Copyright and Labor Fashion Cases Reach Supreme Court

Issues in copyright and labor kept lawyers busy in 2019; however, the Los Angeles case that made the most headlines was a streetwear brand that brought its case to the U.S. Supreme Court.

In June, the U.S. Supreme Court handed down a 6–3 decision, ruling that the brand FUCT (Friends U Can’t Trust) could register its name with the U.S. Patent and Trademark Office. The majority opinion for the court decided that the brand did not break a provision of the Trademark Act of 1946, also known as the Lanham Act. This provision bars registration of a trademark considered to be “immoral or scandalous.”

FUCT had been selling T-shirts and clothes bearing its name since 1990. The Los Angeles–headquartered brand had been hailed by various consumer magazines and was also seen on the backs of celebrities from Leonardo DiCaprio to Rihanna. In 2011, brand founder Erik Brunetti attempted to register the brand’s name at the U.S Patent and Trademark Office to help protect the brand against knock-offs. The office deemed the brand’s name too immoral and scandalous for trademark protection. Brunetti sued and took his case all the way to the U.S. Supreme Court.

Writing the opinion for the majority, Justice Elena Kagan said that the provision creates a bias based on viewpoint and therefore violates the First Amendment. “If the ‘immoral or scandalous’ bar similarly discriminates on the basis of viewpoint, it must also collide with our First Amendment doctrine,” Kagan wrote.

Other copyright cases loomed large during 2019. A prominent player on the California fashion legal scene is the Doniger/Burroughs law firm. It has sued brands and prominent retailers for copyright infringement. It experienced a setback in the case Gold Value International Textile v. Sanctuary Clothing LLC. It was decided June 4 at the United States Court of Appeals for the Ninth Circuit in Pasadena, Calif., that Doniger/Burroughs’ clients had to pay $121,423.01 in attorneys’ fees and litigation expenses to the defendants in the case. A motion for additional fees and expenses is on appeal.

The case was originally filed in 2016. Gold Value International Textile, which was doing business as Fiesta Fabric, alleged that Sanctuary Clothing LLC copied a fabric design that was sold at various retailers. The suit stumbled when Sanctuary’s lawyers saw mistakes in the Gold Value/Fiesta copyright registration and demanded that the court deem the copyright registration invalid and dismiss the action.

Representing Sanctuary was Jessica Rutherford, a partner in Ferdinand IP, which has offices in several cities, including Los Angeles and New York.

“The court made clear that there is a severe downside to bringing cases without valid registration,” she explained.

“This is the first time an appellate court held that a registration can be declared invalid under the PRO IP Act [Prioritizing Resources and Organization for Intellectual Property Act of 2008] without a finding of intent to defraud the copyright office, which was the old common-law standard,” Rutherford said. “It makes it easier for defendants to prove a registration invalid.”

The Ninth Circuit has declined to rehear the case, but in November Gold Value filed a petition with the U.S. Supreme Court to discuss the case. Defendants have been granted an extension until Feb. 3, 2020, to file a brief in opposition.

Other copyright cases continued to be important. In one case, SPI, an established brand that makes scrubs used by medical personnel, sued the 6-year-old brand Figs. The younger scrubs brand has been successful enough to mount a splashy billboard campaign around Los Angeles.

SPI sued Figs in Los Angeles Superior Court, alleging that Trina Spear, Figs’s co-founder and co–chief executive officer, stole trade secrets from SPI while she was working as an associate for the private equity firm The Blackstone Group, Inc. Blackstone was privy to SPI’s trade information because the equity group was considering handling an SPI transaction. After allegedly becoming privy to the confidential information, Spear left Blackstone and started Figs with Heather Hasson, who now serves as the company’s co-CEO. Hasson said that the lawsuit has no merit.

In other legal cases, after years of litigation, Byer California agreed to pay $325,000 in a civil fraud lawsuit that alleges the decades-old San Francisco clothing company for five years undervalued the cost of its merchandise coming through customs, thereby paying lower duties.

In 2019, California became the first U.S. state to pass a fur ban, making it illegal to sell or distribute a fur product.

In June, California Gov. Gavin Newsom signed a state budget that included $16.3 million that would be placed in the state’s underfunded Garment Restitution Fund. It was estimated that more than 400 people are on this fund’s waitlist for compensation for unpaid wages, said Marissa Nuncio, executive director of the Garment Worker Center, headquartered in downtown Los Angeles’ fashion district.

However, wage-theft investigations continue. The U.S. Department of Labor issued a nearly $54,000 fine against ESS Apparel Inc., a Los Angeles garment-sewing contractor for underpaying 21 employees, it was announced in early June.

The GWC’s Nuncio said that these investigations are crucial in a large industry. “They are sending a message that there are eyes watching,” she said.

“The industry is large, and there aren’t as many resources to do enforcement adequately. There are thousands of factories and tens of thousands of workers. It is hard to be everywhere. We have a long way to go still,” Nuncio said. “We’ve seen the labor agencies [U.S. and California State Labor Departments] working to improve and be more strategic with their investigations.”