“Fashion does not stand still, but clothes remain unchanged!”
Gianni Versace
Retail in the Fashion business is changing rapidly: many foreign brands have already left Russia, shopping centers are recommended to pay attention to Russian designers, brands are leaving for marketplaces, and the Government of the Russian Federation allows parallel import of goods.
The current situation as a whole opens up new opportunities for entrepreneurs and makes the issues of intellectual property protection especially relevant.
In practice, parallel import has a number of difficulties. A quick purchase of the previous volumes of goods of a particular brand is almost impossible, because a pre-order is required. Even in mono-brands, there are buyers who make purchases of their own brand, taking into account the peculiarities of the demand of the region in which they work, in volumes that are necessary to meet local demand. According to these orders, the goods are produced by the brand. If there are no official orders, then this product is not produced. The so-called “free warehouse” is not available for all brands, because it is unprofitable for the company.
Working with brands, distributors and retailers have been building business relationships with them for many years, and the delivery of partners’ clothes “bypassing”, without their permission, means the end of reputation and the burning of all bridges. Now all market players are in a transition period, trying to create new formulas, schemes and rules of operation.
The main areas of activity currently operating:
- Transfer of rights, sale of business to close partners within the Russian Federation. Deliveries continue, in general, the mechanisms remain the same.
- The closure of the official Russian office and its own mono-brand stores, but at the same time the preservation of franchised outlets. Thus, the brand actually remains in the country, purchases may be different from different franchisees, they provide supplies themselves. Also, online sales of the brand on marketplaces can be organized in parallel.
- Complete closure of all stores, including franchised ones, but at the same time maintaining sales through multi-brands and marketplaces. Here we see that even vertical retailers, which traditionally produce goods for certain retail areas, go to such schemes. Of course, there are also entrepreneurs who have embarked on the path of parallel import. They are actively engaged in importing goods of different brands from other countries, through partners, second-hand. If this product is really original, then logistics and difficulties with bank transfers lead to its rise in price. So when we see a product on sale under a well–known brand, but cheap, reasonable questions arise about how this is possible. Perhaps, at the moment, the approximate price of the goods is the only criterion that you can somehow rely on when determining counterfeit.
The delivery of clothing of mass-market brands that have left the market is also impossible in large volumes. Inditex, H&M, Uniqlo brands produce collections exclusively for their own retail space. There are no squares – clothes are not produced. What we see now on the marketplaces is either the remnants of departed or outgoing brands, or some kind of official-unofficial agreements with them on small deliveries.
For example, when Massimo Dutti began to be sold on Lamoda, the platform officially stated that they “still work with brands or their official distributors only directly.” There is information that some brands are indeed planning to sell leftovers on Lamoda and are considering options for further cooperation. So you can still buy famous sports brands here. There is simply less choice, fewer novelties and innovative models and materials. Wildberries is already actively selling drains purchased from brands that have left the Russian market. The marketplace often hears reproaches about the insufficiently active fight against counterfeiting, and the topic of parallel import makes these conversations even more relevant. So, if the buyer has seen the brand’s collection in an offline store, can compare positions and prices on the marketplace and in the store – this is one thing, when things arrive under the parallel import scheme, there will be nothing to compare with, the problem of fakes will become acute.
Hugh Devlin, a business consultant who has worked for more than 25 years with major fashion brands (Givenchy, Valentino, Vivienne Westwood, John Galliano), says that legal disputes in the field of fashion most often arise due to incorrectly drawn up contracts. “Most people think that in the field of fashion it is necessary to protect the rights to a trademark or design, although there are few such cases. Most often there are disputes regarding contract law. Every time a designer has a relationship with a buyer, consultant or freelancer, it’s a contract. It is important for designers to understand them. The big problem is that people sign what they don’t understand,” the expert believes.
In the designer’s cooperation with investors, the expert also advises to carefully read the contract and make sure that your views on the future coincide. “The LVMH deal with J. W. Anderson and Nicholas Kirkwood, the Kering deal with Christopher Kane were concluded after six months of negotiations…” Devlin shares.
Georges Geoffroy, Manager of the Brand Protection Department at LVMH (Louis Vuitton, Moët, Hennessy) and Vice-chairman of the Intellectual Property Committee of the Franco-Russian Chamber of Commerce and Industry, says that in recent years the number of cases involving counterfeit goods has increased in Russia. He explains that this is due to the increased activity of the committee.
Counterfeit infringes the exclusive rights to the trademark. In addition, attackers can violate copyright, as well as the right to a patent, which protects an industrial design and the right to a secret of production (know-how).
Works of graphics, design, fine and decorative arts will be objects of copyright. The protection for them is valid for the entire life of the author and for another 70 years after his death.
There is a small court practice in Russia on copyright issues in the field of design. Examples in the law prove that the design of clothing or products (gloves, glasses, bags) is an object of copyright. The same goes for the design on fabrics. For example, in 2013, a Russian court ruled in favor of the plaintiff, who complained about the violation of the exclusive right to design bed linen by a competitor.
The appearance of the product can be protected by a patent for an industrial design. It registers as an image and prohibits others from creating products that will look like your object.
To get protection, the appearance of the product must meet two conditions: be new and original.
- a product is considered new if, before the date of registration of the product as an industrial design, its appearance (the totality of all its elements) has not become publicly
- available, the product is recognized as original if its appearance (the totality of all its elements) has been creatively developed. And also there is no similar product in the world that makes the same impression as the original
The process of obtaining a patent is not fast: Rospatent will approve the application at least 10 months after filing. If approved, the patent is issued for 5 years with the right to extend. The maximum term of protection of the exclusive right to an industrial design is 25 years.
If you want to register an industrial design after publication, then do it no later than 12 months from the date of publication.
In the fashion industry, designers often register bags, jewelry, eyeglass frames and perfume bottles as industrial samples.
In the Federal Law “On Trade Secrets”, a trade secret is a secrecy regime that allows its owner to obtain material benefits: to earn, save or stay on the market.
In foreign and Russian practice, there are many legal disputes over the violation of trade secrets. For example, Louis Vuitton has filed a lawsuit for 500 thousand dollars against the former vice-president of the French fashion house. He went to work for competitors, and the company considered that by doing this the former employee violated the obligations of non-competition and non-disclosure of information.
The Russian fashion industry today is still at the stage of development. In order to buy clothes from domestic manufacturers, businesses need to solve several problems: managerial, logistical, marketing, and, of course, they need to be able to manage and protect intellectual property.
Your lawyer, Anna Gretskaya
Head of the Legal
boutique “Formula of Success”
