The Crime Behind Design
Forgery is still a major problem in the fashion industry, and most consumers cannot determine real versus counterfeit merchandise. Fashion merchandise incorporates various designs through prints on fabric, pattern of stitching, or even the structure of the work itself. Separating those designs from the article is often at issue in counterfeit sales. In an effort to protect their work, companies and designers began to copyright it to deter other companies and designers from copying it, manufacturing those items, and making money from the use of the copied work. Despite these efforts, production and demand of counterfeit products continue to rise. However, if the original product has a copyright, the owner of the copyright can sue for copyright infringement. “Copyright infringement is the use of works protected by copyright law without permission for usage where such permission is required, thereby infringing certain exclusive rights granted to the copyright holder, such as the right to reproduce, distribute, display or perform the protected work, or make derivative works.”
Copyright infringement cases are often civil lawsuits. However, they may rise to the level of criminal copyright infringement cases. Criminal penalties have been imposed as a deterrent to nonpermissive use of others’ designs; however, in the fashion industry there has been a lack of criminal charges for copyright infringement. Since, criminal copyright charges have graver consequences because they are federal charges, if utilized in fashion cases, they could serve as a greater deterrent to prevent copyright infringement.
Under 17 U.S.C. § 506(A) and 18 U.S.C. § 2319, fraudulent manufacturers and sellers may face fines in addition to imprisonment for criminal copyright infringement. A felony charge may have the following sentences: (1) A person convicted for the first time may be imprisoned for up to five years and/or fined up to $250,000; (2) Persons with prior criminal copyright infringement convictions may be imprisoned for up to ten years and/or $250,000. A felony penalty will result from a violation “of a victim’s rights of reproduction or distribution in a quantity stated,” which refers to the amount of things made or ordered. Under 17 U.S.C. § 506(A), criminal copyright infringement must be for the purpose of commercial advantage or financial gain. On the other hand, a misdemeanor charge carries a sentence of up to one year and/or a $100,000 fine. A defendant will face a misdemeanor charge if the copyright infringement “does not meet the numerical and monetary thresholds, or if the defendant is involved in the infringement of the rights bestowed upon the copyright holder, including the right to prepare derivative works, or the right to publicly perform a copyrighted work.”
Many companies, including Jordan Outdoor Enterprises and Yeezy Apparel, Levis Strauss and Evisu International, Adidas and Forever 21, Rothy and Giesswein, Deckers and Gap have all been a party in civil suit surrounding copyright infringement. However, Louis Vuitton (“LV”) has pushed further and sought damages as well as criminal charges for infringement claims. As a result, Eisenhauer Road Flea Market had to pay LV $3.6 million in damages along with a list of other actions in the court order, which included ordering the Flea Market to post signs informing sellers that selling LV goods in the flea market was a criminal offense. The Court held Eisenhauer Road Flea Market responsible for contributory infringement because the flea market knowingly allowed counterfeit LV goods to be sold.
LV has also successfully sued Akanoc Solutions for contributory negligence, for providing web-hosting for websites that sold counterfeit LV goods. Ultimately, neither company was convicted for criminal infringement, however the order included a list of disciplinary actions and injunctions moving forward.
Outside of the fashion industry, companies have succeeded in criminal copyright infringement cases. For example, in the music industry, Raul Zaragoza-Vaquero was convicted of criminal copyright infringement for selling illicit CDs of popular music artists over a five-year period. He was sentenced to 33 months in prison and ordered to pay $36,000 in restitution. Perhaps similar repercussions in the fashion industry would better deter fraudulent manufacturers.
In most cases, a civil suit precedes a criminal infringement case. However, in the fashion industry, there has been a lack of criminal infringement cases despite the prevalence of civil suits. A recent case decided by the United States Supreme Court has paved the way for stricter enforcement in the fashion industry by creating a clear test to determine the separability of a design from a useful article in reference to copyright infringement. Varsity Brands v. Star Athletica, decided in March of 2017, provided a clear two-part test to determine whether a design is not only copyrightable, but separable as well. In this matter, separable is the ability to remove the design from what you originally applied it to, be able to apply that same design to any other type of object, or even allow the design to stand alone as a painting would. Varsity, Plaintiff, is a large company that designs, makes, and sells cheerleading apparel uniforms, holding over 200 copyrights for their designs. Star Athletica, Defendant, is a small and fairly new company that markets and sells cheerleading uniforms.
In 2010, Varsity filed suit against Star for copyright infringement in reference to the sale of cheerleading uniforms that resembled five of Varsity’s copyright designs. Star argued that Varsity’s copyrights were not valid because they were for useful articles and cannot be separated from the uniform. Varsity on the other hand, argued that the copyrights were valid as the designs were separable and had no function. The Supreme Court affirmed the Court of Appeals decision, holding the following:
A feature incorporated into the design of a useful article is eligible for copyright protection only if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article, and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated. That test is satisfied here.
The Court also noted that Varsity’s designs that appeared on the uniform were separable and eligible for copyright, noting that a distinction between physical and conceptual separability was not necessary.
Although this decision did not rise to the level of criminal penalties, it has given designers and companies a hope that the criminal copyright penalties will be enforced in future cases. Copyright infringement is a crime that affects everyone, making those that wish to present new ideas fearful. These counterfeit items are even sold on social media. According to one study, there are over 50,000 Instagram accounts promoting and selling counterfeit luxury fashion items. Just one factor contributing to the counterfeit industry bringing in profits of over a trillion dollars a year. As a result, the federal government has indicated that it plans to make combatting the sale of counterfeit items online a priority.
Copyright infringement is a serious crime, as it “is inherently immoral because it involves the willful theft of property and causes harm to both the copyright owner and society.” Enforcement of the criminal copyright infringement statute in the fashion industry may help deter nonpermissive use of designs.