Recycled Products: How Fashion and Clothing Brands Can Promote Sustainability While Protecting Brand Value | Perkins Coie

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The fashion industry is the second in the world biggest polluter behind big oil, and is responsible for around 10% of global greenhouse gases emissions. There are a number of factors that contribute to this problem, ranging from ‘fast fashion’ – a model based on producing low-cost clothing intended to be worn only a few times – to the elimination of over-stocked luxury goods. .

Consumers today are increasingly aware of environmental issues. The younger generations in particular have a clear preference for environmentally friendly products: 74% of Millennials and 62% of Gen Z are willing to pay more for durable goods. Fortunately, consumer demand has caused a noticeable and welcome shift towards sustainability in the fashion and apparel industry.

Enter “upcycling”, which consists of reusing pre-existing clothes, bags, accessories and fabrics in a new product. Upcycling, which reduces waste and promotes creativity, was recently named the biggest fashion trend of 2021 by Vogue. Indeed, luxury brands like Balenciaga, Miu Miu, JW Anderson and others have embraced upcycling, especially in light of the pandemic, which has resulted in between $ 167 billion and $ 190 billion in excess inventory of spring / summer 2020 collections. But some of the more notable recycles involve small-scale designer products that incorporate well-known brands or copyrighted designs. These products are particularly lucrative and popular because they offer a luxury look at lower prices. This raises a difficult question for brands: how to promote eco-friendly upcycling while protecting brand value?

Unfortunately, the legal landscape in the United States has made this question even more difficult to answer, but, as noted below, brands competing in the circular market may be best placed to proactively promote sustainable upcycling while at the same time. preserving brand equity.

The legal landscape

To establish infringement, a trademark owner must establish that (1) he owns a valid senior mark and (2) the defendant’s junior use creates a likelihood of confusion for the consumer. Resellers often have a Second Element defense under the First Sale doctrine, which prevents brand owners from controlling the resale of genuine, unmodified products. The reason for this is that the trademark indicates that the product is genuine, so that the reseller does not make any false representations that could confuse the resale buyer. This enabled the resale of clothing and accessories to reach a market of $ 36 billion, which is expected to almost double in the next five years.

In particular, the first sale doctrine does not apply to materially altered products, which consumers might think have been authorized by the trademark owner. Upcycled products are inherently materially different from the originals, which has resulted in several high profile lawsuits against upcyclers. For example, Chanel recently sued Shiver + Duke for its reuse of authentic Chanel buttons in costume jewelry.[1] Likewise, Rolex sued Californienne for its pre-owned Rolex-branded personalized watches, but the matter was settled before a decision was taken.[2] Nike also recently worn suit against MSCHF for its “upcycling” of Nike sneakers to “Satan shoes”, which was also settled before the decision.

However, this is a fairly new area for the courts — and a recent ruling shows that these cases are often unclear. In the landmark decision of 2021 Hamilton International Ltd. vs. Vortic LLC, the United States District Court for the Southern District of New York held that the defendant’s conversion of the plaintiff’s antique HAMILTON pocket watches to wristwatches did not infringe the plaintiff’s rights because the advertisements and the Defendant’s website contained a “full disclosure” that the Defendant’s watches were created with HAMILTON Pocket Watch Parts. Further, the court ruled that the display of the HAMILTON mark on the defendant’s watch faces was admissible even though the defendant derives some benefit from the plaintiff’s mark.[3] This case is pending appeal to the United States Court of Appeals for the Second Circuit, but if upheld it could constitute a potential obstacle to enforcement by brand owners against recyclers.

Hamilton establishes that the line between authorized upcycling and counterfeiting is far from clear and requires careful and fact-specific investigation. Brands should rely on trusted intellectual property advisers to navigate this volatile legal space.

Sustainable practices to meet market demand

It’s unclear where the upcycling case law will land, but in the meantime, there is certainly consumer demand for upcycling products. Perhaps this is why brands have started to proactively partner or compete directly with smaller scale upcyclers.

For example, upcycling experts from RealReal and Los Angeles Atelier & Repairs recently teamed up to create “Souvenir 01”, Which transforms unsold or damaged pieces from Balenciaga, A-COLD-WALL *, Jacquemus, Dries Van Noten, Ulla Johnson, Stella McCartney, Zero + Maria Cornejo and Simone Rocha into unique garments. Likewise, Altuzarra Recreated collection and Loewe The surplus project recycle fabrics from past seasons to create new pieces. At the same time, luxury conglomerate LVMH recently launched an online marketplace for “animal corpses”(Or fabric or leather not used).

Take away food

There is consumer demand for environmentally friendly recycled products, and the law to tackle the diversion of recyclers in court is still being drafted. Nevertheless, fashion and clothing companies must be careful to protect their brands from abuse.

A brand confronted with an offending upcycler always has the tools to fight against embezzlement without involving the courts. For example, “informal enforcement” through letters of formal notice, business-to-business discussions and / or opt-out requests can go a long way in tackling infringements. Trademark owners should rely on trusted intellectual property lawyers to develop an enforcement plan based on the facts of the specific infringement at issue.

On the other hand, and as several of the examples above show, brands can guard against abuse by third parties by proactively producing their own recycled goods. Intellectual property advisers can also help brands establish recycling partnerships and product flows, including through licensing agreements, co-branding agreements, merchandising agreements, and other contractual arrangements. By participating in the circular economy, fashion and clothing brands can contribute to sustainability while properly controlling their downstream brands.

End Notes

[1] Chanel, Inc. v Shiver and Duke, LLC, 1: 21-cv-01277 (SDNY 2020).
[2] Rolex Watch USA, Inc. v. Reference Watch LLC d / b / a La Californienne, Courtney Ormond and Leszek Garwacki, 2: 19-cv-09796 (CD Cal. 2019).
[3] Hamilton International Ltd., v. Vortic LLC, 486 F. Supp. 3d 657, 668 (SDNY 2020) (citing Champion Spark Plug Co. vs. Sanders, 331 US 125, 130 (1947) (noting that it may be “quite permissible” for the “second-hand dealer to gain some advantage from the mark”)).

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