The Fashion Law is one of the leading authoritative sources dedicated to the field of fashion. It is a source of objective fashion law and business analysis, and serves as a community for lawyers, business executives, fashion industry insiders, designers, and students, alike. Julie Zerbo is the founder and editor-in-chief of The Fashion Law.
Much has been made of blockchain, and how it can be applied in fashion. As revealed in a recent TFL article, this distributed, decentralized, public ledger technology could stand to make a significant impact in terms of boosting supply chain transparency (both for brands and consumers), as well as assist in cutting down on the unintentional purchase of counterfeit goods, which has become a topic of continued conversation in connection with luxury resale. But beyond those very obvious uses of this type of technology, there is something else, something that brands may – or may not – opt to use it for: policing the gray market.
Gray market goods – authentic branded goods obtained from one market (i.e., a country or economic area) that are subsequently imported into another market and sold there without the consent of the owner of the trademark – have been a longstanding issue in fashion. Highly-watched cases like the decade-long copyright fight between Omega and Costco – which centered on Costco’s practice of buying authentic Omega watches outside of the U.S. and then selling them in its American warehouse club stores for a discount – and Kirtsaeng v. John Wiley, which centered on the sale of imported textbooks, have helped to provide insight by way of case law.
A combination of new factors, however, make the gray market – and more generally, the sale of goods by retailers outside of a brand’s authorized network – a topic of enduring interest, even if the practice, itself, is not a novel one. Recent lawsuits, such as the one that Dermalogica filed against Target in November, have seen at least some brands upping the ante in the fight against the distribution of these authentic products. The rise of Amazon, as well as resale sites, at least some of which are offering new-with-tags products, also brings the traditional gray market and unauthorized sales practices of retailers like T.J. Maxx back into the forefront.
These developments are coupled with some luxury brands’ legal efforts to strictly control the channels of distribution through which their products are sold, whether it be Chanel’s lawsuits against resellers or Coty’s European Union fight against the unauthorized sale of its products on certain e-commerce marketplaces.
With this in mind, the supply and distribution-chain monitoring capabilities that blockchain provides would appear to be one of the more compelling applications of the technology, and while at least some brands, such as the notoriously-controlling Chanel, are likely clamoring for the ability to keep their products out of unauthorized channels of distribution, others might not be so eager.
The reality of unauthorized distribution is double-sided.
The mainstream portrayal of the gray market and other unauthorized channels by the media and by nearly all brands, themselves, is a markedly unflattering one. Gray market-induced distribution can “interfere with [brands’ existing] contracts and economic relationships,” as Dermalogica argued in its lawsuit. Such widespread distribution outside of brand’s authorized retailer can diminish the prestige and exclusive image of a luxury entity, other assert.
Yet, what is less frequently discussed in connection with the sale of goods vis-à-vis the gray market or other authorized channel is that at least some brands are actively participating in it. As TFL previously reported, that no small number of brands are either very quietly selling off their merchandise to retailers like T.J. Maxx and online equivalents, or turning a blind eye when their authorized retailers do so in an attempt to bring in as much as millions of dollars for unsold products at the end of the season that might otherwise be destroyed.
BoF, citing sources last year, confirmed that while “few luxury brands will discuss the practice, most participate in some form, including Gucci, Prada, Dior, Louis Vuitton and Valentino,” for example. “Brands tolerate grey market activity for the sake of making their short-term results better — never mind the long-term damage,” Luca Solca, the former head of luxury goods at Exane BNP Paribas, told the site, who estimates that the gray market accounts for “5 to 10 percent of sales” for many luxury brands.
Regardless of the way that brands are doing away with unsold wares, they are uniformly keeping their mouths shut about the upsides of such practices in order to maintain their premium positioning while simultaneously reaping benefits for their own bottom lines, meaning that luxury brands will certainly adopt blockchain for an array of uses, if they have not already begun to do so. One thing they likely will not be opting to use it for though: cutting out that end-of-season retailer, which is helping them to pad their balance sheets.
When most people hear the word blockchain, they tend to think of Bitcoin, the decentralized virtual currency that has risen in value exponentially over the past few years. While blockchain technology is best known for supporting virtual payments and other financial applications, other uses are rapidly being developed across every sector of the economy, and fashion figures are beginning to discover that the possibilities presented by blockchain could serve to addressing some of the industry’s most pressing issues – from supply chain mismanagement to counterfeiting.
In the simplest of terms, a blockchain is a shared database or digital ledger that automatically updates information across an entire network, without the need for a central intermediary. When a user enters information in the ledger, that entry becomes linked to every other entry, or “block,” and every other copy of the ledger is automatically synchronized via the internet. The connection among all the blocks in the “chain” makes the ledger unhackable, at least in theory, because a hacker trying to alter a single transaction or entry would have to alter every other link in the chain as well. The distributed nature of blockchain also makes it transparent, because every user can see the entire history of entries in the ledger.
Companies are already using this technology to verify digital identities, enable “smart” contracts that execute automatically, and track shipments of goods around the world. Walmart, for example, is using IBM’s blockchain platform to track food shipments as part of an initiative to improve safety, and the diamond industry is using Everledger’s blockchain to verify the source and unique attributes of diamonds.
Blockchain has obvious potential in the fashion industry, which could benefit significantly from the application of such technology to supply chain and inventory management, the latter of which represents “one of the [fashion industry’s] biggest challenges,” according to Fabio Cesari, the head of research and development at YOOX NET-A-PORTER GROUP. Cesari revealed late last year that “stock inventory management can cost retailers millions in both money and wasted hours every year.” Consistent seasonal over-production, which similarly gives rise to complications for brands from a bottom-line perspective, could also be aided by the application of blockchain.
Such benefits extend to brands’ supply chains. Even very diligent brands experience difficulties in terms of oversight and transparency due to the trans-national nature and inherent complexities of modern-day sourcing and manufacturing. Blockchain, when combined with radio frequency identification and other Internet-of-Things technologies can instantaneously track shipments of raw materials from source to factory, then track the finished product through its entire distribution chain to the consumer, thereby, giving rise to greater transparency about the origins of garments and accessories not just for brands but for consumers, as well, should brands opt to share this information.
While other tracking technologies have existed for some time, the distributed nature of blockchain technology provides marked advances, in large part because records cannot be altered, lost or destroyed; if a supplier tries to alter an order, for example, the customer will still have an indisputable record of the original order information.
Looking beyond manufacturing and distribution, blockchain also has the potential to enhance intellectual property protection for designers and brand owners, something that is particularly important given the incessant saturation of markets across the globe with counterfeits, infringing goods, and products that are otherwise sub-par or have been tampered-with. When branded goods can be tracked through blockchain, their authenticity can be easily verifiable by brand owners, retailers and consumers, potentially helping to reduce unintentional purchases of counterfeit goods.
Still yet, blockchain applications will enable designers to document every step in the design process, providing unalterable proof of creation in case of a dispute. Brand owners who license their intellectual property can use blockchain technology to track sales and royalty payments – similar to a system already being developed by the music industry for tracking royalties, using IBM’s blockchain platform.
In short: the uses of the technology extend far beyond digital currencies and if applied correctly, could serve to assist fashion in facing some of its most long-standing and largely unassailable issues.
Jeffrey H. Greene is a partner at Fenwick & West LLC, where he focuses his practice on strategic foreign and domestic brand counseling and protection. Anne Marie Longobucco is an OnRamp Fellow at Fenwick & West LLC, where she focuses her practice on U.S. and international trademark clearance, trademark prosecution, dispute resolution, and enforcement.
Amazon is not the only company currently being sued over its private label endeavors. Scentbird is, too. Following a behind-the-scenes fight that has been developing over the past several months, the budding beauty and fragrance subscription service has been slapped with a strongly-worded lawsuit by beauty and skincare brand Lush, which alleges that the nearly 4-year old Scentbird is infringing its trademark “deliberately, willfully, intentionally, and in bad faith.”
According to Lush’s complaint, which was filed last week in a New York federal court, Scentbird got its start in 2014 by “offering subscription fragrance [and more recently, beauty product] plans whereby subscribers would receive monthly shipments” consisting of tester-size products from Versace, Gucci, Burberry, DKNY, Calvin Klein, and Dolce & Gabbana, among others.
While the two companies coexisted peacefully for several years, Lush – which describes itself as “one of the world’s premier suppliers of bath, hair care, skin care, and beauty products” – argues that things began to go south when Scentbird began expanding by way of a private label bath and body capsule collection, including, a body wash, a body oil, and a lip oil that uses the “Lush Gold” name.
Lush asserts in its complaint that prior to the “Lush Gold” capsule being released, its counsel alerted Scentbird of its rights in the “Lush” trademark and of its concerns that Scentbird’s use of a “confusingly similar” mark in conjunction with its practice of stocking of third-party fragrance and beauty products would likely confuse consumers about as the source of the “Lush Gold” products. In particular, Lush feared that consumers would likely believe that the “Lush Gold” products were either produced in collaboration with or are otherwise affiliated with or approved by Lush, which is not the case.
Scentbird’s Lush Gold line
Scentbird did not respond to Lush’s correspondence and instead, Lush asserts, released the “Lush Gold” collection with “full knowledge and in conscious disregard of [Lush’s] intellectual property rights,” thereby giving rise to claims of trademark infringement, unfair competition, and deceptive trade practices.
Shortly after Scentbird began offering the “Lush Gold” products on its website, Lush sent a second letter dated November 10, 2018, reiterating its trademark-centric qualms, and demanding that Scentbird cease use of the “Lush” trademark.
In response to that letter, Scentbird “took the position that it is not using ‘Lush Gold’ as a trademark,” and therefore, not running afoul of the law. To be exact, Scentbird argued that it is not using the word “Lush” as a designation of the source of the products, such as how Nike uses a swoosh on the side of sneakers to indicate that they are Nike sneakers or how many Gucci bags bear an interlocking “G” logo, thereby alerting consumers that it is a Gucci bag. Instead, it says that it is using the term “Lush” as a descriptive term or name for the products, themselves, not as a the name of a brand.
This distinction matters because in order for an alleged infringer’s use of another’s trademark to actually be deemed to be infringing, the alleged infringer must be using the term as a trademark – i.e., in manner intended to alert consumers of the source or brand behind the product – and not merely to describe a product.
With that in mind, Scentbird argues that it is not engaging in infringement and has “refused [Lush’s] requests to cease use of the ‘Lush’ mark within a commercially reasonable timeframe.”
And Lush is not buying it. It claims that despite Scentbird’s allegations, “the risk of confusion here vis-à-vis the parties’ uses of the ‘Lush’ mark is especially acute,” and it is being damaged severely by Scentbird’s unauthorized use not only because of the confusion but because of the fact that “customers are not fully satisfied with its ‘Lush Gold’ products.”
Lush points to “recent product reviews posted on Scentbird’s website,” which take issue with the quality of the “Lush Gold” line, including asserting that consumers “might be disappointed” with the goods and that the lip balm “doesn’t last long and the taste/flavor is unappealing.” More than that, Lush cites the “F” rating that “the Better Business Bureau® has given Scentbird” thanks to “a total of 109 customer reviews averaging to just one star out of five, and with over 500 customer complaints in the last year, alone.”
As a result of this culmination of factors, including Scentbird’s continued “disregard for [Lush’s] property rights and goodwill,” Lush has asked the court to immediately and permanently bar Scentbird from such “unauthorized use” of the “Lush” mark, including by “modifying all packaging and promotional materials to eliminate the Lush and/or Lush Gold marks,” and to pay up for “all damages [Lush] sustains as a result of Scentbird’s infringement and unfair competition.”
*The case is Cosmetic Warriors Limited v. Scentbird, Inc., 1:19-cv-01137 (SDNY).
Cuyana, the buzzy womenswear brand, known for its “buy less but buy better” ethos is not only cultivating a dedicated following for its fast-growing premium essential garments and accessories brand. In announcing its latest round of funding, the San Francisco-based brand – which was founded in 2011 by Karla Gallardo, a former Goldman Sachs and Apple Inc. analyst, and Shilpa Shah, fresh from a stint with interactive entertainment company Kabam – is making headlines.
The Series C funding round investment – $30 million from H.I.G. Capital in partnership with d.Luxury Brands – is one of “the largest rounds raised by a female-founded fashion retail company,” per Forbes.
Since its launch as a digitally-native brand, Cuyana has expanded to brick-and-mortar outposts in New York, and California’s Pacific Palisades, Venice, and San Francisco, and also built out its offerings of responsibly sourced, high-end apparel and accessories, all the while, achieving profitability. That is something rare, Ben McPherson, co-CEO of d.Luxury Brands, told Forbes. "The fact that they've been able to achieve profitability is quite an anomaly in this market.”
The $30 million in funding is particularly impressive considering that Cuyana is a women-founded startup. As Harvard Business Review revealed last year, “There is an enormous gender gap in venture capital funding in the United States.” To be exact, female entrepreneurs receive only “about 2 percent of all venture funding, despite owning 38 percent of the businesses in the country.”
The Financial Times, citing a separate report published last year in the journal Venture Capital, revealed that “97 percent of all U.S. venture capital was handed to male chief executives between 2011 and 2013.” In fact, businesses with all-male teams were found to be “four times more likely to receive funds than teams that included even one woman,” meaning that while access to funding is “a challenge faced by all entrepreneurs looking to grow … for women, the struggle is all the more difficult.”
With such imbalances in mind, Gallardo and Shah’s funding to date, $31.7 million, is significant. That figure – paired with some other notable funding efforts by female founders – might even suggest that venture capital may be increasingly going to female-founded businesses, at least when it comes to retail.
Cuyana’s retail-fundraising success joins the likes of StitchFix, whose founder Katrina Lake raised nearly $80 million prior to the company’s $120 million initial public offering last year. Luggage brand Away’s founders Jen Rubio and Steph Korey have brought in $107.5 million in funding since early 2015, while Glossier’s Emily Weiss has drummed up $86.4 million for her millennial-centric, direct-to-consumer beauty brand.
Not to be outdone, Rent the Runway has brought in a whopping $416.2 million since its start in 2009 under the watch of co-founders Jennifer Hyman and Jennifer Fleiss; The RealReal, with its female founder Julie Wainwright, has raised $288 million in 8 years; and the Aslaug Magnusdottir and Lauren Santo Domingo-launched Moda Operandi has raised $293.7 million since 2010.
Women-run businesses are still lagging behind their male-driven counterparts, but upstarts like Cuyana very well might be convincing investors that unless they diversify their portfolios, they stand to miss sizable investment opportunities.
"The devil works hard but Missguided works harder.” That was the message that the Manchester-headquartered retailer sent in an Instagram caption late last week alongside a metallic cut-out frock, a dead-ringer for a custom Yeezy one that Kim Kardashian posted an image of just a few hours prior. Curiously enough, Kardashian’s own Instagram post included a plea: “Fast fashion brands, can you please wait until I wear this in real life before you knock it off?”
An example of truly fast fashion or a coordinated marketing ploy between the mega-influencer and the millennial-centric fashion company? It seemed as though neither option was out of the question. The 10-year old Missguided brand – which was founded by Nitin Passi in 2009, who has since turned the independently-owned company into an $200 million-plus brand – has looked to the reality television star and her rapper-slash-designer husband for “inspiration” in the past. Missguided’s recreations of many of the looks in West’s Yeezy Season 6 collection, for example, made their way to its e-commerce site swiftly after West’s paparazzi-themed campaign hit social media in January 2018.
Such attempts to offer up Kim K’s wardrobe-for-less make for a lucrative business. The Kardashian/Jenners have spawned an entire group of women across the globe that aspire to look and dress just like them, and with that has come a pool of retailers aiming to cater to those particular consumers.
As the Guardian’s Sirin Kale noted last month, “Clothing this growing army of Kardashian clones is a fast-growing industry of ultra-low-cost online retailers.” In particular, “PrettyLittleThing, Missguided, Boohoo, Nastygal and the U.S. phenomenon Fashion Nova” are offering up “yards of figure-hugging lycra and cheap lace in neon, pastel, or earthy tones” i.e., “outfits that – if you squint hard enough – could be from a Kardashian-Jenner’s Instagram post.”
At the same time, the Kardashian/Jenners are not without a track record of aligning with mass-market fashion collaborations. In a November 2018 article for Cosmo, Elizabeth Holmes looked into Fashion Nova’s practice of turning around Kardashian/Jenner-worn looks – at least in terms of preview-able imagery for its site – within a matter of hours.
For instance, “Less than a day after Kylie Jenner posted pictures [of her 21st birthday celebration] to her Instagram account fast-fashion retailer Fashion Nova shared a $34.99 dupe on its feed, pairing it with the reality star’s birthday pic,” Holmes pointed out. “The model even mimicked Jenner’s downward gaze and right-foot-forward pose. ‘Coming Soon!’ the caption read.”
Photos of sister Kim have similarly been used by Fashion Nova to market and sell knockoffs of her outfits, including the hot pink Yeezy mini dress that she wore for Jenner’s birthday outing.
While it initially appeared that Fashion Nova’s handiwork was a merely demonstration of the lightning speed of modern-day fast fashion copying, the fact that Kim and Kylie’s images were being used to promote the copycat wares almost certainly means that there is likely a little more going on. As Holmes put it, “Would Kris Jenner watch quietly if someone was using her daughters’ images to sell something, and they weren’t getting a cut?” That answer is, of course, no — not only because Jenner is a world-class manager but because such unauthorized commercial uses of a star’s image could run afoul of right of publicity law or constitute passing off in the UK, as we saw in the Rihanna v. Topshop case.
In reality, “Kylie and Kim’s pictures being used to sell knockoff versions of their designer ensembles—in tweets, on Instagram, and on Fashion Nova’s site—as well as their prior sponsored posts on behalf of the brand—would suggest that there's some sort of relationship.” And that appeared as though it was what was underway in the case of Missguided.
Until recently, Missguided boasted an entire section on its website of Kim K paparazzi imagery and copycat wares, along with a blurb that read, “She’s capable of breaking the internet, her style is ever-evolving and we can’t get enough of her latest blonde reinvention, but it’s Kim's wardrobe we’re really crushin’ on right now. She’s been rocking camo, all-white and lots of figure-huggin’ fabrics lately so here’s how to get the Kar-sass-ian look.”
Interestingly, that section has disappeared right along with the initial Instagram post, itself, suggesting that this almost certainly was not a coordinated effort between the two, and instead, an instance that, paired with the now-defunct gallery of imagery on Missguided’s suit, crosses the line between largely lawful garment knockoffs to a case of right of publicity violations.
Either way, the lack of clarity, which goes far beyond the Kardashian/Jenner’s social media activity, certainly makes a case for the need for stronger efforts by both advertising authorities in the U.S. and the U.K. The latter recently made headlines for sending letters to an array of influencers and celebrities. In the U.S., however, the Federal Trade Commission has yet to take any action against the Kardashian/Jenners even though the agency was faced with a formal complaint about the famous family in September 2017.
Philipp Plein has been scammed out of nearly $1 million dollars in connection with his New York Fashion Week show, which was advertised to include a Kanye West performance. A behind-the-scenes drama has been unfolding leading up to the Fall/Winter 2019 show for German-born Plein’s eponymous label. Just days ahead of the show, things began to fall apart when invited for the show began to circulate with Kanye West’s name on them as the musical guest.
It was not long before West’s wife Kim Kardashian revealed on social media that despite the invitation for Plein’s show stating that West would perform, no such thing is, in fact, happening. Kardashian set the record straight on Wednesday, tweeting that Kanye is “not performing at any fashion show this season. Just a rumor.”
While that may have appeared to put the issue to bed, it far from over, and will almost certainly lead to litigation, as according to the New York Post, “An associate and former friend of West [was the one who] contacted Plein, pretending to be the rapper’s rep and negotiating for him to ‘perform’ at the show for a seven-figure price tag.” The Post reports that “Plein reportedly fell for the scam and made a deal with the faux rep,” paying up $900,000 ahead of Monday’s runway show.
The most exciting aspect of the fashion industry at the moment is not on the runway, or on brands’ increasingly high-activity, often collaboration-spotlighting Instagram accounts. It is certainly not at the original point-of-sale for most luxury branded wares, nor can it be found in the high-powered creative director and branding switch-a-roos often underway in the upper echelon of the industry. The hottest developments in fashion are a step removed: they are at resale. That is where a growing string of acquisitions and significant fund raising, is underway, at least.
On the heels of FarFetch revealing that it would acquire Stadium Goods, the buzzy New York-based sneaker consignment site that attracted the attention (and funds) of luxury goods conglomerate LVMH roughly a year prior, and before that, when rival conglomerate Richemont snapped up second-hand watch-selling platform Watchfinder, Rebag announced this week that it has landed $25 million in Series C funding.
The latest round, which brings the luxury handbag reseller’s total funding to $52 million, will see the company expand upon its existing brick-and-mortar stores in New York and Los Angeles by way of “an accelerated retail expansion plan;” scale its technology and product team “to further refine its proprietary pricing and luxury handbag evaluation tools;” and bolster its leadership team.
The York-based reseller – which was founded in 2014 by Charles-Albert Gorra, a Harvard Business School alum and business development veteran from Rent the Runway, and Erwan Delacroix, previously of Google – describes itself “an end-to-end luxury resale service that rethinks the role of luxury in the secondary market.”
One of its key points of differentiation from the other seemingly similar sites out there? Unlike most of its resale market peers, which operate on a consignment or per-to-peer marketplace basis, Rebag has shunned the get-paid-only-if-your-product-sells model. Instead, if Rebag’s team accepts a bag based on a seller’s submitted photos, they pay the seller a “fair market price” upfront, and list it on their e-commerce site, one that currently boasts everything from hard-to-find Chanel bags to an array of Hermès Birkins and Kellys.
Rebag joins a larger pool of budding young companies aiming to give luxury and other in-demand goods (i.e., sneakers and streetwear) a second lease on life in the resale realm. Beyond the previously mentioned Stadium Goods and Watchfinder deals is investment activity involving Detroit-based Stock X. Described as “the NASDAQ of sneakers,” the barely-3-year-old company announced in September that it had raised $44 million from investors, including model/entrepreneur Karlie Kloss, DJ Steve Aoki, streetwear designer Don Crawley (aka Don C), and Salesforce chairman Marc Benioff, bringing its total funding to $50 million.
Still yet, Grailed, the curated menswear resale site, took on a $15 million investment in June in a Series A round led by Index Ventures, bringing the company's total funding to about $20 million. And following from that menswear/streetwear/sneaker-centric investment, Foot Locker publicized just this week that it is making a “strategic minority investment” of $100 million in GOAT Group, the operators of the popular secondary sneaker market, GOAT.
The traditional footwear retailer stated on Thursday, “Over time, Foot Locker and GOAT Group will combine efforts across digital and physical retail platforms to create exclusive customer experiences.” While, Eddy Lu, the co-founder and Chief Executive Officer of GOAT Group, boasted about the group’s pioneering of the “ship-to-verify model with a mission to bring a seamless and safe customer experience to the secondary sneaker market.”
Something Old, Something New
So, what is driving this push of venture capital and brand acquisition interest? It is an array of factors, of course, not least of which is the ease and accessibility of luxury resale sites. In fact, many of these resale sites are actually standing in place of the slow-to-adapt luxury brands, themselves, which refuse to offer up many of their handbags for sale online. In other words, a consumer can find an array of Chanel bags – albeit good condition, pre-owned ones – on Rebag. They cannot, however, purchase a new Chanel bag – or some of the most coveted Hermès, Celine, Dior, and Louis Vuitton bags – with a click of the mouse or a click of an iPhone app; they must visit one of the brand’s brick-and-mortar stores to do so.
This holds true for the likes of purposely-limited edition streetwear products and sneakers, which are often unattainable at retail. Adidas’ wildly buzzy Yeezy collection with rapper Kanye West was an apt demonstration of this, as quantities were kept so small for the vast majority of the parties’ partnership that consumers were often forced to look to sites like Stock X if they wanted to get their hands on the shoes at all.
Beyond the pure ease of e-commerce, resale sites by virtue of their lower-than-initial-retail prices attract a whole slew of consumers that would otherwise not be luxury shoppers, leading many resale owners and analysts, alike, to liken these businesses to a “point of entry” for young consumers not yet flush enough with cash to buy a quilted Chanel flap bag at retail.
That same demographic is enticed by the “treasure-hunt experience” that secondhand shopping provides, without the hassle of leaving their couches.
These factors, among others, are why mass-market fashion resale site, Thredup, projects that the total resale retail market will reach $41 billion in revenue by 2022. That figure is less than the $53.4 billion in total revenue at luxury goods conglomerate LVMH brought in for 2018, but it is not to be discounted, as “in a world where sales are swiftly declining for the many big retailers, that's huge growth in market share,” per analyst Richard Kestenbaum.
Travis Scott, fresh from his Super Bowl half-time stint, is shedding light on an additional canvas for ambassador activities: music videos. It is hardly a coincidence that the rapper is exclusively dressed in Saint Laurent for the duration of his new “Can’t Say” video; Vogue revealed this week that the Nathalie Canguilhem-directed video “was entirely produced and styled by Saint Laurent.”
The extent of the partnership between Scott – who appears in Saint Laurent’s recently-released Spring/Summer 2019 campaign – and the Paris-based brand is likely not obvious to the uninformed eye, at least not in terms of the video wardrobe, which lacks any ubiquitous YSL branding. Moreover, according to Vogue the project falls outside of the traditional bounds of a branded relationship, as it “represents an unusually close relationship between brand and artist.”
Nonetheless, the video partnership should come as little surprise as brands have clamored – for decades – to partner with musicians. Just as Instagram has proven a hotbed for brand advertising, “Music videos are an amazing advertising platform,” Mark Mulligan, a music analyst for Midia Research, told Marketing Week. There are few other forms of “content that drive the same amount of eyeballs in a day.”
But more than just play counts, music videos are hugely attractive to brands, as they enable brands to reach consumers in a less obviously commercial way in much the same way as in native digital content does.
This type of non-obvious advertising is at the core of what U.S. government entities, such as the Federal Trade Commission (“FTC”), look for when determining when consumer-facing disclosures are needed. Yet, while the FTC has been strict about establishing that social media influencers make it clear to their followers when a post involves any sort of sponsored product (or brand) promotion that would not necessarily be obvious, music videos have largely escaped a government smack down.
The video, on its face, seems as though it might fit neatly into the realm of FTC’s endorsement rules, which require there to be clear and conspicuous” disclosures (i.e., #ad and the like) when a social media post – or even a music video – are borne from a “material connection” between an influencer and a brand. There is a connection, after all, between Travis Scott, as a YSL ambassador, and the brand that consumers might not know.
But does it make sense for the FTC to require disclosure in the same way as obvious social media product promotional posts when it is not obvious that Saint Laurent and its clothes are involved in the video at all?
It is here that an important distinction comes into play: product endorsements versus product placements. The FTC defines an “endorsement” as “any advertising message that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser,” and requires that sponsored social media endorsements bear disclosures.
Product endorsements are probably not what is going on in the Travis Scott video, though. Instead, the FTC would likely find the music video to be an example of a product placement, which, differs from an endorsement. In order for a simple product placement to require #ad-style disclosures, the product must be endorsed. In other words, the “mere showing products or brands in third-party entertainment content” does not require disclosure, but the active promotion of that product or brand does.
If Travis Scott were to give Saint Laurent a shout out or endorse its brand/garments in some way in the video, that would change the game, and require disclosure, but that is not what is happening here. (One could potentially make an argument that this is a “disguised commercial” and require disclosure, but that seems like a bit of a tenuous assertion, especially If Scott was going to make the music video with or without YSL’s involvement – and he likely was).
This product endorsement vs. product placement sans endorsement distinction is an important one, and it is likely why it is very rare to see disclosures used in connection with music videos. Makes sense (I think).
THE FASHION LAW EXCLUSIVE — Christian Louboutin has secured a victory in a long-running case over its wildly litigious red soles. Following a heated legal battle with Yves Saint Laurent that ended in 2012, Christian Louboutin's famous red shoe sole has led to legal battles across the globe ... in Switzerland, in France (against Zara), in Belgium, in China, and beyond. One such trademark fight – which Louboutin initiated against Dutch footwear brand Van Haren barely a year after the final ruling in the Louboutin v. YSL case – has been underway ever since. Until now.
In 2012, Van Haren caught the eyes of Louboutin’s legal counsel after it launched a collection of high-heeled shoes featuring red soles. Paris-based Louboutin, which has made its name thanks to the Chinese red lacquered soles of its celebrity-favored footwear, swiftly responded with a trademark infringement lawsuit, claiming that a Dutch high street brand was causing confusion amongst consumers and intentionally looking to profit from the established appeal of Louboutin’s world-famous red sole, which was registered as a trademark in the Benelux region years prior.
In an early round of the case, the District Court of The Hague ordered Van Haren to immediately cease its manufacturing and sale of black and blue shoes bearing red-soles, and ordered the brand to pay damages to Louboutin as a result of its infringement. Van Haren appealed this decision and the parties ended up before the Court of Justice of the European Union ("CJEU"). The EU's highest court was tasked with determining the common question is nearly every case involving Louboutin: whether the footwear brand’s red sole trademark is valid.
On the heels of a win this summer, when the CJEU panel held that the color that appears on the Louboutin shoe sole is just that, a color (that identifies a source), and it can be protected, the vase was sent the case back down to the District Court of The Hague, which has handed Louboutin an ultimate victory.
A panel of judges for the District Court of The Hague held on Wednesday that Louboutin’s Benelux trademark for its red sole “is valid, and it is established that Van Haren has infringed that trademark.” The court also rejected Van Haren’s counterclaims against Louboutin.
With that in mind, the court has ordered that Van Haren pay damages to Louboutin, including its legal costs and attorney’s fees, and is requiring the company to “cease all use of the sign challenged by Louboutin in this matter,” to provide Louboutin with “the full names and addresses of professional customers to which Van Haren has sent the item,” and to compile information regarding the production price and selling price of the shoes at issue, as well as the volume sold.
A representative for Van Haren said that the company is deciding whether it will pursue an appeal of the court’s decision.
“From October to December, more than six million shoppers searched for a Gucci bag, belt or shoe, making Gucci accessories the most powerful products in fashion over a sustained period now approaching two full years,” Lyst reveals in its latest Index report. Every 3 months, the fashion discovery platform “analyzes the online shopping behavior of more than five million shoppers,” by way of searches on its site and Google data, conversion rates and sales, as well as brand and product social media mentions and engagement statistics worldwide,” to determine the hottest brands and products.
For the fourth quarter (i.e., October to December 2018), Gucci topped the list of “hottest brands” overtaking last quarter’s “it” brand Off-White, which landed in the number two spot for Q4 followed by Balenciaga, Moncler (thanks to its ongoing “Genius” collaboration series), Fendi, Versace, (“Italian brands continue to dominate the Index”), Stone Island (“Searches for Stone Island jumped 122% last quarter, with more than 327,000 brand mentions on social media”), Vetements, Valentino, and Burberry (“Lyst data shows the revamped British brand is now resonating with new customers”).
As for the quarter’s top womenswear products, Lyst notes that “footwear remains the most powerful product category, with six out of ten of the hottest products shoes this quarter.” French ethical sneaker brand Veja’s V10 sneakers, for instance, are on the list for the first time in the number 3 position. The site reveals that “The Meghan Effect” had a hand that; “after Meghan Markle was spotted wearing a pair of Veja’s sustainable trainers on October 21, online searches for the brand increased by 113%.”
Not to be outdone, the two Gucci accessories in the hottest products list — the brand’s Gucci Soho Disco bag, which took the number 1 spot, followed by its logo belt, in the number 2 position — “drove twice as many orders as the other eight products combined.” Also on the list: Moncler Genius 3 Grenoble Vonne ski jacket (in the number 4 spot), (5) Versace Chain Reaction sneakers, (6) Ugg Fluff Yeah slides, (7) Balenciaga Speed sneakers, (8) Dr. Martens Jadon boots, (9) Fila Ray sneakers, and (10) Saint Laurent monogram envelope chain wallet.
“Together with the Gucci Soho bag and the Saint Laurent monogram envelope chain wallet, these products have achieved new icon status, inspiring copycat versions and continually driving staggering levels of searches and sales.”
For men, the hottest products blurred the lines between “elevated performance outerwear and streetwear,” says Lyst, with the following topping the list: (1) Nike Air Force 1 '07 LV8 Utility Volt Sneakers, (2) North Face Nuptse jacket, (3) Patagonia Men's Classic Retro-X fleece, (4) Fendi Bag Bugs windbreakers, (5) Stone Island long sleeve tee, (6) Moncler Maya jacket, (7) Givenchy logo wool sweater, (8) Versace baroque bathrobe, (9) Converse x Off-White 70 hi-top sneakers, and (10) Puma RS-X Reinvention sneakers.
As for number 8, Versace’s $595 baroque bathrobe, searches for the item increased by 240% over the three month period, according to Lyst, “likely influenced by the likes of Kanye West, Kevin Hart, and Drake, who have all posed in the striking, instantly recognizable robe on Instagram.”