The Hottest Fashion Statement You've Probably Never Heard Of: Copyright Litigation

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The Hottest Fashion Statement You've Probably Never Heard Of: Copyright Litigation

By Brian Howard, Legal Data Scientist, Director of Analytics Services, Lex Machina - 09/28/2015
Although copyright litigation is more often associated with entertainment or publishing businesses, retail and apparel industries should pay close attention. A new report on copyright litigation trends signals that a large portion of copyright cases involve clothing retailers and textile pattern companies. 

Retailers surprisingly are amongst the most frequently sued defendants in traditional copyright cases (i.e., non-internet file-sharing/piracy suits). In fact, of the top 16 defendants in these non-file-sharing cases, 11 are retailers or have significant retail business. The top copyright defendants by cases filed since 2009 include Ross Stores (181 cases), the TJX company (TJ Maxx, etc.; 98 cases), and the Burlington Coat Factory (54 cases).

While discount stores top the list, boutiques and departments stores are not immune. Other top defendants include Rainbow USA (44 cases), J.C. Penney (39 cases), Sears (39 cases), Forever 21 (38 cases), and Nordstrom (34 cases). E-commerce giants Amazon.com and Walmart also appear on the list, at 55 and 38 cases, respectively, since 2009.

Who are the plaintiffs suing these retailers? Is this a trend? And what does this mean for your business?
Knowing the answers to these questions can help fashion designers and retailers protect their organizations from costly litigation. Even a small copyright case that goes to trial could cost upwards of $250,000, according to the American Intellectual Property Law Association's (AIPLA) 2015 economic survey. Greater awareness and sophistication with copyright infringement issues in the apparel industry can mitigate the risk of these suits and improve the odds of winning when cases are filed. 

The Copyright Litigation Report analyzes U.S. district court cases dating back to 2009, but even in that short timeframe, it's easy to see patterns emerging. In this time period, Coach ranked ninth in terms of terms of total copyright lawsuits filed, with 260 cases, making it the only fashion brand among the top 10 plaintiffs. On the other hand, Ross Stores has been the most frequently sued copyright defendant, with an average of 26.5 cases filed each year from 2009 to 2014.  But so far 34 cases have been filed against it through the end of July 2015 ? a marked increase. The vast majority of cases against Ross Stores involve textile/fabric pattern plaintiffs.

Indeed, the past two years have seen one such company, Star Fabrics, become the third most-litigious company in non-file-sharing copyright cases. Along with other top textile pattern plaintiffs Unicolors, L.A. Printex, and United Fabrics International, the combined case filings of these four companies have increased: from 67 in 2011 to 106 in 2014 (the four have filed a total of 546 cases since 2009). Interestingly, many of the textile pattern companies are represented by a single law firm – Doniger Burroughs – which has filed 741 cases since 2009; more than twice the number of the next leading firm.

For plaintiffs such as these textile pattern companies mentioned above, litigation can be good business. The four textile pattern companies mentioned above have been awarded more than $1.3 million in damages and six permanent injunctions from 2009 through July 2015.

How can data help you prepare for copyright litigation?
The Report is a good starting point for understanding what is happening in copyright litigation in the retail and apparel industries. However, with case filings on the rise, good strategy requires more than just understanding — it requires insights and preparation.

If your organization is being sued, having intel on the plaintiffs and opposing counsel can make a big difference. Even before being sued, knowing which counsel to retain can translate into a more coherent legal strategy — the days after receiving a threat or complaint can be hectic, and having a plan in place helps companies spend their time on crafting the right response rather than scrambling to find lawyers.

Conversely, if you believe your copyright has been infringed, finding the right counsel quickly can be crucial, as wasted time equates to lost revenue. Conduct due diligence on which firms have the best track record: who can successfully get injunctions quickly, secure a transfer to a more favorable venue, or bring home the most in damages. Plaintiffs can also analyze the previous litigation of potential defendants to determine whether a company will likely settle quickly or will fight all the way to a trial.

There are legal analytics tools available that can help your organization make data-driven decisions, including showing the average time to trial to help you calculate legal costs. These tools can help you identify the most litigious plaintiffs so your organization can reduce its radar profile and tread extra carefully when dealing with these companies.

Awareness of the players and the issues involved is a big first step on the path to devising a good legal and business strategy. Data-driven insights can reduce damages, minimize attorneys' fees, and properly allocate budget and legal spend, ultimately letting companies focus on the business of clothes rather than being distracted by the disruption of litigation.


Brian Howard is legal data scientist in director of analytics services with Lex Machina.