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Gucci, Balenciaga, YSL, Bottega Veneta, et. al. File Suit Against Alibaba Group for selling Counterfeit Goods

The battle against counterfeits in China rages on in the latest lawsuit filed by Gibson Dunn last month on behalf of their clients Gucci, Balenciaga, YSL, Bottega Veneta and several other luxury goods manufacturers against Alibaba Group, a privately owned Hangzhou-based group of E-commerce businesses. The Plaintiffs are alleging that the Defendants facilitated the sale of millions of dollars in counterfeit goods.

The heavy hitters in luxury goods are going after a major internet giant. Alibaba comprises of business-to-business online web portals, online retail and payment services, a shopping search engine, and data-centric cloud computing services. It handles more transactions than any other E-commerce company in the world, totaling $248 billion last year (more than that of eBay and Amazon combined). Reports of Alibaba's impending IPO are speculating that it could be the largest IPO ever by a technology company.

The Plaintiffs are claiming that the Defendants assisted the counterfeiters' business operations by providing the marketplace, search engine, advertising and logistical services for their illegal enterprises. The complaint provides details of the search and sale process, demonstrating how the Defendants cause the sales to take place by directing customers to the illegal counterfeits through their proprietary algorithms and keywords sold to the counterfeiters that include Plaintiffs' trademarks and the word "replica."

Given the ongoing battle of counterfeiting in China, Alibaba's deep pockets, and the detailed 147 page complaint, we here at TFG don't foresee this case going away anytime soon without a major fight or a major settlement. We'll be sure to keep our fashion law readers updated. Until then, more details of the case can be found in the copy of the complaint below:



TFG Exclusive: Fashion Quote of the Day


"Fashion goes in only one direction – forward – and I am a firm believer in thinking that way too."

-Anna Wintour



The Digitalization and Globalization of Fashion: What My Recent Trip to Europe Revealed about Fashion Tech's Impact

With the ongoing developments in fashion tech, there is no question that the digitalization of fashion has disrupted the industry and truly globalized it. Blogs, E-commerce sites, aggregate sites, auction sites, apps, mobile shopping, YouTube streaming, podcasts, Instagram, Pinterest and every digital platform in between have forever changed the people's access to fashion trends as well as the industry's access to the people. And no where did this shift become more evident to me than on my recent trip to Europe.


It had been almost ten years since I had last visited the continent. To provide our readers with a "tech snapshot" of that time, text messaging was the only exciting feature on any cell phone, the word "selfie" did not exist, there was nothing wireless about any computer or laptop, especially your internet connection, long distance calls back to the States inevitably involved a calling card purchased at a local newspaper stand, and the only thing I regularly bought online was music (illegally of course).

But I digress. My memories of Europe circled mostly around a couple study abroad experiences and countless summer vacations with my family. During our trips, we always made a point to indulge in some shopping and take advantage of the fact that Europeans were always one step ahead of the fashion game. People watching inevitably entailed taking note of what the women were wearing on the streets of Paris, Italy, London, etc., followed by stalking the trends in the stores and bringing them back home (tax free forms and all).

Last month, I took off for a three week trip with my husband that took us through Paris, Dubrovnik, Florence, various towns in Italy, and London. As we pounded the pavement from one city to the next, what immediately struck me was how the fashionable set of Europe were dressed no differently than their American counterpart. Birckenstocks, high-waisted jeans, pants, gladiator sandals, rompers, cross-body bags, crop tops, oversized the trend, and that trend could be found on the streets of every city we visited.  

True, Europeans still have a more sophisticated way of putting a look together and maintain a greater appreciation of fashion. Some would even argue the inventory at the stores are still slightly different than back home. But I was surprised to see that those differences have diminished over the years and if anything, are almost unnoticeable. The fashionable set on these two leading continents, and around the world, are taking their cue from the same leading fashion blogs, Instagram accounts, and Pinterest boards. What I saw on my trip was essentially fashion tech's impact on real life- a global look that had been channeled through these digital platforms.


With one swift click of the mouse, the sartorially oriented can shop the same online boutiques that curate those rare styles and brands that ten plus years ago could only be accessed when visiting certain cities.  With one glance of any social media app on a smartphone, millions of followers from around the world can see the latest shoe style or "it" bag and can choose to either purchase it within seconds upon their discovery, or find an inspired-by version.  During the trip, I personally found myself cross-checking the stores' sale prices on my iphone with one quick search on my ShopStyle app. I even caught one sales lady lying to me when she insisted the brand didn't make the jacket I wanted in a smaller size. After one search on my Farfetch app, I found the jacket in a smaller size online, proving my instincts right and her sneaky sales pitch wrong. Needless to say, instead of making the purchase at that London boutique, I bought it on my iphone as I was exiting the dressing room (and at a better price!).


Image Courtesy of Wall Street Journal 

The digitalization of fashion has essentially disrupted time and space between the consumer and the industry, creating a closer, instantaneous, and more informed global relationship than ever before. And while this topic is deserving of more detailed research and metrics to assess the degree of fashion tech's impact, sometimes it's enough to take to the streets, get out into the world, and see the ripple effect with one's own eyes. After all, in the case of fashion, the street is always one of the first places to look to anyways.


2013 Fashion Law Recap

NYFW has officially begun and before TFG goes full force in providing our readers with the latest runway coverage, I wanted to go back to my fashion lawyer roots and recap some of the recent cases and developments in fashion law that have already set the tone for the new year.

First off, the legal dispute between Tory Burch and her ex-husband Chris Burch, colorfully dubbed by Judge Strine as a "drunken WASP fest" has been settled. As noted in our previous post, the dispute began over the sale of Chris's stake in Tory Burch LLC, which Chris claimed his ex-wife made difficult for him to do. Additionally, Chris claimed that Tory Burch was also interfering in business partnerships related to his new retail concept C. Wonder, which many claimed that its seeming likeness to the Tory Burch chain upset his former wife.  This was confirmed when Tory Burch countersued her former husband for trade dress infringement over the similarities between the two brands, as well as unfair competition and breach of fiduciary duty.

The similarities included the resemblance of their gilded logos, in-store light fixtures and respective candy-colored decor. Tory Burch’s lawyer Marc Wolinsky told WWD at the time, “[t]his guy ripped off Tory Burch. His product looks like our product, his stores look like our stores.” Chris Burch's lawyer Andrew Rossman responded that both of the brands’ products reflected “timeless styles that other people invented.” The terms of the settlement remain confidential. However, it is known that Chris Burch still retains an undisclosed stake in Tory Burch LLC.


Second, the Innovative Design Protection Act (IDPA) of 2012 has died in Congress because the 112th Congress has ended and the bill was not passed into law. Fashion continues to remain in exile of the U.S. Copyright regime, perpetuating the knock-off industry. 

Here's hoping that Senator Schumer will reintroduce the IDPA in the next session of Congress.  Designers deserve to be afforded some form of copyright protection. One thing is for sure- the debate over copyright protection for fashion continues.


Third, the Federal Trade Commission (FTC) fined four retailers — Macy’s Inc., Sears Roebuck and Co., Amazon Inc. and Leon Max Inc. — a combined $1.26 million for allegedly falsely labeling rayon products as made of bamboo. I have encountered some major labeling issues as a fashion lawyer and can confirm that the FTC does NOT mess around when it comes to labeling products, especially those meant to be eco-friendly. Their specific guidelines are meant to protect the consumer and prevent false advertising and misleading labeling.

Charles Harwood, acting director of the FTC’s Bureau of Consumer Protection, told WWD “If a textile is made of rayon, sellers need to say that, even if bamboo was used somewhere along the line in the production process.” Sears, including its Kmart subsidiaries, agreed to pay $475,000 to settle the charges, while Amazon agreed to pay $455,000, Macy’s $250,000 and Leon Max $80,000. More posts on FTC apparel guidelines to come.


Last and most recent, John Galliano won the first round of what is sure to be a protracted and intense labor dispute after a Paris court ruled that it was qualified to hear Galliano’s claims against his dismissal in March 2011 after 15 years as creative director at Dior, following a series of public outbursts during which he uttered racist and anti-Semitic insults. John Galliano blamed the remarks on work-related stress. 

Despite the disgrace in Galliano's downfall, complicated commercial contracts remain at the heart-and-center of this dispute. Dior's attorney believes that the Labor Relations Court is not qualified to hear the case, since Galliano was linked to Christian Dior Couture and John Galliano by a multitude of contracts, including several consultancy agreements with Galliano’s company, Cheyenne Freedom. He added that these could not be treated separately from the employment contracts established between Galliano and the two companies, and that he was therefore more an independent contractor than a subordinate. Nevertheless, the Paris court did not seem to agree and it remains to be seen what kind of severance package Dior's former employee will get.

2013 has already proven to be a fruitfull one in the fashion law world. TFG will be sure to be at the forefront of these as well as future cases and developments. 


TFG Exclusive: Style Curator 


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