[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
INNOVATIVE DESIGN PROTECTION AND
PIRACY PREVENTION ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
INTELLECTUAL PROPERTY,
COMPETITION, AND THE INTERNET
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
ON
H.R. 2511
__________
JULY 15, 2011
__________
Serial No. 112-46
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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67-397 PDF WASHINGTON : 2011
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COMMITTEE ON THE JUDICIARY
LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina JERROLD NADLER, New York
ELTON GALLEGLY, California ROBERT C. ``BOBBY'' SCOTT,
BOB GOODLATTE, Virginia Virginia
DANIEL E. LUNGREN, California MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio ZOE LOFGREN, California
DARRELL E. ISSA, California SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana MAXINE WATERS, California
J. RANDY FORBES, Virginia STEVE COHEN, Tennessee
STEVE KING, Iowa HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona Georgia
LOUIE GOHMERT, Texas PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio MIKE QUIGLEY, Illinois
TED POE, Texas JUDY CHU, California
JASON CHAFFETZ, Utah TED DEUTCH, Florida
TIM GRIFFIN, Arkansas LINDA T. SANCHEZ, California
TOM MARINO, Pennsylvania DEBBIE WASSERMAN SCHULTZ, Florida
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
[Vacant]
Sean McLaughlin, Majority Chief of Staff and General Counsel
Perry Apelbaum, Minority Staff Director and Chief Counsel
------
Subcommittee on Intellectual Property, Competition, and the Internet
BOB GOODLATTE, Virginia, Chairman
BEN QUAYLE, Arizona, Vice-Chairman
F. JAMES SENSENBRENNER, Jr., MELVIN L. WATT, North Carolina
Wisconsin JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina HOWARD L. BERMAN, California
STEVE CHABOT, Ohio JUDY CHU, California
DARRELL E. ISSA, California TED DEUTCH, Florida
MIKE PENCE, Indiana LINDA T. SANCHEZ, California
JIM JORDAN, Ohio JERROLD NADLER, New York
TED POE, Texas ZOE LOFGREN, California
JASON CHAFFETZ, Utah SHEILA JACKSON LEE, Texas
TIM GRIFFIN, Arkansas MAXINE WATERS, California
TOM MARINO, Pennsylvania DEBBIE WASSERMAN SCHULTZ, Florida
SANDY ADAMS, Florida
[Vacant]
Blaine Merritt, Chief Counsel
Stephanie Moore, Minority Counsel
C O N T E N T S
----------
JULY 15, 2011
Page
THE BILL
H.R. 2511, the ``Innovative Design Protection and Piracy
Prevention Act''............................................... 133
WITNESSES
Lazaro Hernandez, Designer and Co-Founder, Proenza Schouler
Oral Testimony................................................. 3
Prepared Statement............................................. 5
Jeannie Suk, Professor of Law, Harvard Law School
Oral Testimony................................................. 13
Prepared Statement............................................. 15
Christopher Sprigman, Professor of Law, University of Virginia
School of Law
Oral Testimony................................................. 74
Prepared Statement............................................. 77
Kurt Courtney, Manager, Government Relations, American Apparel &
Footwear Association
Oral Testimony................................................. 91
Prepared Statement............................................. 92
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Prepared Statement of the Honorable Bob Goodlatte, a
Representative in Congress from the State of Virginia, and
Chairman, Subcommittee on Intellectual Property, Competition,
and the Internet............................................... 1
Prepared Statement of the Honorable Melvin L. Watt, a
Representative in Congress from the State of North Carolina,
and Ranking Member, Subcommittee on Intellectual Property,
Competition, and the Internet.................................. 10
APPENDIX
Material Submitted for the Hearing Record
Response to Post-Hearing Questions from Lazaro Hernandez,
Designer and Co-Founder, Proenza Schouler...................... 102
Response to Post-Hearing Questions from Jeannie Suk, Professor of
Law, Harvard Law School........................................ 105
Response to Post-Hearing Questions from Christopher Sprigman,
Professor of Law, University of Virginia School of Law......... 116
Response to Post-Hearing Questions from Kurt Courtney, Manager,
Government Relations, American Apparel & Footwear Association.. 125
Letter from Stephanie Lester, Vice President, International
Trade, Retail Industry Leaders Association..................... 130
INNOVATIVE DESIGN PROTECTION AND PIRACY PREVENTION ACT
----------
FRIDAY, JULY 15, 2011
House of Representatives,
Subcommittee on Intellectual Property,
Competition, and the Internet,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:08 a.m., in
room 2141, Rayburn House Office Building, the Honorable Bob
Goodlatte (Chairman of the Subcommittee) presiding.
Present: Representatives Goodlatte, Quayle, Coble, Chabot,
Marino, Watt, Conyers, Chu, Lofgren, and Jackson Lee.
Staff Present: (Majority) Blaine Merritt, Subcommittee
Chief Counsel; Olivia Lee, Clerk; and Stephanie Moore, Minority
Subcommittee Chief Counsel.
Mr. Goodlatte. Good morning.
The Subcommittee on Intellectual Property, Competition, and
the Internet will come to order. I want to welcome our
witnesses for this hearing on the ``Innovative Design
Protection and Piracy Prevention Act.''
I am going to submit my opening statement for the record
and I believe that the Ranking Member, Mr. Watt, who I believe
will be here shortly, and the Ranking Member of the full
Committee, Mr. Conyers, have indicated an interest in doing the
same in order to get to our witnesses as quickly as possible.
Our reason for doing that is because we are expecting votes
around 11. Once they come, they are going to be very lengthy,
and we may have to conclude before then. We will gauge that at
11.
[The prepared statement of Mr. Goodlatte follows:]
Prepared Statement of the Honorable Bob Goodlatte, a Representative in
Congress from the State of Virginia, and Chairman, Subcommittee on
Intellectual Property, Competition, and the Internet
Article I, section 8, of the Constitution lays the framework for
our nation's copyright laws. It grants Congress the power to award
inventors and creators for limited amounts of time exclusive rights to
their inventions and works. The Founding Fathers realized that such an
incentive was crucial to ensure that America would become the world's
leader in innovation and creativity. This incentive is still necessary
to maintain America's position as the world leader in innovation.
Most industrialized nations provide legal protection for fashion
designs. However, in the United States, the world's leader in
innovation and creativity, fashion designs are not protected by
traditional intellectual property regimes. Copyrights are not granted
to apparel because articles of clothing, which are both creative and
functional, are considered useful articles, as opposed to works of art.
Design patents are intended to protect ornamental designs, but clothing
rarely meets the criteria of patentability. Trademarks only protect
brand names and logos, not the clothing itself. And the Supreme Court
has refused to extend trade dress protection to apparel designs. Thus,
a thief violates Federal law when he steals a creator's design,
reproduces and sells that article of clothing, and attaches a fake
label to the garment for marketing purposes.
But it is perfectly legal for that same thief to steal the design,
reproduce the article of clothing, and sell it, provided he does not
attach a fake label to the finished product. This loophole allows
pirates to cash in on the sweat equity of others and prevents designers
in our country from reaping a fair return on their creative
investments.
The production lifecycle for fashion designs is very short. Once a
design achieves popularity through a fashion show or other event, a
designer usually has a limited number of months to produce and market
that original design. Further complicating this short-term cycle is the
reality that once a design is made public, pirates can immediately
offer identical knockoffs on the Internet for distribution.
Again, under current law, this theft is legal unless the thief
reproduces a label or trademark. And because these knockoffs are
usually of such poor quality, they damage the designer's reputation as
well. Common sense dictates that we should inhibit this activity by
protecting original fashion works.
Our undertaking is similar to action taken by Congress in 1998 when
we wrote Chapter 13 of the Copyright Act, which offers protection for
vessel hull designs. The ``Innovative Design Protection and Piracy
Prevention Act'' amends this statutory template to include protections
for fashion designs. Because the production lifecycle for fashion
designs is very short, this legislation similarly provides a shorter
period of protection of three years that suits the industry.
The bill enjoys support among those in the fashion and apparel
industries. While concerns have been expressed about the scope of
previous versions of this legislation, my office has engaged in
discussions through the years with interested parties to ensure that
the bill does not prohibit designs that are simply inspired by other
designs; rather, the legislation only targets those designs that are
``substantially identical'' to a protected design. Other provisions,
including a ``home-sewing'' exception and a requirement that a designer
alleging infringement plead with particularity, ensure that the bill
does not encourage harassing or litigious behavior.
H.R. 2511 is identical to legislation reported by the Senate
Judiciary Committee last December. Between this event and the growing
coalition of stakeholders coalescing around our bill, I am optimistic
that we can enact fashion piracy reform in the 112th Congress.
I look forward to hearing from our witnesses, and I now recognize
the Ranking Member from North Carolina for his opening statement.
__________
Mr. Goodlatte. In the meantime, let me go ahead and welcome
our witnesses and introduce them. We have a very distinguished
panel of witnesses today.
Each of the witnesses' written statements will be entered
into the record in its entirety. I ask that each witness
summarize his or her testimony in 5 minutes or less.
To help you stay within that time, there is a timing light
on your table. When the light switches from green to yellow,
you will have 1 minute to conclude your testimony. When the
light turns red, it signals that your 5 minutes have expired.
And it is the custom of this Committee to swear in our
witnesses.
So I would ask that the witnesses rise.
[Witnesses sworn.]
Mr. Goodlatte. Thank you very much. Please be seated.
Our first witness is Lazaro Hernandez, who co-founded
Proenza Schouler, a New York-based modern luxury women's wear
and accessory label, in 2002. The company has won a number of
industry honors from the Council of Fashion Designers of
America, including the 2003 Perry Ellis Award for New Talent,
the 2004 Vogue Fashion Fund Award, and the 2007 and 2011
Women's Wear Designer of the Year Award.
Proenza Schouler is sold in more than 100 outlets worldwide
and has collaborated with Target and J Brand Jeans, among other
retailers. The company has also developed working relationships
with a number of celebrities such as Kristen Stewart, Sarah
Jessica Parker, Gwyneth Paltrow, Kirsten Dunst, and Julianne
Moore.
Originally a pre-med student from South Florida, Mr.
Hernandez dropped out of the University of Miami and enrolled
in the Parsons School of Design, from which he graduated 9
years ago.
Our next witness is Jeannie Suk, professor of law at
Harvard Law School. Professor Suk specializes in criminal law
and family law, while also teaching art and entertainment law.
Prior to her current duties, Professor Suk served as a law
clerk for Judge Harry Edwards of the U.S. Court of Appeals for
the D.C. Circuit and for Justice David Souter on the United
States Supreme Court. She also worked as an Assistant District
Attorney in Manhattan and was a fellow at the New York
University School of Law.
Professor Suk studied ballet at the School of American
Ballet and piano at the Juilliard School before earning her
B.A. From Yale, a Doctor of Philosophy from Oxford as a
Marshall Scholar, and her law degree from Harvard.
Our next witness is Christopher Sprigman, professor of law
at the University of Virginia School of Law. He teaches
intellectual property, antitrust, competition policy, and
comparative constitutional law. Prior to joining the Virginia
faculty in 2005, Professor Sprigman clerked for Judge Steven
Reinhardt of the Ninth Circuit Court of Appeals and for Justice
Lawrence Ackerman of the Constitutional Court of South Africa.
He also taught law in Johannesburg, worked in the Antitrust
Division of the U.S. Department of Justice, practiced law in
Washington, and served as a residential fellow at the Center
for Internet and Society at Stanford Law School. Professor
Sprigman earned his B.A. From the University of Pennsylvania
and his law degree from Chicago.
Our final witness is Kurt Courtney, manager of government
relations at the American Apparel & Footwear Association since
2007. In that capacity, he handles a wide variety of issues
affecting the industry. That includes intellectual property,
health care, taxes, ports, and government contracts.
Before joining AAFA, Mr. Courtney spent 5 years on Capitol
Hill working for Representatives Zack Wamp, Buck McKeon, and
Ileana Ros-Lehtinen. A native of Los Angeles, Mr. Courtney
graduated from the George Washington University in 2000 with a
Bachelor of Arts Degree in International Affairs.
I want to welcome all of you.
Mr. Hernandez, we will begin with you.
TESTIMONY OF LAZARO HERNANDEZ, DESIGNER AND COFOUNDER, PROENZA
SCHOULER
Mr. Hernandez. Hello. Good morning, Chairman Goodlatte,
Members of the Subcommittee.
I am pleased to be here today to testify in support of H.R.
2511, or the ID3PA, on behalf of the Council of Fashion
Designers of America. The CFDA is the leading trade
organization representing the American fashion industry. Over
85 percent of its members are small businesses that are
creating jobs across the country, as fashion has grown to a
$340 billion industry in the United States.
My design firm, Proenza Schouler, began as a senior project
simply at Parsons School of Design. In 1998, I met my design
partner, Jack McCollough, who is here today. In our senior year
at Parsons, we designed our first collection. And the entire
collection was, remarkably, bought by Barney's New York. As a
result, at the age of 23, we launched our independent label,
Proenza Schouler, which is named after our mother's maiden
names.
I would like to thank the Committee for taking up the
important issue of fashion piracy in this legislation. The
fashion business is already a tough business, and it is getting
tougher because of piracy. It takes tens of thousands of
dollars to start a business and even more to sustain it. Just
one of our collections--and we produce four collections a
year--cost about $3.8 million. The cost of a typical show is
approximately $320,000. So you can see a significant amount of
money has been spent before a designer has received their first
order.
As designers, we expect many challenges. And we can handle
most of them. However, we are helpless against copyists who
prey on our ideas. Established or undiscovered, all designers
have been touched by fashion design piracy. Fashion design is
intellectual property that deserves protection.
Fashion is different from basic apparel. Our designs are
born in our imaginations. We create something from nothing at
all. But by far, the majority of apparel is based on garments
already in the public domain. Nothing about this proposed
legislation will change that. Nobody will ever be able to claim
ownership of a T-shirt or something as simple as a pencil
skirt.
When designers produce basic garments that complement their
original designs in their collection, we know the difference
between that and what is new. And so do the design pirates.
This bill is intended to protect only those designs that are
truly original.
Our PS 1 satchel has been knocked off repeatedly. We have
attempted to assure our rights and fight this piracy, but
without success, because, unfortunately, it is currently legal
under U.S. law to pirate a design that happens to be the key to
our business. Every other developed country other than China
has a law on the books to protect fashion, except the U.S. As a
result, the U.S. has become a haven for copyists who steal
designers' ideas and sell them as their own with no fear of
consequences. It has also become the weak link of international
IP protection and the first if not only market for Chinese
exporters of pirated designs. This is completely unacceptable.
The problem is worsening with new technologies. Today,
digital images from runway shows in New York or red carpet in
Hollywood can be uploaded to the Internet within minutes,
viewed at a factory in China, and be copied and offered for
sale online within days, which is months before the designer is
able to deliver the original garments to stores.
Piracy can wipe out young careers in a single season. The
most severe damage from lack of protection falls upon emerging
designers, such as ourselves, who everyday lose orders and
potentially our entire businesses. While salvage designers and
large corporations with wide recognized trademarks can better
afford to absorb these losses caused by copying, very few small
businesses can compete with those who steal their intellectual
capital. It makes it harder for young designers to start up
their own companies. And isn't that the American Dream?
Ever designer must develop their own DNA in order to make a
lasting and recognizable impact on consumers. It is like
developing their hit song. Imagine if a starting songwriter's
first song was stolen and recorded by someone else, with no
credit to the songwriter. And worse, it becomes a hit. They
hear it on the radio every day, and they are never credited.
That is what happens to many young designers whose ideas are
stolen and rendered by others. It is very hard to survive when
you become the victim of this type of theft.
I thought it would be helpful to talk a little bit about
the economics of the industry. Designers don't make a profit
selling a small number of high-priced designs, but only after
they offer their own more affordable ready-to-wear lines based
on their high-end collections. Just like other businesses, they
can lower their prices based on volume. Design piracy makes it
difficult for a designer to move from higher-priced fashion to
developing affordable renditions for a wider audience. It also
makes it impossible to sell collections to stores when the
clothes have already been knocked off for less. And licensing
deals are then no longer an option. In other words, fashion
designers should have the chance to knock off their own designs
before others do it for them.
Proenza Schouler is an example of successful licensing
deals. Several years ago, we designed a collection for Target.
There are many more examples of successful partnerships between
American designers and large American retailers, including
discount retailers. There is no reason that real innovation,
rather than knockoffs, shouldn't be available for everyone. The
average consumer can wear affordable new designs created by
true designers rather than poor copies of the real thing made
by pirates in China.
In order for this bright future to happen, we desperately
need the ID3PA passed into law. The ID3PA has been narrowed
significantly from previous Congresses. Apparel manufacturers
had legitimate concerns, so designers began negotiations with
the association representing U.S. apparel and footwear
manufacturers, the AAFA. We are pleased that the results of
those negotiations is the legislation recently introduced.
We will need this bill to be enacted. Our industry is
growing opportunities all across the country and many in your
districts. We can't compete against the pirates. And piracy is
worsening. Without this legislation, this creativity and
innovation that has put American fashion in the position of
leadership will dry up. We ask you to please pass this
legislation quickly. Thank you for your time.
[The prepared statement of Mr. Hernandez follows:]
Prepared Statement of Lazaro Hernandez,
Fashion Designer & Co-Founder, Proenza Shouler
introduction
Good morning Chairman Goodlatte, Ranking Member Watt and other
Members of the Subcommittee. I am pleased to be here today to testify
in support of the Innovative Design Protection and Piracy Prohibition
Act, or ID3PA, on behalf of the Council of Fashion Designers of America
(CFDA). CFDA is a leading trade organization representing the American
fashion industry. Our members are prominent household names and
primarily up and coming talent. The vast majority--over 85%--are small
businesses. These small businesses are creating jobs across the country
as fashion has grown to a $340 billion industry in the U.S. The CFDA
also counts among its fashion constituents publishing, communications,
retail, manufacturers and production whose success is contingent on the
success of designers.
My design firm, Proenza Schouler, began simply as a senior project
at Parsons School of Design. It was there that, in 1998, I met my
design partner Jack McCollough. For three years we each designed
independently. During those years we were fortunate to have our talent
cultivated by some of the great names in the fashion industry; Jack was
mentored by Marc Jacobs, I by Michael Kors. In our senior year at
Parsons, we designed our first collection. It received the Golden
Thimble award for best student collection and remarkably, the entire
collection was bought by Barneys New York. As a result, at the age of
23, we launched our own independent label, Proenza Schouler, named
after our mothers' maiden names.
In just five years, we grew from a company of three people to fifty
with total annual operating costs of $15.2 million. Ours is not a
typical story and it may sound like success came easily for us. It
didn't. Proenza Schouler is the result of tens of thousands of hours of
very hard work, a lot of determination, talent and a little luck.
costs of the fashion business
The fashion business is a tough business. With each new season,
designers put their imagination to work, and their resources at risk.
It takes tens of thousands of dollars to start a business and even more
to grow and create new collections and shows to showcase them. Just one
of our collections--and we produce 4 collections a year--costs $3.8
million. The cost of a typical show is approximately $320,000. So,
before a designer has even received that first order, they've spent a
significant sum of money.
As designers we expected many of the challenges we face; the
challenges of securing funding, convincing retailers to carry our
collections, meeting deadlines, delivering our clothes in time to
stores, finding studio space, attracting talented employees. We can
handle all of those. However, we are helpless against copyists who prey
on our ideas. Our story of long hours and sacrifice, pinching pennies
to grow a business, is the same story told by countless small designers
who are working as entrepreneurs to build businesses based on their own
intellectual capital. We were fortunate to win awards and gain
notoriety early but there are countless, undiscovered small designers
across America working in their studios waiting to have someone buy
their clothes or accessories. Established or undiscovered--we all have
been touched by fashion design piracy. We luckily survived despite its
disastrous effects, but many colleagues whose names you will never
hear, had to close down.
fashion, inspiration and intellectual property
I thought it might be helpful to describe the fashion design
process and how it is so much like other creative pursuits that today
enjoy copyright protection. Fashion is not protected under current law
because of the general rule exclusion of useful articles from the scope
of copyright protection. In other words, we all must wear clothes.
While there are other means of protecting various components of
intellectual property relative to fashion, the protection of fashion
design falls between the cracks: neither trademark (protecting the
brand) or trade dress (requiring such recognition as constituting
secondary meaning), or design patent (which involves such a lengthy
process that it offers no protection against the fast creative fashion
cycle) provide adequate protection.
But designing a fashion collection is no different from the
intellectual process involved in creating a painting or a song except
perhaps its lengthy process. The development of a collection usually
begins 10 months before it is launched. We draw inspiration from the
world around us. Personally, we do research and development, not in a
lab, but through the cultures we observe through travel, the books we
read or the music we listen to. For example, work on our fall
collection took place in the American West. We spent time in Wyoming,
Colorado and New Mexico exploring Native American history and their
crafts and were inspired by Navajo textiles. When you look at our
designs you won't see knockoffs of Navajo crafts. Instead you will see
that we incorporated their feel and some of their elements to create
our own originals.
Our designs are born in our imaginations, unlike the production of
most basic apparel. While we create something from nothing, by far, the
majority of apparel is based on garments already in the public domain.
Nothing about the proposed legislation will change that. Nobody will
ever be able to claim ownership of the t-shirt or the pencil skirt.
When designers produce basic garments to complement the original
designs in our collections and create complete outfits, we know the
difference between what is new and what is based on a common template--
and so do design pirates. The bill is intended to protect only those
designs that are truly original.
new technologies & lack of a u.s. law fuels piracy
In recent years America's fashion designers have become some of the
most sought after throughout the world. The level of originality seen
on runways each season continues to surpass and surprise. However, with
the accolades American designers are receiving comes the devastating
blow of fashion piracy.
One of our most popular designs has unfortunately become a typical
example of the problem we highlight. Our PS1 satchel is one of the most
knocked off designs on the market today. We have attempted to assert
our rights and fight this piracy--but without success--because
unfortunately it is currently legal under U.S. law.
Current U.S. intellectual property law 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. Internationally, design protection is the norm. Every other
developed country, other than China, has a law on the books to protect
fashion except the U.S. As a result the U.S. has become a haven for
copyists who steal designers' ideas and sell them as their own with no
fear of consequences. It also has become the weak link of international
IP protection and the first, if not only, market for Chinese exporters
of pirated designs.
With every passing year, the problem of copying worsens. It is
growing with new technologies. Just as the Internet has transformed
industries like music, books and motion pictures, and created new
opportunities for piracy, it has done the same for fashion. Today,
global changes in both the speed with which that information is
transferred and the location where the majority of clothing and
textiles are produced have resulted in increased pressure on creative
designers. Digital photographs from a runway show in New York or a red
carpet in Hollywood can be uploaded to the Internet within minutes, the
360 degrees 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.
piracy harms designers
I have heard the argument that somehow fashion piracy doesn't harm
the industry, but rather helps it. This is akin to the concept that
stealing from legitimate owners encourages them to replace their
property and thus boosts the Gross National Product. Those suggesting
that it helps designers to have their works knocked off have certainly
never stood in my shoes. Far from helping the designer, design piracy
can wipe out young careers in a single season. The most severe damage
from lack of protection 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 copying, very few small businesses can
compete with those who steal their intellectual capital.
Every designer must develop their own DNA in order to make a
lasting and recognizable impact on consumers. It's like developing
their ``hit song'' or anthem. Imagine if a starting songwriter's first
song was stolen and recorded by someone else with no credit to the
songwriter and worse, it becomes a hit. They hear it on the radio every
day and they are never credited. That's what happens to many young
designers whose ideas are stolen and rendered by others. It's very hard
to survive when you become a victim of this type of theft.
the economics of fashion--
licensing deals make fashion accessible
Some designers make their names in high end collections, where they
sell a very small number of rather expensive designs. While the designs
can be high priced, the designer never recoups development costs for
the designs because he or she sells so few garments. Designers are only
able to recoup their investments when they later offer their own
affordable ready-to-wear lines based on those high end collections.
They then can lower the prices at which their designs are sold because
they sell more of them. Just like other businesses--it's dependent on
volume. Design piracy makes it difficult for a designer to move from
higher priced fashion to developing affordable renditions for a wider
audience. It also makes it impossible to sell collections to stores
when the clothes have already been knocked off. Licensing deals are
then no longer an option. In other words, fashion designers want the
chance to knock off their own designs before others do it for them.
Proenza Schouler is an example of successful licensing deals.
Several years ago we designed a capsule collection of clothing and
accessories for the Target GO International campaign. To those who
argue that protecting fashion will drive up costs, accessibility and
ultimately harm consumers, our experience disproves this myth. In the
past few years we have seen a proliferation of partnerships between
American designers and large American retailers including discount
retailers. In addition to us, some other American designers who have
collaborated with such retailers are Isaac Mizrahi at Target, Isabel
Toledo at Payless, Norma Kamali at Wal-Mart, Mary Kate and Ashley Olsen
at JC Penney, Billy Reid at J.Crew, Diane von Furstenberg at Gap and
Vera Wang at Kohl's. These stores have all seen the value of making the
works of American designers available in their stores through licensing
deals so that 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.
This bill will make it easier for all designers, not just the big
names, to make their designs available at a variety of prices in a
variety of stores. There are some in the industry who have become
comfortable with the status quo. They see no need for a new law and
fear that they might have to change the way they do business. To those
companies I say, talk to all of the small designers put out of business
by your current practices and business models.
There is no reason that real innovation, rather than knockoffs,
shouldn't be available for everybody. Consumers can have more choices
precisely because of innovation. The average consumer can wear new
designs, created by true designers rather than poor copies of the real
thing made by pirates in China. As I stated before, fashion in America
is a $340 billion industry, in n this economic downturn we should
encourage growth in this sector. 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 a designer's creation and then go sell it for a
third of the price. Because innovation is the fuel of the U.S. economy,
in the long term, lack of protection will shrink American businesses
and provoke the loss of American jobs.
the id3pa is desperately needed
Congress has passed laws to protect against counterfeits. One in
three items seized by U.S. Customs is a fashion counterfeit. Congress
has 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 could not be
counterfeiting. Both must be addressed or else the small designer with
no brand recognition is left defenseless to the devastating problem of
piracy, leaving only famous brands and big companies protected.
It is for all these reasons that we are here today to strongly
support your efforts to pass the Innovative Design Protection and
Piracy Prevention Act.
The legislation will provide three years of protection to designers
for original designs. That is far less than the life of the author plus
70 years granted to other copyrighted works. However, because of the
unique seasonality of the fashion industry, a shorter term of
protection is reasonable. In three years a designer will have time to
recoup the work that went into designing the article, develop
additional lines, or license lines to retailers.
The CFDA first came to Congress five years ago to ask for a new
law. At the time we heard legitimate criticisms from apparel
manufacturers who were fearful of the impact of new legislation.
Designers began negotiations with the association representing U.S.
apparel and footwear manufacturers--the AAFA. We are pleased that the
result of those negotiations is the legislation recently introduced by
Chairman Goodlatte, and Representatives Nadler, Sensenbrenner, Coble,
Sanchez, Issa, Jackson Lee, Waters and others. In short, we:
Addressed concerns that a new law could encourage
needless and expensive litigation by crafting a special pre-
trial proceeding--pleading with particularity--during which a
plaintiff would have to prove the copied design is protected
and that the alleged copyist had the opportunity to have seen
the design or an image of it. Designers as well as
manufacturers had concerns that they could be on the receiving
end of lawsuits and this new procedure provides important
protection.
Included penalties for false representations to deter
frivolous lawsuits.
Protected only unique and original designs. Anything
already created by the time of its enactment would be in the
public domain and available to copy. It is a high standard to
qualify for protection, amounting to originality plus novelty.
New and unique designs will qualify for protection, while
everything else remains in the public domain.
Addressed concerns that it is too difficult to tell
if something is infringing by limiting the scope to copies that
are ``substantially identical.''
Included the doctrine of independent creation as a
defense to infringement. This makes clear that if someone
independently designs an article of apparel that meets the
standard for infringement, (without any knowledge of the
protected design) no infringement occurs.
I am not a lawyer but we have relied on one who is an expert in
fashion law heavily during this process, Professor Susan Scafidi of
Fordham, the academic director of the Fashion Law Institute. As she
told this subcommittee in 2006, the first version of this bill was ``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.'' The lengthy negotiations between the CFDA
and the AAFA have resulted in an even more narrowly and precisely
tailored way to support the entire American fashion industry.
We need your help to get back to the business of designing. We're
all entrepreneurs who create our fashion with the hope of designing
something that will catch on and capture the imagination of U.S.
consumers. Success that starts in our individual design studios grows
opportunities all across the country for fabric manufacturers,
printers, pattern makers, the shippers and truckers who transport the
merchandise, design teams, fabric cutters, tailors, models,
seamstresses, sales people, merchandising people, advertising people,
publicists, and those who work for retailers. This is a big employment
business today. We are creating jobs across this country.
However, we can't compete against piracy. Without this legislation,
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 and urge you to quickly pass this
legislation. Thank you for your time.
__________
Mr. Goodlatte. Thank you, Mr. Hernandez.
Before we go on to Professor Suk, I want to acknowledge the
presence of the Ranking Member. The gentleman from North
Carolina, Mr. Watt--the Ranking Member of the full Committee
and I have submitted our testimony for the record.
If you are satisfied with that, we will proceed to the next
witness.
[The prepared statement of Mr. Watt follows:]
__________
Mr. Conyers. Mr. Chairman, can we recognize the presence of
Judy Chu as well?
Mr. Goodlatte. We absolutely welcome her and the other
gentlewoman from California, Ms. Lofgren.
And the gentleman from Ohio, Mr. Chabot.
We will now turn to Professor Suk.
Welcome.
TESTIMONY OF JEANNIE SUK, PROFESSOR OF LAW,
HARVARD LAW SCHOOL
Ms. Suk. Chairman Goodlatte, Ranking Member Watt, and
Members of the Subcommittee, thank you for holding this hearing
and for inviting me to speak to you today.
I am Jeannie Suk, professor at Harvard Law School, where I
conduct research on law and innovation in the fashion industry.
My testimony today is based on my scholarly work with Professor
Scott Hemphill of Columbia Law School, and I have submitted our
article, ``The Law, Culture, and Economics of Fashion,'' which
was published in the Stanford Law Review. I have submitted that
along with my written testimony.
Like all of the arts, fashion design involves borrowing and
influence from existing works and themes in our culture. Even
the most original creation in the arts is indebted to prior
work. And so, appropriately, Federal copyright law does not
consider most of the similarity or even copying in the arts to
be copyright infringement.
When there is a trend in fashion, just as in movies, books,
music, and culture, many people are converging on similar ideas
through conscious and unconscious influence by work from the
past and the present.
But these common forms of borrowing do not require blatant
replication of another's work product, a practice that takes
profits from the original producer and thus undermines the
incentive to create that Federal copyright law aims to foster.
The ID3PA protects the incentive to create but also
safeguards designers' ability to use a large domain of creative
influences and to participate in fashion trends. Deviating from
the ordinary copyright infringement standard with a much
narrower substantially identical standard for infringement, the
Act allows plenty of room for designers to draw inspiration
from others, much more room than producers of books, movies,
and music currently have. At the same time, it prohibits
copyists from selling near exact copies of original designs. In
short, the ID3PA strikes an effective balance between the
significant public interest in incentivizing the creation of
original design and the equally important public interest in
leaving designs largely available for free use.
A key distinction to recognize is the distinction between
products that are inspired by a designer's work and products
that replicate or knock off a designer's work without any
effort at modification. For simplicity, I am going to call
these ``inspired-bys'' and ``knockoffs.''
If you have difficulty telling the difference between two
designs, you are looking at a copyist's
Knockoff, not an inspired-by. This is a crucial difference
as a matter of innovation policy because knockoffs cannot
plausibly claim to be forms of innovation, whereas inspired-bys
can. Knockoffs directly undermine the market for the original
designs and reduce the designer's incentive to innovate in ways
that inspired-bys do not.
The ID3PA is therefore a highly moderate bill that only
targets businesses that produce and sell knockoffs of original
designs. The vast majority of the apparel industry will not be
affected. If retailers are not selling knockoffs, they have
nothing to fear from this bill. And even if they are, they are
still safe if the design that they knock off is in the public
domain or is not itself original, or if they are unaware that
the items that they sell are knockoffs. And even if the copied
design is original, knockoff sellers can simply wait 3 years
for the copyright term on a particular original design to end.
The ID3PA reflects a judgment that knockoffs are not
necessary to the business model of high-volume sellers of
on-trend clothing at a low price point. This judgment is
correct. Current knockoff sellers would need to adapt their
businesses to focus on selling inspired-bys instead. They would
have to innovate and invest somewhat in design rather than only
replicate others' work in full.
Does this mean consumers would no longer have low-price
access to designs by great designers? No. Many extremely
talented designers, such as Mr. Hernandez and his colleagues,
have partnered with high-volume retailers, such as Target and
H&M, to offer their designs in large numbers at a low price.
The ID3PA encourages this kind of partnership because this
allows designers to profit from the creative labor they invest
in their original designs. If retailers wish to sell these
designs with minimal or no modification, under the Act, they
would have to reach an arrangement with the designer to do so,
or face liability.
Our current intellectual property system unintentionally
creates an unfortunate bias in favor of the most established
famous fashion firms and against smaller emerging designers who
have the most potential for innovation in design. Established
firms like Louis Vuitton have the benefit of trademark and
trade dress protection. Their advertising promotes and protects
their brand image, as does the use of high-end materials and
workmanship that are very difficult to copy at a low cost. They
have a clientele that does not often overlap with the discount
shoppers. And all of this means that the established luxury
firms suffer comparatively less from the design knockoffs than
their smaller, not as established counterparts.
Emerging designers do not have the advantages just
described. Their products are not well enough recognized to
qualify for trademark or trade dress protection, nor do they
have the money to advertise and reinforce their brand image.
But what these designers do have to offer consumers is their
innovative designs. They cannot command the same prices as the
famous luxury firms. Thus, emerging designers are more likely
to be in competition with their copyists as their consumer
bases are more likely to overlap. A design that retails for
hundreds instead of thousands is within the reach of many
consumers who might well opt for the still less expensive
knockoff. Thus, knockoffs are particularly devastating for
emerging and mid-range designers who face significant entry
barriers and struggle to stay in business.
This act helps level the playing field, which is currently
skewed to the protection of luxury and brands rather than
innovation in design. The ID3PA strikes an appropriate balance
between giving incentives to create and leaving designers free
to draw upon influences. If enacted, it would serve its purpose
to push the fashion industry toward innovation rather than
substantially identical copying. It represents a wisely
balanced and a carefully tailored response to the problems of
this industry.
Thank you, and I look forward to your questions.
[The prepared statement of Ms. Suk follows:]
Prepared Statement of Jeannie Suk, Professor of Law,
Harvard Law School
Chairman Goodlatte, Ranking Member Watt, and Members of the
Subcommittee, I am Jeannie Suk, Professor of Law at Harvard Law School.
Thank you for this opportunity to testify about the Innovative Design
Protection and Piracy Prevention Act (``IDPPPA''). My remarks draw on
my ongoing research with Professor Scott Hemphill of Columbia Law
School on law and innovation in the fashion industry.\1\ Along with my
testimony, I submit our Stanford Law Review article, The Law, Culture
and Economics of Fashion. We have also written on the Act's
predecessors: two iterations of the Design Piracy Prohibition Act,\2\
and the Innovative Design Protection and Piracy Prevention Act
introduced in the Senate last Term.\3\ I submit one of these articles,
published in the Wall Street Journal.
---------------------------------------------------------------------------
\1\ C. Scott Hemphill & Jeannie Suk, The Law, Culture, and
Economics of Fashion, 61 Stan. L. Rev. 1147 (2009); C. Scott Hemphill &
Jeannie Suk, Reply: Remix and Cultural Production, 61 Stan. L. Rev.
1227 (2009); C. Scott Hemphill & Jeannie Suk, The Squint Test, How to
Protect Designers like Jason Wu from Forever 21 Knockoffs, Slate, May
13, 2009, http://www.slate.com/id/2218281/(last visited Jul. 10, 2011);
C. Scott Hemphill & Jeannie Suk, Schumer's Project Runway, Wall Street
Journal, Aug. 24, 2010, available at http://online.wsj.com/article/
SB10001424052748704504204575445651720989576.html (last visited Jul 10,
2011).
\2\ Design Piracy Prohibition Act, S. 1957, 110th Cong. (2007);
Design Piracy Prohibition Act, H.R. 2033, 110th Cong. (2007)
\3\ Innovative Design Protection and Piracy Prevention Act, S.
3728, 111th Cong. (2010).
---------------------------------------------------------------------------
Like all of the arts, fashion design inevitably involves degrees of
borrowing and influence from both specific existing works and general
themes in our culture. Even the most original creative work in the arts
has important debts to prior work. Appropriately, federal copyright law
does not consider most of the borrowing and similarity that occurs in
the course of creative production to be copyright infringement. A trend
in fashion--just as in movies, books, music, and culture--is the
convergence on similar themes by many different producers who are
consciously and unconsciously influenced and inspired by other work
from the past and the present. But these common forms of borrowing in
the arts do not require blatant replication of another's work, a
practice that most directly takes profits from the original producer
and thus most undermines the incentive to create that federal copyright
law aims to foster.
The goal of a law addressing copying in fashion design should
indeed be to give an incentive to create, but also to safeguard
designers' ability to draw upon a large domain of creative design
influences and to participate in fashion trends. The IDPPPA, in its
current form, achieves this goal. By deviating from the ordinary
copyright infringement standard with the much narrower ``substantially
identical'' standard for infringement, it allows plenty of room for
designers to innovate by drawing inspiration from others--much more
room than producers of books, music, and film currently have. At the
same time, it prohibits copyists from making exact or near-exact copies
of original designs. It rewards designers who produce original work
with legal protection against copyists, but limits frivolous litigation
through heightened pleading requirements. It protects creative
designers' ability to profit from their original work, but maintains,
or even expands, consumer choice. In short, the IDPPPA strikes an
effective balance between the significant public interest in
incentivizing the creation of original design and the significant
public interest in making existing design vocabularies largely
available for free use.
effects on retailers
A key distinction that must frame an analysis of the IDPPPA is the
difference between products that are inspired by a designer's work and
products that replicate a designer's work without effort at
modification. The IDPPPA most squarely affects clothing producers and
sellers known as ``fast fashion'' firms. Many simply think of these
firms as blind copiers of the latest trendy designs, but fast fashion
firms actually fall into two distinct categories: designers and
copyists. Fast fashion designers, like H&M and Zara, usually take the
latest trends and adapt or interpret them. The result is a relatively
inexpensive product that is clearly inspired by, but not identical to,
other designers' products. By contrast, fast fashion copyists, like
Forever 21, choose particular designs to copy, and replicate those
specific designs as best they can. These firms make no effort to modify
the original design.
I am going to call fast fashion designers' products ``inspired-
bys,'' and fast fashion copyists' products ``knockoffs.'' Put simply,
if you have difficulty telling the difference between two designs, you
are looking at a copyist's knockoff, not a designer's inspired-by. The
difference between inspired-bys and knockoffs is crucial. It is a
distinction that can be easily grasped by designers, retailers, and
consumers. We need to allow the inspired-bys while stopping the
knockoffs, which directly undermine the market for the original designs
that copyists target and which reduce the incentive to innovate. The
IDPPPA's narrow infringement standard is designed to do just that--to
distinguish between those who engage in interpretation of others' work
and participate in a fashion trend, and those who slavishly copy a
particular original design.
Retailers who sell clothing that is on trend but not an exact copy
need not fear this Act. But the IDPPPA would undoubtedly harm those
retailers whose businesses rely upon selling exact knockoffs of
particular designs. This is what the Act is intended to do. Those
retailers would no longer be able to avoid design costs by freely
taking another's design in its entirety. Current retailers of copyists
would have to adapt to the IDPPPA's requirements. They could do so in
several ways. First, knocking off is not necessary to the business
model of high-volume sellers of on-trend clothing at a lower price
point. Sellers of knockoffs could become sellers of inspired-bys. They
could employ designers--or direct the designers they currently employ--
to engage and modify other designers' original designs. Such work would
not be infringing, as it would not be ``substantially identical'' to a
protected original design. And even where the copies are substantially
identical, the copied design may not meet the high standard for
originality that is needed for protection under the IDPPPA. Second,
fast fashion firms could partner with designers, and sell the resulting
products inexpensively. Fast fashion firms do engage in many such
partnerships already. The IDPPPA would bring the sellers of knockoffs
into the fold such that they would need the designers' authorization to
make knockoffs of original designs.
While our current intellectual property regime does not provide
protection for fashion design, it does provide protection for fashion
firms' trademark and trade dress. Large, well-known firms like Louis
Vuitton and Chanel have the benefit of trademark and trade dress
protection. Their advertising promotes and protects their brand-image,
as does the use of high-end materials and workmanship that are
difficult to copy at low cost. They also have a wealthy clientele that
does not often overlap with the shoppers at Forever 21. All this means
that established luxury firms suffer comparatively less from the
practice of knocking off than their smaller, not as famous
counterparts. Young and emerging designers do not have all the
advantages just described. Young designers' products are generally not
well enough recognized to qualify for trademark or trade dress
protection. Nor do they have the money to advertise and reinforce their
brand image. They cannot command the same premium for their products as
the famous high-end luxury firms. Thus emerging designers are more
likely to be in direct competition with their copyists, as their
customer bases overlap. A designer's dress that retails for $300
instead of $3000 is within the reach of many consumers who might well
opt for the still less expensive knockoff. Thus, knockoffs are
particularly devastating for emerging designers, who face significant
entry barriers and struggle to stay in business. This Act would help
level the playing field with respect to protection from copyists and
allow more such designers to enter the market, create, and flourish.
Such an increase in emerging and smaller designer market participation
would ultimately benefit retailers who sell the smaller designers'
products, such as department stores.
That many less-established designers may lack resources to hire
lawyers and sue copyists does not change this analysis. First, even
under current law, smaller designers already do file suit against
copyists, attempting to cobble together some semblance of protection
against design copying by relying on currently existing intellectual
property protections in trademark and copyright. There is little reason
to doubt that small designers would utilize protection for design,
which is after all what they are really after in the lawsuits they
currently file. Second, litigation by large fashion firms against
copyists making knockoffs could have positive collateral consequences
for small designers. For instance, if Forever 21 had to change its
business model because it could no longer create replicas of products
by Louis Vuitton--which does have the resources to litigate under the
IDPPPA--that change in the culture and norms of fashion design would
also work to small designers' benefit. Such enforcement by larger
plaintiffs, in other words, may produce systemic changes that would
work to smaller entities' advantage. Finally, while small designers
often lack the resources to hire lawyers on an hourly basis, nothing in
the Act prohibits contingent fee arrangements. Such arrangements would
allow small designers to vindicate their rights, even if they could not
afford to pay a lawyer's usual hourly fees.
effects on consumer choice
Unquestionably the IDPPPA would change the consumer's playing
field. Because fast fashion copyists could no longer sell inexpensive
knockoffs without authorization, consumers may lose the low-price
alternative knockoffs now offered. In an IDPPPA regime, such consumers
may not have access to those exact designs at the knockoff price. For
some, this will seem a significant limitation, especially since the
customer who shops for the knockoff of a Louis Vuitton item is not the
same customer who would buy the genuine article.
This limitation, however, is not as substantial as it may appear.
First, the IDPPPA's protections would move fast-fashion designers to
engage with those designs--that is, innovate--rather than simply
replicate them. Indeed, the modifications copyists would be required to
make under the IDPPPA would serve to expand consumer choice as high-
volume sellers shifted their efforts toward inspired-bys and away from
knockoffs. The increase in the variety of inspired-by designs would
more than offset the loss of choice from prohibiting knockoffs.
Second, many high-end designers have partnered with higher-volume
discount retailers such as Target and H&M to offer their goods at a
lower price point. The IDPPPA encourages this kind of partnership.
Under the Act, discount retailers would have even more incentive to
pair with designers if they wished to sell others' designs with minimal
or no modification.
Therefore, while the IDPPPA would restrict consumer choice in terms
of easy availability of unauthorized knockoffs at a low price, it would
increase consumer choice in terms of selection of goods. Fast-fashion
copyists would have to become fast fashion designers who engage with
designers' output, and thereby produce new options for consumers.
effects on litigation
Last Term, when the Senate Judiciary Committee considered a version
of the IDPPPA identical to this Act, one Member raised the concern that
the IDPPPA might produce a flood of litigation.\4\ The Member pointed
to two elements of the Act in support of this concern. First, the Act
gives designers the ability to protect their designs, without any
registration requirement. Hence, any designer could claim that any
design was protected, and so could attempt to litigate under the
statute. Second, some of the statute's language--specifically the
``substantially identical'' and ``non-trivial'' requirements--may
require significant judicial interpretation. Hence, designers and
copyists alike would have an incentive to litigate, in an effort to
define their rights and liabilities under the statute. Combined, the
Member suggested, these factors might lead to a flood of litigation in
the already busy federal courts.
---------------------------------------------------------------------------
\4\ United States Senate, Committee on the Judiciary, Executive
Business Meeting 53:14 (Dec. 1, 2010), http://judiciary.senate.gov/
hearings/hearing.cfm?id=e655f9e2809e5476862f735da
165262f (last visited Jul. 10, 2011) (comments of Senator John Cornyn).
---------------------------------------------------------------------------
This concern is overstated. First, the Act requires that plaintiffs
plead each element of a design infringement claim with particularity.
This requirement will curtail many frivolous lawsuits before they
begin, and will cull others out at an early stage. Second, the Act's
``substantially identical'' standard for infringement is a high bar, as
is the Act's stringent standard for originality. Litigation under the
Act will be concentrated around knockoffs, leaving inspired-bys
relatively untouched. Even under the current intellectual property
regime, we see far greater numbers of lawsuits by designers against
sellers of knockoffs than against sellers of inspired-bys. From 2003 to
2008, at least fifty-three lawsuits alleging trademark and copyright
infringement were filed against Forever 21.\5\ By contrast, two were
filed against H&M and none were filed against Zara.\6\ Under the
IDPPPA, we could similarly expect to see sellers of inspired-bys remain
relatively untouched, and the sellers of knockoffs would either have to
adapt their business strategy or face liability.
---------------------------------------------------------------------------
\5\ The Law, Culture, and Economics of Fashion, supra note 1, at
1173.
\6\ Id.
---------------------------------------------------------------------------
Nor is it likely that large fashion firms, recognizing less-
established designers as competition, would succeed in driving those
designers out of business by saddling them with litigation costs
through baseless suits. IDPPPA plaintiffs must plead with particularity
that the allegedly infringing article is ``substantially identical in
overall visual appearance to . . . the original elements of a protected
design,'' or is not ``the result of independent creation.'' To plead
with particularity that a copy is ``substantially identical'' when the
allegedly offending garment is not easily mistaken for the original
would be extremely difficult. A baseless suit would be subject to early
dismissal. Moreover, a suit filed simply to harass or lacking the
requisite particular facts, might lead to sanctions against the firm
and its lawyers.\7\ These factors--the ``substantially identical''
standard, the heightened pleading requirement, and the prospect of
sanctions--create a strong deterrent against suits meant to drive
upstart designers out of business by imposing litigation costs.
---------------------------------------------------------------------------
\7\ See Fed. R. Civ. P. 11(b)(1), (c) (imposing sanctions for
complaints presented for an improper purpose).
---------------------------------------------------------------------------
Of course, there would be litigation under the IDPPPA, and courts
would have to interpret the language in the Act and sometimes draw
difficult lines. But this is the natural consequence of Congress's
passing any law. The IDPPPA's internal controls on litigation would
discourage litigiousness and stem the flood of litigation that some
fear.
The IDPPPA strikes an appropriate balance between giving incentives
to create original designs and leaving designers free to draw upon
influences, inspirations, and trends. If enacted, it would serve its
purpose, to push the fashion industry toward innovation rather than
substantially identical copying. The new law would harm fast fashion
copyists but not retailers as a whole--and even then, only by
compelling firms to change their businesses in ways consistent with
Act's purpose. It would increase consumers' choice of designs that are
inspired by other designs and that participate in trends, while
limiting their ability to buy exact knockoffs of designs. It would not
promote unnecessary litigation, but to the contrary, represents a
wisely balanced and carefully tailored response to the problems of a
distinctive industry.
Thank you for the opportunity to discuss this important Act with
the Subcommittee. I look forward to your questions.
Published works submitted:
C. Scott Hemphill & Jeannie Suk, The Law, Culture, and Economics of
Fashion, 61 Stan. L. Rev. 1147 (2009), http://papers.ssrn.com/
sol3/papers.cfm?abstract
_id=1323487
C. Scott Hemphill & Jeannie Suk, Schumer's Project Runway, Wall
Street Journal, Aug. 24, 2010, http://online.wsj.com/article/
SB10001424052748704504204
575445651720989576.html
ATTACHMENT 1
ATTACHMENT 2
__________
Mr. Goodlatte. Thank you, Professor Suk.
Professor Sprigman, welcome.
TESTIMONY OF CHRISTOPHER SPRIGMAN, PROFESSOR OF LAW, UNIVERSITY
OF VIRGINIA SCHOOL OF LAW
Mr. Sprigman. Thank you.
I want to start by thanking the Subcommittee and especially
Chairman Goodlatte and Ranking Member Watt for inviting me
today. For the past 6 years, along with my friend and colleague
Kal Raustiala from the UCLA Law School, I have studied
innovation and competition in the fashion industry. Professor
Raustiala and I have written an academic article on the topic
entitled, ``The Piracy Paradox: Innovation and Intellectual
Property in Fashion Design,'' and a followup article, ``The
Piracy Paradox Revisited.'' I have also given testimony on this
issue before this submitted before back in 2006. I testified in
a predecessor to the current ID3PA.
So I have some new data for you, but before I get
there--and I have some slides--I want to talk about a bit
of history. The issue of protection for fashion design is not
new. Since the end of World War II, Congress has considered
providing some sort of copyright protection for fashion designs
on about a dozen occasions. And each time they declined to do
so, I believe there was wisdom in that.
The U.S. fashion industry has grown and thrived over the
past half century--and it continues to do so today. Sales of
apparel and shoes have registered virtually uninterrupted
annual increases since 1945, growing during this period more
than twentyfold. The fashion industry in the U.S. is a leader
in the world. It produces a huge variety of apparel. Innovation
occurs at a pace that is unheard of in other industries. Styles
change rapidly. Goods are produced for consumers at every
conceivable price point. In short, the fashion industry looks
exactly as we would expect a healthy, competitive, creative
industry to look.
The important point here is that all of the fashion
industry's growth and innovation has occurred without any
intellectual property protection in the U.S. for its designs.
Indeed, never in our history has Congress granted legal
protections for designs of fashion goods. The fashion industry
enjoys trademark protection for brands. It enjoys copyright
protection for its fabric designs. But the shape, the cut, the
style of a garment is not protected by copyright law or any
other form of IP in this country.
But unlike in the music or film or publishing industries,
copying of fashion designs has never emerged as a threat to the
survival of the fashion industry. And why is that? Well, it is
because of something we all know instinctively about fashion.
And Shakespeare, as usual, put it best: The fashion wears out
more apparel than the man. That is, many people buy new clothes
not because they need them but because they want to keep up
with the latest style. And this simple truth lies at the
foundation of the fashion industry. It makes copying an
integral part of that industry's success.
So why is that? Well, without copyright restrictions,
designers are free to rework an appealing design. The result is
fashion's most sacred concept: The trend. Copying creates
trends. And trends are what sell fashion. Every season, we see
designers take inspiration from others. Trends catch on. They
become overexposed. And then they die. New designs take their
place. This cycle is familiar. But what is rarely recognized is
that the cycle is accelerated by the freedom to copy.
In our articles, Professor Raustiala and I explain how
copying and creativity actually work together in the fashion
industry. For fashion, copying does not deter innovation. It
speeds it up.
Now I want to take a look at some new data that we have
uncovered that supports our views.
Can I have the first slide?
So I have been working data from the Consumer Price Index,
our government's official measure of inflation. We have been
looking to see if the changes over time in the prices of
apparel suggest any significant effect on the fashion industry
from the copying of fashion designs. To do this, we collected
data on the prices of women's dresses from 1998 to the present.
This is hundreds of thousands of observations of prices. We
then divided the dresses into 10 categories--we created 10
categories ranging from the cheapest 10 percent of dresses,
like apparel on discount racks, to the most expensive 10
percent, like for example, Mr. Hernandez' designs.
Here is a graph illustrating what we found. What you see is
price stability over the entire period for every category
except one, the top category, the most expensive women's
dresses. What happened there? The average price of the most
expensive 10 percent of women's dresses went up substantially
over the data period. Now, actually, the ninth decile, which
isn't shown here, behaved the same way as the tenth--the most
expensive 20 percent of women's dresses have gotten much more
expensive since 1998. Everything else has gotten cheaper or
stayed the same.
And what does this mean? Well, if cheap fashion copies were
competing with the more expensive garments they are imitating,
we would expect to see some effect on the prices of high-end
garments. In short, competition from cheap copies would tend to
depress the prices paid for the high-end origins. But that is
not happening. The high-end originals are the only garments
that have any price growth during this period. And the price
growth of the segments is very healthy.
This is particularly impressive when you look at this next
graph. This is in percentage terms. We have a 250 percent price
growth over the period for the most expensive garments. The
second decile, the second tenth, behaves about the same. That
means that for the top designers as well as for the entry
designers in high-level fashion, prices are very robust.
So the takeaway from this is I don't think the ID3PA is
necessary. We have a healthy competitive industry. During the
question period, I would like to explain, so I don't take too
much time, why I think the ID3PA could cause some mischief. It
is not only that it is unnecessary, but it could lead to a lot
of litigation. This isn't going to create jobs, I think, except
for lawyers. I can explain more about that if anyone cares to
know.
Thank you very much.
[The prepared statement of Mr. Sprigman follows:]
__________
Mr. Goodlatte. Thank you, Professor Sprigman.
We will now turn to Mr. Courtney.
Welcome.
TESTIMONY OF KURT COURTNEY, MANAGER, GOVERNMENT RELATIONS,
AMERICAN APPAREL & FOOTWEAR ASSOCIATION
Mr. Courtney. Thank you, Chairman Goodlatte, Ranking Member
Watt, Ranking Member Conyers, and Members of the Subcommittee,
for inviting the American Apparel & Footwear Association to
testify today in support of the Innovative Design Protection
and Piracy Prevention Act.
My name is Kurt Courtney and I am manager of government
relations for AAFA, where I work on a range of intellectual
property rights issues for the apparel and footwear industry.
My written statement goes into further detail about our
members. But in summary, AAFA's collective membership
represents the largest cross section of the fashion industry
across all price points for consumers worldwide. Our industry
accounts for more than 1 million U.S. employees and more than
$340 billion at retail each year.
Ensuring strong protection of intellectual property has
always been a key priority for AAFA and its member companies.
Our members fight endlessly to protect their trademarks and
brand names in the U.S. And throughout the world. It is with
this in mind that we are pleased to appear before you today.
Mr. Chairman, in 2006, you introduced the Design Piracy
Prohibition Act, the DPPA, which sought to offer new copyright
protection for original fashion designs. As AAFA's legal team
evaluated the bill, we wholeheartedly understood the narrow
problem the legislation was trying to solve, but we
fundamentally disagreed with its overly broad definitions,
which industry experts and legal counsel feared would have
opened a Pandora's box of litigation that would have been very
detrimental to the industry.
At that time, Mr. Chairman, we expressed these concerns to
you and you challenged us to help develop a more targeted bill
to protect original fashion designs and not increase the
prevalence of lawsuits in our industry. So we went to work. In
conjunction with the Council of Fashion Designers of America,
CFDA, we worked with your office and New York Senator Charles
Schumer to develop the ID3PA. This legislation represents a
targeted approach that will solve this narrow design piracy
problem without exposing any innocent actor in the fashion
industry to confusing rules and frivolous legal claims.
Throughout the process, we realize that there were a number
of misconceptions that had to be dismissed.
First, many in the media, academia, and even in the
industry continue to believe that the ID3PA addresses the much
larger and more virulent problem of trademark counterfeiting.
It does not. By copying both trademarks and their associated
designs, whether those designs are original or not, trademark
counterfeiters attempt to profit on the good names and
reputations that our members have spent decades building with
their customers. This practice is illegal worldwide and leads
to billions of dollars in losses each years. It represents a
major enforcement priority of the United States Government, as
Customs and Border Protection recently reported that footwear,
apparel, and fashion accessories--like handbags--were the
first, third, and fourth most seized counterfeit items by value
at our borders last year.
The second misconception arose concerning the relationship
between AAFA and CFDA. With our association's initial
opposition to the CFDA-supported DPPA, it lead many to believe
that AAFA was protecting the copyists. As we have explained
previously, CFDA and AAFA have many of the same members, and in
many instances, CFDA designers often work directly with or
license their brand name to one or more of our members. Neither
association wanted to back legislation that would make it
harder to design apparel and footwear or give lawyers a hand in
the design process.
Third, there remains a deep misconception about the scope
of this legislation. And I want to be very clear on this point.
The ID3PA will not cover everything in the fashion world. In
fact, it will only cover those original articles which are so
truly unique that they come closer to art than functionality.
To put even a finer point on this, by definition, the bill
states that nothing in the public domain, which is the
collective works of thousands of years of fashion history, can
be protected under this bill.
Fourth, very few companies will have to worry about
possible accusations of infringements. To infringe an article
must, among other things, be substantially identical to an
original article. The substantially identical standard is
tighter than what had appeared in the ID3PA and is defined as
so close in appearance that it would likely be mistaken for the
original. While the substantially identical standard may be
easily met for basic garments--the blue jeans or underwear in
your dresser--it is a very high threshold when compared against
never-before-seen fashion articles discussed above.
We address a fifth misconception, that the new legislation
will lead to frivolous lawsuits. The ID3PA includes a
heightened pleading process where the burden falls entirely on
the plaintiff to plead with particularity before any legal
action can commence. And in that pleading, the plaintiff must
show, number one, facts that his or her design is original;
number two, that the potential defendant's design is
substantially identical to his or her design; and number three,
facts showing that the defendant had some access to the design
and must have seen it before making the infringing design.
In closing, AAFA believes the ID3PA provides a targeted fix
to the narrow design piracy problem. The legislation provides
designers with a clear and easily understandable framework so
they can enforce their own original designs. At the same time,
it contains multiple protections to ensure that those same
designers can seek inspiration and harness fashion trends
without the chilling effect of frivolous lawsuits.
I want to thank you again for the opportunity for allowing
me to testimony today, and I look forward to answering any
questions.
[The prepared statement of Mr. Courtney follows:]
Prepared Statement of Kurt Courtney, Manager, Government Relations,
American Apparel & Footwear Association
Thank you, Chairman Goodlatte, Ranking Member Watt and members of
the subcommittee for inviting the American Apparel & Footwear
Association (AAFA) to testify today in support of the Innovative Design
Protection and Piracy Prevention Act or ID3PA.
My name is Kurt Courtney, and I am Manager of Government Relations
for AAFA, where I work on a range of intellectual property rights
issues for the apparel and footwear industry.
Our membership includes some of the most recognizable apparel and
footwear brands serving virtually every market segment--ranging from
haute couture to mass market. Our membership includes a diverse group,
including some of the largest and some of the smallest companies in the
industry. They are located in many states, including a number of
traditional manufacturing hubs in New York, Los Angeles, the North East
and the Southeast. Our members employ thousands of designers across the
United States. Collectively, AAFA's membership represents the largest
cross section of the fashion industry across all price points for
consumers worldwide. Our industry accounts for more than one million
U.S. employees and more than $340 billion at retail each year.
Ensuring strong protection of intellectual property has always been
a key priority for AAFA and its membership. Our members fight endlessly
to protect their trademarks and brand names in the U.S. and throughout
the world. It is with this in mind that we are pleased to appear before
you today.
Mr. Chairman, in 2006, you introduced the Design Piracy Prohibition
Act (DPPA), which sought to offer new copyright protection for original
fashion designs. As AAFA's legal team evaluated the bill, we
wholeheartedly understood the narrow problem the legislation was trying
to solve. But we fundamentally disagreed with its overly broad
definitions, which industry experts and legal counsel feared would have
opened a Pandora's box of litigation that would have been detrimental
to the industry.
At that time, Mr. Chairman, we expressed these concerns to you and
you challenged us to help develop a more targeted bill to protect
original fashion designs and not increase the prevalence of lawsuits in
our industry. So we went to work. In conjunction with the Council of
Fashion Designers of America (CFDA), we worked with your office and New
York Senator Chuck Schumer to develop the Innovative Design Protection
and Piracy Prevention Act. This legislation represents a targeted
approach that will solve this narrow design piracy problem without
exposing any innocent actor in the fashion industry to confusing rules
and frivolous legal claims.
Throughout the process, we realized that there were a number of
misconceptions that had to be dismissed.
First, many in the media, academia and even in the industry
continue to believe that the ID3PA addresses the much larger, and more
virulent problem of counterfeiting. It does not. By copying both
trademarks and their associated designs (whether original or not),
counterfeiters attempt to profit on the good names and reputations that
our members have spent decades building with their customers. This
practice is illegal worldwide and leads to billions of dollars in
losses each year. It represents a major enforcement priority of the U.S
Government, as Customs and Border Protection recently reported that
footwear, apparel and accessories like handbags were the first, third
and fourth most seized counterfeited items by value at our borders last
year.
I would note that the so-called ``rogue website'' legislation
currently before the Senate and being separately developed in the House
will help address one of the more onerous ways counterfeiters steal
from legitimate companies--by establishing fake websites to fool
consumers into thinking that they are buying legitimate products. As we
move forward on ID3PA, we look forward to continue working with you and
your staff on this very important issue and other ways to combat
counterfeiting.
The second misconception arose concerning the relationship between
AAFA and CFDA. With our association's initial opposition to the CFDA-
supported DPPA, it led many to believe that AAFA was protecting the
copyists. As we have explained previously, CFDA and AAFA have many of
the same members and in many instances CFDA designers often work
directly with or license their brand name to one or more of our
members. Neither association wanted to back legislation that would make
it harder to design apparel and footwear or give lawyers a hand in the
design process.
Third, there remains a deep misconception about the scope of the
legislation. I want to be very clear on this point. ID3PA will not
cover everything in the fashion world. In fact, it will cover only
those original articles, which are so truly unique that they come
closer to art than functionality. To put an even finer point on this,
by definition, the bill states that nothing in the public domain--the
collective works of thousands of years of fashion history--can be
protected under this bill.
Fourth, very few companies will have to worry about possible
accusations of infringements. To infringe, an article must, among other
things, be substantially identical to an original article. The
``substantially identical'' standard is tighter than what had appeared
in the DPPA and is defined as so close in appearance that it would be
likely mistaken for the original. While this ``substantially
identical'' standard may be easily met for many basic garments--the
blue jeans or underwear in your dresser--it is a very high threshold
when compared against never-before-seen fashion articles discussed
above.
We address a fifth misconception--that the new legislation will
lead to frivolous lawsuits. ID3PA includes a heightened pleading
process where the burden falls entirely on the plaintiff to plead with
particularity before legal action can commence. In that pleading, the
plaintiff must show:
1) Facts that his/her design is original
2) The potential defendant's design is ``substantially
identical'' to his/her design
3) Facts stating that the defendant had some access to the
design to have seen it, before making the infringing design
A sixth misconception revolves around the lack of a searchable
database. Frankly, we felt that a database--especially with the well
documented problems associated with the Copyright Office--would only
cause confusion. Searchable databases in use in other countries reveal
registration for common items like plain white t-shirts. Designers can
still assert originality by including a symbol on the article and can
work to enforce those claims, but only if they can meet the high
threshold established by the three-part pleading process.
In closing, AAFA believes the ID3PA provides a targeted fix to the
narrow design piracy problem. The legislation provides designers with a
clear and easily understandable framework so they can enforce their own
original designs. At the same time, it contains multiple protections to
ensure that those same designers can seek inspiration and harness
fashion trends without the chilling effect of frivolous lawsuits.
Thanks again for allowing me this opportunity to speak and I look
forward to answering any questions.
__________
Mr. Goodlatte. Thank you, Mr. Courtney, for your very
helpful testimony. We have since been advised that we may be
extremely short of time. Votes may be called in a matter of 5
or 10 minutes. As a result of that, Ranking Member Watt and I
have agreed to defer our questions. We'll either submit them to
you in writing, or if there is time at the end, we'll come back
to those.
In light of that, we'll recognize Members for 3 minutes a
piece and see how many we can get through. We'll begin the
Vice-chairman of the Committee, the gentleman from Arizona, Mr.
Quayle.
Mr. Quayle. Thank you, Mr. Chairman.
Professor Sprigman, I was just trying to--in your
testimony, you were talking about back in the 1920's and
1930's, there has always been copying, and there has always
been complaining about copying, yet the design community has
continued to thrive. And trends become trends because of the
copying.
Now, in Mr. Hernandez' testimony, he also stated that if
you have, right now, because of the Internet and because of
digital photography, that within minutes or within hours after
a runway show or a red carpet in Hollywood, that that design
can actually be put into production overseas within a matter of
hours and actually make it to the streets prior to the designer
being able to get his or her design out there. So do you think
that now is the time to be able to put that forth because of
the changing with the technology so that the designers can
actually profit from their own designs?
Mr. Sprigman. I think speed of copying hasn't really
changed very much in 20 years. So I think the fax machine
really changed speed of copying. You could take a photograph at
a runway show and you could fax it. I think the Internet makes
photos from fashion shows a bit more available. But within the
industry--Women's Wear Daily runs a lot of photos. These things
have been available.
The industry has a 6-month lead time. All right. So they
have shows in the fall for apparel that's going to hit the
stores in the spring, and shows in the spring for apparel
that's going to hit the stores in the fall. If the speed of
copying was really a worry, we would see some pressure on that
6-month lead time that the industry has. We don't see it. The
6-month lead time has stayed.
Can I have the slides up again? I would like to have the
last slide up.
Mr. Quayle. Actually, one other question. Mr. Courtney was
stating that he believes that the concise definition in the new
bill is actually very concise and won't lead to frivolous
lawsuits. But do you agree or disagree with that? Because in
your opening statement, you were stating that you believe this
is going to increase litigation.
Mr. Sprigman. I disagree. Before I became an academic, I
spent a long time as a lawyer. And I litigated a lot of
intellectual property cases. The question in this bill is
whether the garment that is the defendant's garment is likely
to be mistaken for the plaintiff's garment. Most people who
would be on a jury, most Federal judges, are not particularly
attuned to fashion, not particularly interested in it. If a
garment looks generally alike, I think in the run of cases
likely to condemn it, we'll get inconsistent verdicts. We'll
get lawsuits being threatened. We'll get cease-and-desist
letters. That is all going to, I think, redound to the
detriment of the young designer, the new designer, who doesn't
have the money to fight this.
Wells Fargo Bank recently, which loans a lot of money to
the fashion industry, said in a statement a couple of weeks ago
that they are worried about this bill because if this becomes
law, they are going to have to check twice, they are going to
have to check three times before they lend to a design firm
that can't indemnify them. And it is the small fry that can't
indemnify. So this will create barriers.
Mr. Quayle. Thank you.
Thank you, Mr. Chairman.
Mr. Goodlatte. The Ranking Member of the full Committee,
Mr. Conyers, is recognized for 3 minutes.
Mr. Conyers. I want to beginning by thanking both you and
Mr. Watt, Mr. Chairman, for your expediency in allowing us to
question our witnesses. This is fascinating stuff here.
The passion of Mr. Hernandez can't be undervalued.
I don't agree with you, but you are very impressive in your
testimony.
What I am trying to find out is things are really going
along. This is a booming industry right now. And I just want to
ask Professor Sprigman, what other mischief might inadvertently
be produced if this bill were to become law, sir?
Mr. Sprigman. I want to show you an example. Could I have a
picture of those handbags up, please? It is a slide with two
handbags on it. This is the mischief that I am worried about.
So on the left, you have the Proenza Schouler PS 1 bag.
This is the bag Mr. Hernandez talked about. On the right, you
have the Mulberry Alexa. The Mulberry Alexa appeared on the
market before the Proenza Schouler PS 1. So, Mr. Hernandez
says, Well, I create out of nothing. No. No one in the fashion
industry creates out of nothing. People in the fashion industry
create out of what happened in the past.
The Proenza Schouler PS 1 has some substantial similarities
to the Mulberry Alexa. I think in a world in which the ID3PA
had been law, when the Proenza Schouler PS 1 came out, I think
Mr. Hernandez could have found himself on the receiving end of
a cease-and-desist letter. This is what I worry about.
When I look at these bags, I see differences. I see a
lovely bag being made by Proenza Schouler that was hot because
it was very attractive. But a copyright plaintiff's lawyer is
going to see a potential settlement. And this is what I worry
about.
There's some wedding dresses as well. Could you show those
wedding dresses?
Mr. Conyers. As they say in our community, I get your
drift.
Mr. Sprigman. I'll leave it there.
Mr. Conyers. I am with you.
I want to compliment Professor Suk for her testimony.
We are always glad, of course, to see Mr. Courtney.
I yield back.
Mr. Goodlatte. The gentleman from Pennsylvania, Mr. Marino,
is recognized for 3 minutes.
Mr. Marino. I have no questions.
Mr. Goodlatte. Thank you.
The gentlewoman from California, Ms. Lofgren, is recognized
for 3 minutes.
Ms. Lofgren. Just one additional question for Professor
Sprigman. You have been very clear about the amount of
litigation that could result. And what we want to do is take
steps to promote a healthy economy and creativity and the like.
So we want to get this right. I am from Silicon Valley, and one
of the issues that has been of concern there--if you are an IP,
you know this--is the issue of trolls, where you have got
rights that are assigned and the only--really, the only thing
that some of these firms do is they buy it so they can
litigate. Do you see the potential for that in this arena?
Mr. Sprigman. I think the unfortunate truth here that is
the ID3PA is going to give rise to copyright trolls. So think
about it if you are a retailer. You can be held liable if you
reasonably should have known that you are dealing in infringing
garments. So the fashion industry puts out so many thousands of
designs every year. This bill doesn't create any kind of
registry as a precondition for claiming protection. I could
imagine a law firm going into business as a copyright troll,
basically buying the right to litigate designs against
department stores. And if you think about the department
stores' reaction to this, the idea of receiving a whole bunch
of cease-and-desist letters every season, the department
store's reaction is going to be, I want indemnification.
The big guys can live in that world. The little guys are
going to be the ones that suffer in that world. That is what I
am worried about--just raising the cost of doing business. If I
thought that it was necessary to do this in order to get
innovation in fashion, I would say, Go for it. But we see a
fashion industry that is about as innovative as it could be,
and we see people at the high end of the industry raising their
prices, profiting. There's nothing to fix that I can see.
Ms. Lofgren. It seems to me, and then I'll stop, that there
is a legitimate trademark issue, because if somebody thinks
they are buying a high-end product that is really a cheap
knockoff, that is a completely different issue than this one.
Mr. Sprigman. That is fraud.
Ms. Lofgren. That is fraud.
Mr. Sprigman. We have a trademark law that helps in that
case and, you know, enforce that. If people are defrauded, go
after them.
Ms. Lofgren. Thank you, Mr. Chairman. I will yield back.
Mr. Goodlatte. Professor Suk, did you want to respond that
that point about how this affects smaller designers?
Ms. Suk. Yes, I did. Yes, thank you. I think that, for one
thing, the new data that Professor Sprigman presented--first of
all, everything is in the interpretation. And I believe that
Christopher Sprigman's interpretation of that data is
incorrect.
I would have an alternative explanation. When you are
seeing high prices at the high end going up, why are rising
prices at the high end considered signs of health rather than
signs of splitting consumers so that you have the midrange
designers in direct competition with the lower-end companies?
And so, therefore, those midrange companies are less able to
compete, and so then you have got the higher-end designers
raising their prices.
So if you have a $500 dress that is going away because of
competition from copyists, then what is left is the higher-
priced dresses. And in many ways, if you see just the high end
going up like that, it can be interpreted as a sign of producer
desperation rather than a sign of health by those designers. So
I think that the interpretation is definitely up for grabs. I
think it would be really helpful to have Professor Sprigman's
data rather than just his interpretation.
Mr. Goodlatte. Go ahead.
Ms. Suk. As for the idea of different bags having similar
looks and there being trolls, for many people who don't know
classical music, the difference between Bach and Handel, one
piece of Baroque music is much like any other. It is true that
for some people, whatever the industry, whether it is painting,
whether it is books, poetry, you are going to have a problem
that if you are not that attuned, you might think that it is
all the same. But that is not unique to the fashion industry.
There are meaningful differences between products that may look
similar to some people. And it is because we care about
innovation within this industry at the level of detail that the
industry actually produces that we would have a law that says
``substantially identical.''
Mr. Goodlatte. Thank you.
I want to get to the gentlewoman from Texas, Ms. Jackson
Lee, for 3 minutes.
Ms. Jackson Lee. Thank you very much, Mr. Chairman.
And thank you to the Ranking Member for your courtesies
extended.
Mr. Hernandez--and thank you, I was delayed in another
meeting on debt ceiling issues. But I come to this Subcommittee
with a great passion about creating jobs.
Tell me how important and how do you define your work as a
property right, as something to be protected so that you can
create jobs and you can have a product that is protected?
Mr. Hernandez. Well, we employ about 50 designers at the
moment, who sort of design products all day, every day. We are
having the problem at the moment where a lot of our designs are
being copied on a much more accessible price point level. And I
think an interesting thing, interesting point that is being
brought up today is this whole point of designers raising their
prices really high. That is not so much a function of margins
as it is a function of us having to keep on pushing the design
level and pushing further and further and kind of pushing
design and getting a little more experimental and having to
kind of push the design level further and further and that
brings the price point up.
Ms. Jackson Lee. And that's because your product is stolen
or redone or copied.
I only have a short period of time. So I want to go to
Professor Sprigman and just say that when we started out this
in country, we copyrighted books and maps and charts. But we've
moved progressively on, for example, into technology and
otherwise. So what would be the aversion to, as this property
is being demeaned, to not move in that direction if we had
protections for those very entities of which you have just
spoken? It is a valuable asset that fashion designers have.
Mr. Sprigman. It's a valuable asset. My only argument and I
think it's the argument that the Framers of our Constitution
made, we have copyright, we have patent to promote the progress
of useful arts and sciences.
The fashion industry has been promoting progress in
beautifully clothing Americans for a long time without any
copyright protections for its designs. Progress is being
promoted through free competition.
For reasons I explain in my academic work, the fashion
industry doesn't depend on property rights as the engine of
innovation.
Ms. Jackson Lee. But change has come about, has it not?
Paintings now are protected, and otherwise.
Mr. Chairman, I'm going to yield back and just simply say I
think we have a good product here, but I think we need take a
great interest in the points the professor has made in
protecting other elements.
But we need to protect you, Mr. Hernandez. We want you to
produce, produce, produce, create jobs, and be successful as an
industry.
I yield back.
Mr. Goodlatte. I thank the gentlewoman.
We have about 5 minutes remaining in the vote that has been
called. Does the gentleman--well, I'll just ask one question.
Mr. Hernandez, critics of fashion design protection argue
that all fashion is derivative of something that came before
it. They believe that unfettered copying actually drives
fashion cycles and results in more creativity. So, two
questions. Is that how it works? And to the extent that it is,
is that fair? And tell us how that connects to your own----
Mr. Hernandez. I think, historically, most artists and
designers are obviously inspired by history and things that
have happened before that. I don't think anyone is sort of
speaking about that being a problem. I think that is a normal
thing that happens amongst artists and designers.
I think the problem is in someone copying, stitch for
stitch, what you have already created. There is a difference
and a very big difference between being inspired by something
and copying something. And I think what has happened in the
modern world is the advent of the Internet, as opposed the
advent of the fax machine, for example, is that there's Web
sites now where you get a runway show, and they can literally
zoom in to the garment front and back, copy stitch for stitch,
and pretty much print it and make it in a couple days flat and
ship it before we ourselves can even take orders on the
product.
And I think that's something that's happened in the last 10
years that has changed the game 100 percent. The protection
hasn't caught up to the level of technology. There's been sort
of a disconnect there. Before, it was a little more--we were a
little bit more protected in terms of the product wasn't as
visible to so many people from such an early stage. Now it is.
Mr. Goodlatte. Thank you. Mr. Courtney, you believe that
this bill has been substantially changed and improved to
address it in the manner that Mr. Hernandez describes, maybe
not literally stitch for stitch, but very close to that, in
order to get the protection of the bill, as opposed to just
general ideas and general trends.
Mr. Courtney. Yes, thank you, Mr. Chairman.
The thing to remember, as I said in my testimony, this is
not intended to cover that anything that anyone is wearing
right now in this room or anything that exists up until
enactment of this bill. But we have to give designers the
opportunity once this bill becomes law to, if they can meet the
very tight definitions that are in the bill of originality,
that is going to spur innovation. That is going to enable
designers to come up with something that really is truly
unique. If they are able to do that, then absolutely they
should be able to get protection for that for 3 years. That is
the reason why we are supporting this bill. We have eliminated
as far as----
Mr. Goodlatte. I am going to cut you short because I want
to give the gentleman from North Carolina the last word.
Mr. Watt. Thank you, Mr. Chairman.
Let me apologize to the witnesses and to the Chairman for
being late. I got consumed with this debt ceiling stuff that we
were involved in and just lost track of time. So I apologize
because I feel responsible for holding--getting us in the time
bind that we are in.
Ms. Suk, Professor Suk, I think you probably won't be able
to respond to this, except in writing. I practiced law for a
long time before I got here, 22 years, and I am just trying to
conceive of a set of jury instructions that you would give to
12 people sitting on a jury that defines clearly the
distinction between inspired by--that is one term you used--and
substantially identical. That is the other term you used. Could
you give some thought to that at some point and perhaps give me
a written set of jury instructions? Because I think if we are
going to respond to Professor Sprigman's concern about
increasing litigation, which could be a substantial deterrent
to innovation--and I see that deterrence acting between small
people like you, Mr. Hernandez, and large people who are
already out there. I don't want you tied up in protracted
litigation against Louis Vuitton or whoever you are competing
against. I guess you don't compete against Louis Vuitton. Maybe
you do. I don't know. I don't know enough about this industry.
But that illustrates a point that I'm making because 12
people sitting on a jury are not going to know a darn thing
about this industry either. You know the distinctions, and the
proof in a case is going to rely on 12 uneducated,
unsophisticated design people making those kinds of
distinctions. And unless that can clearly be drawn, you're just
going to have endless litigation about this. And that's the
concern I have. And that litigation will be more--could be more
of a deterrent to innovation or bringing things to the market
because you'll be just afraid that you're going to get into the
middle of litigation about these things.
So this can't be resolved right now. Maybe I should ask
both the professors to think about that and give me their
thoughts about it in writing. That would be very helpful.
Mr. Goodlatte. I thank the gentleman. And I thank all of
the witnesses for their valuable testimony today.
I apologize also for the Committee for the tightness of the
time here, but we don't control the action on the floor.
Without objection, all Members will have 5 legislative days
to submit to the Chair additional written questions for the
witnesses, which we will forward and ask the witnesses to
respond as promptly as they can so that their answers may be
made a part of the record. Without objection, all Members will
have 5 legislative days to submit any additional materials for
inclusion in the record.
With that, again, I thank the witnesses and the hearing is
adjourned.
[Whereupon, at 11 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record
Response to Post-Hearing Questions from Lazaro Hernandez,
Designer and Co-Founder, Proenza Schouler
Response to Post-Hearing Questions from Jeannie Suk, Professor of Law,
Harvard Law School
Response to Post-Hearing Questions from Christopher Sprigman, Professor
of Law, University of Virginia School of Law
Response to Post-Hearing Questions from Kurt Courtney,
Manager, Government Relations, American Apparel & Footwear Association
Letter from Stephanie Lester, Vice President, International Trade,
Retail Industry Leaders Association