products Labeling Act (the “Fur Act”). The Fur Act governs the manufacture, advertising, selling, importation, transportation and distribution of any fur product in the United States, ensuring that any such product is not misbranded or falsely or deceptively advertised or invoiced. It is important for retailers to be aware of how to comply with the Fur Act and to be up-to-date on the new enforcement policies released by the FTC relating to the Fur Act and its related rules, one of which was issued in January of this year.

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In recent years, the U.S. government has vigorously enforced the Foreign Corrupt Practices Act ("FCPA") against individuals and companies representing a variety of industries. Recent press reports suggest that entertainment companies may be the target of current SEC enforcement efforts, and the government is in the midst of a long-running investigation of Avon Products, Inc. Other companies in the fashion and beauty industry should consider how best to protect against violations.

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Men’s grooming and beauty products, namely cosmetics for men, continue to experience yearly growth. The forecasts of one research firm predict that sales of men's toiletries will hit $3.2 billion by 2016, up from $2.2 billion in 2006. Sales of men’s skin care products like facial cleansers, moisturizers and exfoliants grew more than fivefold from 1997 to 2009, to $217 million from $40.9 million. Increasingly, men are dabbling in concealers, moisturizers, masks, serums and a host of other cosmetic products that were formerly considered to be exclusively for women. Retailers have experienced the most success with cosmetic products for men that have masculine, but non-descript packaging. So while the marketing of cosmetics and beauty products for men is gaining traction and holds promise for new entrants, the legal challenges in bringing a new cosmetic product to market are complex and merit legal attention.

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As summer is upon us, rebellious trend seekers can toss their black nail polish and opt for a shade of neon orange, green or pink. This season’s en trend nail polish includes a color palette of neon hues that are rumored to be illegal in the U.S.. Contrary to recent alarmist headlines, it is not illegal to physically wear shockingly bright neon nail polish. However, it may be difficult to locate a truly neon polish at your local beauty store, since nail polish that includes neon coloration fails to comply with FDA regulation.

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We all remember the sweet scent of our first perfume and only need a simple whiff to propel us back to our youth. Studies show that scent memory is the longest lasting of all of our five senses, meaning you will always be able to instantly recognize the scent your grandmother wore when you were a child. But what if one day that perfume you hold so dear suddenly smelled slightly different? Recently, the perfume industry has become subject to stricter standards forcing longtime perfume makers to abruptly change their ingredient and formulas.

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On August 10, 2011, Judge Victor Marrero denied Christian Louboutin S.A.'s motion for a preliminary injunction to enforce its U.S. trademark (Registration No. 3,361,597) for "lacquered red soles on footwear" covering "Women's High Fashion Designer Footwear" in International Class 25. The Court held that "[b]ecause in the fashion industry color serves ornamental and aesthetic functions vital to robust competition, the Court finds that Louboutin is unlikely to be able to prove that its red outsole brand is entitled to trademark protection, even if it has gained enough public recognition in the market to have acquired secondary meaning." The decision not only concluded that the Lanham Act does not "exten[d] protection to a trademark composed of a single color used as an expressive and defining quality of an article of wear produced in the fashion industry," but also established a new precedent by concluding that trademark protection under the Lanham Act for the fashion industry differs from that in other industries.
 

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On May 20, 2011, the United States Department of Agriculture's National Organic Program ("NOP") issued a Policy Memorandum (PM-11-14) addressing the labeling of textile products containing organic ingredients (such as organic cotton, wool or linen fabrics). The new policy supersedes the July 2008 NOP fact sheet entitled "Labeling of Textiles Under National Organic Program (NOP) Regulations."
 

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If your garment manufacturing work is done in California, you need to register with the California Labor Commissioner or you could face heavy fines.
 

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The Consumer Product Safety Commission (“CPSC”) recently issued a notice announcing a revision to the terms of the stay of enforcement of the stringent certification and testing requirements under section 14 of the Consumer Product Safety Improvement Act (“CPSIA”). With regard to testing and certification of the total lead content in children’s products, except for metal components of children’s metal jewelry, the stay of enforcement is extended until December 31, 2011. The extension of the stay also applies to certain parts of youth all-terrain vehicles, youth off-road motorcycles, youth snowmobiles, bicycles, jogger strollers, and bicycle trailers.
 

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On Monday, February 8, 2011, the Ninth Circuit reversed the United States District Court for the Northern District of California, which had held that Levi Strauss failed to establish by a preponderance of evidence that Abercrombie & Fitch's Ruehl pocket stitching design is likely to cause dilution by blurring of Levi Strauss' famous Arcuate pocket stitching design because it had not established that "[Abercrombie] is making commercial use of a mark that is identical or nearly identical to the [Levi Strauss] Arcuate mark." Compare Levi Strauss v. Abercrombie & Fitch, No. 09-16322, 2011 WL 383972, at *13 (9th Cir. Feb. 8, 2011) with Levi Strauss, No. C07-03752 JSW, 2009 WL 1082175, at *9 (N.D. Cal. Apr. 22, 2009).
 

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Beginning December 1, 2010, foreign-invested enterprises, foreign enterprises, and foreign individuals are now required to pay the city maintenance and construction tax as well as the education surcharge, from which these entities and individuals were formerly exempt. Prior to this regulation, the PRC levied those taxes only on Chinese-owned and funded enterprises and Chinese citizens.
 

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On December 13, 2010, the Supreme Court affirmed Omega, S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9^th Cir. 2008), aff'd per curiam, No. 08-1423 (U.S. Dec. 13, 2010). Justice Kagan did not partake in the consideration or decision in this case.  Costco Wholesale Corp. v. Omega, S.A., No. 08-1423 (U.S. Dec. 13, 2010) (per curiam) (available here).  As the Supreme Court issued an unsigned per curiam opinion, there remains no binding Supreme Court precedent to guide courts in consideration of this issue.
 

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On August 6, 2010 Senator Charles Schumer (D-NY), introduced a bill entitled the Innovative Design Protection and Piracy Prevention Act ("IDPPPA") (S. 3728), which represents a compromise between the American Apparel & Footwear Association ("AAFA") and the Council of Fashion Designers of America ("CFDA") in an effort to afford protection to American designers for new and original fashion designs.[1]
 

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Judge Harold Baer in Gucci America, Inc. v. Frontline Processing Corp., No. 09 Civ. 6925 (HB), 2010 WL 2541367 (S.D.N.Y. June 23, 2010), ruled that Gucci had sufficiently alleged facts to defeat a motion to dismiss in a suit brought against three defendant credit card merchant service providers for trademark infringement. The litigation stems out of an earlier action, Gucci America, Inc. v. Laurette Co., Inc., No. 08 Civ. 5065 (LAK) (S.D.N.Y. June 3, 2008), in which Gucci successfully sued defendant Laurette for operating a website, "TheBagAddiction.com," which sold counterfeit Gucci designs. Gucci later brought suit against three credit card merchant companies, Durango Merchant Services (a Wyoming corporation), Frontline Processing Corporation (a Nevada corporation principally operating in Montana), and Woodforest National Bank (a Texas corporation), alleging that those companies aided and assisted Laurette and other similar website operators in infringing Gucci's marks. According to the allegations set forth in Gucci's complaint, Durango established credit card processing services for web companies like Woodforest and Frontline that sold counterfeit products.  Gucci brought trademark infringement and counterfeit claims against Laurette based upon website sales of counterfeit Gucci products. Gucci alleged that the credit card processing services established by the three defendants were essential to Laurette's sale of counterfeit Gucci products, and, for that reason, Durango, Frontline, and Woodforest were equally responsible for direct, contributory, and vicarious trademark infringement under the Lanham Act and New York state law. The defendants moved to dismiss the action on the grounds that the court lacked personal jurisdiction and that Gucci had failed to state a claim.
 

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China celebrated its Customer Right Protection Day on March 15, 2010. The Administration for Industry and Commerce of Zhejiang province (the “Zhejiang AIC”) issued penalty decisions to several well-known international luxury brands such as Hermes, Hugo Boss, Dolce & Gabbana, Paul & Shark, Trussardi, Tommy Hilfiger and Versace based upon routine quality examinations which found goods sold in China to be substandard.
 

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On Friday, December 18, 2009, the Consumer Product Safety Commission ("CPSC")  issued a notice announcing a revision to the terms of the stay of enforcement of the stringent certification and testing requirements under the Consumer Product Safety Improvement Act ("CPSIA"). With regard to testing and certifying children’s products for compliance with phthalate levels, the stay is continued while the CPSC works toward finalizing the accreditation requirements for testing labs. Once standards for a particular category of product are published in the Federal Register, the responsible parties will have 90 days to achieve compliance with the testing and certification requirements.  For children’s products subject to lead testing requirements, the stay has been extended for an additional year, to February 10, 2011.[1]
 

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On September 9, 2009, a federal judge in Maine agreed with retailers, marketers, and media companies that the recently enacted Maine law "An Act To Prevent Predatory Marketing Practices Against Minors" is likely unconstitutional. Nonetheless, the judge dismissed the challenge to the Act on the ground that the state Attorney General does not intend to enforce it.
 

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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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It is estimated that consumers spent almost $100 billion on gift cards in 2007.  From the consumer's perspective, a gift card is an attractive alternative to an actual gift because it is easy to obtain and reduces the hassle and guess-work of gift-buying.  From a retailer's perspective, gift cards are a great way to attract new customers, strengthen brand loyalty, generate sales, provide an easy means of data-gathering, and reduce the costs of credit card processing.

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The LAPD and the Los Angeles County Sheriff's Department coordinated the largest raid ever on the Santee Alley downtown LA shopping district in late 2007, confiscating $8 million in counterfeit goods and arresting 26 people.  Among the confiscated merchandise were designs copied from labels such as Prada, Rolex, Fendi and Gucci.  The LAPD wants to send the message that selling counterfeit goods will no longer be tolerated.

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A drive past the corner shops of downtown Los Angeles or Manhattan will give anyone an idea of how flagrant counterfeiters of fragrances can be, and how necessary enforcement has become.  Unlike counterfeit handbags or apparel, fake perfume is applied to the skin and poses a special health risk to consumers, since some counterfeit fragrances include additives such as urine and antifreeze.

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Recent discoveries of unlabeled real fur from raccoon dogs used in garments have spurred discussions surrounding proper labeling methods of fur coats.  According to the Humane Society of United States, the unlabeled faux fur found on jackets sold by DKNY, Rocawear, Baby Phat, Sean John and by retailers like Macy's and J.C. Penney is actually dog fur, taken from raccoon dogs who are skinned alive.  In 2005, Macy's pulled coats from its shelves containing raccoon dog fur labeled as raccoon after the Humane Society raised the issue with the chain.

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With the aid of consumer demand and legislative action, the cosmetic industry seems poised to undergo its own makeover in the near future.  Cosmetic manufacturers have long faced the angst of animal welfare groups protesting the use of animals to test the potential health risks of cosmetics and their ingredients.  Cosmetic manufacturers have responded to the public backlash by pointing out that in light of consumer pressure to offer safe and improved products, cosmetic testing on animals allows manufacturers to satisfy consumer demand while simultaneously protecting human health by enabling manufacturers to establish the safety of their products.  Additionally, in most countries manufacturers are required by trading standards and consumer protection laws to show their products are not toxic and dangerous to public health.

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Wool, textile and fur garment importers, sellers, distributors and advertisers may think labels are just a small detail on their products, but the Federal Trade Commission (FTC) disagrees.  The FTC has established specific labeling guidelines which require most textile, wool and fur products to contain labels that show care instructions, the fiber content, the country of origin, and the identity of the manufacturer or another business responsible for marketing or handling the item.  Clothing manufacturers can learn a lot from those who have already paid large penalties to the FTC for their labeling mistakes.

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Within the textile industry, pollution is known to be an issue, because textile production involves a number of processes that may use pesticides and chemicals. However, one of this year’s hottest fashion trends is going “green”. Organic shirts and pants can be found in mainstream retail stores. Design companies are using organic cotton for their latest runway shows. In May 2007, Vogue magazine devoted an issue to the so-called “eco-chic”. But how does one make sure that what is labeled “organic” in fact is organic and what are the standards to be met by manufacturers of clothing and fashion?

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