Lululemon accuses Calvin Klein of infringing on design patents for yoga wear

Lululemon is accusing Calvin Klein and manufacturer G-III Apparel of infringing on design patents for the yoga and running-gear maker's "Astro" pants. Ashby Jones reports on the News Hub, reports The Wall Street Journal

Yoga-apparel maker Lululemon Athletica Inc. is accusing fashion house Calvin Klein Inc. of infringing on design patents for its popular $98 "Astro Pant" in a legal battle that could provide new ammunition for the industry to wield against copycats while bolstering Lululemon's dominant position in high-end yoga apparel.


Lululemon, in a complaint filed in federal court in Delaware last month, claims that Calvin Klein is selling pants that "have infringed and are still infringing" on three patents, including one for a distinctive waistband featuring overlapping panels of fabric. The company was awarded one of the patents last year, and the two others in June.


Lululemon accuses Calvin Klein of infringing on design patents for its yoga pants.

The yoga wear

Court Documents

The nine-page complaint, which also names as a defendant G-III Apparel Group Ltd., a Calvin Klein supplier, offers few other details. But intellectual-property law experts say the suit represents a novel approach at a time when there are few legal protections for designs on apparel.

The fashion industry has historically sought and been granted protection for limited aspects of their products, like trademarks on logos and brand names, which are recognised as their property. For instance, in a trademark dispute between French designers Christian Louboutin SA and Yves Saint Laurent, a unit of PPR SA, a federal court of appeals in New York last week ruled that Louboutin largely owns the exclusive right to use the color red to coat the bottoms of its high-heeled shoes.

But designers haven't had much success in protecting designs on fundamental articles of clothing, ones that might cover, say, the shape of a blouse or the cut of a collar on a shirt.

Generally speaking, copyright law protects forms of art, but not items that are predominantly functional, like shirts and pants. Recent congressional bills that would grant greater copyright protection to clothing designs have failed to advance.

Lululemon is trying to chart a new path by filing and litigating patents secured on the basis of its designs.

Such patents, called design patents, have "for too long been grossly under appreciated" by the fashion industry, said Perry Saidman, a design-law expert and lawyer in Silver Spring, Md.

Fashion designers have only sporadically gone to court over such patents. But slowly, design patents are coming into vogue across a widening number of industries. Apple Inc. made them a key part of its case in its recent legal victory over rival Samsung Electronics Co., in which a jury found that Samsung had copied Apple's designs.

"The time is right for this kind of effort," said Susan Scafidi, the founder of the Fashion Law Institute at Fordham University in New York and an advocate for greater protections for the industry. "These days, it's easier than ever to copy and market even the most innovative designs."

Lululemon's lawsuit also comes at a time when it is easier to get a design patent approved.

It used to take a year or more to secure one from the U.S. Patent and Trademark Office. "By the time a patent issued, that season's designs would be out the door, and new ones would be coming in," said Ms. Scafidi. The PTO generally has become more efficient at reviewing design-patent applications, often taking just months from application to grant. A 2008 ruling from the Federal Circuit Court of Appeals, a specialised court largely focused on patents, made it easier for a design-patent holder to prove infringement.

Partly as a result, The number of design-patent applications awarded has increased significantly in recent years. Last year, the PTO issued 21,356 design patents, 65% more than the 12,951 it issued in 2005.

Since its founding 14 years ago, Lululemon has grown steadily alongside the yoga boom, selling pricey gear designed to stretch and support during downward dog and warrior pose. The company, which went public in 2007, took in $1 billion in revenue last year and has said it expects to top that in its current fiscal year with revenue in the range of $1.3 billion to $1.325 billion. In the fiscal second quarter that ended in July, the company booked revenue of $283 million, which represented a 33% increase over the same period in 2011.

A spokeswoman for Lululemon declined to comment on ongoing litigation. Calls to PVH Corp., which owns the Calvin Klein brand, weren't returned. Calls to G-III Apparel weren't returned.

Lawyers for Calvin Klein haven't yet filed any paperwork in the case, but legal experts say they will likely use a host of potentially damaging defences, including that Lululemon's patents should never have been granted in the first place.

Calvin Klein Pop Up Shop Toky

Indeed, some argue that granting such patents may cause more harm, than help, to the industry. "This whole notion that you'd grant a patent to anyone who adds a seam or two to a waistband is quite problematic," said Ilse Metchek, the president of the California Fashion Association, a trade group that represents some manufacturers, domestic and international garment suppliers, and others close to the fashion industry. "It's only going to create more litigation, and that's hardly something the fashion industry needs more of."

Others doubt whether a Lululemon will provide much of a boost to the industry, partly because design patents provide protection only against exact copies or near copies. "This is not going to be a panacea," said Kal Raustiala, a law professor at the University of California, Los Angeles, and the co-author of "The Knockoff Economy," a recent book on intellectual property. "Design patents are a limited tool."

But any outcome that recognises Lululemon's patents could trigger a broader move by the fashion industry to bring its ideas to the PTO, and perhaps give the industry the control over its designs it has long wanted, other legal experts say.

"Design patents used to be in the backwaters of the patent system," said Christopher Carani, a design-law expert and lawyer in Chicago. "That's just not the case anymore."

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Content thank you; Ashby Jones

Prada CEO Says Fake Goods Aren’t Totally Bad

Patrizio Bertelli spoke on (24 May 2012) in Hong Kong with Bloomberg Television's Robyn Meredith on Expansion Plan, Pricing and his opinion on counterfeit fashion. 

Along with going into details about Adding 260 Shops in 3 Years on Demand From BRICs he remains confident about the Italian fashion house's growth prospects despite fears of a slowdown in demand for luxury goods, as the company posted a 59% rise in first-half net profit.

"We are aware of the negative market trend but, counting on the strength of our brands and our ability to pursue our objectives, we look forward with confidence to the near future without altering our strategy based on achieving our long-term growth targets," Mr. Bertelli said.

“We aim to speed up expansion by opening 100 stores this year, 80 stores each in 2013 and 2014 globally,” said Chief Executive Officer Patrizio Bertelli whose company opened 75 stores last year.

Demand for Prada leather goods and other items is rising even as China’s economic growth slows and Europe’s debt crisis weighs on consumer spending, Bertelli said. The company is benefiting from increasingly wealthy Chinese tourists who are fueling growth in Europe as it also targets markets in the Middle East, he said.

“We are expanding in Morocco, Istanbul, Beirut, Dubai and Qatar,” Bertelli said in an interview with Bloomberg Television conducted in Italian via a translator. “Brazil is also a big market we’re looking at.”

The expansion would increase the number of Prada outlets to 674 by adding to the 388 directly operated stores and 26 franchises it had as of January.

The so-called BRICs take their name from the emerging economies of Brazil, Russia, India and China.

The 66-year-old chief executive also said the company plans to ramp up the presence of the Miu Miu designer wife Miuccia's brand, as it is “under-penetrated” in many countries.

Prada net profit totalled €286.4 million ($371.8 million) for the six months ended June 30, compared with €179.5 million a year earlier. Strong sales in the Asian-Pacific region contributed to the gain.

SHRUGGING OFF FEARS OF A LUXURY SLOWDOWN

Mr. Bertelli minimized concerns about the slowdown of the Chinese economy as a factor affecting Prada's revenues. "We all need to be less hysterical" about China's slowdown, he said speaking to analysts, because the limited decrease in growth recorded so far isn't so significant that it will affect the Italian fashion house's sales. "We're in a global world and we should not focus only on China," Mr. Bertelli said.

About the slowdown of the Chinese economy as a factor affecting Prada's revenues. "We all need to be less hysterical" about China's slowdown, he said speaking to analysts, because the limited decrease in growth recorded so far isn't so significant that it will affect the Italian fashion house's sales. "We're in a global world and we should not focus only on China," Mr. Bertelli said.

Prada's chief executive added that consumers in China are evolving and "need to be stimulated to spend."

In the past few months, the market has started preparing for a slowdown in growth in the luxury industry amid weakening demand in the sector's important Chinese market and an increasingly difficult economic situation in Europe.

But business in the Asian-Pacific region remained strong for Prada in the first half, with revenue increasing 45% compared with a year earlier. In Europe, revenue climbed 37%, supported by purchases by tourists from emerging markets.

Particularly, Prada recorded an increasing presence in Europe of tourists from Russia, India and Brazil as well as from Asia, Mr. Bertelli said.

Patrizio Bertelli 

Prada joins other luxury brands minimising concerns about a Chinese slowdown. Last month France's Hermès International RMS.FR -0.72%SCA said that it would raise its growth target after sales of its Birkin bags, silk scarves and other products in China climbed 25% in the company's second quarter from a year earlier.

Prada's overall first-half revenue increased 37% to €1.55 billion.

In a conference call with analysts, Mr. Bertelli also said that he expects good double-digit growth" at the end of the year compared with the previous year's result, although "we need to be cautious" considering the current economic climate. He said a price increase to cover fluctuations in exchange rates could be considered, but no other price intervention is planned.

SHRUGGING OFF FEARS OF COUNTERFEIT GOODS

While EBay Inc. (EBAY) was fined by France’s high appeals court for sales of counterfeit LVMH Moet Hennessy Louis Vuitton SA (MC) goods on its website, Bertelli shrugged off concerns that fake goods could hurt the company’s sales in markets such as China.

“Fake goods aren’t totally bad, at least it created jobs at some counterfeit factories,” said Bertelli. “We don’t want to be a brand that nobody wants to copy.”

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To contact the reporter on this story: Vinicy Chan in Hong Kong

To contact the editor responsible for this story: Frank Longid 

Additional Content thanks also The Wall Street Journal 

Chanel Ordered To Pay Out in Counterfeit Case!

Chanel, London

The luxury fashion house of CHANEL has been ordered Friday to pay £258,000 (€2000,000) knitwear company World Tricot as part of a long-running counterfeiting suit between the two brands.

French luxury house Chanel "counterfeit" a former subcontractor Lure, World Tricot, who continued seven years seven years to combat principle.

What makes this case interesting is World Tricot, one of Chanel's former suppliers, accused the French fashion house of copying one of its designs back in 2009 - a white crochet pattern. Putting the luxury fashion house the other side of the counterfeit fence, having been the subject of mass counterfeit targets.

The Court of Appeal found that the pattern of the jacket is "a slavish copy of the sample belonging to the World Tricot society" and that it was "founded to support the embroidery issue is a collective work created initiative within the company.

Workshops World Tricot Lure Company. Jacques Balthazard Archives

The founder of World Tricot, Carmen Colle, claimed since she recognized in the window of a Chanel boutique in Tokyo crochet pattern she had proposed to brand in 2004 but it was finally rejected, despite their initial enthusiasm.

"It was not a fight against Chanel but for the right of creative artisans," responded Mrs. Paste that could not hold back his tears discovering decision.

His lawyer Pascal Créhange welcomed "a judgment that will set a precedent": "It is a way of recognizing the creativity of all those who, in the shadow of their workshop, have imagination."


"It does justice to the small hands that have more expertise," added his colleague Ms. Hortense Bessière.

Chanel said in a statement that it had not yet decided on a possible appeal. The statement goes on to say, it always claimed to have "guided" World Tricot in creating the pattern.

World Tricot clothing, accusing Chanel cotnrefaçon, November 6, 2009 in Paris © AFP / File / Patrick Kovarik

"We have never faced a situation like this before, knowing that we work with around 400 suppliers. This very specific case does not reflect the quality of our relationships with our suppliers, "said Bruno Pavlovsky, president of Chanel fashion business.

Combat Ms. Colle, who had managed to make a small business work reintegration of women in difficulty for the big names in haute couture, met many supporters in France.

The former host of neighbourhood could not help thinking Friday to "mess" of the seven years of litigation, "all doors closed" since she was attacked Chanel, she says. World Tricot is in liquidation.

At trial, the court sentenced him to pay Chanel World Tricot 400,000 euros compensation for breach of contract that bound them. The Court of Appeal rejected this time the subcontractor on this point.

Alure (Haute-Saône) where the adventure started World Tricot in the late 1980s, with the financial assistance of Abbe Pierre and Secours Catholique, Ms. Colle stimulus gradually a new workshop will present his first collection this week weekend in the small town of Franche-Comté.

In April 2010, a "charter of good practices" was signed between luxury homes and converters, to "rebuild relations" between contractors and subcontractors.

Reaction Chanel puts this case "very specific"

The fashion house Chanel relativized Friday appealed his conviction for infringement of a small subcontractor, World Tricot, after seven years of litigation, emphasising the new and "very specific" in this case.

"We have never faced a situation like this before, knowing that we work with around 400 suppliers. This very specific case does not reflect the quality of our relationships with our suppliers, "said Bruno Pavlovsky, head of the branch mode Chanel.

Chanel said they would decide "soon" whether or not it appeals to the Supreme Court.

"This story is bad. This is a misunderstanding concerning a sample hook and the first court had recognised our role in creation ", told AFP service communication Chanel.

"Chanel is working nearly 400 suppliers and most over 15 years, some for over 30 years," he added, noting that "the case with World Tricot is very specific, very technical and completely new ".

Chanel was pleased however to have prevailed on the issue of trade relations with Knitting World: The Paris Court of Appeal did not consider that Chanel had broken so offending trade links with World Tricot, contrary to the judgment of first instance. "It is important for our image with suppliers," said Chanel.

The house will still have to pay 200,000 euros in damages to World Tricot infringement.

In December 2011, the Paris Commercial Court had dismissed World Tricot on charges of forgery and was ordered to pay 200,000 euros in compensation to Chanel for "clear defamation" brand. But he was also sentenced to pay Chanel World Tricot 400,000 euros compensation for breach of contract that bound them.

Have we heard the last of this we think probably not. Have your say.

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Additional content thanks Lalsace France