Luxury Brand Under Fire: Chanel’s Lawsuit and Its Impact on Fashion Design

by Denice Obeng*

I. BACKGROUND & CONTEXT: 

Recent litigation such as Lululemon Athletica Canada Inc v. Calvin Klein Inc et al[1] and Adidas America, Inc. v. Skechers USA, Inc[2] highlights the complexity surrounding fashion and intellectual property law. This issue is especially highlighted in the use of designer materials used by other designers within their work[3]. This article will analyse and examine the recent lawsuit which was filed by the luxury brand Chanel against US-based brand J. Logan HOME[4]. Chanel argued that J. Logan Home had infringed trademark and copyright law after the designer used Chanel’s scarfs to upcycle and create a shirt which was then worn by NFL megastar Travis Kelce[5], boosting the shirt's visibility. 




II. LEGAL ISSUES AT STAKE: 

This case has gathered a large amount of attention due to its significance within the fashion industry. Society's shift towards exclusivity in sustainability is driving this trend of upcycling [6] and customisation, which is inadvertently leading to legal conflicts. To be specific, the concerns call for a closer examination around the extent to which a designer can use materials that may be copyrighted or trademarked within their own designs without facing legal repercussions[7].

At the heart of the claim is the need for the interpretation of trademark infringement and if intellectual property law can adapt to the current needs of the fashion industry and wider society. Most importantly, whether the designer’s use of Chanel’s scarves amounts to an increase in dilution or confusion of the distinctiveness arising from Chanel’s brand. This is particularly relevant in fashion design, where the transformation of existing materials into new designs by another creator is common[8]. The question is whether such transformations impact the original brand's identity and consumer perception. 

The outcome of this lawsuit can be predicted to have far reaching implications that will be felt across the entire fashion and luxury industry. It can be said that this will affect designers looking to mix recognisable fabric and patterns whilst maintaining integrity. Moreover, it raises significant questions regarding the balance between the freedom of artists and the necessity to respect brands within an ever-changing industry. This is because fashion is a way for people to express themselves through innovative concepts and designs. However, this also means that it is possible for artistic expressions to intersect with identities of established labels and fashion houses. 




III. SUSTAINABILITY IN THE FASHION INDUSTRY:

It can have a significant impact on how sustainability is achieved in the fashion industry. Designers might push for processes and materials that are more sustainable, but these decisions must align with the supply chain capabilities and sustainability commitments of the brand. This alignment is crucial because even if designers adopt eco-friendly practices, the overall sustainability goals can only be met if the entire supply chain supports these initiatives. Furthermore, brands committed to sustainability must ensure that their supply chains can handle the increased demand for sustainable materials and processes. This holistic approach not only enhances the brand’s sustainability efforts but also sets a precedent for the industry, encouraging other brands to adopt similar practices. By focusing on both innovative design and robust supply chain integration, the fashion industry can make significant strides toward genuine sustainability. 

Consequently, brand reputation and creative freedom can create tension, which can influence the sustainability efforts of a brand by establishing the feasibility of innovations without affecting social or environmental integrity. Balancing a brand’s image and the designer’s creative freedom requires careful consideration to ensure that sustainable practices are genuinely integrated into the brand’s operations without negative impacts.




IV. PRECEDENT AND CASE LAW 

Numerous significant cases bestow insight into both the application of intellectual property law and the interpretation within the context of accessories and clothing.

A noteworthy precedent is the case of Harley Davidson v Urban Outfitters in 2014 [9], which focused on the trademark infringement of Urban Outfitters for selling genuine Harley Davidson shirts that had been upcycled, without permission. The lawsuit alleged that Urban Outfitters had sold numerous bodysuits that contained fake Harley Davidson marks despite having Harley Davidson branded labels and tags. Specifically, Urban Outfitters had upcycled Harley Davidson t-shirts and made them into bodysuits. The case did not reach trial but was settled by the parties with the agreement being for Urban Outfitters to never sell products that bore Harley Davidson marks [10]. 

Unregistered owners of trademarks under U.S. common law receive exclusive rights, which mark from the time scale of when an individual starts using their mark/design in commerce, and this is called the ‘first sale doctrine’. After the first authorised sale of the trademarked goods, the trademark owner will have no control over the sales, and it will not amount to trademark infringement [11]. However, the exemption is that the ‘first sale doctrine’ will not be applicable if the resold goods are not authentic; because they are (1) created with different materials sold under the mark [12], or (2) the sale was unauthorised [13]. 




Another case is Ralph Lauren v VDNS in 2020 [14], which focused on trademark infringement. One of the alleged infringing products included authentic Ralph Lauren swim shorts, which had been upcycled into a hat [15]. The resold goods fell outside the scope of first sale protection, thus amounting to infringement. The court ruled with a default judgment being issued to California-based company, VDNS in favour of Ralph Lauren [16]. 

Another instructive case is Louis Vuitton Malletier S.A.S v Sandra Ling Designs, Inc [17], which focused on trademark infringement after an upcycled designer used numerous Louis Vuitton trademarks to make multiple products from keychains to beanies to even jackets without a licence or authorisation [18]. Louis Vuitton argued that Ling was mis-leading consumers into believing that her products were authentic Louis Vuitton items as well as authorised or approved. The case was brought to an end by Ling agreeing to a permanent injunction for her use of Louis Vuitton marks and paid damages amounting to $603,000 equivalent to £481,476 [19].




V. ANALYSIS OF THE LAWSUIT: 

The precedents discussed above inform individuals of the legal arguments and strategies within the recent Chanel lawsuit by demonstrating how courts have handled the complex issues of intellectual property within the fashion industry. In addition, it is also clear from the precedents that upcycling is undoubtedly still considered infringement. These cases may have a negative impact on the fashion industry in that it will deter innovation, and so smaller companies as well as independent designers may be deferred from participating in upcycling due to legal repercussions. Therefore, it may cause conflict in terms of sustainability and how fashion can participate in a global phenomenon. From past case law, it seems that Chanel is likely to win their lawsuit because although J. Logan Home did upcycle Chanel’s scarf without permission, the defence of ‘transformative use’ would not be satisfied because nothing new was added and it can be argued that the shirt is mis-leading to consumers causing confusion. Chanel could also be successful if, like Harley Davidson v Urban Outfitters [20], a settlement is reached or if a permanent injunction is placed like Louis Vuitton Malletier S.A.S v Sandra Ling Designs, Inc [21]. 

By drawing on the distinction and parallels with such case law and precedents, both practitioners and legal scholars gain significant insight into the ever-evolving standards and interpretation of intellectual property rights when applied to the fashion industry. 

Beyond the parties involved, the lawsuit holds significant implications for the broader fashion industry, consumers and designers. This is because it signals a revolutionary shift within the 

interpretation and enforcement of intellectual property laws, which in turn could potentially shape both future practices and collaborations within the fashion world. 

The legal claims of Chanel against J. Logan Home focuses on the unauthorised use of the trademarked scarves and possibly the copyrighted Chanel designs, which J. Logan Home used to create the shirt worn by Travis Kelce. However, for Chanel to be successful in their claim they would need to be able to prove that the shirt created using their scarves creates a high chance of confusion for consumers regarding the originality of the shirt [22]. The main argument would be whether the incorporation of Chanel’s scarves by the designer creates the assumption that there is a partnership with Chanel, thus deceiving consumers into believing the upcycled shirt is in fact an original Chanel shirt. The possible defence of ‘transformative use’ will also be analysed as well as the wider impact of the case on the fashion industry, 

However, in addition to the trademark aspect, Chanel might also include copyright infringement to the lawsuit if they can show that by the designer using their scarves, and any design elements amounts to the unauthorised use of distribution, reproduction or the adaptation of copyright works [23]which are protected [24]. 



Moreover, the accused designer may argue the case of transformative use [25], which was considered in Chanel, Inc. v. What Goes Around Comes Around, LLC [26]. In that case, the court evaluated whether the original material had been transformed by adding new expression or meaning and whether the new work added value through new information, aesthetics, insights, or understandings. The court ultimately ruled that reselling vintage Chanel products without significant alteration did not qualify as transformative use. This case highlights the strengths and weaknesses of the transformative use of defence. While transformative use can be strong when it emphasises creativity and innovation, the transformation must be substantial and clearly add new value. 

In the current case, the designer would need to prove that firstly the material taken from the original work had been transformed by adding new expression or meaning and secondly, whether value was added to the original by creating new information, new aesthetics, new insights, and understandings [27]. This argument will be stronger if the court views the new designs as distinct and innovative, but weaker if the changes are seen as insufficiently transformative. 

This concept permits limited use of copyrighted material without permission for criticism, parody, transformative work, or commentary [28]. Using case law such as Louis Vuitton 

Malletier S.A. v. Haute Diggity Dog, LLC [29] where it was held that the dog toys were unlikely to cause confusion and so therefore did not amount to trademark infringement because they targeted different audiences, were sold in different countries but also did not infringe on Louis Vuitton’s copyright since it was common knowledge that they were just parodies [30]. 

However, it seems unlikely that this precedent will provide a successful defence for the defendant in this case. Unlike the parody in the Louis Vuitton case, the design here has been repurposed from being worn as a scarf to being worn as a shirt. This transformation into a new piece of clothing represents a unique and distinct act of artistic expression [31], which may not qualify as fair use. This will evaluate whether the designer using Chanel’s scarves would qualify as fair use under the aforementioned purposes, but including factors like the purpose, amount used, market impact, and nature of the copyrighted work. The judge will take these factors into account to determine the legitimacy of the fair use claim. The purpose of the use, for instance, will be scrutinised to see if it is transformative or merely commercial. The amount used will be assessed to ensure it is not excessive. The market impact factor is particularly significant, as it considers whether the designer’s use of the scarves could negatively affect Chanel's market, potentially disadvantaging smaller brands that might struggle more with such market impacts. 

Without a doubt, the conclusion of this lawsuit between Chanel and J. Logan HOME will significantly impact how US intellectual property laws are interpreted within the fashion industry, but also how it will affect global intellectual property rights because of the USA's participation in treaties such as the Berne Convention [32]. This is because it will provide guidance when it comes to the scope of appropriation and creative expression of materials owned by brands within fashion design. This will in turn also set precedent for future cases of which may evolve and involve the convergence of designers, luxury brands and intellectual property rights. Moreover, the current case highlights the occurring tension between protecting the distinctive identity and reputation of global fashion brands with the ability to foster innovation. 




VI. CONCLUSION: 

To conclude, the Chanel v J. Logan HOME lawsuit underscores the multifaceted nature of both intellectual property rights and fashion law. As the legal proceedings continue and unfold, stakeholders from various industries will wait for clarity on the permissible scope of expression in creative design, but also how creativity will navigate the balance delicately between legal compliance and innovation. This is because many designers will want to know where they stand in terms of upcycling, especially in such a time where sustainability is of incredible importance. 










*

Denice Obeng is a recent 2023 LLB Law with International Business & Management graduate from Leeds Beckett University and aspiring Corporate solicitor. She currently works within the luxury beauty industry for some of the biggest brands in the world and has begun to mix her passion for luxury and law



[1] Lululemon Athletica Canada Inc v. Calvin Klein Inc et al, U.S. District Court, District of Delaware, No. 12-01034.

[2] Adidas America, Inc. v. Skechers USA, Inc., 890 F. 3d 747 (2018).

[3] Ema, 'EMA's April Sustainable Fashion Roundup: Coachella, Travis Kelce's Shirt, and Toxic Fast Fashion Brands' (EMA, 8th May 2024) <https://www.green4ema.org/impact-network-blog/emas-april-sustainable-fashion-roundup-coachella-travis-kelces-shirt-and-toxic-fast-fashion-brands> accessed 10 May 2024.

[4] WWD, ‘Logan HOME Creates Men’s Shirts From Designer Scarves’ (WWD, 24th June 2021) <https://wwd.com/feature/logan-HOME-creates-mens-shirts-from-designer-scarves-1234847 940/> accessed 11 May 2024.

[5] Kim Yerin, 'Travis Kelce Is One of the NFL's Best Dressed — See His Most Stylish Moments' (PopSugar, 20th October 2023) <https://www.popsugar.com/amphtml/fashion/travis-kelce-style-49286462> accessed 11 May 2024.

[6] Greg Petro, ‘Upcycling your way to sustainability’ (Forbes, 8th Feb 2019) <https://www.forbes.com/sites/gregpetro/2019/02/08/upcycling-your-way-to-sustainability/?s h=3212695d58e2> accessed 11 May 2024.

[7] Vipasa Shah, ‘UPCYCLING X FIRST SALE DOCTRINE’ (Fordham, 11th April 2023) < http://www.fordhamiplj.org/2022/04/11/upcycling-x-first-sale-doctrine/> accessed 11 May 2024.

[8] Julia Harvey, ‘The Rise of Deadstock Dessing: Designer Approach’ (Elle, 15 June 2021) <https://www.elle.com/uk/fashion/trends/a36282440/upcycling-clothes/> accessed 11 May 2024.

[9] H-D USA LLC et al v. Urban Outfitters Inc (case number: 2:2014cv00298).

[10] H-D USA LLC et al v. Urban Outfitters Inc (case number: 2:2014cv00298), 27.

[11] BonaLaw, ‘First Sale Doctrine in Trademark and Copyright Law’ (BonaLaw, 16th April 2021) < https://www.bonalaw.com/insights/legal-resources/first-sale-doctrine-in-trademark-and-copyright-law> accessed 11 May 2024.

[12] Vipasa Shah, ‘UPCYCLING X FIRST SALE DOCTRINE’ (Fordham, 11th April 2023) < http://www.fordhamiplj.org/2022/04/11/upcycling-x-first-sale-doctrine/> accessed 11 May 2024.

[13] Ibid n(10).

[14] Joseph Myers, ‘Ralph Lauren Sues Custom Apparel Company Over Bootleg Designs’ (PPM, 17th January 2020) < https://www.printandpromomarketing.com/article/ralph-lauren-sues-custom-apparel-company-over-bootleg-designs/> accessed 11 May 2024.

[15] Ibid n(12).

[16] Ibid (n12).

[17] Ibid (n12).

[18] TFL, ‘From Travis Kelce’s Shirt to Button Jewelry: Unpacking the Upcycling Craze’ (TFL, 24th April 2024) < https://www.thefashionlaw.com/from-travis-kelces-shirt-to-modified-rolex-watches-unpackin g-the-upcycling-craze/> accessed 11 May 2024.

[19] Ibid n(16).

[20] H-D USA LLC et al v. Urban Outfitters Inc (case number: 2:2014cv00298).

[21] Louis Vuitton Malletier S.A.S. v. Sandra Ling Designs, Inc. et al, (case number: No. 4:2021cv00352.).

[22] Section 29 Lanham Act, 15 U.S.C. §§ 1051.

[23] Title 17 U.S. Code § 106.

[24] Richard Stim, ‘Fair Use: When Copyrighted Material Can Be Used Without Permission’ (Nolo, n.d) < https://www.nolo.com/legal-encyclopedia/fair-use-rule-copyright-material-30100.html> accessed 11 May 2024.

[25] Jeffrey H. Greene & Matthew D. Witsman, ‘The laws of fashion: landmark luxury cases to watch in 2023’ (Global Legal Post, 2nd June 2023) <https://www.globallegalpost.com/news/the-laws-of-fashion-landmark-luxury-cases-to-watch-in-2023-1489735355> accessed 11 May 2024.

[26] Chanel, Inc. v. What Goes Around Comes Around, LLC 1:18-cv-02253 (S.D.N.Y.).

[27] Kevin Madigan, ' Significant Second Circuit Fair Use Decision Clarifies transformative use Analysis ' (Copyright Alliance, 1st April) 

<https://copyrightalliance.org/fair-use-decision-transformative-use-analysis/> accessed 11 May 2024.

[28] Jordan Phelan, 'Infringement Or Identification?: Nominative Fair Use And The Resale Of Luxury Goods' [2022] 91(2) Fordham Law Review 757.

[29] Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC 84 U.S.P.Q.2D (BNA) 1969.

[30] Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC 84 U.S.P.Q.2D (BNA) 1969 [259].

[31] Steve Schindler & Katie Wilson-Milne, ‘Fashion, NFTs, and Artistic Expression’ (ArtLawPodcast, 4th April 2023) < https://artlawpodcast.com/2023/04/04/fashion-nfts-and-artistic-expression/> accessed 11 May 2024.

[32] Sam Ricketson & Jane Ginsburg, International Copyright and Neighbouring Rights: The Berne Convention and Beyond (3rd edn, Oxford University Press 2022) 96.









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