WWD Law Review: Dress Codes, Copycats and China

Banana Republic was faced with the threat of litigation after a store manager in New York stated the company’s “look policy” does not allow for “urban” braids. Meanwhile, Coty has landed two wins as of late: It was handed a $6.5 million victory over knockoff fragrances and closed a $170 million deal with Burberry. And on the Chinese intellectual property probe front, parties are mixed as to how to proceed with what the Trump administration is estimating to be up to $600 billion worth of infringement-related damages a year.

This Is Bananas, B-A-N-AN-A-S

Social media went into a flurry when Destiny Tompkins, a 19-year-old employee at Banana Republic’s White Plains, N.Y., store alleged that she was reprimanded for “violating the store’s dress code” with her braided hair. Tompkins spoke out against the Gap Inc.-owned company after a manager informed her that her braided hair was “a little too urban and unkempt for [the retailer’s] look and image” and that “he couldn’t schedule [her] for shifts” if she did not remove the braids.

Prior to Banana Republic releasing a statement on Monday, calling the now-fired manager’s behavior “completely unacceptable, counter to our policies,” Tompkins said she and her family were exploring legal recourse as the alleged “dress code” — which Banana Republic has since refuted — amounts to “clear cut discrimination.”

While stores are, in fact, permitted to employ dress codes, as the industry was reminded in a relatively recent case involving Abercrombie & Fitch, dress codes and “look policies” must not be used in furtherance of a discriminatory motive.

Abercrombie was slapped with a lawsuit by the U.S. Equal Employment Opportunity Commission in 2009 for failing to hire Samantha Elauf, a young Muslim woman, because her black headscarf was not in compliance with the retailer’s “look policy.” That case, which centered on a religious accommodation in accordance with Title VII of the Civil Rights Act of 1964 that prohibits employers from discriminating against employees on the basis of sex, race, color, national origin and religion, ultimately went before the Supreme Court and resulted in a loss for the retailer.

It’s Good to Be Coty

Coty, one of the world’s largest beauty companies, is on a winning streak both in and out of the courtroom. Last month, the beauty giant, which boasts a roster that includes the fragrance licenses for Calvin Klein, Marc Jacobs, Hugo Boss, Gucci and Ralph Lauren, among others, was handed a $6.5 million victory by Judge Jesse Furman of the U.S. District Court for the Southern District of New York. Coty filed suit against Excell Brands in September 2015 for trademark infringement and dilution and unfair competition, alleging that the New Jersey-based company was creating knockoff perfumes in an attempt to mislead consumers, and bank on the expansive marketing efforts and resulting appeal of Coty’s fragrances. In addition to selecting similar names for its fragrances (Serenity instead of Eternity, Possession instead of Obsession, and Euphrates instead of Euphoria), Excell made use of very similar bottle designs and product packing to further attract consumers. It also included language on its packaging indicating that its fragrances were “Our version of Euphoria by Calvin Klein,” for example.

The copycat retailer argued that its use of Coty’s trademarks to compare its fragrances to the real thing constituted nominative fair use, as opposed to trademark infringement, but the court was not swayed. Siding with Coty, Furman stated, “Excell’s products copy, with only slight differences, the names, typefaces, packaging, design, coloring and bottle shapes of Coty’s fragrances.”

While Furman was quick to call foul on Excell over an array of claims lodged by Coty, he refused to categorize Excell’s products as counterfeits, holding instead that more than “mere similarity” or “colorable imitation” is necessary for counterfeiting remedies. Nonetheless, Coty walked away with an accounting of more than $6.5 million in Excell’s profits from the infringing products.

That is small change compared to the deal that Coty has closed with Burberry. According to a statement from the beauty giant, it has completed the deal — one that first made headlines in April — and will pay 130 million pounds for a “long-term” exclusive global license for Burberry’s beauty business. The partnership gives Coty the legal rights to utilize Burberry’s intellectual property — including its trademark-protected name and plaid print — to manufacture, market and sell Burberry Beauty fragrances, cosmetics and skin care. Coty “will have overall responsibility for strategic direction on the portfolio’s development,” according to the company and the products will be sold in leading luxury beauty retailers globally, as well as in Burberry stores and digital channels.

China

A hearing before the U.S. International Trade Commission further shed light on the ever-increasing complexity of the relationship between U.S. intellectual property and widespread theft by Chinese entities — the latter of which has no shortage of effects on the fashion industry. In August, the U.S. Trade Representative formally initiated an investigation of China’s IP practices, including any efforts by China to infringe U.S. IP, which the Trump administration has estimated could amount to as much as $600 billion in damages to American rights holders.

One of the most striking points made during the hearing came from Richard Ellings, director of the Commission on the Theft of American Intellectual Property, who told the International Trade Commission that intellectual property holders open themselves up to potential intellectual property theft or forced technology transfer simply by opting “to manufacture in [China].”

Scott Partridge, who is the head of the American Bar Association’s intellectual property division, highlighted “progress” on behalf of the Chinese government, namely its creation of three intellectual property-specific courts, which could theoretically be of use to U.S. IP holders that fall victim to infringement by Chinese companies.

Julie Zerbo is the founder of The Fashion Law.

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