Stop Fashion Piracy

ABOUT THE BILL


The Summary
The Bill
The Testimony of Jeffrey Banks
The Testimony of Susan Scafidi
The Testimony of Narciso Rodriguez
The Testimony of William Delahunt
Counterfeiting Statistics



THE SUMMARY


In spite of the general rule excluding copyright of "useful articles", in 1998 Congress passed an amendment to the Copyright Act to provide limited statutory protection for useful articles. The first design enumerated for this protection was the design of a vessel hull. Our proposed bill, introduced as the Design Piracy Prohibition Act (HR 2033) in the 110th Congress by Congressman Bill Delahunt, amends the underlying vessel-hull language to extend the protection it provides to unique and original articles of apparel.

The Design Piracy Prohibition Act:

The goal is to further perfect the drafting of the bill and ensure that it completely allows for inspiration and trends, while keeping the language tight enough that it protects against a pirate taking a design and making an actual copy. The concept is that a design should not be deemed to have been copied from a protected design if it is original and "not closely and substantially similar in overall visual appearance to a protected design".

THE SPECTER OF A PROLIFERATION OF LAW SUITS

Naturally no area of intellectual property has a bright line rule or an encyclopedic resource that distinguishes between what is a copy and what is not. In the case of fashion design, it depends on the overall appearance of the article as well as on distinctive details. It is no different from a song or a book.

That being said, there are several features of the bill which will avoid frivolous law suits, such as the exclusion from any protection of design staples (e.g. a white, button-down shirt, or bell-bottom pants) which are commonplace, lacking in originality, and essentially part of the public domain.

The best answer to those afraid of a proliferation of law suits is to refer to what happens in Europe. The level of litigation there is very low because the highly protective legislation acts as a deterrent and very few cases are brought to Court. Statistics concerning fashion design infringement litigations in the Courts of Appeal of France show that these litigations are rare. Out of some 308 appeal cases concerning infringements of protected designs in 2005, only 10 concerned registered designs in the fashion category

We fully expect that the legislation will act as a powerful deterrent in this country as well. Our conversations with leading retailers indicate that as soon as design piracy will be illegal, they will actively enforce its ban in their stores.





THE BILL


To amend title 17, United States Code, to provide protection for fashion design.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Design Piracy Prohibition Act'.

SEC. 2. PROTECTION FOR FASHION DESIGN.



THE TESTIMONY OF JEFFREY BANKS


Testimony of Fashion Designer Jeffrey Banks

Before the Subcommittee on Courts, the Internet and Intellectual Property Committee on the Judiciary

U.S. House of Representatives

Hearing On H.R. 5055, "The Design Piracy Prohibition Act"

July 27, 2006

Good morning Chairman Smith, Ranking Member Berman, Representatives Goodlatte and Delahunt and other Members of the Subcommittee. I am pleased to be here today on behalf of the Council of Fashion Designers of America. The CFDA is a not-for-profit trade association of America's fashion and accessory designers. The CFDA works to advance the status of fashion design as a branch of American art and culture and to help elevate this important American industry.

I got started in the fashion business at the age of 15, working right here in Washington, where I was born and raised, as a salesman at the menswear store Britches of Georgetown. Sadly, Britches is no longer in business, but for those of you who have been here for a time, you'll remember that it was once a Washington icon. Back then, I was probably one of the only high school students in Washington with subscriptions to Daily News Record and Womens Wear Daily but even as a young teen, fashion was my passion. I left DC three weeks after graduating high school, began working as Ralph Lauren's assistant, and started college that fall. I graduated from the Parsons School of Design and after working with Calvin Klein for one year, I opened my own menswear label at the age of 22. I come to speak to you today with over 30 years experience in the United States fashion industry.

Much in fashion has changed during those 30 some years. For one, fashion has grown into a very significant and important US industry, generating approximately $350 billion in the United States each year and supporting the printing, trucking, and distribution, advertising, publicity, merchandising and retail industries as well. And of course, all the industries which support the production and dissemination of men's and women's fashion magazines. Although New York is often thought of as the U.S. fashion capital because fashion is the 2nd largest money-making business in the city, after the stock market, with the exponential growth of America's fashion and design industries other fashion centers have come into existence across the country --- Los Angeles, Dallas, and Atlanta come to mind. That wasn't the case 30 years ago, when most of the fashion in the United States was copied from the European fashion centers of Paris and Milan. Back then there weren't multitudes of talented young American designers generating their own original designs as there are today. The fashion industry in the last few years in America has become a very significant influence in trends and the way the fashion industry is perceived by consumers. American style. American design. It has meaning. And it has value.

This wonderful home-grown industry is really made up of thousands of American small businesses. We're all entrepreneurs who pursue our fashion with the hope of designing something that will catch on and capture the imagination of U.S. consumers. Success that starts in all of our individual design studios, grows opportunities all across the countryä there are fabric manufacturers, printers, the people who produce paper for making patterns, the shippers who ship the merchandise, the truckers who truck, design teams, fabric cutters, tailors, models, seamstresses, sales people, merchandising people, advertising people, publicists, those who work for retailers. In short, this is a big employment business today.

The other most significant change in the industry in the past decade is technological. Just as the internet has transformed our sister creative industries like music, books and motion pictures, creating opportunities as well as problems, it has transformed fashion and not always for the better. In the blink of an eye, perfect 360 degree images of the latest runway fashions can be sent around the world. And of course, they can be copied. And that copying, coupled with the importance of the fashion industry to America, is the main reason that I sit before you today.

Fashion design piracy has become a blight that affects all who depend on the U.S. fashion industry. It robs American workers of their livelihood, which is why the CFDA is working in an alliance with industry partners such as Harper's Bazaar and eBay, among others, to raise the profile of this massive problem. Other countries have recognized the problem and provided protection for fashion design to help counter design piracy. The United States is the only developed country that does not protect fashion in its laws. We want to thank Representatives Goodlatte and Delahunt for recognizing this inequity and introducing H.R. 5055, the Design Piracy Prohibition Act, to remedy it. We also want to thank Chairman Sensenbrenner and Representatives Coble and Wexler, among others, for cosponsoring the measure.

H.R. 5055 would provide three years of protection to those designers who register their ORIGINAL designs with the Copyright Office. That is far less than the life of the author plus 70 granted to other copyrighted works. However, because of the unique seasonality of the fashion industry, we agree with Congressmen Goodlatte and Delahunt that a shorter term of protection is reasonable. That allows the designer time to recoup the work that went into designing the article and develop additional lines of ready-to-wear, etc. I will note, however, that in Europe most member states protect fashion for a term of 25 years, with registration. In Japan, it is 15.

We believe that passage of design protection would be a powerful deterrent to the pirates. In fact, I question how many lawsuits for infringement would actually ever be filed. Since registration of designs is mandatory in order for design protection to be granted, and only original, noncommonplace designs can be protected, I believe that designers will register very selectively. And retailers have told us that if the practice of fashion design piracy was illegal, they wouldn't engage in it. A law would have a powerful and much-needed effect on the market.

The Adverse Impact of Piracy on American Designers

I have heard some question whether fashion piracy actually harms the industry. A few have even suggested that it may help designers to have their works knocked off. I would like to respond to those questions with an emphatic "yes it does hurt the designer and the industry!" And no, far from helping the designer, design piracy can wipe out young careers in a single season. The young designers are the ones who are creating the new designs, which they have to have some way of protecting. Copying is stealing. As a movie and music aficionado, I would never dream of buying an illegal DVD or CD on the street. I respect the film and music industries much too much, and all of the people that work in them. Piracy is taking somebody's design, replicating it quickly, doing it so that nobody would know the difference between yours and theirs unless you are an expert at it, and sending it out as your own. That's clearly wrong and American law must address it.

The Congress has passed laws to protect against counterfeits. One in three items seized by U.S. Customs is a fashion counterfeit. Just this year, you made it illegal to traffic in the labels that are used in counterfeit goods. But a copy of a design is really a counterfeit without the label. If no design piracy existed, there would be no counterfeiting. Both must be addressed or else the small designer with no brand recognition is left defenseless to the problem of piracy, leaving only famous brands protected, and then only if the label is taken.

The fashion business is a tough business. With each new season, designers put their imagination to work, and they put their resources at risk. When I started my business, I started with a five thousand dollar loan from my family. You never would do that today. It takes tens of thousands of dollars to start a business. And every season when you go out to create, if you're creating original prints, original patterns, original samples that you have to go through trial and error, you are talking about thousands and thousands of dollars. Then if you go to put on a show, you can spend anywhere from fifty thousand dollars to a million dollars just to put on a show to show buyers and press what you're creating for that season. So, before you have even received your first order, you've spent thousands and thousands and thousands of dollars. Whether you are an accessory designer or a star designer creating men's, women's, children's lines, you spend many thousands of dollars before you see your first order.

Some designers make their names in haute couture, where they sell a very small number of rather expensive designs. While the designs are high priced, the designer frequently doesn't even recoup investment costs for the designs because he or she sells so few garments. Designers are able to recoup their investments when they offer their own ready-to-wear lines. They can lower the prices at which their designs are sold because they sell more of them. It's all based on volume. Design piracy makes it difficult for a designer to move from haute couture into ready to wear.

The Council of Fashion Designers of America is all about mentoring. We partner with Vogue to run a mentoring program for young designers --- offering on-going technical advice and business grants. A documentary, Seamless, was even made about it. (We are reaching out to you as much for the young designers as anyone else). The CFDA received tons of e-mails after the bill was introduced, saying, "thank you, I've been pirated."

Piracy Fueled by Technology

Copying, years ago, would take anywhere from three to four months to a year or more. But as I said, all that changed with new technology. So once a designer spends the thousands and thousands and gets to that runway show and then reveals a new and original design ≠ it can be stolen before the applause has faded thanks to digital imagery and the internet. Today, there are even software programs that develop patterns from 360 degree photographs taken at the runway shows. From those patterns, automated machines cut and then stitch perfect copies of a designer's work. Within days of the runway shows, the pirates at the factories in China and other countries where labor is cheap are shipping into this country those perfect copies, before the designer can even get his or her line into the retail stores. Since there is no protection in America, innovation launched on the runway ≠ or the red carpet ≠ is stolen in plain sight.

The famous designer with an established and substantial business might be able to withstand that assault, but it can absolutely derail the career of a young designer. Let me show you a few examples of the type of copying that I've been describing ≠ these photos are included in my testimony. At this year's Golden Globes, Desperate Housewives star Marcia Cross wore a stunning coral gown designed by young designer Marc Bouwer. Within days a famous manufacturer renowned for its copying of dresses of the stars had shipped an exact copy to stores across the nation. This dress became that particular manufacturers' most popular selling prom dress of the year.

At the Academy Awards Felicity Huffman wore a black gown created by designer Zac Posen, a 25 year old designer from Manhattan who manufactures all of his designs there in the city. This time, a different manufacturer sold exact copies of the design and was bold enough to use the fact that Huffman wore the gown in his advertising. That's completely legal in the United States. And it prevents Marc Bouwer or Zac Posen from being able to develop the affordable ready-to-wear line of their own designs. They can't gain the volume to allow them to compete against the company that pirated their creations. And it dilutes their haute couture brands because nobody will spend thousands for a gown when it is available for hundreds in a department store. Without a law that makes it clear that design piracy is illegal, these pirates base their marketing strategy on all the free advertising they receive --- based on how good they are at copying! This is an example of the growth of one type of American fashion on the back of small business. That's just wrong, but it's all perfectly legal under U.S. law.

The Impact of Fashion Piracy on Consumers

Some have argued that protecting fashion will drive up costs, accessibility and ultimately harm consumers. I am deeply offended by this argument. In fact the same could be said for the protection of music, movies, software and books. If these works weren't protected by copyright, if new technologies weren't protected by patents, wouldn't prices come down for consumers? In fact, some of the very proponents of eviscerating protection for copyrighted works and limiting the copyright laws are now arguing against protecting fashion design.

If the fashion business is going to grow and provide more choices for consumers, we must understand that design innovation is the real leverage point for American companies ≠ both big and small. More competition and growth won't occur simply by everybody distributing the identical product around the world because copying isn't illegal. Growth won't occur because somebody can steal designer's creation and then go sell it for a third of the price. In the long term, lack of protection will shrink American businesses and mean the loss of American jobs.

Designers want to make their designs available at a variety of prices in a variety of stores. In the past few years we have seen a proliferation of partnerships between American designers and large American retailers ≠ even discount retailers. American designers are collaborating with retailers who realize the enormous benefit of an Isaac Mizrahi at Target, a Mark Eisen at Wal-Mart, or a Nicole Miller at JC Penny. Kohls is reported to be negotiating to sign Vera Wang. These stores have all seen the value of making the works of American designers available in their stores through licensing deals so that these designers get paid for their innovation and creativity. This proves that the real growth of American fashion is in the lower to mid price range.

Other retailers have gone a different path, not licensing, not even hiring in-house designers. They are skipping the use of their own designers in order to copy the work of others and make it available more cheaply ≠ this is done on the backs of the original designers. But design innovation -- in fact brands as we know them -- is an absolutely critical part of a free American economy. With extra labor expenses in the West, designers can't compete if low cost labor countries copy our designs. We have an investment in those designs ≠ they don't. We can't compete against piracy so the creativity and innovation that has put American fashion in a leadership position will dry up. Innovation is an investment but we can't innovate without protection against copying.

If we don't protect American fashion design creativity, we're going to lose all the advantages we've gained in the last ten years by now becoming a global industry, by now working side by side with Milan and Paris. There won't be any more L.A. Style which has become so hot around the globe. No Texas style. The wealthy will still be able to buy the designs originating out of Europe and Japan where protection exists. The rest of America will be left buying the cheap knockoffs of those European designs made in China and other places in Asia where labor is cheap. That will be bad for consumers who have enjoyed the growth of fashion choices in the U.S. And it will be sad for the workers employed by U.S. fashion industry when they no longer have jobs.

I ask that you not let that situation take place. Please pass a law to protect the creativity and innovation of American fashion design just as this subcommittee has done for America's other creative industries. Europe grants designs 25 years of protection. Boat hulls in this country receive 10. We only ask for three. Please pass the Design Piracy Prohibition Act this year. I thank you for your time and look forward to your questions.

Executive Summary of Testimony of Fashion Designer Jeffrey Banks on H.R. 5055, "The Design Piracy Prohibition Act" July 27, 2006

I am pleased to testify on behalf of the Council of Fashion Designers of America. The CFDA is a not-for-profit trade association of America's fashion and accessory designers.

The Growth of the U.S. Fashion Industry to a Big Employment Business In the last decade fashion has grown into a very important US industry, generating approximately $350 billion annually and supporting the printing, trucking, and distribution, advertising, publicity, merchandising, retail and magazine publishing industries as well. Thousands of young American designers, small businesses all across America, are generating their own original designs and creating jobs in all the industries that support fashion.

Technological Changes have Encouraged the Growth of Piracy

Because of the internet, perfect 360 degree images of the latest runway fashions can be sent around the world in the blink of an eye and then copied. Software programs develop patterns from photographs and automated machines cut and then stitch almost perfect copies of a designer's work. Within days of the runway shows, the pirates at the factories in China and other countries where labor is cheap are shipping into this country those copies, before the designer can even get his or her line into the retail stores. Since there is no protection in America, innovation launched on the runway ≠ or the red carpet ≠ is stolen in plain sight. Other countries have recognized the problem and provided protection for fashion design to help counter design piracy. The United States is the only developed country that does not protect fashion in its laws.

Fashion Piracy is Harming American Designers, Workers and Consumers Piracy can absolutely derail the career of a young designer and examples are abundant. Manufacturers selling copies of gowns worn at the Academy Awards are even bold enough to use the stars who wore the originals in their advertising. This piracy robs the designers of the opportunity to launch affordable ready-to-wear line of their own designs. They can't gain the volume to allow them to compete against the company that pirated their creations

In the past few years we have seen a proliferation of partnerships between American designers and large American retailers ≠ even discount retailers. Stores see the value of licensing deals so that these designers get paid for their innovation and creativity. The real growth of American fashion is in the lower to mid price range, but with extra labor expenses in the West, designers can't compete if low cost labor countries copy our designs. Without design protection there won't be any more L.A. Style which has become so hot around the globe. No Texas style. The wealthy will still be able to buy the designs originating out of Europe and Japan where protection exists. The rest of America will be left buying the cheap knockoffs of those European designs made in China.

H.R. 5055 Would Serve as a Powerful Deterrent to Piracy

The Design Piracy Prohibition Act would provide 3 years of protection to those designers who register their ORIGINAL designs with the Copyright Office. That is far less than the life of the author plus 70 granted to other copyrighted works but is reasonable given the unique seasonality of the fashion industry. Registration of designs is mandatory in order for design protection to be granted, and only original, noncommonplace designs can be protected. Designers will register very selectively. Retailers have told us that if the practice of fashion design piracy was illegal, they wouldn't engage in it. A law would have a powerful and much-needed effect on the market.



THE TESTIMONY OF SUSAN SCAFIDI


Susan Scafidi Associate Professor of Law & Adjunct Professor of History, SMU Visiting Professor, Fordham Law School

Written Statement on H.R. 5055, "The Design Piracy Prohibition Act" presented to the Subcommittee on Courts, the Internet, and Intellectual Property U.S. House of Representatives

July 27, 2006

Chairman Smith, Representative Berman, and members of the Subcommittee, thank you for this opportunity to address the issue of intellectual property (IP) protection and fashion design.

Introduction and Executive Summary Historically, American law has ignored the fashion industry. While trademark law protects designer logos and patent law occasionally applies to innovative design elements, the Copyright Office has held that clothing design in general is not subject to protection. As a result of this legal and cultural choice, the United States has been a safe haven for design piracy.

Creative fashion designers over the past century have been forced to rely instead on social norms and makeshift means of defending themselves against copyists.

Today, global changes in both the speed of information transfer and the locus of clothing and textile production have resulted in increased pressure on creative designers at all levels, from haute cout ure to mass market. Digital photographs from a runway show in New York or a red carpet in Los Angeles can be uploaded to the internet within minutes, the images viewed at a factory in China, and copies offered for sale online within days - months before the designer is able to deliver the original garments to stores. Similarly, e-commerce is both an opportunity and a danger for designers, who must battle knockoff artists with ready access to detailed photographs and descriptions of their works. Young designers who have not yet achieved significant trademark recognition, and must instead rely on the unique quality of their designs to generate sales, are particularly vulnerable to such theft.

Despite America's role in promoting the international harmonization of intellectual property protection, the U.S. has not joined other nations in addressing the issue of design piracy and its effects on the fashion industry. The U.S.T.R. has repeatedly targeted the rising global trade in counterfeit trademarked goods, including apparel, but copies of a garment rather than its label remain beyond the reach of American law. H.R. 5055 is a measured response to the modern problem of fashion design piracy, narrowly tailored to address the industry's need for short-term protection of unique designs while preserving the development of seasonal trends and styles.

I. Historical Lack of Protection and Changed Circumstances The lack of protection for fashion design under U.S. law is an anomaly among mature industries that involve creative expression. This exclusion of fashion from the realm of copyright was not inevitable, but was instead the result of deliberate policy choices. Examining the historical and cultural reasons for the differential treatment of fashion design is thus important to understanding the changed circumstances that indicate a greater need for some form of protection today.

A. Theory and Reality: The Historical IP/Fashion Divide

1. Fashion design is part of the logical subject matter of copyright. While in the early days of U.S. copyright only books and maps were eligible for registration, the scope of protection has since increased to include painting, sculpture, textile patterns, and even jewelry design - but not clothing. Why has clothing been excluded from protection? The problem lies in a reductionistic view of fashion as solely utilitarian. Current U.S. law understands clothing only in terms of its usefulness as a means of covering the body, regardless of how original it might be. Surface decoration aside, the plainest T-shirt and the most fanciful item of apparel receive exactly the same treatment under copyright law. In fact, a T-shirt with a simple drawing on the front would receive more protection than an elaborate ball gown that is the product of dozens of preliminary sketches, hours of fittings, and days of detailed stitching and adjustment before it is finally complete. The legal fiction that even the most conceptual clothing design is merely functional prevents the protection of original designs.

Fashion, however, is not just about covering the body - it is about creative expression, which is exactly what copyright is supposed to protect. Historians and other scholars make an important distinction between clothing and fashion. "Clothing" is a general term for "articles of dress that cover the body," while "fashion" is a form of creative expression. 1 In other words, a garment may be just another item of clothing - like that plain T-shirt - or it may be the tangible expression of a new idea, the core subject matter of copyright.

Copyright law, of course, has a mechanism for dealing with creations that are both functional and expressive, although it has not been consistently applied to fashion designs. It is conceivable - and perhaps inevitable in the absence of specifically tailored legislation - that a court could invoke the doctrine of "conceptual separability" to distinguish between the artistic elements of a new fashion design and its basic function of covering the human body. Recent judicial treatment of a Halloween costume design follows essentially this course, noting that elements of a costume like a head or tail are at least in theory separable from the main body of the garment and thus potentially subject to copyright protection. 2 It would require only a small step to find that the uniquely sculptural shape of Charles James' famous 1953 "four- leaf clover gown" or Zac Posen's 2006 umbrella-sleeve blouse are conceptually independent of the human forms beneath them and thus copyrightable. Visual artists, too, have blurred the distinction between art and fashion by designing unique works of art in the shape of clothing.3

In short, fashion design is a creative medium that is not driven solely by utility or function. If it were, we could all simply wear our clothes until they fell apart or no longer fit. Instead, the range of new clothing designs available each season to cover the relatively unchanging human body - and the production of specific, recognizable copies - demonstrates that designers are engaged in the creation of original works.

From the perspective of theoretical consistency, then, the relationship between copyright law and fashion design is ripe for change. However, relying on the courts to take this step would be a lengthy and uncertain process, one that might ultimately require a Supreme Court decision to sort through conflicting precedents. The judiciary, moreover, does not have the authority to tailor intellectual property law to the specific needs of the fashion industry and the public, as would H.R. 5055 (discussed further in Section IV infra), but can only apply existing law. The most efficient and reflective way to secure copyright protection for the creators of fashion designs would be an act of Congress.

2. U.S. law does not support the economic development of the fashion industry. Despite the importance of creative fashion design to the global economy, and to many local economies within the United States, it still operates without the benefits of modern intellectual property protection.

In historical terms, the pattern of industrial development in the U.S. and more recent emerging economies often commences with a period of initial piracy, during which a new industry takes root by means of copying. This results in the rapid accumulation of both capital and expertise. Eventually the country develops its own creative sector in the industry, which in turn leads to enactment of intellectual property protection to further promote its growth. This was the pattern followed in the music and publishing industries, in which the U.S. was once a notorious pirate nation but is now a promoter of IP enforcement.

In the case of the American fashion industry, however, the usual pattern of unrestrained copying followed by steadily increasing legal protection is not present. This situation has led to multiple inefficiencies in the development of the U.S. fashion industry. In the legal realm alone, creative designers have borne the costs of a decades- long effort to craft protection equivalent to copyright from other areas of IP law, particularly by pressing the boundaries of trademark, trade dress and patent law. While each of these areas of intellectual property law offers protection to some aspects of fashion design, most notably logos used as design elements and famous designs that have developed sufficient secondary meaning to qualify for trade dress protection, the majority of original clothing designs remain unprotected. Even design patents, which can in theory protect the ornamental features of an otherwise functional object, are seldom useful in a seasonal medium like fashion. The result is a legal pastiche that is confusing, expensive to apply, and ultimately unable to protect the core creativity of fashion design.

Current U.S. IP law thus supports copyists at the expense of original designers, a choice inconsistent with America's position in fields of industry like software, publishing, music, and film. The most severe damage from this legal vacuum falls upon emerging designers, who every day lose orders - and potentially their businesses - because copyists exploit the loophole in American law. While established designers and large corporations with widely recognized trademarks can better afford to absorb the losses caused by rampant plagiarism in the U.S. market, very few small businesses can compete with those who steal their intellectual capital. In fashion, America is still a pirate nation; the future direction of the industry will be directly influenced by the absence or presence of intellectual property protection.

B. Cultural Explanations and Changed Circumstances

The differential treatment of fashion relative to other creative industries with extensive legal protection is the result of specific cultural perceptions and historical circumstances, many of which have now changed. While it is beyond the scope of this testimony to address the entire cultural history of the fashion industry, several recent developments are particularly important to understanding why a change in the law is appropriate at this time.

1. Fashion design is now recognized as a form of creative expression.

The origins of copyright law date back to the Enlightenment era, a period that also articulated the Western distinction between art and craft. As copyright developed and extended to include various forms of literary and artistic works, it continued to maintain the division between legally protected, high status "fine art" and mere "decorative arts" or handicrafts. The design and manufacture of clothing, which for most families was a household task, did not rise to the level of creative expression in the eyes of the law.

Even after fashion design became increasingly professionalized during the nineteenth century, with the development of both haute couture and ready-to-wear sectors, the U.S. failed to recognize its creative status. Contributing to this low valuation was fashion's association with women rather than men, a shift influenced by the Industrial Revolution. By the end of the nineteenth century, American sociologist Thorstein Veblen famously linked fashion with "conspicuous consumption," concluding that the role of the female was "to consume for the [male] head of the household; and her apparel is contrived with this object in view."4 Both the feminizing of fashion and the intellectual attention to consumption rather than production prevented the legal recognition of fashion as a serious creative industry.

Modern attitudes toward fashion design as a creative medium, however, have changed dramatically. Institutions from the Smithsonian to Sotheby's take fashion seriously, and organizations like the National Arts Club and the Cooper-Hewitt National Design Museum have recently added fashion designers to their annual categories of honorees. Even a Pulitzer Prize for criticism was awarded for the first time this year to a fashion writer, Robin Givhan of the Washington Post. It is inconsistent with this cultural shift for copyright law to deny fashion's role as an artistic form.

2. Creative design now exists at all price levels.

For most of the history of the fashion industry, a small group of elite, Parisian fashion designers dictated seasonal trends, and the rest of the world followed as best they could.

The privileged few were measured for couture originals, the relatively affluent bought licensed copies, and the majority settled for inexpensive knockoffs or sewed their own garments at home.

With the recent democratization of style, creative design originates from many sources and at all price levels. Fashion is now as likely to flow up from the streets as down from the haute couture, and reasonable prices are no guarantee against copyists. Some of the most aggressively copied designs are popularly priced; consider this summer's popular Crocs "Beach" style shoe at $29.99 and its battle with copies sold for as little as $10.00.

In addition, within the past few years high-end designers have shown an increasing desire to reach a wider audience and to collaborate with mass-market producers. Fashion houses are seeking to experiment with new ideas in their runway collections, then to provide customers with affordable versions in their diffusion lines, and finally to adapt the looks for a broad range of consumer needs and budgets. This trickle promises to become a flood, as Isaac Mizrahi's designs for Target are joined by Chanel designer Karl Lagerfeld's line for H&M, Mark Eisen's sportswear for Wal-Mart, and many others.

As a result of these changes, it is no longer necessary for the general public to turn to knockoffs in order to purchase fashionable apparel, as it might have been in past decades. Some creative work is simply affordable; in addition, creators of more expensive designs are now finding ways to enter the mass market as well. A change in copyright law to incorporate fashion would facilitate designers' ability to disseminate their own new ideas throughout the market, much the way copyright law allows book publishers to first release hardcover copies and then, if the book is successful, to print paperbacks.

3. The internet era calls for new strategies to protect creativity.

Creative fashion designers in earlier periods fought copyists by relying on strategic measures like speed and secrecy, the social norms of the industry, and perhaps patterns of consumer behavior. In the absence of copyright protection under U.S. law, these extralegal mechanisms were an important part of the fashion business.

Today, however, the same speed and accuracy of information transfer that affects the music and film industries is also having an impact on fashion. Would-be copyists no longer have to smuggle sketch artists into fashion shows and send the results to clients along with descriptions of color and fabrication. Instead, high-quality digital photos of a runway look can be uploaded to the internet and sent to copyists anywhere in the world even before the show is finished, and knockoffs can be offered for sale within days - long before the original garments are scheduled to appear in stores. Fifty years ago, design houses may have been able to impose somewhat successful embargoes on the press; now, such efforts are futile.

Similarly, the claim that knockoffs enhance demand for ever-newer luxury goods among status-seeking consumers, an economic argument dating back to at least 1928,5 fails to take into account the modern speed of production. Once upon a time it may have been that the adoption of a new luxury item by affluent trendsetters was imitated first by wealthy consumers, then by the middle class, and then in form of knockoffs by everyone else, at which point the fashion-forward would abandon the item and demand the next new thing - which producers were happy to provide. Today, however, this "fashion cycle" scenario is rendered obsolete by the fact that poor quality knockoffs can be manufactured and distributed even more quickly than the originals, leaving creative designers little opportunity to recover their investment before the item is already out of style. Even if the fashion cycle were ever sufficient to support the design industry, that is no longer the case.

As in other areas of creative production, the digital age should provoke a reexamination of the legal protection available to fashion design.

4. The future of American fashion is in creativity, not low-cost copying.

Textile and clothing manufacturing have historically played an important role in the American economy, driving the Industrial Revolution and supporting thousands of jobs.

With the increased harmonization of global markets and the January 1, 2005, dismantling of import quotas in this sector, however, it has become apparent that the U.S. can no longer compete with China and other centers of low-cost production on price alone. No matter how inexpensively the U.S. can produce knockoffs, other countries can manufacture much cheaper versions.

Instead, the future of the U.S. economy will rest on the ability to develop and protect creative industries, including fashion design. America leads the world in industries like music, film, and computer software, but our history as a pirate nation in the field of fashion has limited our influence in this area. Creative fashion design is a relatively young ind ustry in the U.S., albeit one in which there is growing interest among students choosing their careers. If this industry is to reach its full potential, now is the time to consider the impact of government policies, including intellectual property law.

II. Effects of Design Piracy

The lack of copyright protection for fashion design negatively affects both individual designers whose expressions are copied and the intellectual property system as a whole. As a law professor with a website dedicated to IP and fashion, I frequently receive messages from young designers whose work has been stolen or who hope to prevent the copying of their designs. It is with regret that I must repeatedly explain that while that law can protect designers' trademarks against counterfeiters, in the U.S. the actual designs are fair game for copyists.

A. Impact on Designers

Creativity is an intrinsic part of human nature, not a byproduct of the intellectual property system. Poets would continue to write, musicians to sing, and fashion designers to sew even if all copyright protection were eliminated tomorrow. While the concept of intellectual property is only a few hundred years old, archaeologists have recently discovered 100,000-year-old shell necklaces, which they interpret as the first evidence of human symbolic thinking.

The goal of the IP system, however, is not merely to ensure that authors put pen to paper or needle and thread to fabric, but to encourage and reward individuals so that they can continue to deve lop their ideas and skills in a productive manner. In other words, intellectual property law ideally serves as a tool for harnessing and directing creativity. For this reason, the Constitution empowers Congress "[t]o promote the progress of science and useful arts." It is this "progress" over time that is hindered by the lack of legal protection for fashion design.

Young designers attempting to establish themselves are particularly vulnerable to the lack of copyright protection for fashion design, since their names and logos are not yet recognizable to a broad range of consumers. These aspiring creators cannot simply rely on reputation or trademark protection to make up for the absence of copyright. Instead, they struggle each season to promote their work and attract customers before their designs are copied by established competitors.

Over the past century successive waves of American designers have entered the industry, but few fashion houses have endured long enough to leave a lasting impression comparable to the influence of French fashion. While it is difficult to quantify or even identify designers who give up their businesses, particularly for reasons of piracy, there is strong anecdotal evidence that design piracy is harmful to the U.S. fashion industry. Consider just two representative examples, one a historical snapshot from an early attempt to develop American fashion and the other from this year.

In 1938 Elizabeth Hawes wrote a best-selling critique of the fashion industry entitled Fashion is Spinach.6 In it, she chronicled her start working for a French copy house, the only job in the fashion industry available to a young expatriate American in the 1920s; her return to New York to design her own line; and her ultimate disillusionment with the tyranny of mass production and the ubiquity of poor quality knockoffs that undercut her own designs. She ultimately closed her business in 1940, but not before leaving a record of the perils of the industry for a creative designer.

From a legal perspective, little has changed in almost seventy years. Handbag designer Jennifer Baum Lagdameo co- founded the label Ananas approximately three years ago. A young wife and mother working from home, Jennifer has been successful in promoting her handbags, which retail between $200 and $400. Earlier this year, however, she received a telephone call canceling a wholesale order. When she inquired as to the reason for the cancellation, she learned that the buyer had found virtually identical copies of her bags at a lower price.

Shortly thereafter, Jennifer discovered a post on an internet message board by a potential customer who had admired one of her bags at a major department store. Before buying the customer looked online and found a cheap, line- for- line copy of the Ananas bag in lower quality materials, which she not only bought but recommended to others, further affecting sales of the original. While Ananas continues to produce handbags at present, this loss of both wholesale and retail sales is a significant blow to a small business.

Copying is rampant in the fashion industry, as knockoff artists remain free to skip the time-consuming and expensive process of developing and marketing new products and simply target creative designers' most successful models. The race to the bottom in terms of price and quality is one that experimental designers cannot win. Nearly every designer or even design student seems to have a story about the prevalence of copying, a situation that makes the difficult odds of success in the fashion industry even longer.

B. Design Piracy and Counterfeiting

Not only does the legal copying of fashion designs harm their creators, it also provides manufacturers with a mechanism for circumventing the current campaign against counterfeit trademarks. If U.S. Customs stops a shipping container with fake trademarked apparel or accessories at the boarder, it can impound and destroy those items. If, however, the same items are shipped without labels, they are generally free to enter the country - at which point the distributor can attach counterfeit labels or decorative logos with less chance of detection by law enforcement. I have personally witnessed the application of such counterfeit logos to otherwise legal knockoffs at the point of sale; after the consumer chooses a knockoff item, the seller simply glues on a label corresponding to the copied design. The continued exclusion of fashion designs from copyright protection thus undermines federal policy with respect to trademarks by perpetuating a loophole in the intellectual property law system.

III. Comparative IP Regimes and Fashion Design

While the U.S. has deliberately denied copyright protection to the fashion industry over the past century, other nations have incorporated fashion into their intellectual property systems - and have consequently developed more mature and influential design industries.

France in particular has treated fashion design as the equivalent of other works of the mind for purposes of intellectual property protection. French laws protecting textiles and fashion design date back in their earliest form to the ancien régime; these laws were subsequently updated and clarified in the early twentieth century. As a result, Parisian fashion designers have been able over the course of their careers to develop and protect signature design repertoires, which even after the departure of the founding designers can serve as a form of brand DNA for their design houses. The formal recognition of fashion design as an art form has thus helped maintain the preeminence of the French fashion industry and augmented the lasting creative influence of both native designers and those who have chosen to work in France.

The association between strong intellectual property protection and a successful creative industry has not been lost on other countries that sought to support their domestic design industries. As long ago as 1840 a British textile manufacturer wrote, "France has reaped the advantage of her system; and the soundness of her view, and the correctness of her means, are fully proved by the results, which have placed her, as regards industrial art, at the head of all the nations of Europe, in taste, elegance, and refinement."7 While modern French law still offers the most extensive protection to fashion design, Japan, India, and many other countries have incorporated both registered and unregistered design protection into their domestic laws. In addition, E.U. law has since 2002 provided for both three years of unregistered design protection and up to 25 years of registered design protection, measured in five-year terms.

The global legal trend toward fashion design protection has rendered the U.S. an outlier among nations that actively support intellectual property protection, a position that is both politically inconsistent and contrary to the economic health of the domestic fashion industry.

Congress should take these factors into account when considering a reasonable level of legal protection for fashion design.

IV. The Role of H.R. 5055

When analyzed in light of the goals of the intellectual property law system, current challenges to the U.S. fashion industry, and international legal developments, H.R. 5055 is a carefully crafted legal remedy to the inequities resulting from the exclusion of fashion design from copyright law. The bill is narrowly tailored to achieve a balance between protection of innovative designs and the preservation of the extensive public domain of fashion as an inspiration for future creativity. Perhaps most importantly, it is a forward-looking measure that lays the groundwork for the future development of a robust, creative American fashion industry.

The fashion industry's decision not to seek full copyright protection, but instead to request only a limited three-year term, is particularly appropriate to the seasonal nature of the industry. This period will allow designers time to develop their ideas in consultation with influential editors and buyers prior to displaying the work to the general public, followed by a year of exclusive sales as part of the designer's experimental signature line, and another year to develop diffusion lines or other mass- market sales. While many legal scholars have aptly criticized the full term of copyright protection as excessive when viewed solely in light of an incentive-based rationale, a three-year term chosen after careful analysis of the relevant industry is exactly the sort of scheme that "low protectionist" activists have endorsed for copyright as a whole. Such a short term of protection will simultaneously encourage designers to facilitate affordable access to cutting-edge design and contribute to the ongoing enrichment of the public domain.

The choice to amend the Copyright Act, rather than to modify the design patent system or devise a sui generis scheme involving prior review, is also well suited to the needs of the fashion industry. The bill appropriately recognizes that the short lifespan of new fashions is inconsistent with burdensome legal formalities. Indeed, I would suggest that unregistered protection would be even more consistent with the U.S. copyright system, existing European design protection, and the needs of the industry, particularly inexperienced designers. Nevertheless, the establishment of registered design protection is an improvement over the current state of the law.

The language of H.R. 5055, particularly if amended to clarify that only "closely and substantially similar" copies will be considered to infringe upon registered designs, is likewise well crafted to both promote innovation and preserve the development of trends. As with other forms of literary and artistic work, copyright law is clearly capable of protecting specific expressions while allowing trends and styles to form. From a legal perspective, a fashion trend is much like a genre of literature. Granting copyright to a John Grisham novel does not halt the publication of many similar legal thrillers, nor does the protection of Dan Brown's DaVinci Code prevent a spate of novels involving Mary Magdalene or the Knights Templar from appearing in bookstores. When an author writes a bestseller, imitators of his or her style tend to follow - but they are not permitted to plagiarize the original. Copyright in this sense is merely a legal framework that supports an existing social norm; neither reputable authors nor creative fashion designers engage in literal copying of one another.

The level of generality at which fashion trends exist, moreover, is far too broad to be affected by the proposed bill. To paraphrase next month's Vogue magazine, currently on the newsstand, red will still be the new black following the passage of H.R. 5055. In the same way, common trends such as wide neckties in the 1970s or casual Fridays in the late 1990s were not dependent on the presence or absence of design protection, nor would such nonspecific ideas ever be subject to intellectual property protection.

In addition to the protective benefits of H.R. 5055, the legislation may have a beneficial effect on creativity in the industry as a whole. Former copy houses, no longer able to legally replicate other designers' work, will be forced to innovate or at least transform their work so that it no longer substantially resembles the original products. This in turn can be expected to lead to more jobs for design professionals and more reasonably priced choices for consumers.

At present, the bulk of design-related litigation tends to invoke federal trademark and trade dress as well as state unfair competition claims in order to mimic the protections that would be offered by H.R. 5055, with limited success. To the extent that fact-based disputes regarding copying continue to arise, the new legislation will permit parties to engage in more straightforward, simpler litigation. Not only will this avoid the unnecessary distortion of trademark and trade dress law, but it will also clarify the parameters of what constitutes protected design. As in other creative industries governed by intellectual property law, an equilibrium will arise and manufacturers will find it in their best interests to offer retailers innovative rather than infringing work.

H.R. 5055 promises to remedy a historical and theoretical imbalance in the copyright system and to offer protection to the many young American designers whose work is currently vulnerable to knockoff artists. For these reasons, I encourage you to seriously consider this reform.





THE TESTIMONY OF NARCISO RODRIGUEZ


Testimony of Fashion Designer Narciso Rodriguez

Before the Subcommittee on Courts, the Internet and Intellectual Property Committee on the Judiciary

U.S. House of Representatives

Hearing On Design Law - Are Special Provisions Needed to Protect Unique Industries

February 14, 2008

Good afternoon Chairman Berman, Ranking Member Coble and other Members of the Subcommittee. I am pleased to be here today on behalf of the Council of Fashion Designers of America, of which I currently serve on board of directors. The CFDA is a not-for-profit trade association of America's fashion and accessory designers. The CFDA works to advance the status of fashion design as a branch of American art and culture and to help elevate this important American industry.

First I would like to thank Congressmen Delahunt and Goodlatte for introducing HR 2033, the Design Piracy Prohibition Act which protects for a period of three years, fashion designs that are deemed unique and original and registered with the copyright office. This is the number one legislative priority of the CFDA and our president Diane von Furstenberg and we hope it will become law very soon.

It is appropriate that this hearing falls on Valentine's Day, which marks the conclusion of fashion week in New York. Both events serve to highlight the importance of the more than $350 billion U.S. clothing and accessory industry More and more young Americans are going into fashion, and America now leads the world in fashion design.

Fashion designers and their stores are all over America. In addition to the jobs directly related to the manufacturing of apparel and fabric, the fashion industry creates jobs in many sectors: printing, trucking, distribution, magazine publishing, advertising, publicity, merchandising, and retail. The more acclaimed America's fashion designs become, the more they're copied. While the U.S. Chamber of Commerce estimates the lost revenues due to counterfeiting and piracy in the fashion and apparel industry (for 2006) to be $12 billion annually, they also indicate that they believe it may be higher due to the fact that design piracy is not outlawed.

As every counterfeit garment starts as a pirated design, we know the $12 billion worth of counterfeit garments is $12 billion of design piracy. Clearly that's only garments seized, a baseline estimate; as design piracy is not illegal, there are no garments seized and therefore no counting is done. But it's a big problem and it's growing.

I am an American designer with a uniquely American story. As the only son of Cuban immigrants, I grew up in Newark, NJ. My father was a longshoreman who dreamed that I would become a doctor, lawyer or dentist. But from the time I was a teen, I dreamed of being the next Donna Karan, Calvin Klein or Ralph Lauren. Becoming one took much more than just suddenly having a brilliant idea, sketching it and meeting success.

It took training. Fashion design is an art that must be learned, just like painting, sculpting, or writing. It took nearly $50,000 in loans and three years to get my degree from the Parsons School of Design in New York. My parents couldn't afford my tuition, so I took out school loans to pay the $15,000 a year. Today Tuition is $32,000. After graduating, fashion designers usually train as apprentices. I trained under Donna Karan at Anne Klein, as a design assistant at Calvin Klein and as the designer of the Cerruti label in Paris.

It took hard work. After years as an apprentice and designing for someone else, I started my own company in 1998. Ever since then, I'm always traveling to collect ideas, to see new fabrics, develop unusual yarns and fabrics, and to get inspiration from architecture and different cultures and to sell my designs. A signature of my work is the texture and dimension of the fabric of the garment incorporated into the overall design; we create it much like a painter or sculptor creates.

It took financial capital. To design and fabricate my 250 piece collection it takes six to twelve months. The fall and spring runway shows cost on average $800,000 to stage. The fabric another $800,000, the work room that develops the patterns and garments another $ 1,500,000. The travel budget for design and fabric development is $ 350,000 and marketing is another $2,500,000 There are so many aspects of a fashion business that make it risky in the best of circumstances, and the pirates are only making it riskier. The story I'm about to tell you is one of the reasons that I am before this subcommittee today urging that you pass a law to prohibit piracy of fashion designs. Back in 1996 one particular dress put me on the fashion map. My good friend Carolyn Bessette (whom I met while working at Calvin Klein), asked me to design her dress for her marriage to John F. Kennedy, Jr. That dress became the most copied silhouette of the past decade. The pirates sold around 7 million or 8 million copies. I sold 40.

I used a special technique to complete that look and it is part of my signature style that I had been developing since I was quite young. There was a lot of construction and special placement of seams involved even though it looks quite simple. It's a technique that fellow designers have learned from. The first group of copies the pirates released weren't sophisticated, but then, a magazine reprinted the correct sketch of the dress and far superior copies were produced. Those dresses were sold using my name, and using the Kennedy name. Some may say that I benefited from the publicity; publicity with no sales does not pay the bills.

Unfortunately, this piracy story is not unique. I have many more and so do most designers. Years ago I made a signature handbag. It was knocked off by a manufacturer, and walking down the street before I could sell it. Now that I have the financial backing to create the infrastructure that would be required to put a piece like my signature bag into production - everybody already has it. At 21st and Park in New York a guy stands on the corner and sells copies of it every day. I would love to know where that money is going and what it funds. The same thing happened with my signature shoes - we call them the Sarah Jessica shoe because Sarah Jessica Parker wore them on Sex and the City. I was finally at a point in my career where I was able to take a signature look I had worked on for years and produce it for my client. I'd been sketching those shoes, and evolving them since I was a teen. Then the design was knocked off by a manufacturer. There is no way, under the current legal system in the U.S for designers to beat the pirates to market.

Why can't designers beat the pirates? Since there is no protection for fashion design in the U.S., companies have emerged with piracy as their business model. These companies are built for the sole purpose of copying. They have lots of money to warehouse cheap materials in every color of the rainbow. If I show a black dress in crepe with a turquoise bra in satin, then they immediately cut it in similar fabrics and put it into their stores. Pirates don't have to sell it - they just put it in their stores. It's like the guy who takes the shortcut at the race - we all start at the beginning but he cheats and is the first to walk across the finish line.

With no human or capital investments to make, when pirates copy they spend nothing; they can afford to make the copy in such quantities and low price levels that on just one of my 250 styles they could recoup what I might make on my entire collection. I can't even do a diffusion line, which is a mass market line. It is when a designer takes their own designs and produces them at higher volumes using machine sewing and less expensive fabrics Designers Isaac Mizrahi has licensed a line at Target. So has Proenza Schouler, among others - but that only happens when retailers want the designer name as well as the design, which they can steal without paying. People have already taken my DNA and diffused it. The pirates are the only ones who can make lower priced versions of my designs. If the pirate enterprises were forced to hire real designers to work there would be more designers, more jobs, and it would elevate real and original design choices for all consumers. Instead, they are creating jobs in sweatshops in Asia where the copies are manufactured.

Sadly, the U.S. doesn't treat designers as well as we are treated in other developed countries with strong fashion industries, such as Europe, Japan or India - all provide 15-25 years of protection for registered fashion designs. Unlike photographers, sculptors, jewelry designers, and yes, even boat hull designers, fashion designers are not protected at all.

Please take a look at the images before you. Do these designs look any more utilitarian than a piece of beautiful jewelry or a gleaming vessel hull?

This design is one of my own from this season's collection...

This design was created by Rodarte, a small CA company formed by two women designers who stitch everything by hand. They are the up and comers. They are only at a point now where they can make clothes that are affordable and sellable. They are so fresh - their work will be so copied.

This is the work of Brooklyn Designer Maria Cornejo. This is a great example of someone I have greatest respect for. She is a true original.

Fashion designers aren't working with stones or fiberglass, rather our craft is done with beautiful silks, leathers and wools and yes, even metal. Our work can be as whimsical and imaginative as any other - and copied just as fast as any that already has the protection we seek. I heard there is technology today in China that allows a dress to be made from a photo in record time. Perhaps this explains why the pirated merchandise hits the stores not weeks, but months before mine reaches my outlets.

A century ago the U.S. made a determination that clothing was functional and shouldn't be granted protection. Much has changed in the industry since then. As the slides I showed you illustrate, today, fashion design has become an art form. We don't think that Congress should protect all apparel. Some of it isn't original or unique. But when a designer creates that look that is special, so special that everybody wants to copy it, he or she should have a small window of protection - we're asking for three years - in which they can develop their idea and get it into the marketplace themselves.

To address some of the concerns we've heard raised about the bill:

We don't want to prevent anyone from picking up a look. A designer's ability to create a trend is often his mark of success. HR 2033 wouldn't cover any design that had ever been publicly available prior to enactment. There will be a gigantic public domain of designs that we can all use for inspiration. However, I shouldn't have to experience walking down a NY street and seeing my original in the store window of a department store and a cheap imitation in the window of another, a dozen blocks down.

Design piracy protection does not drain the market of accessibly-priced garments; it just assures that the creator of the original design which will serve as the basis for an accessibly-priced garment is the one with the opportunity to manufacture or license that line, not the pirates.

There is no cause of action created against consumers who buy pirated designs in this bill. The only people who can be sued in a civil action are those who make, made or import, for sale or use in trade, or sell or distribute for sale or use in trade pirated designs. Even then the person must have knowledge, or reasonable grounds to know, that the design was protected and was copied.

We have identified solutions to the problems of fraudulent registrations and frivolous lawsuits, two of the most frequent objections to the bill as introduced.

We have clarified the scope of what is protected and developed a more narrow and clear definition of originality.

The American International Property Law Association (AIPLA) has called on Congress to address the problem of fashion piracy. In October the AIPLA Board passed a Resolution in support of the HR 2033 and S1957, the House and Senate Design Piracy Prohibition Acts with some minor changes to which we have agreed. Manufacturers have also expressed some concerns about the bill. Apparel and accessory manufacturers told us they were concerned about the scope of the legislation and the risk of encouraging litigation and to a lesser extent, so were designers. The CFDA has had extensive discussions with the American Apparel and Footwear Association in an attempt to reach a consensus to address concerns we shared. We are hopeful that within the next month, we will be able to jointly present to you the negotiated language. We are grateful to Representatives Delahunt, Goodlatte, Coble, Weiner and Issa for your patience in allowing us to make improvements to the bill that you introduced and cosponsored. While these changes are important, the underlying structure of the bill has not changed. Today's hearing is about overall design protection. Other industries may deserve protection, I'm only an expert on fashion. I do know that the fashion industry has been working on fashion design protection legislation for over 3 years. We have worked with others in the industry to develop unified support for a bill. We've done the hard work. We are hopeful that once we have this agreement we won't have to wait for other sectors of business to fall behind protection. We're ready - they aren't. We would ask that the subcommittee move the Design Piracy Prohibition Act this year.



THE TESTIMONY OF WILLIAM DELAHUNT


Testimony of Congressman William Delahunt

Subcommittee on Courts, the Internet and Intellectual Property Committee on the Judiciary

U.S. House of Representatives

Hearing On Design Law - Are Special Provisions Needed to Protect Unique Industries

February 14, 2008

The Chamber of Commerce, in its report, "Economic Analysis of the Proposed CACP Anti-Counterfeiting and Piracy Initiative", reminds us how "the health of the US economy depends on a wide range of industries that rely on intellectual property to create and produce state-of-the-art products, and how unfortunately, counterfeiting and piracy, therefore serve to undermine the long-run competitiveness of the US economy". According to the Chamber, counterfeiting and piracy cost U.S. businesses a loss of $225 billion in revenue each year. Fashion and apparel account for a minimum of $12 billion of that loss.

We have laws against counterfeiting apparel and footwear; we must enact laws against pirating, which after all, is counterfeiting without the label.

America has become the world leader in fashion design.

In addition to the many and varied manufacturing, marketing, and publishing industries needed to support fashion design - it's worth noting that the fashion industry is creating TV shows, cable networks, internet sites, etc. And I read that it's even reviving real estate values in areas where garment manufacturing businesses lost their jobs to Asian competitors. By the way, this is not just an LA / NY phenomena, it's happening in S.E. Boston too.

In my home state, as well as across America, fashion design businesses are proliferating and growing. As they grow, so do the many businesses that support fashion design, and the number of opportunities for our graduates. The Massachusetts College of Art and Design (MassArt) is now offering a bachelor's degree in Fashion Design to 4-year students, as are many other colleges around the country. In fact, students at MassArt are winning scholarships and recognition from the Council of Fashion Designers of America's merit-based Scholarship Program.

But of course‹as we know from experience in other important areas of American intellectual property - when we lead the world in a creative industry, it soon will become the world's leading counterfeit and piracy victim.

Judging from FBI, Justice and Commerce Department reports, China is growing an industry based on copying and exporting American fashion designs. This job drain is fostered by the speed with which a 3D picture can be sent across the globe to machines that can take a picture and perfectly copy the pattern, the DNA of the design.

And, sadly, the growth of the Chinese fashion piracy industry is also spurred by our lack of laws against it. It's legal!

I read in the Wall Street Journal that in China, one city is devoted to making socks, another - kids' clothes, etc. We need to make sure we don't wake-up to find a Garment Knock-off City! They can create infrastructure in minutes.

Given the fact that we're heading into tough economic times, as we were reminded during the holidays, retail is a closely watched barometer of the country's economic health. This January was the worst January for retail sales since 1969 (the year the International Council of Shopping Centers started keeping track of such). Though, as Women's Wear Daily reports, retailers are looking to designers to create unique and exciting designs to bring them out of the slump or otherwise improve their numbers, as they have in the past.

So we really must ask ourselves: here we are with a real and proven growth opportunity for new jobs in America, new exports‹all based on the kind of intellectual property that has always advantaged our balance of trade. Why aren't we protecting it in the same way we protect and promote our other creative industries that are so important to our economy?

Europe, Japan and India have protection for 15-25 years for registered designs and we have nothing. Clearly, it has fueled their success; one doesn't have to be a fashion expert to know that the European fashion industries are robust industries that play important roles in their economies.

And in Europe (where in some countries they've had protection for over 100 years), their 15-25 year copyright protection for registered designs has spurred negligible litigation. According to the EU, out of some 308 appeal cases concerning infringements of protected Designs in 2005, only 10 out of 308 related to registered designs in the fashion category.

The U.S. fashion industry is vibrant, but it is young. We can't just stand by and watch yet another industry migrate out of the U.S. We need to pass H.R. 2033 to prevent others from growing an industry that Americans create.

As this committee proceeds to beef up the enforcement of our counterfeiting regimes, we should take the time to plug this loophole in our anti-counterfeiting regime. As reported in the media, law enforcement is being thwarted in its apparel anti-counterfeiting efforts because the pirates are taking clever advantage of the fact that we don't have laws against design piracy. To circumvent crackdowns on smuggling by customs, counterfeiters have taken to openly and legally importing goods with pirated designs - "blanks" - only to put on the label that makes a blank an official counterfeit either at the point of sale or in clandestine operations here in the U.S. Last April, a storage unit raid in Massachusetts netted nearly 20,000 counterfeit handbags and wallets, plus more than 17,000 generic handbags and wallets, and enough counterfeit labels and medallions to convert more than 50,000 generic handbags and wallets into counterfeits. Clearly, storage units are not easy to find. Harder yet (or impossible) would be having an FBI agent at each sale. This bill proposes an easier way to prohibit design piracy and thwart counterfeiting.

This bill introduced by myself and Congressman Goodlatte and several colleagues on the Committee, provides a framework. I am aware that there have been fruitful negotiations with those who want to improve the bill - - as all of us do. Time is running out. I would hope, Mr. Chairman, that we can sit down soon, as we return from recess, to connect the ideas that have been proffered and write a bill that can pass our committee in the very near future.



COUNTERFEITING STATISTICS


COUNTERFEITING AND THE U.S. FASHION DESIGN INDUSTRY: BY THE NUMBERS
Counterfeiting and the Fashion Design Industry
Economics of the International and U.S. Fashion Design Industries U.S. Fashion Design Market is Growing

According to the NPD Group, Inc., leading provider of consumer and retail information:

U.S. Fashion Employment


THE NEED FOR PROTECTION FOR ORIGINAL DESIGNS

Fashion is not protected under the current law because of the general rule exclusion of "useful articles" from the scope of Copyright protection.

The copyright of a fabric design is well established and well protected. The pirated design of a fabric is prohibited but even though it is undisputable that the design of a dress or a handbag features the same artistic creative expression as the design of a fabric, in the US, unlike Europe or Japan, the law does not give any protection to designers.

On the other hand, although counterfeits - pirated designs with a fake label - are prohibited, millions of pirated goods are allowed to enter this country every year without the label, only to have fake labels affixed later in the US.

Lack of protection for original and distinctive fashion designs is eroding the innovation and competitiveness of U.S. designers and manufacturers, whose newest and most original creations are imitated and duplicated literally hours after being presented to the public for the first time. The development of new technologies in the last few years has considerably worsened this problem since, via the Internet, counterfeiters and pirates in China have immediate access to all fashion creations the minute they are viewed by the public in New York. Knock-off garments are now often marketed before the originals.