War of the Burches

A "drunken WASP fest" is how Tory’s trial judge, Leo Strine of Delaware Chancery Court, described the case. His words, not mine. As covered in our previous post, Chris Burch filed suit on October 2, 2012 against his ex-wife and Tory Burch LLC for breach of contract and interference with the sale of his 28 percent stake, worth $600 million, in the Tory Burch line. This was after rumblings that his ex-wife was considering suing Chris Burch for trade dress infringment over his C. Wonder line. Initially, the fashion designer responded to the litigation in an NBC interview. But just this last week, Tory took legal steps and had her lawyers file an answer and counterclaims to her ex-husband's suit.

In her court papers, Tory's lawyers cited breach of fiduciary duty, breach of contract, equitable relief, unfair competition, misappropriation of trade secrets and deceptive trade practices. She is looking for injunctive relief, damages and attorneys’ fees and expenses. The designer alleges that her former husband “repeatedly asked for and was given full complete access to competitively sensitive information about the company [Tory Burch LLC] and its best-selling products” in order to create the retail concept C. Wonder. Tory considers C. Wonder a "knock-off" of the Tory Burch retail concept, in everything from the store fixtures, furnishings, area rugs, and wall treatments to the sweater designs, button details, and general aesthetic. In her counterclaim, Tory's lawyers cited examples in which media outlets have confused C. Wonder with Tory Burch. However, Chris's lawyer responded that his client has not violated Tory's intellectual property. "These are timeless styles that other people invented. I don’t think Tory Burch invented the cardigan, the gold button or the ballet flat.” Since this is the latest fashion law case that keeps on giving, we'll be sure to keep our readers updated with any further developments. 

Image Courtesy of NYmag.com

Zara vs. Zara and Lily: A Lesson for Small Business Owners

This case is a great example of why small business owners should never decide on a name for their business without conducting a thorough trademark search through an attorney. Two years ago, an Australian based "mumpreneur", Shelley Tilbrook, decided to launch an online gift store called ZaraandLily.com, or Zara + Lily. Tilbrook came up with the trademark by combining the names of her daughter, Zara, and niece, Lily. Sweet, right?

Well apparently the major Spanish retailer Zara, Inc. didn't think so and their Australian lawyer sent the mumpreneur a cease and desist letter demanding that they cancel their business name and domain name, claiming it is "substantially similar or deceptively similar" to its client's. Like the United States, the trademark laws in Australia are all about preventing consumer confusion. And while Zara did not waste time in protecting their brand name, its PR team released the following statement to soften the legal ramifications:

"Zara Australia wants to underline its high respect for Ms. Tilbrook's initiative and has tried to demonstrate this throughout the process. We cannot forget that Zara originated from a small family business in apparel manufacturing and, as a result, the brand is empathetic to all entrepreneurs."

Nevertheless, Tilbrook still had to learn an expensive lesson. She was left with 50,000 dollars worth of merchandise that she could no longer sell and had to pay an additional 15,000 dollars in rebranding and web costs. For a small business owner, that is quite a hefty amount that she could have avoided paying had she hired an attorney to conduct a proper trademark search. Given that her business was online and had the potential of reaching millions of consumers across the world, her business name was even more susceptible to infringing on someone's trademark than, say, its brick and mortar counterpart. We hope Tilbrook sought the help of a trademark attorney for her new name- Peach and Pear Kids- and that the success of her business will continue despite this first legal hiccup. And to other small business owners out there trying to come up with a name or trademark, do your research and don't underestimate the degree to which big time corporations will go to protect their brand name. To check out the video clip of the news segment covering this case, click here.

Forever 21 In Hot Water With U.S. Department of Labor

It's possible that an entire blog can be dedicated to Forever 21's legal troubles. The Los Angeles based fast-fashion retailer has certainly given fashion lawyers plenty of material to analyze with their knock-off practices. Now it seams their labor practices are under scrutiny by the U.S. Department of Labor for allegedly working with suppliers that don’t pay workers minimum wage or overtime.

Apparently, the retailer has failed to comply with a subpoena issued by the Department for documents about its apparel contractors and manufacturers and now the government attorneys have filed an action with the U.S. District Court of Central California, which will allow a judge to hold a hearing on the matter. Forever 21's labor practices have been under scrutiny since 2008, after the department discovered that about a dozen manufacturers that work with the retailer have “sweatshop-like conditions.”

 

For a little labor law brush-up, the federal minimum wage is $7.25 an hour and employees that work more than 40 hours during a work week should receive overtime. The Department of Labor vehemently enforces these basic standards. "When companies like Forever 21 refuse to comply with subpoenas, they demonstrate a clear disregard for the law, and the Labor Department will use all enforcement tools available to recover workers' wages and hold employers accountable," stated the department's Ruben Rosalez to WWD. It will be interesting to see how far the case will go. In the meantime, you may want to think about hitting up other retailers to find good deals. Saving money should not be at the cost of good business practices. 

NBC Interview with Tory Burch on Fashion Feud With Ex-Husband

With her 2 billion dollar brand, Tory Burch may have had her fair share of success, but as covered in ourprevious post, her legal troubles have yet to subside. After their divorce in 2006, two years after they started Tory Burch, LLC, Chris Burch eventually moved on to launch the eerily similar concept store C. Wonder. There were rumblings that Tory Burch was going to file a lawsuit for trade dress infringement. While the lawsuit never came about, her ex-husband has accused the famous designer of tortious interference with his business and has filed a lawsuit seeking a declaration from the Delaware courts that his ex-wife and her company cannot stop him from pursuing other business ventures.

Seems as though Tory Burch is taking matters into her own hands with some publicity, giving an "unflappable" interview with NBC's Harry Smith. Her composure in describing her legal troubles will definitely fix any damages to her image that may have been caused by her ex-husband's allegations. Whether she will gain favor in the courts or by her ex-husband remains to be seen. 

YSL Drops Red-Sole Suit Against Louboutin

The legal battle which began in 2011 when Louboutin sued YSL for trademark infringement when its rival sold red pumps with a red sole is officially over. YSL has decided to drop all remaining claims in the lawsuit. This comes a month after the Court of Appeals ruled in favor of Louboutin's famous trademark, stating that "the district court’s conclusion that a single color can never serve as a trademark in the fashion industry was based on an incorrect understanding of the doctrine of aesthetic functionality" and that color can indeed be trademarked. However, the court narrowed the trademark by creating an exception for YSL to make and sell monochromatic red-soled shoes. It seems as though YSL's legal team were happy with this ruling, releasing the following statement: 

"Now that the Court of Appeals has definitively ruled for Yves Saint Laurent and has dismissed Christian Louboutin’s claims, Yves Saint Laurent has decided to end what was left of the litigation and refocus its energies on its business and its creative designs. By dismissing the case now, Yves Saint Laurent also wishes to ensure that the Court will not make any further rulings that put at risk the ability of fashion designers to trademark color in appropriate cases.”

With all the excitement surrounding the validation of Louboutin's trademark, many didn't take notice that YSL also saw the ruling as a victory since it supported what was their position all along, which was to distinguish their monochromatic red shoes with Louboutin's trademark of contrasting the red-sole with the rest of the shoe. Now that the exception provided by the Court's ruling supports YSL's design as well, all fashion parties seem to be happy and all is good in the fashion law world.