U.S. Court Enters $15.2 Million Judgment Against “Weight Loss” Tea Co. Over Misleading Claims, Undisclosed Influencer Ads

image: Teami

“Teami and its owners earned millions making unsubstantiated claims about their products and promoted those claims using paid influencers” – from Kylie Jenner to Cardi B – many of whom “failed to appropriately disclose their connections to the company, even after being warned to stop,” the Federal Trade Commission (“FTC”) announced on Friday in connection with a new settlement. According to the government agency, Teami is on the hook for running afoul of the FTC Act and as a result, is being forced to pay nearly $16 million.

In a complaint for permanent injunction filed on Thursday in a federal court in Florida, the FTC asserted that since its start in 2014, Seminole, Florida-based Teami has made has made more than $15.2 million in sales in connection with its Teami Profit tea, Teami Alive tea, Teami Relax tea, and the Teami 30 Day Detox Pack, among other products, which it has sold on its own e-commerce site, as well as through nationally-reaching third-parties like Amazon and Ulta Beaty.

Hardly an ordinary lineup of products, Teami claimed in furtherance of its marketing that these products are capable of “treating cancer,” leading to “rapid and substantial weight loss,” “preventing and treating colds and flus,” and “decreasing migraines.” The problem with those claims, according to the FTC? They “false or misleading” and/or “were not substantiated at the time they were made,” thereby constituting “a deceptive act or practice and the making of false advertisements, in or affecting commerce” in violation of the FTC Act.

More than merely misleading consumers as to the efficacy of its products, the FTC asserts that Teami went a step further by paying a lineup of mega-famous celebrities and heavily-followed influencers to promote the products without requiring that such endorsements be clearly disclosed as such paid-for advertisements. “In addition to advertising Teami products on the Teami website,” the FTC argued, Teami “paid celebrities, including Kylie Jenner and Demi Lovato, and other influencers to promote them on Instagram and other social media,” many of which failed to properly alert consumers as to the nature of the posts.

In light of such alleged widespread disclosure violations, the FTC says that it contacted Teami in April 2018 to inform the company that “any material connections to any endorsers, such as monetary payments, should be clearly and conspicuously disclosed in their endorsements.” This includes “using unambiguous language” placed “above the ‘more’ link” on Instagram. It also sent warning letters to the ten influencers named in its complaint, who allegedly made inadequate disclosures in connection with heir promotion of the Teami products.

While the FTC claims that a month later, Teami introduced a social media policy and instructed influencers to ensure that all posts “for which you receive free product or any type of compensation as an inducement to make the post … use hashtags or words that clearly let the public know of the connection between you and Teami” and to make sure that such disclosures are included above the “more” button on Instagram, the issue of undisclosed or improperly disclosed posts continued.

“Numerous Instagram posts published by paid influencers after May 2018 did not comply with Teami’s own social media policy,” the FTC claims, including posts from Cardi B, Jordin Sparks, Brittany Renner, and Adrienne Eliza Houghton, among others. This is particularly problematic, according to the government agency, as “in many instances, paid influencers were contractually required to obtain approval from Teami for their Instagram posts – including the specific text used – before publishing them.”

With such “obvious and widespread” violations in mind, including Teami’s alleged pattern of “making false and unsubstantiated health claims and failing to disclosure material connections with influencers … over a period of several years, which continued for many months after Teami learned that the FTC was investigating them,” the FTC filed suit against the company and two of its executives.

Now, on the heels of filing its complaint, the FTC revealed that it had reached a settlement with Teami, in which the company “neither admits nor denies any of the allegations” lodged against it, but nonetheless, is prohibited from making health claims in connection with its products “unless the representation is non-misleading” based on “competent and reliable scientific evidence.” Beyond that, the legally-binding order requires that Teami ensure that all influencer endorsements include proper disclosures, and requires that the company carefully monitor such social media posts to ensure proper disclosure.

These terms mirror those that have traditionally been included in prior settlements between manufacturers and marketers, and the FTC, making the kicker the monetary judgment. In furtherance of the order, which was approved by the U.S. District Court for the Middle District of Florida, a judgment in the amount of $15,209,452 — the total sales of the challenged products — has been entered in favor of the FTC against Teami and its executives “as equitable monetary relief.” That judgment, the FTC revealed on Friday, will be “suspended upon payment of $1 million, based on the defendants’ inability to pay the full amount.”

According to a statement from the FTC on Friday, “Today’s order resolving those allegations puts a halt to these practices, and orders the Defendants to return $1,000,000 to consumers who were harmed.”

“Social media is full of people peddling so-called detox teas, promising weight loss,” Andrew Smith, Director of the FTC’s Bureau of Consumer Protection said. “Companies need to back up health claims with credible science and ensure influencers prominently disclose that they’re getting paid to promote a product.”

Daily Links: March 5th

image: The RealReal

image: The RealReal

1. The RealReal Plans More Stores to Boost Fashion Resale Economy: Executives are looking to open a few shops each year in large U.S. cities to help harvest goods from people’s closets and attract new buyers and sellers. This week, it will open its first store in San Francisco, and plans to unveil another in Chicago this summer. – Read More on Bloomberg 

2. RETRO READ: With 9 Million Users and an Online Advantage, The RealReal is Widening its Net. Brands have become increasingly willing to engage in the business of liquidation, or the off-loading of excess merchandise at a discount. The RealReal seems like the perfect place to do it. – Read More on TFL 

3. How the Coronavirus’ Effect on the Fashion Industry Reveals Flaws in the Global Economy: Companies in a wide range of industries are dependent on China as both a manufacturing behemoth and billion-plus-consumer market. But as life in some parts of the country comes to a near-standstill in the face of the outbreak, that reliance looks more and more like a weakness. – Read More on Time 

4. How “climate positivity” could revolutionize the fashion industry: The new term, proposed by the Slow Factory Foundation, encourages scalable solutions rather than empty promises of sustainability. – Read More on i-D 

5. H&M made its former sustainability chief its CEO. Now it wants to help other fashion houses become sustainable: Helmersson’s appointment as chief executive was seen as a signal that H&M intended to ramp up improvements in the sustainability of its supply chain. Now the group is set to capitalize on that work in a new way, earning a service fee by plugging other fashion outfits into that supply chain. – Read More on Fortune

SugarBearHair-Maker is Using “Invalid” Trademark to Sue Competitors Out of Business, Per Lawsuit

image via @kimkardashian

Consumers have come to identify widely-advertised pastel blue gummy vitamins with a single brand, SugarBearHair argued in the lawsuit that it filed against a rival company last year. According to SugarBearHair-maker BeSweet Creations, LLC, a 5-year old Florida-based vitamin brand that counts the Kardashians, Emily Ratajkowski, Bella Thorne, Vanessa Hudgens, and countless Bachelor contestants as paid-for endorsers, TruReflections, Inc. built a business by “willfully, intentionally, and deliberately” selling lookalike products in lookalike packaging, thereby, running afoul of the law.

BeSweet’s February 2019 case centered on TruReflections, Inc.’s alleged attempt to “profit from the name, reputation, and advertising” of the SugarBearHair brand by actively copying the “appearance” of the vitamins, namely, “the shape of a bear presented in [a] blue color.” As BeSweet asserted, it has maintained a trademark registration for the shape and color of the vitamins since 2016, while also taking issue with TruReflections’s use of lookalike packaging, which also allegedly infringes one of its federal registered trademarks.

While the matter appeared to be an easy win for BeSweet when TruReflections, Inc. failed to respond to the complaint, prompting the court to issue a final judgment in BeSweet’s favor in July 2019 and to dismiss the matter, there seems to be more to the case. Late last month, TruReflections, Inc. filed a handful of motions with the court. Interestingly, the filing-party is not the Texas-based TruReflections, Inc. that BeSweet named in its suit; it is a Delaware-headquartered company with the same name.

According to Delaware-based TruReflections, Inc., BeSweet filed suit “against a misnamed, non-existent party,” and thereafter, “with reckless disregard for the truth, filed a knowingly false affidavit of service and falsely claimed it had served the defendant lawfully with the complaint in this matter.” The result, per TruReflections? “Insufficient process and fraud upon the court.”

With such allegations in mind, TruReflections wants the court to vacate the default judgment and to enable it to intervene in the case. In a serrate but related filing, TruReflections sets forth a number of counterclaims against BeSweet, alleging that the company has engaged in trademark fraud and anticompetitive business activity, among other things, by way of its attempts to allegedly “create a monopoly on blue bear-shaped dietary supplements and restrain trade from competitors.”

BeSweet’s SugarBearHair (left) & TruReflections

In a 51-page filing dated February 19, TruReflections points to “a myriad of anticompetitive conduct and malicious interferences by [BeSweet],” which it says “have caused the destruction of [its] business.” For one thing, TruReflections claims that BeSweet is using its trademark registration for the blue bear “to violate the antitrust laws of the U.S. [and] to create or maintain a monopoly” by “conspiring to financially injure, oppress and intimidate TruReflections.” Essentially, TruReflections argues – much like MGA Entertainment asserted in its Bratz-cetric fight against Barbie-maker Mattel – that BeSweet is trying to establish and/or maintain a monopoly position on the ability to make blue bear-shaped vitamins by suing its competitors out of business.

TruReflections claims that BeSweet’s trademark infringement actions are based on an invalid trademark registration, as the blue bear vitamin is functional, and thus, should be barred from registration as a result of trademark law’s absolute bar on functionality.

As Trureflections aptly asserts, BeSweet was “denied full [trademark protection] on the Principal Register numerous times … for [its] blue-colored bear shape” on the basis that the blue bear is a “nondistinctive product design that is not registrable on the Principal Register without sufficient proof of acquired distinctiveness.” Faced with pushback from the U.S. Patent and Trademark Office, TruReflections claims that BeSweet “fraudulently procured a registration on the Supplemental Register” – a secondary register for non-distinctive marks that may be capable of acquiring distinctiveness – “by claiming the mark as a design mark when in fact, it is a functional product design.”

One of the problems with that, according to TruReflections, is that BeSweet has since used that secondary registration, which it allegedly gained as a result of fraud, to “make false infringement claims against competitors,” “unreasonably restrict trade,” and “create a deceptive monopoly on all blue bear-shaped vitamins,” thereby allegedly running afoul of the Sherman Antitrust Act, among other statutes.

All the while, BeSweet has allegedly taken to “intentionally omitting that its mark is only registered as a Supplemental trademark” in order “to harass competitors, whereby resulting in financial injury in the form of loss of sales, and a total loss and destruction of the business.” As a result, TruReflections has asked the court to reopen the case, let it join in, and also to cancel an array of BeSweet’s trademark registrations, from its various wordmarks to its registration for the blue bear.

*The case is BeSweet Creations, LLC v. Trureflections, Inc., 0:19-cv-60490 (S.D. Fla).

Following FUCT’s Supreme Court Win, EU Court Sounds Off on “Fack Ju” Trademark

image: FUCT

In 2019, the nation’s highest court took on a case that centered on the name of a cult-followed streetwear brand. The name – FUCT, which is pronounced a whole lot like the “f” word – had been deemed “immoral” or “scandalous” by the U.S. Patent and Trademark Office (“USPTO”) when its owner Erik Brunetti sought a registration for it in 2011, a development that prompted a closely-watched case that brought about questions of free speech and the preference of certain viewpoints over others.

Ultimately, the case landed before the U.S. Supreme Court, which sided with Brunetti and his nearly 30-year old, Los Angeles-based brand. Brunetti’s counsel argued that in determining what marks are subject to registration, the USPTO decides what is offensive to the general public, and in the process, necessarily prefers some viewpoints over others. That is significant, as such “viewpoint discrimination” is not a valid basis for the denial of a trademark application, and thus, runs afoul of the free speech clause of the First Amendment.

In the majority’s June 2019 decision, Justice Kagan agreed, pointing to the fact that the U.S. trademark statute’s bar against the registration of “immoral” or “scandalous” marks “on its face, distinguishes between two opposed sets of ideas: those aligned with conventional moral standards and those hostile to them; those inducing societal nods of approval and those provoking offense and condemnation.” As such, the longstanding prohibition on registration of such marks with the USPTO violates the First Amendment.

Less than a year later, something of a similar decision has been handed down in the European Union … albeit this time, the case centers on a quest for the registration of the phrase “Fack Ju” – or actually “Fack Ju Göhte,” which is the title of a German film comedy produced by the applicant – after the European Union Intellectual Property Office (“EUIPO”) determined in 2015 that the mark was ineligible for registration. The basis for that decision? The mark is “contrary to public policy or to accepted principles of morality,” which is an absolute ground for refusal, per the EU Council Regulation on trademarks.

In short: the EUIPO found the mark to be “vulgar” and in “bad taste,” and thus, not eligible for registration. The applicant, Constantin Film Produktion GmbH, asserted on appeal that “the expressions ‘Fuck’ and ‘Fuck you’ have lost their vulgar meaning due to the evolution of language in society,” and argued that the fact that millions of German and Austrian citizens had watched the film implied that the title “was not perceived as morally unacceptable.” As such, its mark should be subject to registration and the benefits that come with that.

Fast forward 5 years, and the European Union Court of Justice (“CJEU”) has held that the mark may, in fact, be subject to registration. In a decision dated February 27, a three-judge panel for the CJEU stated that “although the success of a film does not automatically prove the social acceptance of its title and of a [trademark] of the same name, it is at least an indication of such acceptance.” That element, paired with others, such as the fact that the film was permitted to be shown in schools, “indicates that, despite the assimilation of the terms ‘Fack ju’ to the English phrase ‘Fuck you’, the title of the comedies was not perceived as morally unacceptable by the German-speaking public at large.”

Moreover, the court held that “it should be noted that the perception of the English phrase [“fuck you”] by the German-speaking public is not necessarily the same as the perception thereof by the English-speaking public, even if it is well known to the German-speaking public and the latter knows its meaning, since sensitivity in the mother tongue may be greater than in a foreign language.”

With the forgoing in mind, the CJEU panel found “no concrete evidence … that would plausibly explain why the German-speaking public at large will perceive the word sign ‘Fack Ju Göhte’ as going against the fundamental moral values and standards of society when it is used as a trade mark,” and thus, the mark should be eligible for registration.

Daily Links: March 4th

image: Louis Vuitton

image: Louis Vuitton

1. Luxury lifestyle: After scooping up luxury travel pioneer Belmond, LVMH is reportedly one of a handful of parties in the running to buy the Ritz hotel in London from the feuding Barclay family for an estimated £800 million. – Read More on the Times

2. Kohl’s women’s business is one of its biggest weaknesses: Macy’s and J.C. Penney have cited similar obstacles, as fewer women are visiting department stores to buy clothes or buying less clothing altogether, and more are turning to rental options, like Rent the Runway, to build out their work wardrobes. Or they are buying used clothes, via platforms such as ThredUp and Poshmark. Amazon is also becoming a bigger force in fashion. – Read More on CNBC

3. In the Circular Economy, Products Are Designed to Be Recycled: Many business leaders and governments — including China, Japan and the U.K. — argue that we should ditch this linear system in favor of a so-called circular economy of take, make, use, reuse and reuse again and again. – Read More on Bloomberg

4. Why Louis Vuitton, MAC, Gucci are getting into gaming – and why it won’t stop any time soon: As of 2018, China’s online gaming population was made up of nearly half a billion players, with women making up more than half of this market. As such, a stream of fashion and cosmetics collaborations have hit the gaming scene recently, looking for new audiences in a $152 billion market. – Read More on SCMP 

5. RETRO READ: With the Video Game Market on Track to Reach $300 Billion, Luxury Brands Want to Make Real Money from Virtual Clothes. Given the size of the market, its ever-escalating growth rate, and the high levels of engagement that come hand-in-hand with these popular games and the related real-life events, it is not terribly surprising that Louis Vuitton and others want in. – Read More on TFL

10 Years After Tiffany v. eBay, A New Bill Aiming to Hold Online Platforms Liable for Counterfeits is Introduced

image: Tiffany & Co.

A new bill presented to the U.S. House of Representatives this week aims to hold e-commerce platform operators, such as Amazon or eBay, liable for the sale of counterfeit or otherwise infringing products on their sweeping marketplace websites. Entitled the “Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce” – or SHOP SAFE – Act of 2020, the newly-unveiled legislation “incentivizes platforms to engage in a set of best practices to curb the presence of counterfeits on their sites.”

Primarily, the bipartisan bill – which follows from an executive order from President Donald Trump early this year that called for cracking down on U.S. companies that import or facilitate the import of counterfeit or pirated goods – will  establish trademark liability for online marketplace platforms when a third-party sells a counterfeit product “that poses a risk to consumer health or safety and that platform does not follow certain best practices.” Those best practices will include “vetting sellers to ensure their legitimacy, removing counterfeit listings, and removing sellers who repeatedly sell counterfeits,” according to a release from the U.S. House Committee on the Judiciary.

Should e-commerce marketplaces fail to “take steps necessary to prevent the continued sale of counterfeits by third-party sellers,” they will “face contributory liability for their actions” in accordance with the new bill, which if passed, would prove a significant development in the space given that, to date, platform operators have largely been able to avoid liability for the sale of fakes on their sites by third parties.

One of the most frequently-cited cases in this arena is Tiffany & Co. v. eBay, one that saw Tiffany & Co. sue the marketplace giant in 2004, claiming that it should be held liable for trademark infringement because the company knew that its widely-used marketplace site was being used to sell substantial quantities of counterfeit or otherwise infringing goods, even if that knowledge was merely general and did not extend to which particular goods were the legally problematic ones.

The U.S. Court of Appeals for the Second Circuit determined that eBay was not liable for trademark infringement, noting that “eBay did not itself sell counterfeit Tiffany goods; only the fraudulent vendors did, and that is in part why we conclude that eBay did not infringe Tiffany’s mark.” More than that, the court held that in order to impose contributory liability on eBay, the site operators needed to “know or have reason to know”  that counterfeit Tiffany products were being sold on its website, a level of knowledge that had not been established.

Also of critical importance was the finding that eBay was routinely making substantial investments toward anti-counterfeiting initiatives, investing as much as $20 million a year and devoting more than 200 full-time employees to enforcement activities, including its Verified Rights Owner “notice-and-takedown” system.

As reported by Finnegan, another “significant factor weighing in the court’s analysis was its finding that a substantial number of authentic Tiffany goods were sold on eBay, including some that were sold in lots of five or more. Thus, requiring eBay to prospectively ban all listings of Tiffany merchandise being offered for sale in lots of five or more would stifle the legitimate secondary market for Tiffany products on eBay.”

In siding with eBay, the court refused to shift the brand owner’s trademark enforcement burden to eBay, and in 2010, the Supreme Court opted not to take on the case, despite Tiffany & Co.’s argument that it presented “an extremely important question about allocating trademark rights and burdens in the modern Internet economy.”

It is against this background – and in light of the increasingly market-dominating businesses of the likes of Amazon, which generated $42.75 billion in sales on from third-party marketplace in 2018 – that the SHOP SAFE Act is being introduced.

Speaking about the proposed legislation this week, Rep. Jerrold Nadler (D-NY) – who co-sponsored the bill alongside Doug Collins (R-GA), Hank Johnson (D-GA), and Martha Roby (R-AL) – said, “American consumers increasingly turn to the internet to shop. Counterfeiters have followed consumers, and it is clear more must be done to combat the rising trend in online sales of counterfeit products.” He continued on to note that “consumers should be able to trust that what they see and purchase online is what they will get, but counterfeiters continue to join platforms with ease and masquerade as reliable sellers in order to infect American households with dangerous and unsafe counterfeit products. The SHOP SAFE Act proposes a set of commonsense measures to tackle the gaps in these platforms’ systems and stop counterfeit sales.”

So far, the bill is gaining traction among industry participants. “The SHOP SAFE Act is the latest in a string of proactive efforts by Congress and the administration to address the growing counterfeit problem,” Steve Lamar, president and CEO of the American Apparel & Footwear Association, said in a statement. “Unless we are continuously improving in the fight against counterfeits, we are falling behind.”

On the other hand, if its fight in an ongoing lawsuit aiming to hold it liable for strict products liability, negligence, and misrepresentation in connection with the sale of a defective dog leash by a third party on its marketplace site is any indiction, Amazon and similarly situated e-commerce titans can be expected to lobby this bill to death.

Pointing to Consumer Recognition and Louboutin’s Rights, Glossier Pushes for Pink Trademark

image: Glossier

In a couple of the most interesting examples of color-specific trademarks as of late, Glossier filed two applications this spring, seeking registrations that extend to its use of a specific millennial pink hue on the interior of its multi-sized packaging boxes and on pink bubble wrap pouches, as well, on the basis that when consumers see those things in that color, they link them to a single source … the burgeoning 5-year old Glossier brand.

In its preliminary review of the beauty unicorn’s applications this summer, the U.S. Patent and Trademark Office (“USPTO”) refused to register either mark. While trademark protections can cover any word, name, symbol, or design (including logos, colors, sounds, product configurations, etc.), or any combination thereof, the national trademark body has some issues with Glossier’s marks, which it set out in Office Actions last year. For instance, a USPTO examining attorney initially determined that the pink bubble wrap trademark is problematic, as it “appears to be a functional design … with a specific utilitarian advantage,” namely, the bubble wrap serves “a protective feature for the goods being stored in the interior,” thereby making it ineligible for registration. Glossier’s counsel has since pushed back against this.  

Meanwhile, a USPTO examiner also took issue with Glossier’s application for boxes of “various sizes” that have a pink-colored interior, asserting in a separate letter in August that the mark is not registrable because, among other things, it is decorative and thus, does not function as a trademark. According to the USPTO, consumers are not likely “to perceive the color pink as identifying the origin of [Glossier’s] goods; but rather, they will perceive the colors as decorative features … because they are accustomed to encountering various colors, including pink, on various packaging for cosmetics and beauty care goods.”

On the heels of filing a response to the bubble wrap pouch Office Action early this year, Glossier has responded to the pink-lined box Office Action. In doing so, it opted to refine the language of the trademark description to limit its scope from pink-lined boxes generally to the “color pink [as applied to the inner surface of portions of boxes] so that it contrasts with the rest of the box.” As such, Glosser’s clarification mirrors the language that Christian Louboutin was forced to adopt in connection with the modification of its trademark registration in light of the outcome of the case that it filed against Yves Saint Laurent in April 2011. (Louboutin’s trademark registration now only extends to a lacquered red sole on contrasting-colored footwear; as opposed to broadly covering a “lacquered red sole on footwear”).

Glossier’s pink box trademark drawing (left) & specimen (right)

In response to the USPTO examiner’s previous assertion that the use of the color pink on the boxes is functional and therefore, ineligible for registration, Glossier claims that not only are there “numerous other color options available for other parties to use on the interior of boxes for cosmetic products,” it states that “there is no particular value or advantage to making a pink interior that contrasts with the rest of the box.”

With the issue of functionality out of the way, counsel for the buzzy brand, which was born from then-blogger Emily Weiss’ beauty website Into the Gloss in 2014, asserts that it has met the second prong at play – secondary meaning – given “the extensive evidence … that relevant consumers immediately recognize [its unique and distinctive use of] the color pink as applied to only the interior of a box indicates that the cosmetics and skincare products originate from Glossier and not from any other source.” Per Glossier, “This is bolstered by the fact that so many of [its] purchasers make a point to share photos of not just the cosmetic products, but also the box they come in, [which] speaks to the distinctiveness of the Glossier packaging.”

“These social media posts not only demonstrate that many consumers already associate the pink box with [Glossier], but they also serve to educate even more consumers and reinforce the association between the pink box and Glossier,” the company’s counsel states.

Such usage of color is not unheard of. Pointing to a famous example in which the use of a color maintains source-identification capabilities, and thus, trademark rights, Glossier’s counsel states that “it is well known that Christian Louboutin owns trademark rights … for ‘a red lacquered outsole on footwear that contrasts with the color of the adjoining (‘upper’) portion of the shoe,’” noting that “a federal court held that this trade dress was enforceable and protectable insofar as it would not preclude competitors’ use of red outsoles in all situations, such as monochromatic use.”

“Similarly here,” Glossier’s counsel asserts that the brand “seeks protection for a narrowly defined display of the color pink that is capable of acquiring distinctiveness just as Louboutin’s red sole was.” And more than that, the brand’s counsel says that Glossier’s particular “use of the color pink is analogous to Tiffany’s use of robin’s egg blue, in which Tiffany has secured multiple trademark registrations as applied to its product packaging.”

One of the most striking differences between Louboutin and Tiffany & Co., and Glossier – from a secondary meaning perspective – is, of course, the length of time that they have been using their respective color marks and the related saturation of the market with those marks. Unlike, Tiffany and Co., for instance, which has been using its robin’s egg blue since 1889, Glossier has been using its signature pink for just over five years. When it comes to Louboutin, the level of fame associated with its use of the red sole is noteworthy in that it has appeared on nearly every major red carpet across the globe, and generated demand that sees the brand sell more than 1 million pairs of its pricey, red-soled footwear per year.

More than that, the Tiffany & Co. and Louboutin likely boast significantly more sizable marketing budgets (although marketing spending by direct-to-consumer brands is on the rise), which enable them to boost brand awareness and thus, establish and maintain a link between their use of color and the source of their products in the minds of consumers

However, even if time and reach are not on Glossier’s side compared to the aforementioned companies, not all is lost. Chances are, social media (and traditional media attention, as well) has helped the 5-year old direct-to-consumer company to boost its level of sales (which were expected to surpass $100 million in 2018), brand awareness, and critically, consumer awareness of its trademark  in the market beyond that of a traditional brand, something that very well might help the company make its case for secondary meaning.

All the while, Glossier and its savvy legal counsel are laying the groundwork in an interesting and informative demonstration of how a young brand can claim rights – and potentially amass registrations – in less-conventional branding elements (something Off-White has also been exploring via quotation marks and red zip ties), a move that has traditionally been used almost exclusively by more established (read: older) companies, making this a matter worth watching.

Daily Links: March 3rd

image: Boohoo

image: Boohoo

1. The fashion industry in 2020: Amid uncertainty, brands, retailers, and other fashion-industry players must act strategically to capitalize on digital opportunities, boost earnings, and address sustainability. – Read More on McKinsey

2. For the fashion industry, the fallout from the coronavirus may be just beginning: China, where the virus originated, is a major manufacturing hub for many industries, including fashion. It currently manufactures more than a third of all clothing and textiles globally, although its market share in apparel manufacturing has declined slightly over the past few years. – Read More on Fast Co. 

3. An Insider’s Guide to the Fast Fashion Industry: “I think people who buy from Boohoo think the clothes are cheap because it’s cheap material. But it’s cheap labor. People are overworked and underpaid.” Read More in Vice

4. Fashion Nova Reportedly Spent $40 Million on Influencer Marketing in 2019: To put that in perspective, note that the No. 2 brand—Flat Tummy Co.—is said to have spent nearly $14 million. The top five is rounded out by Ciroc, Walmart, and PrettyLittleThing. – Read More on Complex

5. RETRO READ: How Fashion Nova Won the Internet and Is Transforming the Way Millennials Dress. “To paying customers, especially hard to fit ones, Fashion Nova symbolizes a revolution in terms of access to trendy, affordable clothes.” – Read More on TFL 

6. Unions press FTC to investigate Amazon’s market power: In a petition to the agency, they urged the FTC to examine alleged anti-competitive behavior on Amazon’s part, including directly and indirectly controlling product prices, tying its search rankings to the company’s own profit, price discrimination against users of competing e-commerce platforms, using data from its platforms to give it an advantage, and depressing wages in local labor markets. – Read More on Retail Dive

A British Comedian Legally Changed His Name to Hugo Boss to Protest Brand’s Aggressive Trademark Enforcement

image: Hugo Boss

A British comedian is not amused with Hugo Boss’ penchant for aggressively policing unauthorized uses of its trademark-protected “Boss” name. In response to what he characterizes as the multi-billion dollar German fashion brand’s pattern of sending “cease and desist letters to a number of small businesses and charities who use the word ‘BOSS’ or similar … costing them thousands in legal fees and rebranding,” Joe Lycett has legally changed his name to Hugo Boss.

Sharing a signed “deed pool,” the formal documentation that reflects a legal name change in the United Kingdom, on social media over the weekend, 31-year old Lycett stated, “It’s clear that Hugo Boss HATES people using their name. Unfortunately for them, this week I legally changed my name by deed poll and I am now officially known as Hugo Boss.” He followed up the initial announcement by asserting that he “will be launching a brand new product as Hugo Boss,” which he says will be revealed as part of his part-comedy, part-consumer education television show, Joe Lycett’s Got Your Back. 

In furtherance of the trademark-centric stunt, Lycett pointed to a recent back-and-forth between the nearly 100-year old Metzingen, Germany-headquartered fashion brand and Boss Brewing, which erupted after the small Welsh brewery filed to register the names of two of its best-selling beers with the United Kingdom Intellectual Property Office (“UKIPO”), only to face pushback from the brand. In a cease and desist letter that it sent to the brewery, and in its formal opposition filings with the UKIPO, Hugo Boss asserted that the names of the company’s Boss Black and Boss Boss beers were likely to cause confusion among consumers as to the source of the products or Hugo Boss’ affiliation with them, particularly since the brewery also made and sold branded merch.

As such, Hugo Boss argued that the marks were not only ineligible for trademark registration but the names should be changed entirely.

While 6-year old Boss Brewing defended its use of the beer names and the corresponding trademark applications for registration, which it filed in October 2018, arguing that Hugo Boss “has the Boss trademark in most areas, but [does] not have it in alcohol,” the parties ultimately settled the matter, with Boss Brewing agreeing to alter the names of the beers at issue and retain from making and selling apparel.

Speaking to Wales Online this summer, Boss Brewing co-owner Sarah John said that the company had paid almost £10,000 in legal fees during the four-month fight with Hugo Boss and would incur further costs due to the fact that they were “going to have to go through and change the labels of [the allegedly infringing beers],” which she said would “be of great expense and time for a small brewery.”

The trademark squabble between the two companies made headlines, in large part due to the striking difference in size between them, but, in reality, it is hardly a novel occurrence. Instead, it is part of a well-established pattern of large brands taking on unauthorized uses of their names on trademark infringement and dilution grounds.

Early this year, for instance, Tiffany & Co. prevailed in a fight against a small British beauty company called Cotswold Lashes by Tiffany. The New York-based jewelry giant filed an opposition to a then-pending trademark application for “Cotswold Lashes by Tiffany,” asserting that the unrelated company’s mark is “very similar” to its own UK and European Union-registered trademarks for “Tiffany & Co.” and “Tiffany,” and at least some of the parties’ goods/services overlap. With that in mind, Tiffany & Co. asserted that the mark – if registered – “would take unfair advantage of [its] marks” and would “dilute the distinctiveness” of its famous marks.

And the UKIPO agreed. In a decision in January, UKIPO trademark hearing officer George W. Salthouse stated that there is a chance that consumers might be misled into believing that goods and services bearing the “Cotswold Lashes by Tiffany” name “are those of [Tiffany & Co.] or provided by an undertaking linked to [Tiffany & Co.] … as simply a slightly different use of the [Tiffany & Co.] marks.” As such, the application for “Cotswold Lashes by Tiffany” was formally shot down and the company’s owner Tiffany Parmar was forced to pay £1,000 to Tiffany & Co. as a “contribution towards its [legal] costs.”

Before that, Spanish fast fashion giant Zara successfully took on a trademark application filed by Zara Tanzania Adventures for a figurative trademark, which features the word “Zara” along with “Tanzania Adventures” for use in connection with “travel agency and hotel services,” among other things. In furtherance of its opposition, Zara argued that while it is not in the safari business, there was a risk of confusion, nonetheless, as it is not uncommon for fashion brands, publications, and influencers, alike, to marry fashion and travel trends. Paired with “the current trend of fashion brands evolving into new adjacent markets, such as food, travel, hotels and restaurants,” there is a chance that Zara would be subject to consumer confusion and/or unfair competition should Zara Tanzania Adventures’ mark be registered.

Discussing the case at the time, K&L Gates’ Simon Casinader and Daniel Cartmell said that Zara’s win “demonstrates the far reaching, evolving nature of fashion brands and the markets they can operate in and are expanding into,” noting that in the eyes of the Court of Justice of the European Union, “the risk of unfair advantage could not be ruled out in spite on the differences between the goods and services, and emphasized the importance of considering all relevant factors to the circumstances of the case in order to ascertain the risk.”

Zara had previously threatened to sue the owner of a small, United Kingdom-based business, called Zara’s Countywear. Zara threatened legal action unless the owner, who named the business after her daughter, Zara, rebranded immediately.

Still yet, Chanel made headlines in the U.S. in 2014 when it famously filed suit against a Merrillville, Indiana salon owner named Chanel Jones, alleging that her spa and beauty salon – named Chanel’s Salon – was infringing at least nine of its federally registered trademarks and was benefiting from the established reputation of the fashion company’s name. In what would prove to be a swift win, the U.S. District Court for the Northern District of Indiana sided with Chanel, determining that Jones’ use of the word “Chanel” was, in fact, an infringement of Chanel’s trademark rights, and ordering her to cease all commercial use of the word.

At the heart of these efforts to put a halt to others’ seemingly harmless unauthorized uses of brands’ trademarks is the fact trademark rights – which are some of brands’ most valuable assets – depend on the ability of those marks to identify a single source. The fear of genericide and the risks that come with it are why brands’ legal teams actively police the market for such unauthorized uses. It is why, for years, Chanel periodically has run full page “ads” in fashion publications asking industry insiders, including journalists and critics, to stop using its name to describe non-Chanel items. And it is also why lawsuits in this vein and trademark oppositions are routine practice for luxury brands, in particular.

As for Lycett, there is no guarantee that he will be able to use his new name in a commercial capacity and also avoid trademark liability. After all, the Chanel case – and others – have made perfectly clear that individuals do not have an unfettered right to use their personal name for commercial purposes if that name conflicts with an already established brand name and that name is likely to cause confusion amongst consumers and dilution if the original mark is a famous one.

In a statement provided to TFL, a rep for Hugo Boss said on Monday, “We welcome the comedian formerly known as Joe Lycett as a member of the HUGO BOSS family. As he will know, as a ‘well-known’ trademark (as opposed to a ‘regular’ trademark) HUGO BOSS enjoys increased protection not only against trademarks for similar goods, but also for dissimilar goods across all product categories for our brands and trademarks BOSS and BOSS Black and their associated visual appearance.”

“Following the application by Boss Brewing to register a trademark similar to our ‘well-known’ trademark, we approached them to prevent potential misunderstanding regarding the brands BOSS and BOSS Black, which were being used to market beer and items of clothing,” the rep continued. “Both parties worked constructively to find a solution, which allows Boss Brewing the continued use of its name and all of its products, other than two beers (BOSS BLACK and BOSS BOSS) where a slight change of the name was agreed upon.”

“As an open-minded company,” Hugo Boss’ rep says, “we would like to clarify that we do not oppose the free use of language in any way and we accept the generic term ‘boss’ and its various and frequent uses in different languages.”

A Hot Genre of Videos on TikTok: Those Dedicated to Finding Low-Cost Luxury Fakes

image: TFL

“Last year, millennials unknowingly spent $482 million on counterfeits on Black Friday, [with] one in four likely to fall for counterfeits due to their inability to spot fakes online.” That is what digital IP infringement detection and removal firm Red Points stated in the market research report it released ahead of Black Friday in 2018. While younger demographics of consumers are not immune to being duped into buying counterfeit goods online, if TikTok is any indication, many young consumers are actively seeking out counterfeits, making videos dedicated to finding fakes a top type of content on the video-sharing social media site.

According to a recent report from CNBC, “A major video genre on TikTok is videos on how to find ‘dupes,’ or items on sites like DHGate, AliExpress or Amazon for items that look like Chanel, Gucci, Louis Vuitton and Cartier or other pricey designers.” In addition to luxury labels, activewear brand Lululemon and teen-focused retailer Brandy Melville populate the list of names for which TikTok stars are providing their followers with “dupes” for in furtherance of a larger trend in light of the fact that “many younger consumers are cost-conscious but also photographed at a dizzying rate.”

CNBC’s findings coincide with those reflected in a 2019 report from the International Trademark Association (“INTA”), which polled 1250 American consumers between the ages of 18 and 23 and uncovered some telling insights on the state of the counterfeit economy. Among the striking takeaways from INTA’s report: 71 perfect of Gen Z-ers in the U.S. had purchased a counterfeit good over the past year, with apparel and footwear being among the most-purchased types of fakes.

As for why – exactly – these consumers are driven to purchasing counterfeit goods – i.e., ones that are “exact imitations of a brand’s product and its packaging” – in the specified year-long period, INTA discovered that 73 percent of the American consumers surveyed said that such purchases are driven, at least in part, by the fact that they “feel they cannot afford the lifestyle they want.”  And of those consumers, only 35 percent said that they “expected to purchase fewer counterfeit products in the future.”

Pointing to one specific example, CNBC cites Holly Yazdi, an 18-year-old high school senior from Alabama, who counts “dupe” videos among her most heavily-viewed posts on TikTik. “A video of how to buy an Amazon dupe of Cartier’s $1,650 yellow-gold ‘Love Ring’ for less than $20” is her most popular post, per CNBC, with “other videos including [where to find] lookalike Gucci boots ($89 for the dupe; $1,190 for the real thing).”

While it is unclear, CNBC states, what TikTik’s official policy is for posts like this, the 3-year old Beijing-based company, which boasted more than 1 billion users as of February, “could potentially be liable if lots of users are directing other users to the sales of dupes. As for who else could be liable, the e-commerce marketplaces offering up these so-called “dupes,” a term that is used interchangeably with legal term of art, namely, counterfeits and trademark infringements.

In light of such rampant availability of counterfeit or otherwise infringing products on its site and given increased pressure from the Trump administration, including a recent U.S. Department of Homeland Security report centering on the role of marketplace sites in the sale of counterfeit goods, Amazon is reportedly readying a new program in which it will provide an increased amount of information about the sale of counterfeit goods on its platform to law enforcement in furtherance of its effort to cut down on fakes.

As for the brands, themselves, most have been reluctant to – or in the case of LVMH, have been openly opposed to – enter into a partnership with the likes of Amazon due, in part, to the presence of counterfeit goods on such sites, CNBC’s Megan Graham says that brands “have to decide whether to encourage the creativity of its fans,” including their penchant for making “dupes” by affixing brands’ trademark-protected logos to garments and accessories and posting videos of this on sites like TikTok, “or come off as buzzkills if they try to clamp down on the activity.”

“If you’re Chanel and you believe the only way to be Chanel is to sell thousand-dollar handbags, and you don’t at least take a look at what’s happening on TikTok or what’s happening in this generation, you [are being shortsighted] to what will make you relevant for generations to come,” says Katy Hornaday, chief creative officer at advertising agency Barkley.

But in reality, the decision that brands have to make are nearly non-existent when it comes to fans because brands do not tend to take legal action against individual consumers for buying and/or displaying fakes. This is not only because such actions come with a risk of public relations pushback, but because there is no legal basis for policing the buying and wearing of fakes in the U.S.; trademark infringement and counterfeiting liability rests, instead, with the manufacturers and/or sellers of counterfeit goods.

With that in mind, brands have focused almost exclusively on the sellers when it comes to counterfeit goods, with that pool being widened to e-commerce marketplace sites and other third-party actors, such as customs brokers and other import-related parties … but not consumers.