The Fashion Supply Chain from the Legal Perspective | Holland & Knight | PI Apparel

Hi, I'm Carolyn, here again with my friend Tom Brook, and I'll make a little introduction. We're going to be talking about fashion intellectual property from a legal perspective here with Tom. You know, I'm so happy to be here speaking with him today. I've known him for a bit, and we did work on an intellectual property case together for Lucchese Western Boots some years ago. Tom works at Holland and Knight. He is an amazing intellectual property lawyer, and he is a partner at the firm. He started out his career as an aide to senators and congressmen, and he has had articles that appeared in IP Today, World Intellectual Property Review, and several others. Be sure to connect with him on LinkedIn and hit him up while you're here to discuss your intellectual property or legal needs. No charge. Right, do it while it's free. No, I'm just kidding. Anyway, yeah, I think, you know, I think this is the first time that we've maybe had somebody here from a legal perspective at the Py Apparel events that I've attended over the last 3, 4 years. So I find that kind of interesting and a different, new, and fresh perspective. You know, Tom consults and offers incredible insight to clients on trademark, copyright, patent, and trade secret issues. He's appeared in federal courts all over the US. And Tom's going to help us define intellectual property a little more clearly. He's going to provide us with some actionable thinking on how we can take steps to protect our ideas, to talk about Gosh, everything. Anyway, I'm excited to get started here and have a few questions for him. To start off, I'm going to ask him to define a few things for us. Because, you know, me doing expert witness work, I've gotten to the point where I kind of understand some of it, but I want to make sure that everybody here has the same perspective. So, Tom, what's the difference between a design patent and a utility patent? And do any of you know? Well, good, good. I'm glad you don't, because—

so design patents and utility patents often run together, but the design is the way something looks. So I actually put my phone away so it wouldn't buzz in my pocket, but so I've lost my visual aid. But Apple certainly has all kinds of patents on the electronics inside the iPhone. But it also has a design patent on the way it looks and the way the icons appear. And in fact, it, it won millions, hundreds of millions of dollars from Samsung, uh, over the look and appearance of the, the actual phone, the way the icons are displayed, saying this appearance is covered by a design patent. Other design patents are something as the original Coke bottle, the green bottle with the curved, uh, look. Uh, and there's certainly other packaging, uh, that are protected by design patents. Uh, Nike has, uh, gotten design patents on, uh, the shape of some of their shoes, but that also has all kinds of utility patents, uh, for the methods of manufacturing shoes. Uh, and then there's all kinds of, uh, uh, other patents on lots of technology and software-related solutions, but that's the basic difference. And you can go down a rabbit hole on this if you want, right?

No, I just think about it as, right, the design patent is how it looks and it's defined by the drawings, and the utility patent is the claims of kind of what it does, right?

Right. It has to move the object, as you— the old, the old expression about a utility patent. But the design is is shape configuration.

So to continue on some of the definitions, what exactly are trade dress, trademarks, and trade secrets?

Well, we'll start with the overarching broad trademark, which is a brand. It's something that you want people to remember. It's a logo. So again, anything like Pi Apparel, you want to remember if you see Pi in that format or here, Hopefully people remember that belongs to this group. And all of you have company names that you hope your customers remember. That's your brand. We talk about personal brands, but then slogans can be branding. "I'm loving it" is McDonald's current slogan. They certainly consider that a brand, a trademark. Trade dress is also shape and configuration. So, for instance, the Toblerone Chocolate bar. If you saw a triangular chocolate bar, you would know, even if it didn't have a package on it, that it's Toblerone. That's their trade dress. There's— you go into the grocery store, walk up and down the aisles, if you see an orange detergent bottle, a box or bottle with a target on it, Tide detergents, or Procter Gamble certainly hopes that you remember that trade dress is their brand.

Yeah. What I found with trade dresses, like from a distance, like say the Nike swoosh, right? You might not know as a little kid that the brand is called Nike and that the swoosh is theirs, but you know that the same anonymous source, right, makes that product and they've acquired something over time, which is that brand recognition.

Absolutely. So, and especially in— in, I think, in the apparel business, where, you know, the question is how big do we want the brand? You hope you will recognize the style or the trade dress as uniquely belonging to that particular brand.

Right, so you can have a patent, a utility patent, a design patent, but you can also in addition have acquired trade dress. It's a, I think it's a kind of a cool thing to have. Tell us what are trade secrets exactly?

Trade secrets at the very basic often are just customer lists are trade secrets, but also methods of operation, business operation, software, proprietary software, ways of doing business. And, you know, many employees are put onto employment agreements that say you understand that you're— the company that's paying your paycheck has trade secrets and, you know, you've got to respect them and you can't go sell them to the enemy, or—

Right, or go start another company with those trade secrets later.

Yeah, exactly.

I've been on a couple cases where that's been what's happened. So what are the ways available to people in this room, brands, vendors upstairs and such, to protect their unique ideas? What, you know, how do they do that?

Well, you know, it really depends upon the business, and I've been wandering around the hall Since this morning, it's sort of like button-holing people, say, what do you do? And, you know, be trying to figure out because we have brands here and we have people selling to the brands, software providers, equipment providers, logistics providers, and it's going to kind of depend. But at the very basic level, it— if you have invented something new and proprietary, you should consider patent protection. for that. You can certainly make clear to your employees, to your vendors, and your customers, hey, what we're selling you is proprietary. This belongs to, to us, to our company. Uh, and if you do business with this, you have to understand that you can't reverse engineer it. You can't take this and make it your own. You can't go out and compete with us. So a lot of time that's through agreements. You can look for patent protection. You can copyright. You can get copyright protection for software, for proprietary code, for proprietary material. The problem with software, with copyright, is it becomes public and people can see it. But you can claim rights in it. So sometimes the agreements are the best. One of the most important things you can do is protect your brand. And have people remember, okay, I really liked that XYZ company, uh, you know, they did a good job. And, you know, you want them to remember your name, not who was that guy, that guy I met him in, and, you know, he did a good job, I can't remember the name of his company, uh, I don't know how to find him. Uh, the, the one of the big stories in branding is Amazon. They weren't the first to sell books online, But they branded themselves. It used to be the relentless advertising. I'm old enough to remember it, and people remembered the brand. But that's how they got where they are.

So people are protecting their ideas. How is it different from creating and protecting, you know, physical things, right? Like your socks or your tie or whatever it might be. How does protecting physical products come into play?

Well, again, physical products are branded, and more and more in the clothing industry, the brands become an important part of the physical product. People are putting the brands bigger on clothing, because one of the problems that the fashion industry faces, the apparel industry, is you can't get copyright protection for apparel, for useful articles. It has— or a functional article. So it has to have some sort of ornamental function or some other type of brand or something unique that you could protect. But if it's functional, they're going to say, no, you just, you just created something that has a use and therefore we're going to dedicate to the public. If it's completely unique, you might be able to get a patent for it, but that's sort of the tricky problem. And the fashion industry for years has been trying to get Congress to fix the law to give them more protection, give it more protection, but you're not getting that.

Hasn't happened yet?

No, it's not happening this year.

Right. So So the big word of the day, I think, is AI. And someone here, I think at lunchtime, asked me, were you and I going to be talking about artificial intelligence? So can AI be used to create new designs and products and software products and services and everything else? So AI can be used, but do you protect AI, or what do you do when you've— asked, you know, well, chatbots, whatever it is, right?

The first thing is, you know, there's a lot of scary potential for AI, but we've been using AI for a while. It's been out there in limited form. I think ChatGPT and Meta have made this more topical. But, you know, if you've been using a search engine, If in case you haven't noticed, it said if you search for something, next thing you know, it starts driving ads to you, and Amazon starts driving ads, and Facebook starts driving ads for what you just searched for. That's AI at work, uh, at a rudimentary level. Uh, and it certainly can be used and is being used to do product design, to do product line management, to do inventory control, uh, to do logistics, uh, to do a lot of the basic But as it was some— one of the other panelists talked about earlier, you still need a human element.

Right. So you still need the human element. But if the AI is doing the design work for you, can you still claim—

There you go.

—the rights to it? And that's, I guess, kind of the crux of the issue, right?

That is the crux of it. So there's two issues, protecting yourself and protecting what you create. And if there's no human element to the protection— to the creation process, the courts have ruled, and it's clear now, that you can't claim— you, the company, you, the owner of the AI, if you ask AI to do something, hey, design me something, or write this text, or write this information, or create something for me, if it's all machine-driven, and no human element is involved, then there's no copyright protection, there's no chance of patent protection, there's no chance for that. You have to have some sort of human input in order to claim protection if you want to use AI to do something for you. If you want to use AI, the danger of AI is, and what is, is that it basically scrapes data, which is what the internet's been doing now for years. If you're on social media, the joke is the reason it's free, it's because you are the product. It's been scraping your data for years. If you've been on any kind of social media or even Amazon or eBay or anything.

Interesting way of looking at it. Yeah.

So it's using— so AI goes out and looks at your product, the, the authors, the writers, the creators, the, the, the creative industry is very unhappy with AI because it's basically taking all their ideas. And there are ways to protect yourself from that, of course, too.

Right, so I guess this leads into the next question, which is, what happens if you use open source software?

Yeah, everybody, people get excited. Well, I don't want to pay some developer. Why should I pay this software company? I look online, there's this, this open source. I'll just use it for free. The problem with that is, you know, the, the term we lawyers use, The joke is you've infected your software with open source. Your software, your proprietary information—

It's no longer yours.

It's— well, it's everybody's. It's open source. So if you use open source, whatever you create with open source becomes open source. I mean, I'm, I'm painting this with a broad brush. There's of course exceptions to this and there's ways around all this, but be exceptionally careful if you want to use open source. Because the open source people have this idea that everything should be free and open to everybody. And you may not want your competitors, your customers, your vendors seeing what you're doing, despite your desire to be, you know, traceable and open.

Right. So if you're having any questions here for Tom while we're speaking, please go ahead and— oh, look, there you go. There's the Slido. So if you have any questions, go ahead. Get to those in the end. I think I have 2, 3 more questions for Tom before that.

I can make stuff up too. I know.

Well, actually, instead of me— well, instead of making something up, but you mentioned right before we came on stage that, you know, walking around this morning, you saw or spoke to a few people who did have some questions for you. Right.

Remind me, what was that? Well, one of the most— you know, we heard earlier one of the panelists was talking about We're trying to get away from using fossil fuels. Everybody's trying to get away from using chemicals, fossil fuels. We're concerned about climate change, we're concerned about that. It's hard to get completely away from fossil fuels, and especially with swimwear was the example she used. But you can make certain claims about your apparel, or if you're not in the apparel business, if you're about your operations in general. And as anybody who's operated any kind of business knows, there's various government agencies at the local, state, and federal level who will examine every claim you make, whether it's, you know, claiming to be plant-based, claim to be made in America, claimed to be sustainable, natural. And you need to be careful with the Federal Trade Commission. If you're operating in California, there's all kinds of whole level of other complexity to be concerned about.

So does supply and material sourcing present an intellectual property challenge, and how do I keep proprietary information confidential? I'm sure, you know, people— yes, trade secrets, and, you know, you go to work for a company and you're told, oh, we're Well, you can't share this with anybody, and when you leave, you're not able to. But how do people really keep that confidential?

Well, that's the tricky part is to, you know, you've got to pick a vendor, pick a partner that you trust. And we saw Pivot was up here talking about working with helping to find the right suppliers and that sort of thing. It's hard to find people if you're not familiar with them, but, you know, you need to be able to trust the manufacturer, trust the software vendor, and— but verify. So if you have a vendor come in to set up a program for you, you want to be able to review that and be clear that whatever intellectual property you have, you keep, uh, and that whatever is created for you, you get, you the, the brand owner, uh, and then the, the vendor gets to walk off and do their own thing. If you're on the vendor side, if you're a software provider, a service provider, I know many of you are on that side of the equation, you want to be able to say, I'm an electrician. I'm gonna come in and wire your building, but I can go wire the next building over and do the exact same job next door. You aren't gonna get a proprietary, unique system that you can claim ownership of. I'll do something with your data, but I'm not— and so you've gotta make sure the agreements are clear as to who gets what, when, and how.

Just a couple more questions. How do we protect against AI, especially when transparency and supply chain has become more expected and key to manufacturing and design?

Well, that's the big question that we're all grappling with. The data security, data security, data security is going to be more and more important. You know, protecting against data breaches, uh, to make sure that AI doesn't get into your system, your computer system, and borrow, uh, your proprietary information. Uh, so that's, that's going to be key. Uh, put notice up on, on your website and put notice that it's considered proprietary and that it shouldn't be used. Uh, again, if, if somebody gets in Uh, you know, you're gonna have to deal with that. Unfortunately, data breaches have become sort of a way of life. Uh, you're not gonna kill every cockroach. Uh, but I think the other thing is to be constantly innovating, constantly making changes so that, okay, AI, uh, has seen, uh, our designs, uh, from 2022. Well, big deal, they're on the market now. And we're going to move forward with that.

So I have a question that wasn't on our list we didn't cover. So I'm putting you on the spot, although I know you know the answer by heart here. So when you design something, a utility patent or a design patent, you know, is there a certain timing with which you have to register the design or have it on the market? And same thing with a trademark, because I know that there are certain requirements requirements that go along with when you file. Sure.

So patents are very different than trademarks. The big difference is that patents have a limited lifespan. So, you know, there are, for instance, various drug patents that were covered by patents, and then suddenly there's generic varieties on the market. You know, I'm an allergy sufferer, so for years I got prescribed Alegria, that now suddenly Alegria is available and knockoff Alegria is available, and there's plenty of other drugs like that, um, on the marketplace. So when you file for a patent, uh, you have to, uh, file the application within a year of initial disclosure or creation. So if somebody comes up with a brilliant idea at your company, or you come up with a brilliant idea that's worthy of a patent, don't sit on it for 4 or 5 years. Now, the way around it is, oh, I've improved upon it. Yes, yes, I found— first thought of this up in 2016, but this is the 2022 version, 2023 version. I'm filing for it now. Same thing goes to the far— at the far end, you— your patent lasts 20 years from the day you file the application And then 20 years later, the patent ends. What IBM and Microsoft and Nike and many other big companies do is they file new patent applications saying we've improved upon the last one, and this goes on forever. Trademarks, the brand, I mean, there are some trademarks that are well over 100 years old. All the big auto companies have had trademarks for Ford and Chevrolet and other brands. Price, they're going back the first part of the 20th century. Quaker State goes back to the 1800s, and some of the other manufacturing brands go back that far. You can keep it forever. You don't need to file for the application any— I'm working with a client now that's been using its name since the '80s, but they were in Tampa, Florida. Now they've moved out of Tampa, they've got an office in Atlanta, They're moving into Texas and they're realizing they're now a national brand and they probably should file for a trademark application. No problem. Right.

So it's my understanding also that you have to apply in each country separately. Is that right? Yes.

Both patents, trademarks— patents and trademarks are national with the exception of the European Union, but they're national in character. So your U.S. trademark will not help you in Canada. Or Mexico, etc., etc. And you have to apply again in those—

in each country.

And so we have country clients in the UK, it's like, this is a famous brand in the UK. Uh, well, that's nice, but it doesn't help you here. And there are certainly examples. The Mars candy company has nothing to do with the Mars candy company in Europe. So a Milky Way in the United States is not the same as the Milky Way in Europe, different companies.

Okay, so last question, again putting you on the spot before we get to the couple questions. We've got a couple of those anywhere, add, but tell us a fun story, something like an extreme case, if you don't mind indulging him with me.

Sure, sure.

I want to hear about something like really out of the ordinary.

Well, okay, we'll go to apparel case, and you mentioned my cowboy boot client. But many years ago, they developed a unique way of, a design for cowboy boots. And the expensive part of a cowboy boot is all the tooling and the designs that go on the boot. If you think about Western wear, and that's expensive. So what they did was they, they put a saddle, they call it, a piece of leather across basically the bottom, and you know, right here. I know there's a technical term for that part of your foot, but I can't think of it right now. But it's basically a flat piece of leather right there with the design popping out in a little hole. The idea is they use cheap leather instead of the expensive tooled leather, and then the, the little design was the feature, so they were saving a lot of money on that. And it was a unique look. So they said, all right, we've got— we want to patent that, that you— the way of manufacturing. Nobody else has ever done this before. And then we want to claim trade dress in the way the, the, the unique appearance. And then we want to come up with a unique name for it so that, well, people will come into the stores and say, I want that I believe it was Diego, and this is a— I can't remember, you know, since you put in the spot I could look it up, but I think it was Diego or something like that. I want that brand. Well, naturally their competitors started copying them, and so we got into a lawsuit over the whole thing, and there were some problems with our claims. With what— with— it was one of those about, about 8, 9 months into the lawsuit, my client pulled me aside, said, I need to show you my documents. I actually invented this a while ago. I didn't file the app, we didn't file the application on time. Oh, that's bad. But so we had to deal with that, and I had to say, all right, we're dropping the patent claims, we're just going to go with these other claims. What happened was for us though because we had stalled the other side through litigation, they didn't really get their product on the market. And by the time they got their product on the market, we had sort of become the market leader. Everybody knew that our client was the source for this thing, this special boot, and they only wanted ours. They didn't want the, the imitator.

Well, that frequently happens. I mean, think about Ugg, right? Some people want the fakes or the copies or whatever it might be that want to pay something less expensive, but, you know, 90% of the population, right, wants the traditional classic Ugg, and they're gonna pay for that, which, you know, can cost 2 to 3 times more because they want the authentic original, right? Right.

I've got another story I could tell you about the Cajuns fighting over trade dress for packaging for spices, but that's not this industry.

Okay, we've got a few minutes left. It's perfect, we've got 3 questions Here, if you have a patent, copyright, can you allow use of that product at a cost? It's a way of loaning it out for profit.

Absolutely. Oh yeah, licensing. So, you know, I certainly in this industry there's lots of licensing where people own patents, design patents on apparel, and copyrights on Computer code, I mean, most of the vendor agreements that the software companies here and the service providers here are licensing agreements. You're licensing somebody else the right to use your patented technology or your copyrighted technology or your trade secrets. So absolutely licensing agreements.

Right, now I remember, I don't know if you remember like those lighted shoes from like LA Gear or some of the Michael Jackson stuff. Those lighted shoes, that was, someone who had invented it and the companies were paying to use that technology that had been patented by somebody else. I worked on that back in the day. So how do you demonstrate or prove that your product has human intervention and is not purely AI created and it's entitled to legal protection?

Oh, that's a good one. Document, document, document. I mean, keep records. You know, on February 13th, 2023, I, you know, instructed— here's the email confirming that I did this, you know, and here's where I told my— or I instructed, you know, the engineering department to come up with this, or here's my designs, or here's my— here's the code I scratched out, you know. It's just, you know— And it could be emails, right?

I mean, it can be emails, it can be notes, it can be anything, right? Presentations.

But speaking just broadly, remember there's no such thing as deleting an email. There really isn't. Be careful. Yeah, be careful. I mean, this is not a fashion apparel question, but there really is no such thing. If somebody wants to find a deleted, deleted email and they get a hold of your hard drive, a forensic expert can get that. So don't send emails saying, hey, we thought this was a good idea. IBM's doing it, or Nike's doing it, and so we're gonna steal their idea. Don't put—

Yeah, no, I've been on some footwear expert cases. You know, I do like the report writing and depositions and stuff for some intellectual property cases in footwear, and the emails we see sometimes with literally a company taking photos of samples of someone else's product, sending it to a factory or their counterparts saying, can "Can you make it just like this?" And then the company that's being sued or the brand that's being sued says they didn't copy. Right. And it has to be part of the disclosures. And I'm writing my report thinking, "Yay, I have great info here." So super interesting. So I guess last question, unless you have anything else, but who owns the technical pattern sets at a factory used to create a garment? That's a great question.

It is good. We get into that actually in the footwear. My footwear client has gotten into that, who owns those, because that— and it's one of those things where it's best to put it in writing. I mean, the assumption would be that the creator owns it. The company that created the designs own that, but it's always best to have it written down. We agree that we created this and you're manufacturing it on our behalf. And this especially becomes important when working with people overseas. You know, and we— the last session there was a lot of discussion about getting out of China. One of the tricks is going to be the agreements people have signed working with Chinese companies. If you want to get out of China, make sure that when you leave you take everything with you and they don't copy. Yes, sir? So back to the— just a regular question. If the brand just sent a sketch but the factory actually created the pattern sets themselves— Right. —and the cutting dies, say, yeah. Right. Well, that— yeah. If it's not stipulated. If it's not spelled out. It's going to be a smell test at the end of the day. I mean, you know, generally in the United States, if you're having manufacturing in the United States, the designer wins. It's clear the designer created it. They're the creative person. But most of your manufacturing isn't being done in the United States. So you need to make sure— spell it out, spell it out, spell it out.

Yeah. No, I've worked with factories where, you know, the outsole molds, right, for creating bottoms on shoes can cost $2,000, $3,000 for molds in each size. So it can be a $20,000, $30,000 investment, and the factory or mold shop not being willing to give it to you if you move to another factory or country. It's scary, and it has happened. I've experienced it. So I think— are we all done? Yeah? OK. Great. Thank you so much, everyone.