Fast Fashion: EU-wide
Reducing the time it takes to get new fashion lines to customers is key to maintaining a commercial advantage. The traditional 6-month lead time on new stock is now often closer to 3 months. Some brands such as Public Desire have told how they have sourced materials, produced and promoted footwear in a 6-week timeframe in order to be on people’s feet first. Such “fast fashion” is characterised by very rapid production cycles, low cost and is often inspired by the catwalks or celebrities. This does however expose retailers to risks of infringement of design rights and other intellectual property rights. A recent decision in the case of OTB v Zara serves as a useful reminder that an infringement of third party IP rights can result in a claim in the courts in one EU member state for an injunction and damages in all EU countries where the products have been sold.
OTB v Zara (Decision 5390/2018)
OTB is the parent company of DIESEL and MARNI. An interim injunction was granted in 2016 by the Courts in Milan in favour of OTB and found that Zara had infringed one of Diesel’s community registered designs and one of its community unregistered designs for its skinny jeans, as well as one of Marni’s unregistered community designs for a winter sandal.
OTB claimed that Zara had infringed its IP rights, had acted contrary to the principles of fair competition under Article 2598 of the Italian Civil Code and that owing to said infringements it was entitled to receive compensation for the entire amount of damages suffered in the territory of the EU. Zara submitted that the Italian Court would lack jurisdiction under Article 8(1) Community Design Regulation (6/02) over defendants established abroad which would be concurrent with the position of the CJEU.
The Court held jurisdiction would subsist under Article 8(1) No 1 of the Brussels I Regulation recast. Article 8(1) states that a person domiciled in a Member State may also be sued “where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”.
The Court held DIESEL’s rights valid and found that ZARA had infringed such rights. The Court referred to the extremely crowded character of the clothing sector and stated that modest differences may be perceived by the informed user as different from already known shapes to justify validity. The Court also held Marni’s claim to be valid as the appearance of the sandals presented enough characteristic elements to produce an overall different impression in the relevant sector.
The Court had to consider whether it would have competence to rule in relation to activities of a defendant domiciled in Spain, for the same infringing activities committed outside of Italy but within the EU. Following the decision in Nintendo v Big Ben, the Court had EU-wide jurisdiction to rule on infringement, but also EU wide jurisdiction in relation to remedies and damages. According to Article 19 Rome II Regulation for activities of Zara other than those which have given rise to the infringement on the Italian territory, the applicable law would be the Spanish law. The Court ordered Zara to cease sale and production of the skinny jeans but due to the expiry of the sandals unregistered community designs, a similar order could not be made. Further, it ordered that the proceedings continue in order to determine the actual amount of the damages to be awarded to OTB.
For rights owners this case is useful as it confirms the EU wide nature of community designs. However for retailers it is a good reminder that care should be taken when launching new products and that relevant searches for third party IP should be undertaken however tight the timetable for launch.