Getting dressed for success: IP considerations for start-up fashion houses

This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.

Hot off the heels of London fashion week, the UK's new crop of emerging fashion designers may be wondering how to deal with a sudden influx of interest in their catwalk creations. Whether they are aiming their creations at the luxury or mass markets, an understanding of how best to protect and exploit their creative work, as well as how to avoid disputes with others, is a "must have" for any designer.

What are the relevant IP rights?

Intellectual property (IP) rights protect the results of intellectual or creative endeavour. The most relevant rights for fashion designers to be aware of are:

• Copyright, which protects the expression of their design ideas through drawings and arises automatically. To qualify for protection, drawings must be original (i.e. not substantially copied from a pre-existing work) and involve some skill and labour, but the threshold for originality is quite low.

• Designs, which protect the appearance of their clothing or other fashion goods. There are several forms of protection available (UK Design Right, UK Registered Design, unregistered Community Design, registered Community Design) for novel designs. Some arise automatically and some require registration. The features of a product which may be protected include its shape and certain other features (depending on the right relied upon).

• Trade marks (or branding), which essentially relate to the marketing of their goods and how consumers identify them as originating from a particular fashion house. Trade marks typically consist of names and/or logos, which may be registered or unregistered (preferably the former).

Different IP rights, each affording different benefits to the owner, can attach to the same product.

Ownership

The law enables the owner of an IP right to stop others from using it for commercial gain. IP rights are usually a fashion house's most important assets, so it's important to ensure the rights are owned by the right person or business entity.

Designers will own the IP in their creations, unless they are employees and the work was created in the course of employment. Works that are created jointly (outside of employment) will be jointly owned. Whatever the initial position IP rights can be transferred to a new owner (see our further comments below).

Designs: seasonal trend or timeless classic?

When deciding whether or not to invest in registered design protection, designers should give some thought to the longevity of their design. A registration affords the owner a longer term of protection. However, many fashion trends are transient and some designers do not see sufficient value in registration. If, for example, the design is for a novel style of shoe that will be manufactured in its thousands each season resulting in great value to the business then a registration may be warranted. On the other hand, if the design reflects a passing fad a registration may serve no lasting purpose and unregistered rights may provide sufficient protection for the life of the product.

The law allows designers who are unsure of the potential popularity of their designs to delay making a decision about registration for 12 months following the date the design is first revealed.

A registration protects against imitation without the need to prove copying. The unregistered rights only protect against copying.

Copying and being copied

Copycat designs are rife in the fashion industry. Cheaper versions of runway hits can arrive on the high street before the dust has settled on fashion week. Established fashion houses will have their own strategies for dealing with copycats if, in fact, they take any action at all. For a seasonal line, it may not be worth the expense.

However, designers that are new on the scene should know where they stand as regards their own rights and those of others.

On the one hand, designers should ensure that their work reflects their own creative output. Contrary to popular belief, there is no rule saying that if a certain number of changes are made to someone else's design a complaint of copying can be avoided. Misuse of a third party's IP can prove costly and be very damaging to the reputation of a young business.

On the other hand, designers also should take steps to protect their own work. Proving that copyright subsists in drawings, and/or that prototypes are protectable designs, and that such rights are owned by the designer or his/her business is crucial if they are to be enforced. Designers should keep records documenting the design process and different iterations of the design in question. Drawings should be marked with the owner name and date and the "©" sign.

Trade marks: what's in a name?

A value of over US$25bn, for the Louis Vuittons and Nikes of this world (Forbes: The World's Most Valuable Brands 2015). Aside from its potential monetary value, a distinctive and unique brand name not only identifies the origin of the goods, it also conveys a particular message about their quality and image, which is important to the fashion-conscious consumer (think Chanel, Zara, H&M).

The best way to protect a brand name is to obtain a trade mark registration for it in relation to the specific fashion items and accessories for which you use it or intend to use it, and in the territories where the goods will be sold. A registration gives the owner the right to prevent the marketing, sale and distribution of goods bearing the trade mark, or a similar mark where there is a risk consumers could be confused between them. Well-known trade marks are afforded even wider protection. But be careful not to tread on anyone else's toes: before investing in a brand name check that no one else is using the same name or something similar.

A trade mark registration can last indefinitely if it is being put to use, and can be a powerful tool in the world of fashion, particularly when it comes to commercialising IP rights.

Monetise that asset

IP may be bought, sold or licensed, just like any other form of property. An owner can choose to dispose of his/her IP right for a one-off fee, or he/she can opt to allow selected uses of the IP right under licence. The terms of the licence would stipulate how and where the right may be used, and for how long, and for what reward to the owner.

Commercialising IP rights can provide very lucrative revenue streams to the owner. Furthermore, licensing, franchise and distribution arrangements can provide the owner with access to markets far and wide. The stronger the brand, the greater the demand for it will be. But fashion houses should always take care to protect the quality their brand stands for, and having the responsibilities and obligations of their commercial partners set out in a written agreement is a must.