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Issue 17 Out Now

How Fashion Powerhouses Deal With Competition

Legal battles are commonplace in the fashion industry and used to protect their image and flush out the competition. Although relevance and trending fashion styles change dramatically, brands insist on filing lawsuits. When luxury pieces sell for a lower price at stores accessible to the general public, these lawsuits are more likely to occur. Brands take legal action to conserve the exclusivity and artistry that goes into making luxury garments.

While lawsuits can be helpful when dealing with infringement. Lawsuits strategically halt opposing brands from using similar aesthetics. For example, in Adidas V. Thom Browne, the sportswear company filed a trademark case against Browne. Adidas is suing Browne for his use of parallel lines on jackets and socks. Ultimately Adidas lost the case, resulting in no penalties against Browne. While it may seem like a debate over the use of stripes, the real battle here is the trademark. The four stripes are the trademark of Adidas, but Adidas does not own stripes. This case showcases a large brand using legal action to restrict advertisement and sales for another brand.

To get a better idea of how brands compete through legal action, take a look at some of the most significant lawsuit cases in the Fashion Industry;

This image is included in a lawsuit filed by Lululemon against Peloton. (U.S. District Court)

Lululemon Athletica Canada, Inc. v. Peloton Interactive

In 2021 Lululemon and Peloton partnered in a campaign lasting till September. When the partnership ended, Peloton sought to release a private clothing line. Shortly after, in November, Lululemon issued a cease and desist order. Allegedly, items in their line infringed on their trade dress rights and design patents. Consequently, the court ruled in favor of Lululemon, forcing Peloton to phase out their designs. Similar to Adidas V. Thom Browne, this case also raises questions about using similar imagery. Athleisure typically uses similar silhouettes and articles of clothing, such as sports bras and leggings. This case highlights the inconsistencies of intellectual property in the sportswear industry.

[Photo from Complaint filed by Hermѐs International in Hermès International, et al. v. Mason Rothschild (1:22-cv-00384-JSR)

Hermès v. MetaBirkins

Following the rise of NFTs in 2021, artist Mason Rothschild created MetaBirkins, an NFT bag that sold for $450 per piece. Once Hermès saw the likeness to their signature Birkin bag and the increasing sale of the product. Hermès took legal action against Rothschild, arguing that the MetaBirkins, violated their trademark policies since there is no affiliation with the brand. Rothschild remarks that there is no violation due to the protection of NFT under First Amendment rights. The artists also rely on artistic expression to further dispute claims of infringing. In February 2023, the court ruled in favor of Hermès. The decision was influenced by NFT artwork not being protected by the first amendment upon further research. Correspondingly, Hermès was awarded $133,000 in damages.

This image is included in a lawsuit filed by Puma against Forever 21. (U.S. District Court)

Puma v. Forever 21

In 2017 Puma filed a lawsuit against Forever 21, claiming the brand infringed upon the Fenty Shoe design patent, exchanged dress, copyright, and unfair competition. Since 2014 Puma has worked with Rihana to create Fenty Shoes featuring Creeper Sneakers, Fur Slides, and Bow Slides. Forever 21 released a series of shoes that looked identical to the Fenty Shoe line, infringing on their patent plan. Forever 21 responded to the lawsuit by attempting to dismiss all claims. Eventually, they were granted dismissal on all claims but design patent infringement. Although Forever 21 did copy the Fenty design and image. Forever 21’s argument that the brand falsely advertised and filed Rihana as a designer in their lawsuit. Along with claiming their line takes inspiration from the 1940s. This argument led to the courts siding with Forever 21, resulting in both parties ceasing legal action and agreeing to settle.

Hermès v. LVMH

Brands with similar identities, such as Hermès and Moët Hennessy Louis Vuitton (LVMH), tend to have rigid relationships. Starting in 2010, LVMH announced they owned 14.2 percent of Hermès, going on to assure that they would not accumulate more stake than they already have. From 2011–2012 LVMH would secretly build ownership in Hermès through minority shareholders such as family members. This tactic Raised their share to 22.6 percent, along with 16 percent in voting rights. Leading to Hermès filing a complaint against LVMH, the brand responded by issuing a complaint against Hermès for blackmail, slander, and unfair competition. Accordingly, in 2013 LVMH was fined $13.2 million for not disclosing information about their ownership in Hermès. LVMH continued to increase its stake from 22.6 percent to 23.2 percent even after its loss. Eventually, in 2014, LVMH divested its holdings after a series of lawsuits between the two french brands.

Chanel, Inc. v. The RealReal, Inc.

One of the best ways to shop sustainably is to buy from resalers. Those who shop for used luxury utilize The RealReal to buy and sell designer. The issue with reselling luxury items is their verification. Without verification, the reselling business would face false advertising and copyright infringement charges. In 2018 Chanel took this opportunity to sue The RealReal for trademark infringement, falsely advertising the sale of allegedly counterfeit Chanel handbags, and unfair competition. Later in 2020, The RealReal would procure the dismissal of Channels claims. In defense, the resell store would make a counterclaim stating, “Chanel, faced with a new threat to the core of its business model, which is premised on a limited supply and few access points for consumers, has waged an aggressive campaign of exclusionary and anticompetitive conduct — including repeated interference with The RealReal’s business relationships — to monopolize the market” (The RealReal). They would further argue that upon seeing internal documents, Chanel viewed the secondhand market as competition. Information that Chanel holds revenue in another luxury reselling business, Farfetch, while prosecuting The RealReal also came to light. Chanel denied a lawsuit against Farfetch, although The RealReal uses identical practices. This case is a prime example of how large companies strategize to eliminate rising competitors. Both companies have since put a hold on legal action and will work to reach an agreement.

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