The Fashionable Supreme Court: Will They Say Yes to the Trade Dress?


Copyright Protection of Non-Utilitarian Designs under the Copyright Act of 1976



Designers in the high fashion industry face many obstacles in receiving intellectual property protection for the utilitarian aspects of their clothing. Congress has provided copyright protection only for original works of art, but not for industrial designs that embody utilitarian functions.  See 17 U.S.C. 101.  Copyright protection does not extend to utilitarian aspects of objects because it would open up a flood of litigation over exclusive monopoly rights that would “burden competition, raise prices, and also harm consumers.”  See Star Athletica, L.L.C. v. Varsity Brands, Inc., Brief for United States as
Amicus Curiae 5-6.  This proves problematic, however, when art and industrial design are intertwined, especially in the fashion industry which combines aesthetic elements with utilitarian garments.  Under the separability doctrine, these pictorial, graphic, and sculptural works on the design of a useful article are copyrightable so long as they “can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.”  See  17 U.S.C. 101.  But what happens when pictorial, graphic, sculptural works are inseparable from the utilitarian aspects of a garment?  See Star Athletica, L.L.C. v. Varsity Brands, Inc. provided fashion designers with newfound intellectual property protection for aesthetic aspects that are incorporated into utilitarian aspects of their garments.


Obstacles Designers Faced in the High Fashion Industry Prior to the Star Athletica Decision


It is without a doubt that fashion, namely high fashion, has now become a status symbol that relies heavily on its branding and aesthetic more so than any utilitarian value its designs may serve.  So much of the value that these high fashion designs derive is from its rarity and accessibility to only the elite and wealthy.  Accordingly, it is not too surprising that fast fashion powerhouses have copied these high fashion runway looks along with several other brand elements available to the more general public.  


Fast fashion brands, i.e. Zara or Mango, have often tried emulating high fashion ad campaigns by recreating the featured garments for an exponentially lower price.  For example, Celine’s ad campaign for the 2011 fall and winter collection consisted of models in a natural setting surrounded by aloe plants.  Zara later emulated this in black and white during the Spring and Summer 2014 season and again during the Fall and Winter 2015 season with a minimalist focus on a model in black and white and an aloe plant.



fashion, Zara, model
High fashion Black & White


A few other examples of this are pictured below where Zara emulated Balenciaga’s Fall and Winter 2016 collection with its red parka and comparable styling to Lotta Volkova or a cream colored trench coat with athletic zip up wear underneath for the Burberry Fall 2016 season, which was a distinctive look for that season featuring model Chris Wu.



fashion, models, couture
Balenciaga on the left and Zara on the right


The similarities between the campaigns are not entirely identical, and even if they were, there were not rigidly defined protections under the Copyright Act.  Zara and other fast fashion powerhouses such as Mango and Forever 21 have a legally cognizable right to provide their own independent expressions about their fashion ideas.  Accordingly, they continue to use these similarities with the intention that consumers create a psychological connection between the high fashion brand and the fast fashion brand.  Fast fashion powerhouses strengthen these connections by recreating the styling, colors, and design to produce the same high fashion look elite fashion designers were inspired by without infringing logos, patents, or trademark protected designs.  This leaves high fashion designers left fairly powerless and unprotected by copyright laws.  This all changed with the holding of
Star Athletica, L.L.C. v. Varsity Brands, Inc., which provided high fashion designers with much more expansive intellectual property protection.



coats, Burberry, Zara, fashion, style, couture
Burberry coat on left and Zara coat on right

Gucci, Mango, high fashion, couture, models
Gucci on left and Mango on right


Star Athletica, LLC v. Varsity Brands, Inc.: Progress Toward Copyright Protection of Fashion Design


In March 2017, the Supreme Court established a test for determining the copyright eligibility of design elements in fashion in
Star Athletica, L.L.C. v. Varsity Brands, Inc. Respondent Varsity Brands, Inc. obtained more than 200 copyright registrations for two-dimensional designs that appear on their cheerleading uniforms.  Respondent employed designers who sketched design concepts of uniforms consisting of “original combinations, positionings, and arrangements of elements which include V’s (chevrons), lines, curves, stripes, angles, diagonals, inverted V’s, coloring, and shapes.” 137 S. Ct. 1002, 1007 (2017).  Respondent Varsity Brands, Inc. sued Star Athletica, L.L.C., a competitor that also markets cheerleading uniforms, for copyright infringement for using 5 of Respondent’s copyrighted designs.  Id.  The District Court granted the petitioner summary judgment holding that designs could not be conceptually or physically separated from the uniforms, and therefore were not copyrightable designs.  Id.  The Sixth Circuit later reversed this and concluded that graphics “could be identified separately and were capable of existing independently” of the uniforms under 17 U.S.C. 101.  Id.  Specifically, they found that the graphic designs were separately identifiable because “the designs and a blank cheerleading uniform can appear ‘side by side’ and . . . are capable of existing independently.”  Id. The Supreme Court found these conflicting perspectives on the separability analysis warranted certiorari to resolve this widespread disagreement over the proper separability test.  Id

Varsity Brands, Supreme Court, copyright, fashion,
Appendix to Opinion of the Supreme Court


The Supreme Court relied solely on a statutory interpretation of 17 U.S.C. 101, rather than a free-ranging interpretation of the best copyright policy for the case at hand.  See 
Mazer v. Stein, 347 U.S. 201 (1954).  The Court looked at the “whole provisions of the law” to determine the meaning of 17 U.S.C. 101.   See United States v. Heirs of Boisdore, 8 How. 113, 122 (1849).  The statute provides that:

A pictorial, graphic, or sculptural feature incorporated into the design of a useful article is eligible for copyright protection if it (1) can be identified separately from, and 2) is capable of existing independently of, the utilitarian aspects of the article. 17 U.S.C. 101.


The Court focuses more on the second requirement, stating that the burden of proof for the first requirement is not that difficult to satisfy.  See 
Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S. Ct. at 1010.  The Court states that the trier of fact must determine whether the separately identified feature can exist apart from the utilitarian aspects of the article.  Id.  This means that it has to be able to exist on its own if its imagined independent from the useful article.  Id.  If it cannot be imagined separately from the useful article, then it is not a pictorial graphic or sculptural feature of the article itself, but rather as part of one of the utilitarian aspects of the garment.  Id.


The Copyright Act provides that the owner of the copyright can reproduce this work copies on any kind of article regardless of whether it embodies a utilitarian property.  See 137 S. Ct. at 1005.  The Court states that this is a mirror image of 17 U.S.C. 113(a) which protects an authorship fixed on some tangible medium that is non-utilitarian and then later applied to a utilitarian object.  
Id.  On the other hand, 17 U.S.C. 101 protects the art that is first fixed in the medium of a useful article.  Id.  Accordingly, the Court holds that the copyright protection extends to pictorial, graphical, or sculptural objects regardless of whether they are affixed to utilitarian or non-utilitarian objects.  Id.


The Court held that this interpretation of the statute is consistent with a past holding in the Copyright Act’s history.  
Id.  In Mazer, the Court held that the respondents owned copyright protection for a statuette that served as the base of the lamp and it was irrelevant if can be identified as a freestanding sculpture or lamp base.  Id.  The Copyright Office used the Mazer holding in the modern separability test to copyright law in section 101 of the 1976 Act. Id.


Using statutory interpretation and case law, this Court held that the surface decorations on the cheerleading uniforms can be considered separate under the separability test mandated in Section 101 of the 1976 Act.  See 137 S. Ct. at 1006.  They reasoned that if the decorations were removed from the uniforms and affixed to another medium, they would not copy the uniform itself.  
Id.  They analogized that just as two-dimensional fine art are aligned with the shape of the canvas on which it is painted, these decorations are aligned with the shape of the uniform itself.  See 137 S. Ct. at 1012. Respondents may only prohibit the reproduction of these surface designs; however, the Court holds that they have no right to prevent others from manufacturing a cheerleading uniform identical in shape, cut, or dimensions.  See 137 S. Ct. at 1006


Ultimately, the design of the uniforms satisfy the requirements of Section 101 of the 197 Act because they 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 in some other medium if imagined separately from the useful article. 137 S. Ct. at 1016. Based on this interpretation, the Supreme Court affirmed the Court of Appeal’s judgment.  
Id.


Now high fashion designers can turn to this holding when any aesthetic design is affixed to a utilitarian design.  This holding has revolutionized high fashion designers’ intellectual property interests for their designs in the high fashion industry that is victim to fast fashion’s intellectual property theft.

 



Landlord-Tenant Battle Over NYC Rent Stabilization


 

 

rent, NYC, real estate, commercial, landlord, apartment
Rent Stabilization

 

New York’s first step towards rent regulation can be traced back to the 1920s.[1]  The history of rent control in New York has been a battle between owners and tenants for quite some time.  In general, rent controlled apartments must be in buildings of three or more units constructed on or before February 1, 1947 and tenants must have occupied their apartment since at least July 1, 1971.[2]  Under rent control, the maximum rent is determined by statute, through the Maximum Base Rent formula.[3]  The Maximum Base Rent formula allows a landlord to increase monthly rent charges in order to recoup the costs of owning the building.[4]  In addition, hardship increases may be allowed in specific circumstances, including when there is substantial rehabilitation to the building, and to recover the cost of major capital improvements.[5]  When a rent-controlled apartment becomes vacant, it is subject to rent stabilization, or, if it does not meet the requirements of rent stabilization, it is deregulated entirely.  If a rent-controlled apartment becomes vacant, and the maximum legal rent exceeds $2,000.00 instead of remaining under rent stabilization, the unit is deregulated.

 

Under the NYC Rent Stabilization Law, rent-stabilized apartments are subject to certain statutory rent increases, including a 20% increase for a two-year lease upon vacancy.[6]  In addition, rent Stabilization Law §26-504.2 [a] provides for the deregulation of rent-stabilized apartments that reach a threshold of legal regulated rent.  Specifically, deregulation will apply to:

 

“any housing accommodation which becomes vacant on or after [April 1, 1997] and before the effective date of the rent act of 2011 and where at the time the tenant vacated such housing accommodation the legal regulated rent was two thousand dollars or more per month; or, for any housing accommodation which is or becomes vacant on or after the effective date of the rent regulation reform act of 1997 and before the effective date of the rent act of 2011, with a legal regulated rent of two thousand dollars or more per month.”[7]

 

Owners have been abiding by Rent Stabilization laws for years but, when Richard Altman decided to sue his owner for illegally deregulating the unit he leased in 2003 by counting the 20% rent increase allowed by statute to push his rent over the $2,000.00 threshold, uncertainty spread throughout New York.  For apartments involuntarily placed under rent regulation in New York City, those regulations were removed when a vacant apartment crossed a certain rent level. However, previously unresolved in the case law was whether, in order to effect deregulation, that rent level had to be reached during the tenancy of the last tenant prior to vacancy, or could be reached through implementation of various increases allowed to owners between two actual tenancies, such as the 20%.

 

Initially, in 2015 the New York Appellate Division for the First Department ruled in favor of Richard Altman, holding that although the owner was entitled to a 20% rent increase for Altman’s initial lease, that increase did not serve to deregulate the apartment because the rent was not over $2,000.00 at the time the prior tenant vacated the premises.  The decision by the Appellate Division caused mass uncertainty by owners and tenants who had been previously deregulated by the 20% increase. Tenants believed they had won and were ready to start filing lawsuits to return their units to rent stabilized and collect damages for over paid rent.  While tenants were excited about the court’s ruling the decision left landlords in a very difficult position because they had previously followed the law by including the 20% to deregulate the apartments and were facing potentially thousands of dollars in back-pay to tenants and thousands of apartments being re-stabilized. However, the Altman decision was appealed and heard by the New York Court of Appeals.

 

law, litigation, gavel, court, real estate, judge
The Final Decision

 

April 26, 2018 was a monumental day for landlords who were facing potential re-stabilization of thousands of previously deregulated apartments.  The Court of Appeals introduced Altman with the statement that it must determine whether the 20% vacancy increase should be included in determining if the rent of a unit exceeds the $2,000.00 threshold.  To tenant’s dismay, New York’s highest Court ruled in favor of the landlords allowing vacancy rent increases to be used to boost a unit’s cost over the deregulation threshold.  Ultimately, the Court of Appeals ruled that the 20% increase should be considered when determining the legal regulated rent at the time of the vacancy.  The decision was a massive defeat for Altman and all other tenants hoping to re-stabilize their rent.  The Court of Appeals Chief Judge Janet DiFiore wrote in her decision that state law makes it clear the vacancy rent increase should be counted when figuring if any apartment has reached the deregulation threshold.  “The legislative history could not be clearer and leaves no doubt that the Legislature intended to include the vacancy increase,” DiFiore wrote.[8]  The unanimous ruling by the Court of Appeals prevents the unjustified re-stablization of thousands of apartments that were appropriately deregulated according to law.  It also prevents thousands of deregulated tenants from receiving a windfall in the form of a rent-stabilized apartment with a below-market rent.

 

New York City, Empire State, real estate, commercial litigation
New York City landscape

 

The New York Court of Appeals decision will continue to allow landlords to deregulate units and buildings that were once rent stabilized. In a city where rent is continuing to increase and become unaffordable, rent stabilized apartments will continue to decrease. Unfortunately, for tenants seeking rent stabilized apartments there are not many left and there will not be new rent stabilized apartments appearing on the NYC real estate horizon. The endless new construction taking place all over New York will continue to make landlords deregulate apartments and drive rent prices up.  Bear in mind if you are one of the lucky few living in a rent stabilized apartment, hold on to it for as long as you can.  Otherwise, it will be like looking for a need in a haystack of brand-new, highly-priced, luxury apartments.

 

 

 

 

 

 

 

[1] Peter D. Salins & Gerard C.S. Mildner, Scarcity By Design: The Legacy of New York City‘s Housing Policies, 120-21, 52-53 (1992).

[2] N.Y.C. Admin. Code 26-403(e)(2)(h).

[3] N.Y. Comp. Codes R. & Regs. tit. 9, 2201.4.

[4] Id.

[5] N.Y. Comp. Codes R. & Regs. tit. 9, 2201.4(b)-(c).

[6] Rent Stabilization Law §26-511 [c] [5-a].

[7] Altman v. 285 W. Fourth LLC, 2018 NY Slip Op 02829.

 

[8] Id. at 6.



Winner – Litigation Lawyer of the Year


The LAW FIRM of DAYREL SEWELL, PLLC is pleased to announce that Dayrel S. Sewell, Esq. has been selected as the outright winner and recipient in the category of – Litigation – Lawyer of the Year – USA by Finance Monthly.  Finance Monthly selection criteria is dynamic, relying on matters such as legal expertise and innovation; peer recognition and personal achievement; and involvement in significant legal cases and legal activity.


The Finance Monthly Law Awards 2017 recognizes the achievements of law firms, lawyers, barristers and those connected to the legal world who have a proven track record in delivering results for their clients over the past twelve months.  The awards are divided into individual and form categories.  Each category has been selected to represent the diversity of skills and knowledge that the profession has to offer clients across the globe.

The voting and nomination is inclusive consisting of a three-month process.  Voting procedures are sent to Finance Monthly’s readership database – over 195,880 contacts.  All readers evaluate the nominees based on all the Law Awards criteria. This accomplishment for Dayrel S. Sewell, Esq., by Finance Monthly – Law Awards, exemplifies innovation in client care; strategic thinking and planning; and superior qualifications.


The Finance Monthly is a trusted source for business and corporate professionals, specifically legal practitioners, either in-house counsel or private practice.



The Duality of the U.S. Supreme Court’s Janus Decision


The Duality of the U.S. Supreme Court’s Janus Decision

The LAW FIRM OF DAYREL SEWELL, PLLC is pleased to announce its latest publication, “The Duality of the U.S. Supreme Court’s Janus Decision”, appearing in the 2015 American Bar Association Securities Litigation Fall Newsletter (see below).

You are encouraged to comment and receive free updates by subscribing to the firm’s Blog and Press Release sections.

The Duality of the U.S. Supreme Court’s Janus Decision

Securities Exchange Act, litigation, securities, SEC, Rule 10b-5



Redskins Trademark Fumble


Redskins Trademark Fumble

The LAW FIRM OF DAYREL SEWELL, PLLC is pleased to announce that Messrs. Sewell’s and Fine’s recent, featured publication, “The “Redskins” Trademark: Turn-over on Downs”, appears in this month’s IPFrontline newsletter (Trademark Turn-over on Downs).

You are encouraged to comment and receive free updates by subscribing to the firm’s Blog and Press Release sections.



Musical Litigation Groove


Musical Litigation Groove

The LAW FIRM OF DAYREL SEWELL, PLLC is pleased to announce that Messrs. Sewell’s and Ng’s recent, featured publication, “Pharell Williams and Robin Thicke told they “Got To Give It Up””, appears in this month’s IPFrontline newsletter.

You are encouraged to comment and receive free updates by subscribing to the firm’s Blog and Press Release sections.


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