Industry Voices: Strategies for Avoiding Copyright Infringement

Legal

As of Thursday, February 13, 2014

The prolonged contraction/softness of the apparel industry has forced apparel companies to take drastic actions to try to remain profitable. One unfortunate byproduct is the rise of copyright-infringement lawsuits, many of which appear to have been filed in an effort by a few companies to find alternate income streams. If your company is a potential target of one of these, what can your company do to reduce the likelihood that your company would be sued for copyright infringement and, if sued, that it would be found guilty of infringement? To answer that, it is important to understand the basics of copyright infringement.

What is copyright infringement, and how is it proved?

At its most basic level, copyright infringement is the determination that the allegedly infringing item was copied from the source item. However, since there is rarely direct proof of copying, infringement is determined to have occurred if: (1) the allegedly infringing item is “substantially similar” to the source item; and (2) the alleged copier had access to the copyrighted design. Whether or not two designs are “substantially similar” is, of course, a highly subjective determination based upon visual comparison of the similarities—and differences—between the two items at issue. Because the similarity only needs to be “substantial,” it is clear that copyright infringement is found where the defendant exactly copied the plaintiff’s work or started with the plaintiff’s work and made changes to that work (what is called a “derivative work”).

Access, however, is a factual determination that only asks whether the alleged infringer could have had access to the allegedly infringed design. If both of these elements are met, the copyright holder would have made its case for copyright infringement.

Once the plaintiff has made its case, it would be up to the defendant to present evidence that it did not copy the copyrighted design—for without copying, there is no infringement. Put another way, independent creation, no matter how similar the defendant’s work may be to the plaintiff’s work, is a defense to copyright infringement.

It is important to note that the alleged infringer’s intent or knowledge is not an element of the determination of copyright infringement. In fact, if copyright is to provide any protection to the copyright holder, the alleged infringer’s intent or knowledge cannot be an element—for, if it were, then all an alleged infringer would have to do to avoid liability would be simply to say, “I didn’t know.” Further evidence that lack of intent or knowledge does not insulate a party from a claim of copyright infringement is the legal right of the copyright holder to seek and obtain damages and other remedies (for example, an injunction) not only from the alleged infringer, but if the alleged infringer was a manufacturer, for example, then the copyright holder can also obtain remedies from any retailer to whom the alleged infringer sold such goods, even though the retailer’s only “offense” was buying and selling the allegedly infringing goods.

Strategies to avoid a claim of copyright infringement

The plaintiff’s case for copyright infringement can be—and typically is—built upon circumstantial evidence. Since independent creation is a defense to a claim of copyright infringement, if the defendant can prove that it did not copy the plaintiff’s work, then the defendant should prevail. From this flows some basic strategies that, if employed, should reduce not only the chance that your company would be the target of one of these lawsuits, but if it is named as a defendant in one of these suits, then it should also reduce the chance that your company would be found guilty of copyright infringement.

  1. Hire your own designers. By hiring your own designers you can retain greater control over the designs that your company brings to market. To do so you need to educate your designers on what is and is not actionable copying. Most importantly, they should be required to maintain a design log identifying the inspirations behind their designs and then tracking the evolutions of their designs. Because independent creation is a defense to copyright infringement, no matter the similarity between the two designs at issue, these design logs often provide the defendant with the strongest defense to an allegation of copyright infringement.
  2. Don’t ask your designers/suppliers to “make me something just like this.” One of the most common critiques of the apparel industry is that it is a “knock-off” industry. I disagree. It is certainly a trend-driven industry, but following a trend is not the same thing as making a knock-off. Semantically, a “knock-off” is a copy or derivation of an identifiable design, which, by that very definition, constitutes copyright infringement. Creating a design by following the same trend or finding similar inspirations for the design is not copyright infringement, as it is the designer’s own expression of the common idea. If you ask your designer (or supplier) to “make me something just like this,” then what you are likely to get in return is a derivative work and, therefore, infringing. And don’t believe that there is any rule about the number or percentage of changes that insulates you from copyright infringement. That is simply not true.
  3. If you do buy a design (or, in the case of a retailer, the finished product) from a third party, treat the transaction with respect. When a manufacturer buys a design, oftentimes what they are acquiring is the right to use the design but not the copyright in the design. That means that the designer can sell the same design to a competitor and you have no right to try to stop others from using the same design. Also, it is important to understand where the design came from and, if at all possible, to get that information in writing. This is important because by doing your “due diligence” you put your company in the position of being an innocent infringer. As stated above, lack of knowledge or intent does not negate a claim of copyright infringement; innocent infringement is still infringement. However, if the defendant is found to have an innocent intent, that can reduce the damages assessed for the infringement. Conversely, if the defendant is found to have committed willful infringement, then damages can be enhanced and the defendant can lose insurance coverage for the claim.

Douglas Lipstone is a partner with Los Angeles–based Weinberg Gonser LLP. He can be reached at (424) 239-2862 or doug@weinberg-gonser.com.