B.A.F.F.L.E.D. Fashion Law

Big Merger Style

After a little break in August, which we hope you enjoyed, too, we're back with a discussion on the collision of 2 of our favorite things--fashion and M&A (mergers and acquisitions). 

Just recently, American luxury group, Tapestry, found itself standing before the court in a standoff against the Federal Trade Commission (FTC). Tapestry, the group housing brands like Coach, Kate Spade, and Stuart Weitzman, is in the midst of an $8.5B acquisition of Capri Holdings, the house containing the likes of Michael Kors, Jimmy Choo, and Versace. As often the case, the crux of this FTC claim is the concern of reduced competition, with so many brands rolling up to the same owner. The concern is the limitation it will put on the "accessible luxury market". It is often considered the market for those just getting into luxury goods, like teens and young professionals, or those choosing not to pay exuberant prices, no matter the heritage of the brand. 

Tapestry and Capri see things differently.

The yet to be united Tapestry and Capri believe this merger will not only be good for the consumer market, but for America on the luxury stage altogether. Tapestry claims the deal will spur innovation, optimize economies of scale on the business side and improve options, selection, and experience on the customers side. 

The FTC counters with the claim the Tapestry foothold would drive up prices, limit consumer options, and make the "accessible luxury market" diminish greatly. They see it creating a greater divide between the haves and have-nots, hurting the economy versus doing any good. Understanding the power of these conglomerates in the marketplace, there's also a good chance this deal could push consumers to younger, upstart brands. This would be a positive for those companies, but the scope to which it'd be able to impact them is difficult to determine. 

Proceedings could take a while, and they're just a little over a week into hearings thus far. If approved, the combo positions Tapestry in a similar vein to LVMH, and elevates the American luxury house in a space long dominated by European houses stunting brand heritage and legacy.

Being such a diverse nation, the hope is there will be great benefits in this deal across all of its many parts, for all of our many diverse business and consumer types.

We'll be watching this one...

B.A.F.F.L.E.D. Fashion Law

Will Chinese Tariffs Further Fuel Fakes?

If you've been watching national news lately, you know the president is pushing for tariffs on items imported from China.  This has a major impact on local and state governments in America, who rely on Chinese companies for some of their infrastructure items like railcars, for example.  Certainly we support domestic jobs and manufacturing, but the reality is, much has moved overseas.  These are the cards dealt.

Imposing these tariffs could really hit closer to home--literally, if clothing and beauty items are swept into the list.  The likelihood is there.  Not only would items like synthetic and human hair be included, but lipstick, shampoos, and other essentials.  Consumers will really flock to small business if that becomes the case (which we support!).  The tariffs could also have an impact on the creative industry, in further flourishing the counterfeit market.  Like the now-shifting market in Iran, the love for high fashion, but barriers to enter the market can call for desperate measures.  

Counterfeit luxury items are sold openly in Iran.  It's almost a market necessity, as the global economy was long cut off because of international sanctions.  Importers have struggled to bring good into the country.  Consumers haven't let their wants struggle.  Neither have knockoff merchants.  As many sanctions have been relaxed over the last couple years, the market is sliding toward change, but not easily. Despite super conservative leadership in Iran, counterfeiters found ways to get consumers what they wanted--even if it meant taking on detested Western ways of loving luxury.  

The proposed Chinese tariffs in America could make for a similar situation.  Sure, there's already a counterfeit market here, and it's unlikely there won't always be one.  But, if brands are cut off in such a way to create burdens consumers aren't used to, counterfeiters will definitely find a way to meet demand--whatever it takes. When it comes to counterfeits in the health and beauty industry, it's more than just bags with questionable logos.  Formulas and chemical compounds are at stake.  Health is a whole different ballgame.  

As hearings continue on this issue in D.C., it is worth keeping an eye on.  Will counterfeits be king?

B.A.F.F.L.E.D. Fashion Law

"I'll Just Get Another One"--Is Fast Fashion Killing Your Pocket?

When fashion first hit the map in the way we know it today--you know, when Charles Worth started putting labels with his name on them in the garments he made--consumers were not only buying custom pieces, but making investments.  We're a bit departed from that today.

Today, we quickly run to stores like Zara, H&M, or Forever 21 (me included, but I'm working on improving my ethical fashionista practices, ok?!).  While those stores give us the quick fix we need, often at their risk of an infringement lawsuit, they also present problems for our pocketbooks.  With a plethora of reasonably priced costume jewelry, t-shirts and dresses to last for a few wears, it's hard not to fall into the trap of spending.  Unfortunately, the trap is actually a spiral.

Going back to the days of Charles Worth, garments, and probably accessories, too were made to last.  Shoppers considered them investments.  They may have had to wear them a bit more often than we'd like to don outfits these days, but the pieces were solid.  They should have been, and should be.  They were quality.  Today, the garments at fast fashion outlets not only skirt the line of infringing on a designer's hard work (both established and new designers), but also put a hurting on the pocketbook--subconsciously.  

What consumers aren't considering when buying 5 dresses for $100 is, "they'll be back".  They'll be back soon.  Those $20 dresses will only last so long before falling victim to the washing machine or an easily snapped string one way or another.  At first blush, the response is--"I'll get another one."  Yep, and put more money into the hands of companies with questionable labor practices or terrible corporate cultures--the discriminatory and disrespectful kind.  (See Zara)  We'll continue to help the owners of Zara and H&M be 2 of the 10 richest people on the planet.  What's also happening is more money coming out of the consumer's pocket.  Every single time a purchase is made for a quick fix, it's less money to be spent on something made of better quality; something which will last longer and wear better.

Very few of us are completely innocent in feeding this bad habit.  Hopefully though, we'll all think twice when we turn down the $45 garment for 3-$50 ones.  Sometimes, that's a great deal.  Sometimes, it's a raw deal.

For more on ethical fashion, click here!

B.A.F.F.L.E.D. Fashion Law

Why You Should Care about Fashion Law

By: Dana Martin

Often perceived as an elitist and superficial industry, the lawyers who come to the defense of fashion get a bad rap. After all, why should anyone care about protecting huge fashion and luxury goods conglomerates like Hermès from online retailers selling fake Birkin bags? The answer is simple: the law of fashion doesn’t only exist to protect the designers, it’s there to protect you, the consumer.

Fashion law is a broad category that covers everything from employment issues to mergers and acquisitions. However, most of the rhetoric surrounding fashion law focuses on protecting a brand’s trademark. So what does that mean, and why is it important to you? According to the United States Patent and Trademark Office, a trademark is “any word, name, symbol, device, or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services.” So, a trademark can be anything from a logo like the Nike “swoosh” to the red sole on the heel of a Louboutin, so long as its purpose is to provide a signal to the consumer about what brand is responsible for the product they are buying.

This is important because, as consumers, we base a lot of our decision on which products to buy in which brand created them. The brand of a product carries with it expectations of a certain level of quality according to our past experience. Think back to the last time you were at the grocery store. Did you decide to buy name brand paper towels or the generic brand? You can’t test each package of paper towels in the store, so how would you know one might be superior to another? Maybe you have tried both kinds and have concluded that the name brand is a higher quality product. The next time you need paper towels you are more likely to choose that brand because your past experience has led you to expect a certain level of quality from that product. This is called brand loyalty.

Brand loyalty exists in the fashion industry all the way from runway couture to your everyday attire. Think about your favorite pair of jeans that fit like a glove. When it’s time for a new pair, that’s probably the brand you seek out at the department store. You expect them to fit, feel, and last as long as your old ones. In an industry like fashion where your options are seemingly limitless, when we find a brand that seems to fit our shape, style, and budget, we reward that company with our loyalty. Ideally, if enough people buy the clothes, the brand recognizes the demand and keeps producing outfits that you love. Everyone wins!

Now imagine that when you get to the grocery store, both the name brand and the generic paper towels have almost indistinguishable packaging. If you accidentally choose the generic brand, you may be frustrated with the inferior quality of product that you received. Believing you purchased the name brand, you might decide that their product is no longer living up to your expectations, and decide that the next time you need paper towels you will choose a different brand altogether. In this scenario, the generic brand took advantage of the name brand’s good reputation by tricking the consumer into purchasing it, and in the process destroyed that consumer’s brand loyalty. And now you, as the consumer, wasted your money on a product that you did not intend to buy.

This same concept can be true beyond household cleaning products and especially in the fashion industry. Consumers want to be able to make decisions about a brand based on their experiences with it, but if they are confused about which brand they are purchasing that becomes impossible.  If a company is selling handbags by tricking consumers into thinking they are buying a designer bag rather than by creating their own brand loyalty, the biggest loss falls on the consumer, who chose to spend his or her money expecting a product of a certain quality and received a knockoff instead. Ultimately, protecting the trademark of a brand protects that company from others trying to profit off their good reputation, but it also protects your ability as the consumer to make an informed purchase.

On the surface, fashion law might seem like nothing more than a hobby for attorneys who keep the latest issue of Vogue hidden beneath the Wall Street Journal on their desks. After a closer look, however, it is clear that by protecting trademarks we encourage companies to take responsibility for their products. This means a company must learn to distinguish itself by producing higher quality goods rather than leaning on a competitor’s hard earned reputation.  This means that you, as the consumer, get to reap the benefits of companies trying to win your loyalty by producing better quality products. 

Happy shopping!