H&M Sues Forever 21? Beach please!

In an interesting twist, arguably the two most common fashion design piracy defendants are pitted against each other. H & M Hennes & Mauritz AB (“H&M”) has issued a complaint against Forever 21, Inc., in the US District Court Southern District of New York. Below is a comparative image of the tote bags at issue:

H&M

(H & M Hennes & Mauritz AB)                    (Forever 21, Inc.)

There is no doubt about it – there is a stark similarity between the designs.

H&M, which professes to be the second largest global clothing retailer, first sold its BEACH PLEASE tote bag in the US in April 2014.   As of July 2015, it sold thousands of BEACH PLEASE tote bags globally. H&M formalized its copyright to the design by securing a copyright registration, which was granted on June 12, 2015. H&M alleges that Forever 21 subsequently commissioned a Chinese-based manufacturer to produce infringing designs, which were sold globally. H&M has reason to believe that Forever 21 has profited substantially from sales of the BEACH PLEASE tote bag.

H&M is seeking the following relief:

  • Forever 21 be enjoined from:
    • creating, importing, purchasing, distributing, displaying, selling or offering to sell tote bags that infringe H&M’s BEACH PLEASE tote bag
    • using H&M’s intellectual property rights regarding the tote bags;
    • inducing others to commit infringing acts.
  • An accounting of Forever 21’s profits derived from the advertising, promoting, marketing, purchasing, distributing, selling or offering of the infringing products
  • Damages
  • Costs of litigation

H&M bases its complaint on 5 grounds:

  • H&M’s graphic is subject to copyright protection. Forever 21’s graphic is substantially similar, if not virtually identical, to that of H&M, thereby constituting copyright infringement.
  • The graphic is non-functional, inherently distinctive and has acquired secondary meaning. As such H&M asserts that the BEACH PLEASE design functions as trade dress; Forever 21’s unauthorized use of the BEACH PLEASE logo constitutes trade dress infringement.
  • Forever 21’s unauthorized use also constitutes a false designation of origin.
  • Moreover, Forever 21’s unauthorized use constitutes an attempt to pass off its products, constituting statutory and common law unfair competition against H&M.

What is interesting to the fashion law community is that H&M and Forever 21 are notorious defendants in the fashion industry. In fact, H&M takes note of this trend with respect to Forever 21 stating in the Complaint: “[Forever 21] has also been accused of copyright violations in the past”. So to a large extent, we have the kettle calling the pot black. However, it is interesting that they are now warring amongst themselves. Perhaps it is karma; perhaps it is just business. Nonetheless, in this instance the magnifying glass is focused on Forever 21. In the fashion law community, Forever 21’s disregard for intellectual property rights and propensity to resolve matters outside of litigation has some wondering whether this is all a part of its business strategy. It may simply be cheaper to pay an undisclosed settlement sum to the designer rather than sourcing new designs or paying licensing royalties. It would not be shocking if this case settled, but it sure would be interesting if it did not!

SIGNIFICANT Changes to Canada’s Trade-marks Regime

Canada’s trade-mark regime was officially given a maaaaaajor dose of botox on June 19, when proposed changes to trade-marks legislation was given royal assent. Whereas some revisions were expected, others have brand owners and their trusty trade-mark lawyers up in arms.

First, let’s go over the expected changes. Canada is now a signatory to a series of international trade-mark treaties, Madrid, Nice and Singapore. This brings Canada into alignment with the global system and, frankly, makes sense if Canada is going to continue to be a player in the global marketplace.

The good news? What qualifies as a trade-mark is now expanded. In addition, the registration process will be streamlined.

The unfortunate news? Trade-mark applicants will now be required to adhere to a classification system with respect to their wares and services – this may increase costs as there will likely be a “per class” government fee.

The bad news? Canada is no longer going to be a use-based jurisdiction. Historically, any brand owner is required to use the trade-mark in Canada in order to obtain trade-mark rights. This has been foundational to Canadian brand protection. The impending revisions to the legislation do away with this concept. Thus, there is no longer a use requirement in order to obtain a trade-mark registration. This is less than ideal. This allows “brand pirates” to secure registrations in Canada, which can then be used to block legitimate brand owners from launching their brands in Canada. If you’ve ever had dealings with the Chinese trade-mark regime (and I’ve had many clients do so), it is a comparable regime. Bottom line, if you want to secure your trade-mark rights in Canada, you should do so quick before the “brand speculators” do so.

As with any type of new legislation, it takes time for the changes to come into practice, which is beneficial for the brand owner. I highly recommend that brand owners take advantage of this time lag to file their trade-mark applications now and secure their rights ahead of the onslaught of “brand speculators/pirates”.

If you want more information about this, feel free to reach out.