Chances are you’re probably not concerned with any thorny legal issues when you see an eBay or The Real Real ad featuring a resale designer handbag — you most likely want to know what’s the price. Now that we’ve been conditioned to get extra value and save the environment by reselling, recycling and renting (representing the circular economy) rather than producing, using and throwing away (the wasteful straight line) it’s ironic to think that perhaps those who reap the benefits are the lawyers. On Thursday evening I attended a panel discussion dealing with this subject and more entitled “Re: Fashion, Legal Issues in the Circular Economy” at The Fashion Law Institute at Fordham University School of Law.
Panelists included Julie Golden, ADAY; Sonia Valdez, Legal Counsel, eBay; Allyson Tenney, Director, Division of Engineering (Textile Flammability and Electrical), U.S. Consumer Product Safety Commission; Gail Wheeler, Vice President – Legal Counsel, Hermes; Jana Checa Chong, Intellectual Property Counsel, Louis Vuitton Americas; and John Maltbie, Director of Intellectual Property, Civil Enforcement at Louis Vuitton Americas. Jeff Trexler, Attorney and Associate Direction, Fashion Law Institute was the moderator.
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Since just about everyone spoke strictly OTR (off the record) I will not be attributing anything to any particular individual — instead here’s a general overview of the legal trends in the world of secondary market sales and advertising. Golden of ADAY was the lone exception, there to represent her new apparel company which takes activewear fabrics and makes them into “regular” clothing. “These items are easy to care for yet are the opposite of fast fashion — they are made to stay in your wardrobe for a long time,” she said. ADAY’s “Waste Nothing Jacket” is made from recycled plastic water bottles which are ground down and made into yarn. The company uses a “closed-loop system” for the dying process which means they are recycling the same water minimizing usage. A “Reprieve” program in which customers can send back their old pieces and receive new ones — the old ones will be broken down into reusable materials is in the works. Golden wore a basic white button-down shirt and black pants from ADAY with a cape from Rent the Runway — she takes advantage of their unlimited subscriber program, as does eBay’s Sonia Valdez who wore a black dress from RTR.
I found it fascinating to hear that eBay has 160 million active users and one billion live listings representing mostly small businesses and local economies. There is a long-standing relationship of anti-counterfeiting with luxury designer brands like Louis Vuitton and Hermes. Regarding authentication, seller ratings come into play concerning trust issues which is why user feedback is so vital to their business model. Of course, it’s still got to be an uneasy alliance as luxury brands eye luxury goods resellers with a certain degree of contempt and hostility — these sites are considered the competition.
The point was made that since luxury brands are all about craftsmanship, they are the only ones genuinely able to authenticate their own product. Not even a former employee should be considered to be able to do so. In the case of Chanel vs. What Goes Around Comes Around, the court upheld the claim of trademark infringement stating (among other things) that WGACA was creating confusion with the customer base in falsely leading customers to believe that Chanel had partnered with them. Similarly, Dillard’s was caught creating false stories or advertising around their “Louis Vuitton Department,” using fake LV signage, claiming that they sold exclusive limited editions that had only been used on the runway as well as stating that Vuitton would repair or authenticate the bags.
Moderator Trexler suggested that First Sale Doctrine which states that the right of a producer to control the distribution of a product bearing its trademark does not extend beyond the first sale of the product, as well as Fair Use Doctrine are “always there” and could apply here. Exceptions to First Sale Doctrine can include “material alterations,” for example, if a serial number is etched off of a resold item. High-end counterfeits are sometimes sold to customers unknowingly — in the case of Glamora by Sadia consumers were paying thousands of dollars for counterfeit bags which supposedly came from the sellers own collection.
In my opening, I referred to some of the issues when sites such as Rebagg feature LV product or a Celine luggage bag in their ads — both protected trademarks– something also done by The Real Real. Another example of sketchy advertising showed a Vuitton wallet supposedly marked down by about $150. However, the list price was inflated to make one think they were getting a better deal. The actual savings for the probably fake wallet over the one directly from Louis Vuitton was only $10!
Things can really get sticky when items are modified — whether upcycled, embellished or reconstructed. Louis Vuitton items, in particular, are subject to becoming “western wear” — they’ve been bedazzled, bejeweled and even had Gucci stripes painted on them. A hilarious (and hideous) LV Speedy bag was displayed that someone had decided to deck out in long fringe! A brand known for producing these types of items called Medium Rare was found to have surfaced on Beyonce and Kylie Jenner’s Instagrams. Reconstructed items raise other legal issues mainly if they are made in the same category (for instance iPad cases or bracelets) as authentic items, adding to that old customer confusion dilemma. It also begs the question of whether the material used is genuine or counterfeit.
A suggestion was made to employ blockchain technology to authenticate luxury goods– much the way that its used on art –rather than some of the third party authenticators new to the market such as Luxuca or Entropy. It was stated that it’s virtually impossible to authenticate 100% based on photographs alone (even microscopic high-resolution photos are not sufficient). Here’s a no-brainer that Gucci may have picked up on: If Banana Republic and Club Monaco can sell vintage Chanel and Hermes products why are these luxury brands not selling their own vintage goods?
– Laurel Marcus
