[House Hearing, 109 Congress] [From the U.S. Government Printing Office] A BILL TO PROVIDE PROTECTION FOR FASHION DESIGN ======================================================================= HEARING BEFORE THE SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY OF THE COMMITTEE ON THE JUDICIARY HOUSE OF REPRESENTATIVES ONE HUNDRED NINTH CONGRESS SECOND SESSION ON H.R. 5055 __________ JULY 27, 2006 __________ Serial No. 109-138 __________ Printed for the use of the Committee on the Judiciary Available via the World Wide Web: http://judiciary.house.gov ______ U.S. GOVERNMENT PRINTING OFFICE 28-908 WASHINGTON : 2006 _____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800 Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001 COMMITTEE ON THE JUDICIARY F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman HENRY J. HYDE, Illinois JOHN CONYERS, Jr., Michigan HOWARD COBLE, North Carolina HOWARD L. BERMAN, California LAMAR SMITH, Texas RICK BOUCHER, Virginia ELTON GALLEGLY, California JERROLD NADLER, New York BOB GOODLATTE, Virginia ROBERT C. SCOTT, Virginia STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina DANIEL E. LUNGREN, California ZOE LOFGREN, California WILLIAM L. JENKINS, Tennessee SHEILA JACKSON LEE, Texas CHRIS CANNON, Utah MAXINE WATERS, California SPENCER BACHUS, Alabama MARTIN T. MEEHAN, Massachusetts BOB INGLIS, South Carolina WILLIAM D. DELAHUNT, Massachusetts JOHN N. HOSTETTLER, Indiana ROBERT WEXLER, Florida MARK GREEN, Wisconsin ANTHONY D. WEINER, New York RIC KELLER, Florida ADAM B. SCHIFF, California DARRELL ISSA, California LINDA T. SANCHEZ, California JEFF FLAKE, Arizona CHRIS VAN HOLLEN, Maryland MIKE PENCE, Indiana DEBBIE WASSERMAN SCHULTZ, Florida J. RANDY FORBES, Virginia STEVE KING, Iowa TOM FEENEY, Florida TRENT FRANKS, Arizona LOUIE GOHMERT, Texas Philip G. Kiko, General Counsel-Chief of Staff Perry H. Apelbaum, Minority Chief Counsel ------ Subcommittee on Courts, the Internet, and Intellectual Property LAMAR SMITH, Texas, Chairman HENRY J. HYDE, Illinois HOWARD L. BERMAN, California ELTON GALLEGLY, California JOHN CONYERS, Jr., Michigan BOB GOODLATTE, Virginia RICK BOUCHER, Virginia WILLIAM L. JENKINS, Tennessee ZOE LOFGREN, California SPENCER BACHUS, Alabama MAXINE WATERS, California BOB INGLIS, South Carolina MARTIN T. MEEHAN, Massachusetts RIC KELLER, Florida ROBERT WEXLER, Florida DARRELL ISSA, California ANTHONY D. WEINER, New York CHRIS CANNON, Utah ADAM B. SCHIFF, California MIKE PENCE, Indiana LINDA T. SANCHEZ, California J. RANDY FORBES, Virginia Blaine Merritt, Chief Counsel David Whitney, Counsel Joe Keeley, Counsel Ryan Visco, Counsel Shanna Winters, Minority Counsel C O N T E N T S ---------- JULY 27, 2006 OPENING STATEMENT Page The Honorable Lamar Smith, a Representative in Congress from the State of Texas, and Chairman, Subcommittee on Courts, the Internet, and Intellectual Property............................ 1 The Honorable Howard L. Berman, a Representative in Congress from the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property................ 2 The Honorable Bob Goodlatte, a Representative in Congress from the State of Virginia, and Member, Subcommittee on Courts, the Internet, and Intellectual Property............................ 3 The Honorable William D. Delahunt, a Representative in Congress from the State of Massachusetts, and Member, Committee on the Judiciary...................................................... 5 WITNESSES Mr. Jeffrey Banks, Fashion Designer, on behalf of the Council of Fashion Designers of America Oral Testimony................................................. 8 Prepared Statement............................................. 10 Mr. David Wolfe, Creative Director, The Doneger Group Oral Testimony................................................. 13 Prepared Statement............................................. 15 Ms. Susan Scafidi, Visiting Professor, Fordham Law School, Associate Professor, Southern Methodist University Oral Testimony................................................. 77 Prepared Statement............................................. 78 Mr. Christopher Sprigman, Associate Professor, University of Virginia School of Law Oral Testimony................................................. 85 Prepared Statement............................................. 87 APPENDIX Material Submitted for the Hearing Record Prepared Statement of the Honorable Howard L. Berman, a Representative in Congress from the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property.......................................... 195 Prepared Statement of the Honorable Maxine Waters, a Representative in Congress from the State of California, and Member, Committee on the Judiciary............................. 196 Prepared Statement of the United States Copyright Office, Washington, DC................................................. 197 Prepared Statement of the American Free Trade Association, Miami, FL............................................................. 220 A BILL TO PROVIDE PROTECTION FOR FASHION DESIGN ---------- THURSDAY, JULY 27, 2006 House of Representatives, Subcommittee on Courts, the Internet, and Intellectual Property, Committee on the Judiciary, Washington, DC. The Subcommittee met, pursuant to notice, at 9:13 a.m., in Room 2141, Rayburn House Office Building, the Honorable Lamar Smith (Chairman of the Subcommittee) presiding. Mr. Smith. The Subcommittee on Courts, the Internet, and Intellectual Property will come to order. I don't know what the distraction was out to my left, but we are all going to come to order this morning. After our opening statements, then we will introduce our witnesses and proceed with our hearing. In just a moment, I will announce we are going to be going out of order in one way, and I am going to go into greater explanation in regard to that in just a second. I recognize myself for an opening statement. The topic of today's hearing is not the usual for our Subcommittee. That our audience is unusually well attired may well reflect the subject. The legislation we are considering today would create a new intellectual property right for fashion designers. H.R. 5055 amends chapter 13 of the Copyright Act to extend design protection for articles of clothing, as well as watches, handbags, sunglasses and other fashion accessories. Currently, articles of clothing are considered useful articles and are generally ineligible for copyright protection. The design of a useful article is protected under copyright, ``only if and only to the extent that such design incorporates pictorial, graphic or sculptural features that can be identified separately from and are capable of existing independently of the utilitarian aspects of the article.'' For the first time under this bill, fashion design would be protected by copyright law and copies that are found to be in ``appearance in the whole of the protected design would be prohibited.'' Design protection legislation has been introduced in Congress since 1914. Previous bills took one of two forms: changes to copyright law or relaxation of the restrictions placed on design patents. They were based on the limited protection available to useful articles under the patent, copyright and trademark laws. Advocates of H.R. 5055 say that under current law, fashion designs are generally ineligible for any type of protection, so designers, especially new designers entering the field, easily become victims of those who wish to copy their designs and profit from them. Others have expressed concerns that the legislation is too broad and would prohibit the ability of designers and retailers to replicate current trends and styles, something on which the fashion industry thrives. This Subcommittee must carefully weigh the competing interests and the consequences of establishing such a precedent. Our Subcommittee follows the mandate of the Constitution to protect the intellectual property rights of our citizens and those who fairly deserve to reap the benefits of their creativity and inventions. At the same time, we must also make sure that intellectual property legislation does not have an adverse impact on economic growth. When we allow goods to be taken out of the marketplace and assign ownership rights to a certain creator, we should look at the fairness of doing so and also the impact it will have on the market. The economic impact of expanding designer protection for fashion designs and the potential burden to the Copyright Office of a large increase of registered designs both need to be explored. Because the bill mandates that a court, and not the Copyright Office, settle disputes over registration of designs, the impact of the bill on the Federal court system also needs to be examined. We will look forward to discussing these issues and ask some questions on these subjects during the hearing today. I will now recognize the Ranking Member, Mr. Berman, for his opening statement, then we are going to move very quickly to the opening statement of the mover of this legislation, the gentleman from Virginia, Mr. Goodlatte. Mr. Berman. Along with Mr. Delahunt. Thank you, Mr. Chairman. H.R. 5055 would extend copyright protection to fashion designs. I am open-minded about this issue and see that the Copyright Office in their written testimony has raised the core question for discussion today. [The written testimony of the U.S. Copyright Office is published in the Appendix.] Mr. Berman. Is there a need for this legislation? And what evidence is available for quantifying the nature and extent of the harm suffered by fashion designers due to the lack of legal protection for their designs? The global fashion industry is said to have revenues of $784 billion annually. According to the NPD group, total U.S. apparel sales reached $181 billion in 2005. California alone produces over $13 billion in apparel products and employs 204,000 direct employees, 59,000 indirect workers, and put me through college and law school. Reportedly, apparel and footwear losses due to counterfeiting have been estimated to be $12 billion annually. The fashion designers are seeking this protection in order to prevent the rampant piracy of their fashion designs, as well as to maintain the incentive for designers to continue to develop new, original fashion designs. This protection would last only 3 years, allowing original designers sufficient time to recoup the expenses incurred in designing and developing their fashion works. Current copyright law only provides protection to those design elements of a useful article that are separable and independent of the utilitarian function of the article. Therefore, fashion works have traditionally been denied copyright protection on the ground that they are considered to be useful articles. Fashion designers do have access to some other intellectual property rights both in trademark and patent law. However, trademark law protects the elements of a design that indicate the source of the product, but does not provide general protection for designs. In patent law, there is the potential for design patents, but this route of protection often is not practical for designers because of the length of the time it takes before the patent issues, as we know, combined with the typical lifespan of a fashion design, which is only a single season, maybe 3 to 6 months. Further, the design patents require a level of novelty and originality that has generally been held to be higher than that which is achieved by fashion works. The fashion industry is unique in that it epitomizes the ultimate paradox of intellectual property protection. The arguments I have heard illustrate both sides of the debate. Is a high level of protection necessary to promote innovation? Or does the lack of a high level of protection for fashion designs actually spur increased creativity in the fashion industry? Furthermore, in part as a result of the great speed with which fashion trends come and go, new fashions are available in the high-end designer stores and in the low-end retail outlets, making these fashions available to virtually all individuals regardless of their income level. Will an increased level of protection for designers be at the detriment of the retailers and the public? In the past, Congress has demonstrated a flexibility in expanding copyright laws. For example, providing design protection for buildings through the Architectural Works Copyright Protection Act, and providing protections specifically for semiconductor mask works and boat hulls. Should we be extending copyright protection to fashion designs or are there other areas that we should also consider extending protection to, such as for example the furniture and auto parts industries? I look forward to understanding the extent of the problem of fashion design knockoffs and what the impact is on the high- end market. For example, is there a fear of lost sales in this market as a result of production in retail stores? In addition, I would like for the witnesses to describe what constitutes a design that is substantially similar. Is it an exact copy? Is it a mere inspiration of a current trend? And how does one determine if it is something in between? I yield back, Mr. Chairman. Mr. Smith. Thank you, Mr. Berman. The gentleman from Virginia, Mr. Goodlatte, is recognized for an opening statement. Mr. Goodlatte. Mr. Chairman, thank you very much for holding this important hearing on the Design Piracy Prohibition Act, which I was pleased to introduce with my good friend and colleague, Congressman Delahunt of Massachusetts, and also Congressman Coble, Congressman Wexler and Chairman Sensenbrenner. Article I, section 8 of our 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 this type of 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 protections. 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, if a thief steals a creator's design, reproduces and sells that article of clothing, and attaches a fake label to the garment to market it, he would be violating Federal law. However, under current law, it is perfectly legal for that same thief to steal that same design, reproduce and sell the article of clothing if he does not attach a fake label to it. This loophole allows pirates to cash in on other's efforts and prevent designers in our country from reaping a fair return on their creative investments. Furthermore, the production lifecycle for fashion designs is very short. Once a design gains popularity through a fashion show or other event, a designer usually has only a limited number of months to effectively produce and market that original design. Further complicating this short-term cycle is the fact that once a design is made public, pirates can now virtually immediately offer an identical knockoff piece on the Internet for distribution. Again, under current law, this theft is legal unless the thief reproduces a label or trademark. Because these knockoffs are usually of such poor quality, these reproductions not only steal the designer's profits, but also damage his or her reputation. It is simply common sense that these creators' works be protected. Chapter 13 of the Copyright Act offers protection for the designs of vessel hulls. The Design Piracy Prohibition Act protects designers by amending chapter 13 of the Copyright Act 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 that suits the industry, 3 years. This legislation further establishes damages for infringing a fashion design at the greater of $250,000 or $5 per copy. This legislation has broad support among those in the fashion and apparel industries. While concerns have been expressed by some about the scope of the legislation, my office has been engaged in discussions with interested parties to ensure that the bill does not prohibit designs that are simply inspired by other designs, but rather targets those that are more significantly similar. In addition, the Copyright Office has weighed in with testimony saying that almost all of their suggestions have been incorporated into this legislation and that it provides a sound basis for balancing competing interests. I look forward to hearing from our expert witnesses today. As America's fashion design industry continues to grow, America's designers deserve and need the type of legal protection that are already available in other countries. The Design Piracy Prohibition Act establishes these protections. Again, thank you, Mr. Chairman, for holding this important hearing. Mr. Smith. Thank you, Mr. Goodlatte. The gentleman from Massachusetts, Mr. Delahunt? Mr. Delahunt. I won't take 5 minutes, Mr. Chairman. Mr. Smith. The gentleman is recognized for an opening statement. Mr. Delahunt. I thank the Chair for inviting me. As you well know, I have served on this Subcommittee during my first 3 terms here in Congress. I just want to underscore some of the statistics that the Ranking Member, Mr. Berman, referred to in his opening remarks: $12 billion in terms of losses because of piracy to the American economy just in this particular segment of our American economy. We are all aware that in a significant way our competitive advantage in the new world of electronic commerce is at risk because of piracy. So what I would suggest is that in addition to fairness to the creative community, this is even in a more significant way about whether we are going to protect our economy. I would suggest that one only has to review the trade deficits that we have experienced in a consistent way through the course of the past 10 years, that I would suggest support the passage of this particular legislation. I would just associate myself with the remarks of Mr. Goodlatte. Mr. Smith. Thank you, Mr. Delahunt. Let me ask the witnesses to stand, if you would, so you could be sworn in, and then we will begin. [Witnesses sworn.] Mr. Smith. Thank you. Please be seated. I mentioned a while ago that we were going to proceed out of order. We are actually going to do something today that has never been done, to my knowledge, at this Subcommittee or any other Committee. It is with the agreement of the Ranking Member that we do so, and that is to allow Mr. Goodlatte to actually ask questions before you all give your testimony. That is not to say your testimony is not important. It is to say that Mr. Goodlatte has a hearing and a markup of the Committee that he chairs, the Agriculture Committee, which begins in 3 minutes. So in an effort to accommodate him because he is the author of the bill, along with Mr. Delahunt, we are going to have Mr. Goodlatte ask his questions now. That is, of course, with the witnesses' indulgence, and then we will hear your testimony and the rest of us will ask questions at that point. So Mr. Goodlatte is recognized for his questions. But I want to add one caveat, and that is to say that we are not setting a precedent by doing this. This is going to be an exception to the general rule. Mr. Goodlatte is recognized for his questions. Mr. Goodlatte. Thank you. Mr. Chairman, I am deeply indebted to you and Congressman Berman for this forbearance. It is highly unusual, and I respect that. If it were not for the fact that the other hearing and markup in my Committee is something that is of great importance to the Agriculture Committee, I would not impose in that fashion. But since you have been so kind as to hold the hearing, I welcome the opportunity to ask a few questions of the witnesses before they testify. Mr. Wolfe, welcome. I read two interesting things in your testimony. One, you thanked and acknowledged Public Knowledge, well represented by GiGi Sohn behind you, for the contribution to your efforts to prepare your testimony; and also that you have fashion designers as clients. So I was interested in noting that, and I wonder if you think that any of your client designers have ever created anything unique or original that would be worthy of protection. Okay. Now, let me ask you this question. You mentioned in your testimony, in fact, I would say the main focus of your testimony is protecting trends in the fashion industry. You want trends to be able to move fluidly, and we do, too. In fact, the CFDA has repeatedly told me and other policymakers that they are not interested in protecting trends. So I have been looking at language to include in the bill to make it clear that trends are not included. Would that be an improvement from your perspective? Mr. Wolfe. I think there is a difficulty in defining what is a ``trend.'' Is a trend an item, or is a trend an idea, or is a trend just an attitude? That is one of the major problems about the bill, frankly. I think the whole fashion concept is so ephemeral that trying to nail down specifics becomes impossible. Mr. Goodlatte. Mr. Sprigman, not by way of impeachment prior to your testimony, but you have a long record of opposing measures passed by the Congress that have originated in this Committee, including the Copyright Renewal Act of 1992, the Sonny Bono Copyright Term Extension Act, the Copyright Act of 1976, the Bern Convention Implementation Act. I think I am correct in saying that you have not been supportive of any of those. I also note your view of Congress's copyright policy expertise is that, ``The copyright clause is framed as a delicate balance between creation and dissemination, intellectual property and free speech. Congress and the court have now sawn off one arm of that balance.'' You have also said that, ``While the fair use doctrine may still exist, however, it has been crippled by the Digital Millennium Copyright Act,'' something that I was very much engaged in the crafting of. Those are some rather strong views. I have heard from others as well about every intellectual property protection, including protection for music and movies. They say it will stifle innovation and that consumers will suffer because there will be fewer choices. I would appreciate it if you would explain your views further on that. Mr. Sprigman. Well, that is too broad a question for me to address, except to say that I am not old enough to have a long record of opposing those bills, because a lot of them I was a child when they were passed. I will just say that I have a record of noting some constitutional problems with some of these bills, and I am involved in some litigation that focuses on those constitutional problems. Mr. Goodlatte. Challenging the constitutionality of those statutes? Mr. Sprigman. Challenging the constitutionality of the Uruguay Round Agreements Act; challenging the constitutionality of the removal from the copyright scheme of formalities. That is a matter of public record. I am involved in that litigation. I am a lawyer representing clients in that litigation. Mr. Goodlatte. Okay. Mr. Sprigman. In terms of the general desirability of copyright laws as a system, I am also on the record as saying that copyright is a boon to the United States. It is a boon to the economy. It is Congress's responsibility to get the balance that the framers put into the Constitution right, and that balance is a balance between creating innovation incentives for authors and inventors, and allowing people access to ideas and to expression. That is the important balance, and it doesn't behoove us to ignore where Congress strikes that balance. We should constantly be reexamining whether Congress has struck that balance correctly because I would note that technology moves along and a balance struck at one point in one technological world may be perfectly appropriate, and it may later become somewhat inappropriate when technology evolves and makes things possible that weren't possible before. I am not the only one to notice this. Every major copyright scholar has noticed this. Mr. Goodlatte. Based on that comment, let me then follow up with this question, similar to the one I asked Mr. Wolfe. If we included language in the bill to make it clear that it only protects against copies that are significantly similar and not those merely inspired by other designs, would that be an improvement from your perspective? Mr. Sprigman. I think this bill is unnecessary and I think it is unwise. I think the substantial similarities standard in this bill---- Mr. Goodlatte. You are going to get to testify in a minute. Mr. Sprigman. Right. And I am going to answer your question. Mr. Goodlatte. You get the last word. Mr. Sprigman. Absolutely. Mr. Goodlatte. But if you could answer the question? Mr. Sprigman. Yes, I think the ``substantial similarity'' standard that is in the bill now, as I teach my students, would reach designs that are inspired as well as those that are copied. I think it would be better if the bill were clearly limited only to those garments that are point-by-point copies of existing garments, but I don't think that is necessary either, even though it would clearly be better than what we have now. Mr. Goodlatte. Thank you, Mr. Sprigman, Professor. Mr. Chairman, I have other questions, but I will submit those in writing, if I may. I thank you very much again for the forbearance. Mr. Smith. Thank you, Mr. Goodlatte. That reminds me, I am going to have questions to submit to the witnesses as well. We will ask you to respond to those questions within a week, if you can. We will now return to regular order. Let me introduce the witnesses officially. Our first witness is Jeffrey Banks. Mr. Banks is an internationally known fashion designer. His design credits include Ralph Lauren and Calvin Klein, as well as his own successful menswear label. With 30 years of experience in the fashion industry, Mr. Banks has served as a senior boardmember of the Fashion Institute of Technology and currently sits on the executive board of directors of the Council of Fashion Designers of America. Mr. Banks is a graduate of the Parsons School of Design. Our next witness is David Wolfe. Mr. Wolfe is creative director of Doneger Creative Services, the Doneger Group's trend and color forecasting and analysis department. His views have appeared in such publications as The Wall Street Journal, Women's Wear Daily, Vogue, Glamour and Forbes. Mr. Wolfe has worked in the fashion industry for over 35 years and began his career in a small-town department store. He later moved to London where he established himself as a fashion artist, published in Vogue, Women's Wear Daily, and the London Times. Mr. Wolfe is a graduate of the Cleveland School of Art. Our third witness is Susan Scafidi. Professor Scafidi is a member of the law and history faculties of Southern Methodist University, where I went, and a visiting professor at Fordham Law School. She is the author of a book entitled, ``Who Owns Culture?'' and numerous articles on intellectual property, as well as a Web site dedicated to I.P. and fashion design called ``Counterfeitchic.com.'' Professor Scafidi has taught intellectual property law for over 10 years at institutions including Yale and Georgetown. She is a graduate of the University of Chicago, Duke University and Yale Law School. Our final witness is Chris Sprigman. Mr. Sprigman is an associate professor at the University of Virginia Law School where he teaches intellectual property. Mr. Sprigman has served as appellate counsel in the Antitrust Division of the U.S. Department of Justice, and is a former partner with the Washington, D.C. office of King and Spaulding, LLP. Mr. Sprigman graduated from the University of Chicago Law School and the University of Pennsylvania. Welcome to you all. We have your written statements. Without objection, they will be made a part of the record. As you know, we hope that you will keep your testimony to 5 minutes. Mr. Banks, we will begin with you. TESTIMONY OF JEFFREY BANKS, FASHION DESIGNER, ON BEHALF OF THE COUNCIL OF FASHION DESIGNERS OF AMERICA Mr. Banks. Good morning, Chairman Smith and Members of the Subcommittee. I am pleased to testify on behalf of the Council of Fashion Designers of America. I come to speak to you with over 30 years experience in the United States fashion industry, including working for Ralph Lauren and Calvin Klein, before starting my own menswear business at age 22. Much in fashion has changed since then. Fashion generates approximately $350 billion in the United States annually and is no longer only based in New York. It is now also centered in such diverse places as L.A., Dallas, Chicago and Atlanta. The American fashion industry is made of thousands of small businesses who live on the hope of designing something that will capture the imagination of consumers. Success in our studios grows opportunities in many sectors, from publishing to trucking to retail all across the country. As the Internet has transformed our sister creative industries like music, books and motion pictures, creating opportunities as well as problems, it has transformed fashion, and not always for the better. Runway fashions can now be sent around the world and copied in the blink of an eye. Fashion design piracy has become a blight that affects all who depend on the fashion industry. The U.S. is conspicuous in that unlike Europe and Japan, it does not protect fashion in its laws. H.R. 5055 provides 3 years of protection for original designs registered with the Copyright Office. This is less than the life-plus-70 granted to other copyrighted works, less than the 10 years granted to vessel hull designs, and less than the protection provided in Europe and Japan. Because of the unique seasonality of the fashion industry, this is enough time for the designer to recoup the work that went into designing and marketing his collection. We believe that the passage of design protection would be a powerful deterrent to the pirates. I question how many lawsuits for infringement would ever be filed. Since registration of designs under H.R. 5055 is mandatory and only original non-commonplace designs can be protected, I believe that designers will register very selectively. Retailers have told us that if fashion design piracy was illegal, they wouldn't buy copies. The law would have a powerful and much-needed deterrent effect on the market. As a movie and music aficionado, I would never dream of buying an illegal DVD or CD. You recently passed a law to combat counterfeiting. Counterfeiting starts with design piracy. You can't make a counterfeit bag without first copying the bag's design. Both counterfeiting and piracy must be addressed, or else a small designer with no brand recognition will be left defenseless to the problem of piracy. Copying today through technology is instantaneous. Although a designer can spend tens of thousands to mount their runway show to reveal their new lines, they frequently don't even recoup their investments. Their designs are stolen before the applause has faded; software programs develop patterns from photographs taken at the show and automated machines then cut and stitch copies of designers' work from those patterns. Within days, the pirates in China are shipping U.S. consumers tons of copies before the designer can ever even get his originals into the store. American design and designers add a value in the world marketplace. Design innovation is the reason for this. It enables fashion houses to provide more choices for consumers, more competition and growth, and it won't occur simply by everybody distributing identical product around the world. In the long term, lack of protection will shrink American businesses and mean a loss of American jobs. Designers want to make their designs available at a variety of prices in a variety of stores. In the past few years, we have seen a proliferation of American designer partnerships with large American retailers, even discounters like Target, Wal-Mart, J.C. Penney, Kohl's and Payless. Design innovation is an absolutely critical part of the economy. Designers can't compete if low-cost countries copy our designs. If we don't protect American fashion design creativity, we deprive consumers of the fashion choices they have enjoyed with the growth of the industry, and workers of their jobs. The wealthy will still be able to buy the designs originating out of Europe and Japan, where protection exists. The rest of America will be left buying the cheap knockoffs from Europe. I urge you to pass this important legislation. And I thank you very much, and I look forward to your questions. [The prepared statement of Mr. Banks follows:] Prepared Statement of Jeffrey Banks Good morning Chairman Smith, Ranking Member Berman, Representatives Goodlatte and Delahunt and other Members of the Subcommittee. I am pleased to be here today on behalf of the Council of Fashion Designers of America. The CFDA is a not-for-profit trade association of America's fashion and accessory designers. The CFDA works to advance the status of fashion design as a branch of American art and culture and to help elevate this important American industry. I got started in the fashion business at the age of 15, working right here in Washington, where I was born and raised, as a salesman at the menswear store Britches of Georgetown. Sadly, Britches is no longer in business, but for those of you who have been here for a time, you'll remember that it was once a Washington icon. Back then, I was probably one of the only high school students in Washington with subscriptions to Daily News Record and Womens Wear Daily but even as a young teen, fashion was my passion. I left DC three weeks after graduating high school, began working as Ralph Lauren's assistant, and started college that fall. I graduated from the Parsons School of Design and after working with Calvin Klein for one year, I opened my own menswear label at the age of 22. I come to speak to you today with over 30 years experience in the United States fashion industry. Much in fashion has changed during those 30 some years. For one, fashion has grown into a very significant and important US industry, generating approximately $350 billion in the United States each year and supporting the printing, trucking, and distribution, advertising, publicity, merchandising and retail industries as well. And of course, all the industries which support the production and dissemination of men's and women's fashion magazines. Although New York is often thought of as the U.S. fashion capital because fashion is the 2nd largest money-making business in the city, after the stock market, with the exponential growth of America's fashion and design industries other fashion centers have come into existence across the country--Los Angeles, Dallas, and Atlanta come to mind. That wasn't the case 30 years ago, when most of the fashion in the United States was copied from the European fashion centers of Paris and Milan. Back then there weren't multitudes of talented young American designers generating their own original designs as there are today. The fashion industry in the last few years in America has become a very significant influence in trends and the way the fashion industry is perceived by consumers. American style. American design. It has meaning. And it has value. This wonderful home-grown industry is really made up of thousands of American small businesses. We're all entrepreneurs who pursue our fashion with the hope of designing something that will catch on and capture the imagination of U.S. consumers. Success that starts in all of our individual design studios, grows opportunities all across the country . . . there are fabric manufacturers, printers, the people who produce paper for making patterns, the shippers who ship the merchandise, the truckers who truck, design teams, fabric cutters, tailors, models, seamstresses, sales people, merchandising people, advertising people, publicists, those who work for retailers. In short, this is a big employment business today. The other most significant change in the industry in the past decade is technological. Just as the internet has transformed our sister creative industries like music, books and motion pictures, creating opportunities as well as problems, it has transformed fashion and not always for the better. In the blink of an eye, perfect 360 degree images of the latest runway fashions can be sent around the world. And of course, they can be copied. And that copying, coupled with the importance of the fashion industry to America, is the main reason that I sit before you today. Fashion design piracy has become a blight that affects all who depend on the U.S. fashion industry. It robs American workers of their livelihood, which is why the CFDA is working in an alliance with industry partners such as Harper's Bazaar and eBay, among others, to raise the profile of this massive problem. Other countries have recognized the problem and provided protection for fashion design to help counter design piracy. The United States is the only developed country that does not protect fashion in its laws. We want to thank Representatives Goodlatte and Delahunt for recognizing this inequity and introducing H.R. 5055, the Design Piracy Prohibition Act, to remedy it. We also want to thank Chairman Sensenbrenner and Representatives Coble and Wexler, among others, for cosponsoring the measure. H.R. 5055 would provide three years of protection to those designers who register their ORIGINAL designs with the Copyright Office. That is far less than the life of the author plus 70 granted to other copyrighted works. However, because of the unique seasonality of the fashion industry, we agree with Congressmen Goodlatte and Delahunt that a shorter term of protection is reasonable. That allows the designer time to recoup the work that went into designing the article and develop additional lines of ready-to-wear, etc. I will note, however, that in Europe most member states protect fashion for a term of 25 years, with registration. In Japan, it is 15. We believe that passage of design protection would be a powerful deterrent to the pirates. In fact, I question how many lawsuits for infringement would actually ever be filed. Since registration of designs is mandatory in order for design protection to be granted, and only original, noncommonplace designs can be protected, I believe that designers will register very selectively. And retailers have told us that if the practice of fashion design piracy was illegal, they wouldn't engage in it. A law would have a powerful and much-needed effect on the market. THE ADVERSE IMPACT OF PIRACY ON AMERICAN DESIGNERS I have heard some question whether fashion piracy actually harms the industry. A few have even suggested that it may help designers to have their works knocked off. I would like to respond to those questions with an emphatic ``yes it does hurt the designer and the industry!'' And no, far from helping the designer, design piracy can wipe out young careers in a single season. The young designers are the ones who are creating the new designs, which they have to have some way of protecting. Copying is stealing. As a movie and music aficionado, I would never dream of buying an illegal DVD or CD on the street. I respect the film and music industries much too much, and all of the people that work in them. Piracy is taking somebody's design, replicating it quickly, doing it so that nobody would know the difference between yours and theirs unless you are an expert at it, and sending it out as your own. That's clearly wrong and American law must address it. The Congress has passed laws to protect against counterfeits. One in three items seized by U.S. Customs is a fashion counterfeit. Just this year, you 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 would be no counterfeiting. Both must be addressed or else the small designer with no brand recognition is left defenseless to the problem of piracy, leaving only famous brands protected, and then only if the label is taken. The fashion business is a tough business. With each new season, designers put their imagination to work, and they put their resources at risk. When I started my business, I started with a five thousand dollar loan from my family. You never would do that today. It takes tens of thousands of dollars to start a business. And every season when you go out to create, if you're creating original prints, original patterns, original samples that you have to go through trial and error, you are talking about thousands and thousands of dollars. Then if you go to put on a show, you can spend anywhere from fifty thousand dollars to a million dollars just to put on a show to show buyers and press what you're creating for that season. So, before you have even received your first order, you've spent thousands and thousands and thousands of dollars. Whether you are an accessory designer or a star designer creating men's, women's, children's lines, you spend many thousands of dollars before you see your first order. Some designers make their names in haute couture, where they sell a very small number of rather expensive designs. While the designs are high priced, the designer frequently doesn't even recoup investment costs for the designs because he or she sells so few garments. Designers are able to recoup their investments when they offer their own ready-to-wear lines. They can lower the prices at which their designs are sold because they sell more of them. It's all based on volume. Design piracy makes it difficult for a designer to move from haute couture into ready to wear. The Council of Fashion Designers of America is all about mentoring. We partner with Vogue to run a mentoring program for young designers-- offering on-going technical advice and business grants. A documentary, Seamless, was even made about it. (We are reaching out to you as much for the young designers as anyone else). The CFDA received tons of e- mails after the bill was introduced, saying, ``thank you, I've been pirated.'' PIRACY FUELED BY TECHNOLOGY Copying, years ago, would take anywhere from three to four months to a year or more. But as I said, all that changed with new technology. So once a designer spends the thousands and thousands and gets to that runway show and then reveals a new and original design--it can be stolen before the applause has faded thanks to digital imagery and the internet. Today, there are even software programs that develop patterns from 360 degree photographs taken at the runway shows. From those patterns, automated machines cut and then stitch perfect copies of a designer's work. Within days of the runway shows, the pirates at the factories in China and other countries where labor is cheap are shipping into this country those perfect copies, before the designer can even get his or her line into the retail stores. Since there is no protection in America, innovation launched on the runway--or the red carpet--is stolen in plain sight. The famous designer with an established and substantial business might be able to withstand that assault, but it can absolutely derail the career of a young designer. Let me show you a few examples of the type of copying that I've been describing--these photos are included in my testimony. At this year's Golden Globes, Desperate Housewives star Marcia Cross wore a stunning coral gown designed by young designer Marc Bouwer. Within days a famous manufacturer renowned for its copying of dresses of the stars had shipped an exact copy to stores across the nation. This dress became that particular manufacturers' most popular selling prom dress of the year. At the Academy Awards Felicity Huffman wore a black gown created by designer Zac Posen, a 25 year old designer from Manhattan who manufactures all of his designs there in the city. This time, a different manufacturer sold exact copies of the design and was bold enough to use the fact that Huffman wore the gown in his advertising. That's completely legal in the United States. And it prevents Marc Bouwer or Zac Posen from being able to develop the affordable ready-to- wear line of their own designs. They can't gain the volume to allow them to compete against the company that pirated their creations. And it dilutes their haute couture brands because nobody will spend thousands for a gown when it is available for hundreds in a department store. Without a law that makes it clear that design piracy is illegal, these pirates base their marketing strategy on all the free advertising they receive--based on how good they are at copying! This is an example of the growth of one type of American fashion on the back of small business. That's just wrong, but it's all perfectly legal under U.S. law. THE IMPACT OF FASHION PIRACY ON CONSUMERS Some have argued that protecting fashion will drive up costs, accessibility and ultimately harm consumers. I am deeply offended by this argument. In fact the same could be said for the protection of music, movies, software and books. If these works weren't protected by copyright, if new technologies weren't protected by patents, wouldn't prices come down for consumers? In fact, some of the very proponents of eviscerating protection for copyrighted works and limiting the copyright laws are now arguing against protecting fashion design. If the fashion business is going to grow and provide more choices for consumers, we must understand that design innovation is the real leverage point for American companies--both big and small. 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 designer's creation and then go sell it for a third of the price. In the long term, lack of protection will shrink American businesses and mean the loss of American jobs. Designers want to make their designs available at a variety of prices in a variety of stores. In the past few years we have seen a proliferation of partnerships between American designers and large American retailers--even discount retailers. American designers are collaborating with retailers who realize the enormous benefit of an Isaac Mizrahi at Target, a Mark Eisen at Wal-Mart, or a Nicole Miller at JC Penny. Kohls is reported to be negotiating to sign Vera Wang. These stores have all seen the value of making the works of American designers available in their stores through licensing deals so that these 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. Other retailers have gone a different path, not licensing, not even hiring in-house designers. They are skipping the use of their own designers in order to copy the work of others and make it available more cheaply--this is done on the backs of the original designers. But design innovation--in fact brands as we know them--is an absolutely critical part of a free American economy. With extra labor expenses in the West, designers can't compete if low cost labor countries copy our designs. We have an investment in those designs--they don't. We can't compete against piracy so 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 against copying. If we don't protect American fashion design creativity, we're going to lose all the advantages we've gained in the last ten years by now becoming a global industry, by now working side by side with Milan and Paris. There won't be any more L.A. Style which has become so hot around the globe. No Texas style. The wealthy will still be able to buy the designs originating out of Europe and Japan where protection exists. The rest of America will be left buying the cheap knockoffs of those European designs made in China and other places in Asia where labor is cheap. That will be bad for consumers who have enjoyed the growth of fashion choices in the U.S. And it will be sad for the workers employed by U.S. fashion industry when they no longer have jobs. I ask that you not let that situation take place. Please pass a law to protect the creativity and innovation of American fashion design just as this subcommittee has done for America's other creative industries. Europe grants designs 25 years of protection. Boat hulls in this country receive 10. We only ask for three. Please pass the Design Piracy Prohibition Act this year. I thank you for your time and look forward to your questions. Mr. Smith. Thank you, Mr. Banks. Mr. Wolfe? TESTIMONY OF DAVID WOLFE, CREATIVE DIRECTOR, THE DONEGER GROUP Mr. Wolfe. Thank you, Chairman Smith, Ranking Member Berman and Members of the Subcommittee, for inviting me to speak to you today on the proposed copyright for fashion design. I am David Wolfe. I am creative director of Doneger Creative Services. I analyze men's, women's and youth apparel and accessories markets, as well as big-picture developments in style, culture and society. The fashion industry is thriving in America and it has for the past century because of, and not in spite of, a lack of copyright protection for fashion designs. The fashion industry is like a balanced ecosystem of an ocean reef. It exists because all the various symbiotic elements of design are inspired and they feed off each other. It is successful because it achieves an independent blend of originality, creativity, and yes, copying, and like a reef, the ecosystem would collapse completely in the absence of any one of those elements. H.R. 5055 and the creation of the three monopolies over design would disrupt this delicate balance and devastate a flourishing industry. Copyright law in this country is premised on protecting originality, but finding and defining originality in fashion is an extremely difficult, if not impossible, task. Fashion is a craft, not a science or an art. Fashion is a long tradition of crafts-people working with the same materials, tools, and concepts, which is what makes it difficult for someone to design something that has not been done in a similar or same way before. Current fashion is the product of generations of designers refining and redeveloping the same items and ideas over and over. Copying and appropriation in fashion isn't just about creating a $200 knockoff of $2,000 dresses. It is about incorporating influences from all around. Trends don't always work from the top down, from the exclusive studios of couture to the sales rack in the shopping mall. Often, they work from the bottom up. Because it is so difficult to determine what is original about a particular fashion design, it would be equally difficult to enforce a copyright fairly. Defining and determining originality is difficult enough for those of us who work in and study the fashion industry. It would be nearly impossible for a court or Government agency. If a court cannot determine the originality, then how could it fairly determine whether one design infringes upon another, or whether a design is substantially similar or whether a design is sufficiently original to qualify for copyright protection? I have a few examples with me to illustrate how unfair a copyright would be and how difficult it would be to enforce. Okay? Mr. Smith. I see we have a visual assist here. Mr. Wolfe. We have visual assistance. This is almost an original jeans jacket. It is not from Levis or the Gap. It is from Gloria Vanderbilt. Flip it around, please. Okay. Does this make it an original? All of these are jeans jackets. Where does the originality strike? Who thought of putting jeweled buttons on? Okay, thank you. Fashion design is about creating compilations of elements. Mr. Smith. I think we ought to give Mr. Banks an opportunity to have a fashion show if you are going to present that. [Laughter.] Mr. Wolfe. Copyright would stifle the fashion industry when certain design elements that were otherwise available in the public domain for all to use, like jeweled buttons, would be rendered off-limits. Not only will copyright create litigation, injunctions and licensing that will slow the pace of producing new designs, but fashion designers will have a limited array of design elements available to create new designs. Finally, I would like to point out that fashion designers already have protection for their brands through trademark law. By opposing a copyright for fashion, I am not suggesting condoning piracy in any way. Designers already have legal remedies if a another designer or manufacturer uses their trademark and confuses the consumers as to who made the goods. But copyright for fashion design doesn't make sense because it is a craft that is dependent on building from the past, ideas that came before. It is evolutionary. I urge you to oppose H.R. 5055 and any legislation that would create a copyright for fashion design. Thank you. I look forward to your questions. [The prepared statement of Mr. Wolfe follows:] Prepared Statement of David Wolfe
Mr. Smith. Thank you, Mr. Wolfe. Ms. Scafidi? TESTIMONY OF SUSAN SCAFIDI, VISITING PROFESSOR, FORDHAM LAW SCHOOL, ASSOCIATE PROFESSOR, SOUTHERN METHODIST UNIVERSITY Ms. Scafidi. Thank you. Good morning, and thanks to Chairman Smith, Representative Berman, Congressman Delahunt, and all of the Members of the Subcommittee for inviting me to speak to you about intellectual property and fashion design this morning. Fashion designer Coco Chanel is sometimes quoted as having said, ``Protecting the seasonal arts is childish.'' However, most people who repeat that statement seem to ignore the fact that in the 1930's Coco Chanel herself joined fellow designers as a plaintiff in a landmark French lawsuit that shut down a notorious copyist and helped Chanel build the house that still bears her name. In other words, Coco Chanel was a smart businesswoman who knew how to tell the public what it wanted to hear, while using the law to protect her intellectual capital. This is the constitutional intent of copyright law, to promote and protect the development of creative industries by ensuring that creators are the ones who receive the benefit of their own intellectual investments. Of course, fashion designers create without the benefit of copyright law, but so would poets and songwriters if there were no copyright. It is what humans do. It is also the case that trends in fashion exist in every creative industry, including those supported by copyright. The problem today is that, as in other industries like music and film, the digital era has made pursuing a creative business without copyright protection even more difficult. Even Mr. Sprigman just admitted that technology changes things. A digital photograph of a new design can be uploaded to the Internet and sent to a knockoff artist halfway around the world before the model even reaches the end of the runway, as Mr. Banks pointed out. It used to take months to copy a new style. Now it takes mere hours. That ecosystem has been upset. Creative design at all price levels is vulnerable to copying. H&M, a popularly priced chain that distributes trends to the mass market and is sometimes cited as an example of indifference to copying, was itself knocked-off and brought action last year under E.U. unregistered design protection. The United States should no longer be a pirate nation with respect to intellectual property, as we were in our early years. We are a global superpower and we work with fellow members of the G-8 group, the WTO, the World Intellectual Property Organization at their bilateral trade negotiations to promote I.P. protection, except in the area of fashion design. This is particularly surprising in light of those concerns that Congressman Goodlatte mentioned about counterfeit trademarks. After all, those fake trademarks have to be affixed to something, often goods created through design piracy. At this point in our history, America should not be a safe haven for copyists. The failure to protect fashion design is both inconsistent with our international policy and a disadvantage to our own creative designers, especially the young designers who represent the future of the American industry and who are particularly vulnerable to copying. Consider the example of Ananas, a 3-year-old handbag label. Its cofounder is a young wife and mother working from home, actually here in the Washington suburbs, and she has been successful in promoting her handbags, which retail between $200 and $400. Earlier this year, however, she received a telephone call from a buyer canceling the wholesale order. When she asked why, she learned that the buyer had found virtually identical bags in a cheaper material at a lower price. Shortly thereafter, the same designer looked on the Internet and discovered a post on a message board from a potential customer who had seen one of her bags in a major department store, thought about buying it, but went home and on the Internet found a cheaper bag, a look-alike in lower-quality materials, which she not only bought but recommended to others. So Ananas is still in the business at present, but that loss of those wholesale and retail orders is a huge loss to a small business. As a law professor with a particular interest in unprotected areas of creativity, I have kept a file on I.P. in fashion design for almost a decade. I have a Web site, as you mentioned, thank you, dedicated to the subject. I also frequently speak with young designers who have been copied or who would like to proactively protect their work. One of the most difficult things to explain to those young designers is that U.S. law doesn't consider fashion design to be worthy of protection. I hope instead to one day have the law behind them to deter copying in the first place and to protect them against design piracy when the need arises. So H.R. 5055, with its short-term, narrowly tailored protection for the fashion industry is, I think, a groundbreaking example of how copyright law can be narrowly tailored, and carefully designed to serve the creators and the public interest. In fact, this kind of short-term protection is exactly the model of copyright suggested by some law professors who have opposed this Subcommittee's actions on other bills. I am surprised and disappointed that various individuals don't believe that the fashion industry deserves even a minimal amount of protection when compared with other forms of creative expression. So I would like to thank and congratulate the Subcommittee on taking the issue of fashion design seriously and holding this hearing, and I look forward to your questions. Thanks. [The prepared statement of Ms. Scafidi follows:] Prepared Statement of Susan Scafidi Chairman Smith, Representative Berman, and members of the Subcommittee, thank you for this opportunity to address the issue of intellectual property (IP) protection and fashion design. INTRODUCTION AND EXECUTIVE SUMMARY Historically, American law has ignored the fashion industry. While trademark law protects designer logos and patent law occasionally applies to innovative design elements, the Copyright Office has held that clothing design in general is not subject to protection. As a result of this legal and cultural choice, the United States has been a safe haven for design piracy. Creative fashion designers over the past century have been forced to rely instead on social norms and makeshift means of defending themselves against copyists. Today, global changes in both the speed of information transfer and the locus of clothing and textile production have resulted in increased pressure on creative designers at all levels, from haute couture to mass market. Digital photographs from a runway show in New York or a red carpet in Los Angeles can be uploaded to the internet within minutes, the 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. Similarly, e-commerce is both an opportunity and a danger for designers, who must battle knockoff artists with ready access to detailed photographs and descriptions of their works. Young designers who have not yet achieved significant trademark recognition, and must instead rely on the unique quality of their designs to generate sales, are particularly vulnerable to such theft. Despite America's role in promoting the international harmonization of intellectual property protection, the U.S. has not joined other nations in addressing the issue of design piracy and its effects on the fashion industry. The U.S.T.R. has repeatedly targeted the rising global trade in counterfeit trademarked goods, including apparel, but copies of a garment rather than its label remain beyond the reach of American law. H.R. 5055 is 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. I. HISTORICAL LACK OF PROTECTION AND CHANGED CIRCUMSTANCES The lack of protection for fashion design under U.S. law is an anomaly among mature industries that involve creative expression. This exclusion of fashion from the realm of copyright was not inevitable, but was instead the result of deliberate policy choices. Examining the historical and cultural reasons for the differential treatment of fashion design is thus important to understanding the changed circumstances that indicate a greater need for some form of protection today. A. Theory and Reality: The Historical IP/Fashion Divide 1. Fashion design is part of the logical subject matter of copyright. While in the early days of U.S. copyright only books and maps were eligible for registration, the scope of protection has since increased to include painting, sculpture, textile patterns, and even jewelry design--but not clothing. Why has clothing been excluded from protection? The problem lies in a reductionistic view of fashion as solely utilitarian. Current U.S. law understands clothing only in terms of its usefulness as a means of covering the body, regardless of how original it might be. Surface decoration aside, the plainest T-shirt and the most fanciful item of apparel receive exactly the same treatment under copyright law. In fact, a T-shirt with a simple drawing on the front would receive more protection than an elaborate ball gown that is the product of dozens of preliminary sketches, hours of fittings, and days of detailed stitching and adjustment before it is finally complete. The legal fiction that even the most conceptual clothing design is merely functional prevents the protection of original designs. Fashion, however, is not just about covering the body--it is about creative expression, which is exactly what copyright is supposed to protect. Historians and other scholars make an important distinction between clothing and fashion. ``Clothing'' is a general term for ``articles of dress that cover the body,'' while ``fashion'' is a form of creative expression.\1\ In other words, a garment may be just another item of clothing--like that plain T-shirt--or it may be the tangible expression of a new idea, the core subject matter of copyright. --------------------------------------------------------------------------- \1\ Joanne B. Eicher, Clothing, Costume and Dress in 1 Encyclopedia Clothing and Fashion 270 (2005); Valerie Steele, Fashion, in 2 Encyclopedia of Clothing and Fashion 12 (2005). --------------------------------------------------------------------------- Copyright law, of course, has a mechanism for dealing with creations that are both functional and expressive, although it has not been consistently applied to fashion designs. It is conceivable--and perhaps inevitable in the absence of specifically tailored legislation--that a court could invoke the doctrine of ``conceptual separability'' to distinguish between the artistic elements of a new fashion design and its basic function of covering the human body. Recent judicial treatment of a Halloween costume design follows essentially this course, noting that elements of a costume like a head or tail are at least in theory separable from the main body of the garment and thus potentially subject to copyright protection.\2\ It would require only a small step to find that the uniquely sculptural shape of Charles James' famous 1953 ``four-leaf clover gown'' or Zac Posen's 2006 umbrella-sleeve blouse are conceptually independent of the human forms beneath them and thus copyrightable. Visual artists, too, have blurred the distinction between art and fashion by designing unique works of art in the shape of clothing.\3\ --------------------------------------------------------------------------- \2\ Chosun Int'l., Inc. v. Chrisha Creations, Ltd., 413 F.3d 324 (2d Cir. 2005). \3\ See, e.g., Poe v. Missing Persons, 745 F.2d 1238 (2d Cir. 1984). --------------------------------------------------------------------------- In short, fashion design is a creative medium that is not driven solely by utility or function. If it were, we could all simply wear our clothes until they fell apart or no longer fit. Instead, the range of new clothing designs available each season to cover the relatively unchanging human body--and the production of specific, recognizable copies--demonstrates that designers are engaged in the creation of original works. From the perspective of theoretical consistency, then, the relationship between copyright law and fashion design is ripe for change. However, relying on the courts to take this step would be a lengthy and uncertain process, one that might ultimately require a Supreme Court decision to sort through conflicting precedents. The judiciary, moreover, does not have the authority to tailor intellectual property law to the specific needs of the fashion industry and the public, as would H.R. 5055 (discussed further in Section IV infra), but can only apply existing law. The most efficient and reflective way to secure copyright protection for the creators of fashion designs would be an act of Congress. 2. U.S. law does not support the economic development of the fashion industry. Despite the importance of creative fashion design to the global economy, and to many local economies within the United States, it still operates without the benefits of modern intellectual property protection. In historical terms, the pattern of industrial development in the U.S. and more recent emerging economies often commences with a period of initial piracy, during which a new industry takes root by means of copying. This results in the rapid accumulation of both capital and expertise. Eventually the country develops its own creative sector in the industry, which in turn leads to enactment of intellectual property protection to further promote its growth. This was the pattern followed in the music and publishing industries, in which the U.S. was once a notorious pirate nation but is now a promoter of IP enforcement. In the case of the American fashion industry, however, the usual pattern of unrestrained copying followed by steadily increasing legal protection is not present. This situation has led to multiple inefficiencies in the development of the U.S. fashion industry. In the legal realm alone, creative designers have borne the costs of a decades-long effort to craft protection equivalent to copyright from other areas of IP law, particularly by pressing the boundaries of trademark, trade dress and patent law. While each of these areas of intellectual property law offers protection to some aspects of fashion design, most notably logos used as design elements and famous designs that have developed sufficient secondary meaning to qualify for trade dress protection, the majority of original clothing designs remain unprotected. Even design patents, which can in theory protect the ornamental features of an otherwise functional object, are seldom useful in a seasonal medium like fashion. The result is a legal pastiche that is confusing, expensive to apply, and ultimately unable to protect the core creativity of fashion design. Current U.S. IP law thus 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. The most severe damage from this legal vacuum 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 rampant plagiarism in the U.S. market, very few small businesses can compete with those who steal their intellectual capital. In fashion, America is still a pirate nation; the future direction of the industry will be directly influenced by the absence or presence of intellectual property protection. B. Cultural Explanations and Changed Circumstances The differential treatment of fashion relative to other creative industries with extensive legal protection is the result of specific cultural perceptions and historical circumstances, many of which have now changed. While it is beyond the scope of this testimony to address the entire cultural history of the fashion industry, several recent developments are particularly important to understanding why a change in the law is appropriate at this time. 1. Fashion design is now recognized as a form of creative expression. The origins of copyright law date back to the Enlightenment era, a period that also articulated the Western distinction between art and craft. As copyright developed and extended to include various forms of literary and artistic works, it continued to maintain the division between legally protected, high status ``fine art'' and mere ``decorative arts'' or handicrafts. The design and manufacture of clothing, which for most families was a household task, did not rise to the level of creative expression in the eyes of the law. Even after fashion design became increasingly professionalized during the nineteenth century, with the development of both haute couture and ready-to-wear sectors, the U.S. failed to recognize its creative status. Contributing to this low valuation was fashion's association with women rather than men, a shift influenced by the Industrial Revolution. By the end of the nineteenth century, American sociologist Thorstein Veblen famously linked fashion with ``conspicuous consumption,'' concluding that the role of the female was ``to consume for the [male] head of the household; and her apparel is contrived with this object in view.'' \4\ Both the feminizing of fashion and the intellectual attention to consumption rather than production prevented the legal recognition of fashion as a serious creative industry. --------------------------------------------------------------------------- \4\ Thorstein Veblen, The Theory of the Leisure Class 132 (1899; Random House 2001 ed.) --------------------------------------------------------------------------- Modern attitudes toward fashion design as a creative medium, however, have changed dramatically. Institutions from the Smithsonian to Sotheby's take fashion seriously, and organizations like the National Arts Club and the Cooper-Hewitt National Design Museum have recently added fashion designers to their annual categories of honorees. Even a Pulitzer Prize for criticism was awarded for the first time this year to a fashion writer, Robin Givhan of the Washington Post. It is inconsistent with this cultural shift for copyright law to deny fashion's role as an artistic form. 2. Creative design now exists at all price levels. For most of the history of the fashion industry, a small group of elite, Parisian fashion designers dictated seasonal trends, and the rest of the world followed as best they could. The privileged few were measured for couture originals, the relatively affluent bought licensed copies, and the majority settled for inexpensive knockoffs or sewed their own garments at home. With the recent democratization of style, creative design originates from many sources and at all price levels. Fashion is now as likely to flow up from the streets as down from the haute couture, and reasonable prices are no guarantee against copyists. Some of the most aggressively copied designs are popularly priced; consider this summer's popular Crocs ``Beach'' style shoe at $29.99 and its battle with copies sold for as little as $10.00. In addition, within the past few years high-end designers have shown an increasing desire to reach a wider audience and to collaborate with mass-market producers. Fashion houses are seeking to experiment with new ideas in their runway collections, then to provide customers with affordable versions in their diffusion lines, and finally to adapt the looks for a broad range of consumer needs and budgets. This trickle promises to become a flood, as Isaac Mizrahi's designs for Target are joined by Chanel designer Karl Lagerfeld's line for H&M, Mark Eisen's sportswear for Wal-Mart, and many others. As a result of these changes, it is no longer necessary for the general public to turn to knockoffs in order to purchase fashionable apparel, as it might have been in past decades. Some creative work is simply affordable; in addition, creators of more expensive designs are now finding ways to enter the mass market as well. A change in copyright law to incorporate fashion would facilitate designers' ability to disseminate their own new ideas throughout the market, much the way copyright law allows book publishers to first release hardcover copies and then, if the book is successful, to print paperbacks. 3. The internet era calls for new strategies to protect creativity. Creative fashion designers in earlier periods fought copyists by relying on strategic measures like speed and secrecy, the social norms of the industry, and perhaps patterns of consumer behavior. In the absence of copyright protection under U.S. law, these extralegal mechanisms were an important part of the fashion business. Today, however, the same speed and accuracy of information transfer that affects the music and film industries is also having an impact on fashion. Would-be copyists no longer have to smuggle sketch artists into fashion shows and send the results to clients along with descriptions of color and fabrication. Instead, high-quality digital photos of a runway look can be uploaded to the internet and sent to copyists anywhere in the world even before the show is finished, and knockoffs can be offered for sale within days--long before the original garments are scheduled to appear in stores. Fifty years ago, design houses may have been able to impose somewhat successful embargoes on the press; now, such efforts are futile. Similarly, the claim that knockoffs enhance demand for ever-newer luxury goods among status-seeking consumers, an economic argument dating back to at least 1928,\5\ fails to take into account the modern speed of production. Once upon a time it may have been that the adoption of a new luxury item by affluent trendsetters was imitated first by wealthy consumers, then by the middle class, and then in form of knockoffs by everyone else, at which point the fashion-forward would abandon the item and demand the next new thing--which producers were happy to provide. Today, however, this ``fashion cycle'' scenario is rendered obsolete by the fact that poor quality knockoffs can be manufactured and distributed even more quickly than the originals, leaving creative designers little opportunity to recover their investment before the item is already out of style. Even if the fashion cycle were ever sufficient to support the design industry, that is no longer the case. --------------------------------------------------------------------------- \5\ See Paul H. Nystrom, ECONOMIcs of Fashion 18-54 (1928). --------------------------------------------------------------------------- As in other areas of creative production, the digital age should provoke a reexamination of the legal protection available to fashion design. 4. The future of American fashion is in creativity, not low-cost copying. Textile and clothing manufacturing have historically played an important role in the American economy, driving the Industrial Revolution and supporting thousands of jobs. With the increased harmonization of global markets and the January 1, 2005, dismantling of import quotas in this sector, however, it has become apparent that the U.S. can no longer compete with China and other centers of low-cost production on price alone. No matter how inexpensively the U.S. can produce knockoffs, other countries can manufacture much cheaper versions. Instead, the future of the U.S. economy will rest on the ability to develop and protect creative industries, including fashion design. America leads the world in industries like music, film, and computer software, but our history as a pirate nation in the field of fashion has limited our influence in this area. Creative fashion design is a relatively young industry in the U.S., albeit one in which there is growing interest among students choosing their careers. If this industry is to reach its full potential, now is the time to consider the impact of government policies, including intellectual property law. II. EFFECTS OF DESIGN PIRACY The lack of copyright protection for fashion design negatively affects both individual designers whose expressions are copied and the intellectual property system as a whole. As a law professor with a website dedicated to IP and fashion, I frequently receive messages from young designers whose work has been stolen or who hope to prevent the copying of their designs. It is with regret that I must repeatedly explain that while that law can protect designers' trademarks against counterfeiters, in the U.S. the actual designs are fair game for copyists. A. Impact on Designers Creativity is an intrinsic part of human nature, not a byproduct of the intellectual property system. Poets would continue to write, musicians to sing, and fashion designers to sew even if all copyright protection were eliminated tomorrow. While the concept of intellectual property is only a few hundred years old, archaeologists have recently discovered 100,000-year-old shell necklaces, which they interpret as the first evidence of human symbolic thinking. The goal of the IP system, however, is not merely to ensure that authors put pen to paper or needle and thread to fabric, but to encourage and reward individuals so that they can continue to develop their ideas and skills in a productive manner. In other words, intellectual property law ideally serves as a tool for harnessing and directing creativity. For this reason, the Constitution empowers Congress ``[t]o promote the progress of science and useful arts.'' It is this ``progress'' over time that is hindered by the lack of legal protection for fashion design. Young designers attempting to establish themselves are particularly vulnerable to the lack of copyright protection for fashion design, since their names and logos are not yet recognizable to a broad range of consumers. These aspiring creators cannot simply rely on reputation or trademark protection to make up for the absence of copyright. Instead, they struggle each season to promote their work and attract customers before their designs are copied by established competitors. Over the past century successive waves of American designers have entered the industry, but few fashion houses have endured long enough to leave a lasting impression comparable to the influence of French fashion. While it is difficult to quantify or even identify designers who give up their businesses, particularly for reasons of piracy, there is strong anecdotal evidence that design piracy is harmful to the U.S. fashion industry. Consider just two representative examples, one a historical snapshot from an early attempt to develop American fashion and the other from this year. In 1938 Elizabeth Hawes wrote a best-selling critique of the fashion industry entitled Fashion is Spinach.\6\ In it, she chronicled her start working for a French copy house, the only job in the fashion industry available to a young expatriate American in the 1920s; her return to New York to design her own line; and her ultimate disillusionment with the tyranny of mass production and the ubiquity of poor quality knockoffs that undercut her own designs. She ultimately closed her business in 1940, but not before leaving a record of the perils of the industry for a creative designer. --------------------------------------------------------------------------- \6\ Elizabeth Hawes, Fashion is Spinach (1938). --------------------------------------------------------------------------- From a legal perspective, little has changed in almost seventy years. Handbag designer Jennifer Baum Lagdameo co-founded the label Ananas approximately three years ago. A young wife and mother working from home, Jennifer has been successful in promoting her handbags, which retail between $200 and $400. Earlier this year, however, she received a telephone call canceling a wholesale order. When she inquired as to the reason for the cancellation, she learned that the buyer had found virtually identical copies of her bags at a lower price. Shortly thereafter, Jennifer discovered a post on an internet message board by a potential customer who had admired one of her bags at a major department store. Before buying the customer looked online and found a cheap, line-for-line copy of the Ananas bag in lower quality materials, which she not only bought but recommended to others, further affecting sales of the original. While Ananas continues to produce handbags at present, this loss of both wholesale and retail sales is a significant blow to a small business. Copying is rampant in the fashion industry, as knockoff artists remain free to skip the time-consuming and expensive process of developing and marketing new products and simply target creative designers' most successful models. The race to the bottom in terms of price and quality is one that experimental designers cannot win. Nearly every designer or even design student seems to have a story about the prevalence of copying, a situation that makes the difficult odds of success in the fashion industry even longer. B. Design Piracy and Counterfeiting Not only does the legal copying of fashion designs harm their creators, it also provides manufacturers with a mechanism for circumventing the current campaign against counterfeit trademarks. If U.S. Customs stops a shipping container with fake trademarked apparel or accessories at the boarder, it can impound and destroy those items. If, however, the same items are shipped without labels, they are generally free to enter the country--at which point the distributor can attach counterfeit labels or decorative logos with less chance of detection by law enforcement. I have personally witnessed the application of such counterfeit logos to otherwise legal knockoffs at the point of sale; after the consumer chooses a knockoff item, the seller simply glues on a label corresponding to the copied design. The continued exclusion of fashion designs from copyright protection thus undermines federal policy with respect to trademarks by perpetuating a loophole in the intellectual property law system. III. COMPARATIVE IP REGIMES AND FASHION DESIGN While the U.S. has deliberately denied copyright protection to the fashion industry over the past century, other nations have incorporated fashion into their intellectual property systems--and have consequently developed more mature and influential design industries. France in particular has treated fashion design as the equivalent of other works of the mind for purposes of intellectual property protection. French laws protecting textiles and fashion design date back in their earliest form to the ancien regime; these laws were subsequently updated and clarified in the early twentieth century. As a result, Parisian fashion designers have been able over the course of their careers to develop and protect signature design repertoires, which even after the departure of the founding designers can serve as a form of brand DNA for their design houses. The formal recognition of fashion design as an art form has thus helped maintain the preeminence of the French fashion industry and augmented the lasting creative influence of both native designers and those who have chosen to work in France. The association between strong intellectual property protection and a successful creative industry has not been lost on other countries that sought to support their domestic design industries. As long ago as 1840 a British textile manufacturer wrote, ``France has reaped the advantage of her system; and the soundness of her view, and the correctness of her means, are fully proved by the results, which have placed her, as regards industrial art, at the head of all the nations of Europe, in taste, elegance, and refinement.'' \7\ --------------------------------------------------------------------------- \7\ James Thomson, quoted in J. Emerson Tennent, A Treatise on the Copyright of Designs for Printed Fabrics (1841). --------------------------------------------------------------------------- While modern French law still offers the most extensive protection to fashion design, Japan, India, and many other countries have incorporated both registered and unregistered design protection into their domestic laws. In addition, E.U. law has since 2002 provided for both three years of unregistered design protection and up to 25 years of registered design protection, measured in five-year terms. The global legal trend toward fashion design protection has rendered the U.S. an outlier among nations that actively support intellectual property protection, a position that is both politically inconsistent and contrary to the economic health of the domestic fashion industry. Congress should take these factors into account when considering a reasonable level of legal protection for fashion design. IV. THE ROLE OF H.R. 5055 When analyzed in light of the goals of the intellectual property law system, current challenges to the U.S. fashion industry, and international legal developments, H.R. 5055 is a carefully crafted legal remedy to the inequities resulting from the exclusion of fashion design from copyright law. The bill is narrowly tailored to achieve a balance between protection of innovative designs and the preservation of the extensive public domain of fashion as an inspiration for future creativity. Perhaps most importantly, it is a forward-looking measure that lays the groundwork for the future development of a robust, creative American fashion industry. The fashion industry's decision not to seek full copyright protection, but instead to request only a limited three-year term, is particularly appropriate to the seasonal nature of the industry. This period will allow designers time to develop their ideas in consultation with influential editors and buyers prior to displaying the work to the general public, followed by a year of exclusive sales as part of the designer's experimental signature line, and another year to develop diffusion lines or other mass-market sales. While many legal scholars have aptly criticized the full term of copyright protection as excessive when viewed solely in light of an incentive-based rationale, a three-year term chosen after careful analysis of the relevant industry is exactly the sort of scheme that ``low protectionist'' activists have endorsed for copyright as a whole. Such a short term of protection will simultaneously encourage designers to facilitate affordable access to cutting-edge design and contribute to the ongoing enrichment of the public domain. The choice to amend the Copyright Act, rather than to modify the design patent system or devise a sui generis scheme involving prior review, is also well suited to the needs of the fashion industry. The bill appropriately recognizes that the short lifespan of new fashions is inconsistent with burdensome legal formalities. Indeed, I would suggest that unregistered protection would be even more consistent with the U.S. copyright system, existing European design protection, and the needs of the industry, particularly inexperienced designers. Nevertheless, the establishment of registered design protection is an improvement over the current state of the law. The language of H.R. 5055, particularly if amended to clarify that only ``closely and substantially similar'' copies will be considered to infringe upon registered designs, is likewise well crafted to both promote innovation and preserve the development of trends. As with other forms of literary and artistic work, copyright law is clearly capable of protecting specific expressions while allowing trends and styles to form. From a legal perspective, a fashion trend is much like a genre of literature. Granting copyright to a John Grisham novel does not halt the publication of many similar legal thrillers, nor does the protection of Dan Brown's DaVinci Code prevent a spate of novels involving Mary Magdalene or the Knights Templar from appearing in bookstores. When an author writes a bestseller, imitators of his or her style tend to follow--but they are not permitted to plagiarize the original. Copyright in this sense is merely a legal framework that supports an existing social norm; neither reputable authors nor creative fashion designers engage in literal copying of one another. The level of generality at which fashion trends exist, moreover, is far too broad to be affected by the proposed bill. To paraphrase next month's Vogue magazine, currently on the newsstand, red will still be the new black following the passage of H.R. 5055. In the same way, common trends such as wide neckties in the 1970s or casual Fridays in the late 1990s were not dependent on the presence or absence of design protection, nor would such nonspecific ideas ever be subject to intellectual property protection. In addition to the protective benefits of H.R. 5055, the legislation may have a beneficial effect on creativity in the industry as a whole. Former copy houses, no longer able to legally replicate other designers' work, will be forced to innovate or at least transform their work so that it no longer substantially resembles the original products. This in turn can be expected to lead to more jobs for design professionals and more reasonably priced choices for consumers. At present, the bulk of design-related litigation tends to invoke federal trademark and trade dress as well as state unfair competition claims in order to mimic the protections that would be offered by H.R. 5055, with limited success. To the extent that fact-based disputes regarding copying continue to arise, the new legislation will permit parties to engage in more straightforward, simpler litigation. Not only will this avoid the unnecessary distortion of trademark and trade dress law, but it will also clarify the parameters of what constitutes protected design. As in other creative industries governed by intellectual property law, an equilibrium will arise and manufacturers will find it in their best interests to offer retailers innovative rather than infringing work. H.R. 5055 promises to remedy a historical and theoretical imbalance in the copyright system and to offer protection to the many young American designers whose work is currently vulnerable to knockoff artists. For these reasons, I encourage you to seriously consider this reform. Mr. Smith. Thank you, Ms. Scafidi. Mr. Sprigman? TESTIMONY OF CHRISTOPHER SPRIGMAN, ASSOCIATE PROFESSOR, UNIVERSITY OF VIRGINIA SCHOOL OF LAW Mr. Sprigman. Yes, hi. I am Chris Sprigman. I am associate professor of law at the University of Virginia. My research focuses on innovation and how innovation relates to intellectual property rules. I have been doing this research as an academic and I have been working in this area when I was with the Department of Justice with the Antitrust Division. I am here to try to convince you that H.R. 5055 is both unnecessary and potentially could do harm to this industry. Now, the first thing I just want to remind you of is something that no one has disagreed with, which is that the fashion industry is thriving. We have an industry probably in the U.S. around $200 billion. We have U.S. firms participating in an industry that is approaching $1 trillion around the world. Never in our 217-year history of copyright has Congress extended copyright or copyright-like protections to the fashion industry. So we have a 217-year tradition of no copyright in this area. We have the enormous growth and flourishing of a competitive, innovative, vibrant industry. Before we go and change that, we should have more than a few anecdotes about harm. We should have some robust, formal, methodologically rigorous studies of this industry. My colleague, Kal Raustiala, who teaches at the UCLA law school, and I have begun to try to approach this through an article that we have written called ``The Piracy Paradox: Innovation and Intellectual Property in Fashion Design.'' This article will be published in the Virginia Law Review. Many of my comments today will refer to that article, and in fact I have submitted it along with my written testimony. So my first point is that this legislation is entirely unnecessary. If you look at the way the fashion industry innovates, that will become clear to you. We are talking about copying, but what the fashion industry does is occasionally copies point-by-point, right? It takes a garment and makes a facsimile. But mostly what the fashion industry does is it recontextualizes it, reinterprets. It takes a design and it adds inspiration to it and makes something recognizably similar, but new; substantially similar, so it would be reached under this bill and be unlawful, but new. The way the industry creates, the way it creates trends, the way it induces people to treat clothing as something that they buy seasonally, rather than waiting until it wears out, this is the very thing that would be potentially under attack by this bill as currently written. Okay. Some of the proponents of this bill have said, well, Europe has this protection. If Europe has this protection, why don't we? Professor Raustiala and I have looked closely at Europe. And when you look at Europe, you find that, yes, in fact there is an E.U.-wide rule protecting fashion designs, but virtually nobody uses it. If you look in the registry, it is true, and it reflects what Mr. Banks predicts, very few registrations and virtually no major firms register anything, and virtually no litigation. It is not as if, in Europe, fashion firms are not copying. In fact, some of the biggest copyists are European: H&M, Zara and Topshop, these retailers, and European fashion firms that copy and that reinterpret and that recontextualize and that create derivative works and do all the things that fashion firms do. So what do we see in Europe? We see regulation that basically hasn't affected the way the industry actually works. It is unnecessary. Okay. You might ask, well, if we see a situation in Europe where we regulate, but basically the industry goes on as it has always gone on, why shouldn't we just do this in the States? You know, it might not do any good, but it might do any harm. Well, we are not Europe. Unlike in Europe where there is a weak civil litigation system, here in the States we have a very powerful civil litigation system and we are a society teeming with lawyers, including obviously a class of litigation entrepreneurs that accesses the Federal courts. I fear that they will take a look at H.R. 5055 and then they will take a look at the way the fashion operates, and they will sense a very nice payday coming their way. So what we fear is this bill will lead to litigation that breaks up, as Mr. Wolfe has described it, the fashion industry's creative ecosystem that prevents the fashion industry from creating trends and inducing demand for new clothes, but makes the fashion industry a less competitive, less innovative place, that results in higher prices for consumers, that results in less variety being available to consumers, and that takes a very good situation and makes it worse. So I would encourage you to think hard about this. I would encourage you to do no harm until someone comes to you with a compelling study of the harm that we see in the industry from lack of protection, which I don't think exists. [The prepared statement of Mr. Sprigman follows:] Prepared Statement of Christopher Sprigman My name is Christopher Sprigman; I am an Associate Professor at the University of Virginia School of Law. In my role as a law professor, and before that in my career as a lawyer with the Antitrust Division of the United States Department of Justice and in private practice, I have focused on how legal rules--especially rules about intellectual property--affect innovation. Over the past two years, along with Professor Kal Raustiala of the UCLA School of Law, I have spent a considerable amount of time studying the fashion industry's relationship to intellectual property law. Professor Raustiala and I have written an academic article on the topic, entitled The Piracy Paradox: Innovation and Intellectual Property in Fashion Design. This article, which I am submitting along with my written testimony, will be published in December in the Virginia Law Review. The comments I'll make here today will refer to the findings of that article. In brief, for reasons I will explain, Professor Raustiala and I are opposed to H.R. 5055. The Framers gave Congress the power to legislate in the area of intellectual property. But for 217 years Congress has not seen the need to extend IP rules to cover fashion designs. During that period the American fashion industry has grown and thrived, and American consumers have enjoyed a wide range of apparel offerings in the marketplace. We are skeptical that Congress ought to begin regulating fashion design now, given the success of the existing system. We oppose H.R. 5055 for 3 principal reasons: 1) The fashion industry is not like the music, motion picture, book, or pharmaceutical industries. Over a long period of time, it has been both creative and profitable without any IP rules protecting its original designs. Unlike in many other creative industries, copying does not appear to cause harm to the fashion industry as a whole. 2) Fashion design protection has been tried in Europe and has had little effect. Design firms across the Atlantic copy others' designs just the way they do here in the U.S. 3) We fear that a primary effect of H.R. 5055 will be extensive and costly litigation over what constitutes infringement. As such, H.R. 5055 is a lawyer-employment bill, not a fashion-industry protection bill. In my brief time here let me expand on these 3 points. Our first point is that this bill is an unnecessary and unwise intervention in the marketplace. The American fashion industry has become a powerhouse in the decades since World War II. The industry does business in excess of $180 billion per year, and U.S. firms play a substantial role in a global fashion industry worth almost $1 trillion annually. In 2005, the fashion industry grew more quickly than the economy as a whole, and the industry's strong recent growth reflects its robust long-term performance. According to recent data from the Bureau of Economic Analysis, sales of apparel and shoes have registered uninterrupted annual increases between 1945 and 2004, growing during this period more than twenty-fold. So we see growth and profit in the fashion industry, and we also see vibrant competition. New designers and companies regularly rise to prominence and compete for the public's attention with innovative new designs. The fashion industry produces a huge variety of apparel, and innovation occurs at such a pace that styles change rapidly and goods are produced for consumers at every conceivable price point. In short, the fashion industry looks exactly as we would expect a healthy 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 protection to fashion designs. From the industry's beginnings copying has been very common both in the U.S. and abroad. Designers and fashion commentators were talking about design copying back in the 1920s and 1930s. Unsurprisingly, this is not the first time that Congress has considered extending the IP laws to fashion designs. But Congress has always refrained from making this change to our tradition--wisely, in our view. Unlike in the music, film, or publishing industries, copying of fashion designs has never emerged as a threat to the survival of the industry. Why is that? In our article, Professor Raustiala and I explain how copying and creativity actually work together in the fashion industry. This argument is grounded in the fact that fashion is cyclical and driven by popular trends. Styles come and go quickly as many consumers seek out new looks well before their clothes wear out. This is not new: as Shakespeare put it in Much Ado About Nothing, ``The fashion wears out more apparel than the man.'' But the result is that for fashion, copying does not deter innovation and creativity. It actually speeds up the rate of innovation. Copying of popular designs spreads those designs more quickly in the market, and diffuses them to new customers that, often, could not afford to buy the original design. As new trends diffuse in this manner, they whet the appetite of consumers for the next round of new styles. The ability to be copied encourages designers to be more creative, so as to create new trends that capture the attention of consumers. The existing legal rules also help the industry communicate these trends to consumers. In order for trendy consumers to follow trends, the industry has to communicate what the new fashion is each season or year. The industry as a whole does this by copying and making derivatives that take features of a popular design and add new features--this is one of the important ways in which trends are established. In sum, it is the preference of consumers for change in clothing designs that incentivizes creativity in the fashion industry--not intellectual property rules. Copying simply accelerates this process, intensifying consumers' desire for new styles, and increasing consumers' willingness to spend on the industry's next set of design innovations. Congress does not need to step in to alter the market and protect producers. Indeed, if Congress acts to hinder design copying, it may succeed only in depressing demand for new styles, slowing the industry's growth, and raising prices for consumers. Our second point pertains to the E.U.'s experience, which suggests that design protection does not affect copying. In 1998 the European Union adopted a Directive on the Legal Protection of Designs. European law provides extensive protection for apparel designs, but the law does not appear to have had any appreciable effect on the conduct of the fashion industry, which continues to freely engage in design copying. Some may argue that since Europe has design protection legislation, the U.S. should have regulation too. But the European experience suggests precisely the opposite, for two reasons. First, fashion designers have not used the E.U. law very much. We have looked closely at the E.U. registry of designs, and very few designers and design firms have registered their designs--an act that is a prerequisite for protection under the E.U. law, and would also be required for protection under H.R. 5055. Second, copying of fashion designs is just as common in Europe as it is here in the U.S. Indeed, many large fashion copyists, including large retail firms such as H & M, Zara, and Topshop, are European. The law in Europe has had little or no effect on copying, or on innovation in the industry. While the E.U. prohibits fashion design copying, the industry continues to behave as it always has--copying and making derivative works. Although we find the E.U. law has had little effect, we fear that a similar law in the U.S. may actually have a harmful effect. This brings me to our third and final point. Our third point is that while H.R. 5055 is unlikely to do much good, it potentially could cause significant harm. Unlike most countries in Europe, which have relatively weak civil litigation systems, we Americans are, for better or worse, accustomed to resolving disputes through the courts. As a result, the U.S. is a society teeming with lawyers--including, unlike in Europe, a class of litigation entrepreneurs who turn to the federal courts readily to seek leverage in competitive industries. Given our significant differences from Europe in this regard, we fear that H.R. 5055 might turn the industry's attention away from innovation and toward litigation. We foresee extensive litigation over the standard of infringement in the proposed bill. Drawing the line between inspiration and copying in the area of clothing is very, very difficult and likely to consume substantial judicial resources. But however the lines are drawn, the result will be a chilling effect on the industry. Every designer and every firm will be obliged to clear new designs through a lawyer. Individual designers and small firms will be particularly disadvantaged--they are the least likely to be able to afford the lawyers' fees that will be the new price of admission to the industry. Over time, the fashion industry might begin to look more like the music and motion picture industries--i.e., dominated by a few large firms. It is hard to imagine an industry re-configured in this way producing the same rich variety of new designs that today's healthy, competitive fashion industry yields. We believe that the end result of H.R. 5055 could be less consumer choice, fewer opportunities for young designers and small firms to break into the industry, and reduced consumption across the board of fashion goods. In conclusion, the fashion industry thrives by rapidly creating new designs. Via this continuous re-definition of what is ``in style,'' the industry sparks demand by consumers for new apparel. This process results in consumption of fashion goods at a level above what would otherwise occur. It also permits many apparel items to be sold at lower prices than would be possible were fashion design protected by the intellectual property laws. To remain healthy, the fashion industry depends on open access to designs and the ability to create new designs that are derivative of them. The industry has thrived despite the lack of design protection; we are very hesitant to interfere with such success. But we also fear that H.R. 5055 may cause harm. In sum, were it necessary to impose design protection rules to protect the American fashion industry, we would support amending the U.S. Code for the first time in our history to include fashion design. But our research suggests that it is not necessary, that we have had the right rule for the past 217 years, and that Congress should be content to leave the industry to get on with the business of creating innovative new fashions. ATTACHMENT
Mr. Smith. Thank you, Mr. Sprigman. Mr. Banks, let me direct my first question to you. You have just heard Mr. Sprigman say, and we have heard others say as well, that there is a concern about the increased litigation that would come, and the difficulty of determining what is original, shall we say. It occurred to me, and I have a couple of slides I want to put up in a minute, but it occurred to me that what is to prevent someone from, for instance, seeking to copyright men's striped shirts and just changing the width of a stripe or the distance between the stripes a centimeter or less, and copyrighting every manner of striped shirt? And also, I want to put, if you can, I think we are prepared to do so, put up a couple of visual aids here. You have, for lack of another word, let me call it a polka-dot dress. You have the real thing on the left and the knockoff on the right. Here you have a difference in the size of the diameter of the polka-dots, for example. How are you going to copyright something that can be replicated but not exactly duplicated? Is that not going to lead to an excess in litigation? Mr. Banks. Well, first of all, Mr. Chairman, if you look at the slides of the two dresses that were shown, they are not a copy of each other. The one dress by Diane von Furstenberg has a cap-sleeve. It is a wrap-dress. The other dress is a slip- dress silhouette. The size of the polka-dot is different. In fact the space between the dots is different. It is a different bracket print. They are both similar polka-dots, but they are not the same. Mr. Smith. Suppose the polka-dots on the knockoff, just like the striped shirt I described, were a millimeter smaller in diameter. Would that present a problem? Mr. Banks. Well, first of all, you would be talking about prints, and you can already register a print. That is an original design that already you can register. Prints in the home furnishings area, prints in the fashion design area are textiles that can be copyrighted. So we are not really talking about that with this bill. We are not talking about commonplace design either. The jean jackets that David showed us, that is something that is commonplace. Mr. Smith. So the striped shirt would be considered to be commonplace, for example? Mr. Banks. Exactly. Anything that went before, that went on in fashion before this bill would not be represented, whether it is a white buck shoe or seersucker suit or a spaghetti strap dress. Mr. Smith. In the case of the polka-dot dress or even a striped shirt, wouldn't a court find that they are substantially similar and therefore a violation of copyright, or not necessarily? Mr. Banks. I don't think they would necessarily do that. Mr. Smith. Okay. Mr. Wolfe, you decried sort of the lack of originality. In one sense that is easy to say because I certainly could not design anything that I have seen, and therefore I would consider someone who could to be designing something very original. Why do you not think at a design can in fact be original if we haven't seen it before? Mr. Wolfe. I think because the materials involved have been around for centuries. We are talking about fabrics, scissors, needle and thread encasing the human body. Oscar de la Renta once said something to me that I think is worth repeating. He said, ``All we can do is go in and out and up and down over and over and over.'' I don't think anyone in this room is wearing anything that we cannot trace through fashion history and find its derivation. Mr. Smith. But they would say they are not trying to copyright trends, and you are talking about trends. Mr. Wolfe. Oh, no, I am talking about just the reality of the fact that it is impossible to create a new design. It is possible to create a new textile, a new print, but la new design is almost impossible because all we are doing in creating a new one is putting together existing elements in a different way. Mr. Smith. It sounds as if you are saying there is nothing new in the world. That reminds me of someone who said at the turn of the century that everything that had been invented had already been invented, or all the patents had already been filed. You don't think someone could come up with something that is not a result of prior effort? Mr. Wolfe. Not in terms of garment design that human beings wear made out of fabric, needle and thread. When we move to spray-on clothes, great. [Laughter.] And we may. Mr. Smith. Thank you, Mr. Wolfe. Okay, I appreciate it. Ms. Scafidi, you mentioned I believe in your written testimony, but not necessarily in your oral testimony, that you thought this legislation might be too broad in some of its wording. Would you go into that in a little bit more detail as to how it might be narrowed to better achieve the task that it tries to accomplish? Ms. Scafidi. Certainly, Mr. Chairman. I think that we are all in favor of trends. I think that it is marvelous that Mr. Wolfe is in the business of identifying and selling trends, and therefore de-emphasizing the originality of his clients so that they will keep buying his trends. I think that it is important, therefore, in this legislation for the industry in general to continue protecting trends. I understand that Congressman Goodlatte has proposed language suggesting that we say that only closely and substantially similar garments will be infringing, those that in their overall appearance are closely and substantially similar to one another. I think that is a wonderful idea. Mr. Smith. Do you think that that is a narrow enough definition itself? I can see a lot of courts coming out with different results from that definition. Ms. Scafidi. I think it echoes what we do in copyright generally. I think that a court asked to compare two paintings or two sculptures would engage in a similar process. I don't think we should go as far as Mr. Sprigman suggested would be an improvement, although not a recommendation of his, and say that only line-for-line copies should be protected, the reason being a clever copyist can move one button or raise a hemline and claim that it is an entirely new garment. Mr. Smith. You are not saying Mr. Sprigman sees the world in black and white instead of color, are you? [Laughter.] Ms. Scafidi. I wouldn't presume to comment on Mr. Sprigman's eyesight. [Laughter.] But no, I do think that that language, ``closely'' and ``substantially similar,'' is perfectly consistent with the rest of copyright. Mr. Smith. Okay. Thank you, Ms. Scafidi. Mr. Sprigman, you say in your testimony that copying does not cause substantial harm, and yet it seems to me that the damage done by knockoffs can be quantified. Perhaps it is $12 billion or perhaps it is some other figure, but why don't you believe that knockoffs actually do create harm, do cost the originators profits, and undercut the market? Mr. Sprigman. Sir, the question with knockoffs is always not is someone harmed. Someone is harmed. The question is whether the industry in the aggregate benefits. The paradox here, the reason we titled the article The Piracy Paradox, is that the same thing that causes individualized anecdotal harms causes systemic, economy-wide benefits. It is the way the ecosystem works. In every competitive ecosystem, and of course in this country we prefer competition, right? We view competition as the mainspring of our economy. We introduce IP rights when we think there is a problem with innovation, and we need to incent innovation. But there is no problem with innovation here. The ecology that we have, the creative system that we have in the fashion industry, incentivizes innovation. There are many more fashion designers entering this business than there are new record companies or new film studios. This is a much more competitive and open industry. Mr. Smith. Let me go back. Did you say the industry you felt was harmed, but the economy was helped? Mr. Sprigman. No, I don't think the industry is harmed. I think the industry is helped. Mr. Smith. But aren't individuals harmed if their profits lower as a result of the knockoffs? Mr. Sprigman. Individuals are harmed by point-by-point knockoffs. Individuals may be harmed or helped by reinterpretations depending on whether those reinterpretations reflect well on their original design. It is a mix. But the industry as a whole depends on this ability to create trends, and by creating trends, that is how they sell so much fashion. So there is a huge benefit, huge benefit to the way we do things now and the way the industry does things now. Before you put that huge benefit at risk, I would want to know whether this $12 billion has anything to do with design copying or whether this is in fact trademark infringement for which we already have remedies. Mr. Smith. Okay. Thank you, Mr. Sprigman. The gentleman from California, Mr. Berman, is recognized for his questions. Mr. Berman. Well, it is obvious for anyone with good eyesight, fashion and style is not my strong suit. I am trying to, I looked at the picture of those two dresses up there and apparently no one says that would infringe, the knockoff, if that is what it is, it looked to me sort of like two different types of dresses. Mr. Sprigman. I say it. Mr. Berman. Yes? Mr. Sprigman. I say it. It would potentially infringe if you pass this law. The substantial similarity standard in the law potentially would make the second an infringement of the first. Mr. Berman. And why is it substantially similar? Mr. Sprigman. In my copyright classes, I spent a long time on this with my students. The substantial similarity standard is not limited to copying. Mr. Berman. I need the Cliffnotes. Mr. Sprigman. Yes, the Cliffnotes is that any substantial use of an element of the original design could result in a finding of infringement. So think of it in the music context. Do you know the song, ``He's So Fine''? Right? Well, the George Harrison song, ``My Sweet Lord'' was determined to be substantially similar to ``He's So Fine.'' If you know these two songs, it doesn't immediately pop into your head that those are copies. George Harrison wasn't copying. He was hearing something in his head and he was recontextualizing it, and it came out a completely different song, but that is substantially similar because of those five notes that are appropriated. If you look at visual cases and film cases, substantial similarity standard proscribes, prohibits, makes unlawful small---- Mr. Berman. Was there an infringement in that music case? Mr. Sprigman. Yes. And that was considered to be an easy case. So the substantial similarity standard, as it has developed in the courts, has nothing to do with exact copies. It has to do with taking inspiration, which is what the fashion industry does. This bill addresses and makes unlawful what they do. So where this is going to end up, I mean, I can't tell you that this is going to wreck the fashion industry, but it puts their creative process under threat. You know, to see in color, you have to see the complexity of the creative process. And the complexity of the creative process has resulted in a big thriving industry. Mr. Berman. Well, I would like to hear the other witnesses, Mr. Banks and Professor Scafidi perhaps, address this question. In books and music, maybe not so much as I would think, but in books and music you could talk about words and notes and the extent to which they are the same. But with fashion design, what aspects, assuming this is law, what aspects must be compared? Is it simply if the appearance is similar? Do you look at the type of fabric, the type of stitching? It seems to me if it is as narrow as exactly the same, then you simply reward the person who puts the zipper or something in a slightly different place, and you really don't get anything from the bill, but when you start getting these more general standards, what is the analysis a court is going to take in looking at this? Mr. Banks. Well, Mr. Berman, I would think a perfect example of blatant out-and-out copying is something that I think almost everybody in this room would be very familiar with. Mr. Berman. Even me? Mr. Banks. Even you. Mr. Berman. Okay. Mr. Banks. In the springtime, there is something called the Academy Awards, which is also known as the greatest fashion show in the world because we spend an inordinate amount of time in front of our television sets, maybe for an hour before the Academy Awards starts, watching the actors and the people who are associated with the film business coming in on the red carpet and seeing what they are wearing, and having different interviewers, Joan Rivers, et cetera, asking, whose dress are you wearing?; who made that for you?; where did you get that dress? Within days, usually 2 days after the Oscars, you can turn on Good Morning America or the Today Show and you can see interviewers with manufacturers in this country with line-for- line copies, and they credit the designer who designed those dresses. This is the Zac Posen dress, or this is the Bill Blass dress. But they have line-for-line copies at a fraction of the cost of the original, which they will be shipping to department stores in this country by the end of that week. Now, the designer who designed that dress, whether he is a European designer or she is a European designer or an American designer, is not benefiting from that. The only person who is benefiting from that is that copyist. Mr. Berman. Let me just challenge that for a second, because I bet those designers at least have their assistants watching those shows hoping that their name will be mentioned by whoever is on that morning show 2 days later talking about it. I mean, there is something about being mentioned that is worth something. Mr. Banks. There is something about being mentioned, but that doesn't sell that dress. Mr. Berman. That business we are in. Mr. Banks. That doesn't sell your dress. That sells your personality as a designer, but that doesn't sell your dress. Mr. Berman. But it may make your next design more valuable. Mr. Banks. It might. It might. Case in point, a few years ago a totally unknown designer named Olivier Theyskens designed a coat for Madonna to wear to the Oscars. Now, people came up to her and said, whose dress is that? And she said Olivier Theyskens. They had never heard of that designer. He was a young kid, 22, 21 years old. Yes, that made him, that made him as a designer, and he was able to get from that, you know, a very interesting contract with a big French house. But having that garment knocked off when he couldn't even get it made in time to sell to stores does not help his cause. Mr. Berman. Am I out of time? Mr. Smith. The gentleman is recognized for an additional minute, both to finish his question and to yield me time when he finishes. Mr. Berman. Okay. The displacement issue, the very close copy that appropriately would be covered by this kind of a bill, maybe not what we saw on the screen, but something else. First, will the people who could afford the outfit, the coat that Madonna wore, will they be buying those? Like, maybe the reason they could afford Madonna's coat is because when they have a chance to buy something like that coat for 10 percent of the price, they buy it, and that is how they get rich. In other words, what are the economics of the displacement? Are all those knockoffs creating a whole new world of buyers and giving some prestige to the designer without any loss to the designer? Mr. Banks. I wouldn't say there was no loss to the designer. I definitely don't feel that if the designer is just getting the credit for having designed the dress, when the designer can't even get the dress made, shown to his buyers in time, and through the manufacturing process of creating something that is original---- Mr. Berman. Is that what is going on? Is that what is going on? Mr. Banks. Yes. Mr. Berman. The knockoff is coming out so quickly that the designer never gets the much more expensive dress for the much more expensive stores even made because those stores know that that knockoff is going to be---- Mr. Banks. And they would be reluctant then to buy the dress if it has already been knocked off. Mr. Smith. Would the gentleman yield? Mr. Berman. Sure. Mr. Smith. I want to return, Ms. Scafidi, to a subject that we talked about a while ago, and run a phrase by you. We talked about some phrases that have been suggested as a standard. If we used, instead, ``virtually identical'' as a way to describe the item or copyrighted item or a knockoff, would that be a better test because that has a history in copyright law already that has been somewhat established? Obviously, it is a little bit more narrow definition, but wouldn't that help solve some of the problems that we confront? Ms. Scafidi. Chairman Smith, I would be very uncomfortable with the idea of using the phrase ``virtually identical.'' Mr. Berman suggested that a clever copyist could just move a zipper a little bit and thus be outside any kind of reach of this law. I worry that that is exactly where ``virtually identical'' would take us. I would also remind you all, with respect to the ``substantially similar'' standard, which I have been teaching for about a decade now, which is a really long time now that I think about it, that it is not as flexible and as extreme as Mr. Sprigman would suggest. In fact, the music industry has not been destroyed by cases like that one, and in Europe the fashion industry has not been destroyed by the application of similar standards. Mr. Smith. Okay. Thank you, Ms. Scafidi. We made an exception a few minutes ago and allowed Mr. Goodlatte, for the reasons explained, to ask question out of order. We are going to make another exception, and I am going to recognize the gentleman from Massachusetts, Mr. Delahunt, for some questions, even though he is not a member of the I.P. Subcommittee, but because he is an original cosponsor of the legislation. This is a one-time-only exception to the general rule and not setting a precedent. He will be recognized for his questions. Mr. Delahunt. I thank the Chairman. I have a number of questions, and some I will submit in writing, again with the forbearance of the Chair. I would like to pose some questions to Professor Scafidi. Mr. Sprigman is concerned about the lawyers and a subculture, if you will, that will see opportunity here. Although I think it was yourself or Mr. Banks that said that the lack of litigation in the E.U. underscored the fact that the E.U. rule served as a deterrence. Can you describe for us the regimen in the E.U. and its application? Ms. Scafidi. Absolutely. Mr. Sprigman has said that designers in the E.U. don't take advantage of the protections available to them. That is actually inaccurate. First of all, designers in the E.U. automatically have 3 years of unregistered design protection. Moreover, a large number of them continue to register to get longer terms of protection anyway, terms of up to 25 years under the E.U. registered design right. In fact, 4,013 designs for clothing were registered in 2004; 5,426 in 2005, numbers substantially larger than those suggested by Mr. Sprigman, and about half that much again for fashion accessories. So we do have a large number of registrations taking place. Concurrently, we have a very small amount of litigation. Why is that? I think it is because these registrations and the unregistered design protection, together serve as a deterrent to would-be copyists. In fact, it forces those copyists to innovate so that we actually get more innovation in the fashion industry as a whole. So I think those two elements work together very nicely. Mr. Delahunt. Thank you, Professor. Let me direct this question to Mr. Banks. I notice that although the Copyright Office said that the bill before us provides a sound basis for legislation to protect fashion designs, and that while there may be merit, the fashion design should be given protection. The office has, at least at this stage, not been provided with sufficient information to come to a conclusion on the need. I am aware of the fact that you and your colleagues have had a series of discussions with the Copyright Office. Was the case presented there for protection? Mr. Banks. The reason that we wrote to the Copyright Office was to find out if it would be feasible to, and a sort of ready way to make copyrights, or rather registration of designs through that office. Following the European system, which is to take a digital picture of the design, front and back; have that digital picture e-mailed to the Copyright Office; and then it would be registered. It is just that simple. A fee would be paid. It is not obstreperous. It is not a difficult thing to do. It is not particularly time consuming. That was what we approached the Copyright Office about. Mr. Delahunt. Let me just ask one final question here. Do you have a concern, and I think the catalyst of the concern is the reality of electronic commerce, the advent of the Internet has changed, if you will, the need for design protection. I think as Mr. Sprigman talked about 217 years of a tradition, well obviously the Internet is a rather recent innovation. I have a concern, and tell me if it is a legitimate concern, that since the E.U. has this regimen, this regime of protection, I don't want you running over to Europe and incorporating over there and further exacerbating our trade balance. Has anyone in the industry, you know, what is the buzz in the industry in terms of if we see an enhancement of, we see an increase in terms of the billions of dollars of piracy, is there a potential for an exodus of American fashion designers to go to Europe and receive the protection under the E.U.? Mr. Banks. Well, I would say a perfect example of an American designer flourishing in Europe is Marc Jacobs, who designs for Louis Vuitton, which has a multimillion-dollar business. Louis Vuitton registers up to 80 designs per season of just accessories alone designed by Marc Jacobs for Louis Vuitton. That is just bags, shoes and other accessories. That doesn't even include the ready-to-wear. They do a registration of 80 styles per season, and he is a designer who, with the backing of Louis Vuitton, helps pay for his business here in America, his Marc Jacobs business located here in America. Mr. Delahunt. Thank you, Mr. Banks. Mr. Sprigman. Mr. Delahunt, I would like to be given a chance to respond. Mr. Delahunt. We don't--the rules here are that we ask the questions. Mr. Sprigman. Mr. Chairman, I would like to respond. Mr. Smith. The gentleman is recognized for an additional minute so that Mr. Sprigman can respond. Mr. Sprigman. Well, I have done some research on the rate of registration in Europe. I have actually looked at the databases. Between January 1, 2004 and November 1, 2005, we have 1,631 registrations. Of those, many, the majority are nothing more than plain T-shirts, jerseys, sweatshirts with either fixed trademarks or pictorial works. These are registrations that are made to protect a trademark, which is already protected. These are not major registrations for the most part made to protect designs. We see no evidence of any substantial number of registrations by any major design firms. Most of the registrations that we see are from fast-fashion firms like StreetOne, which has about one-third of all the existing registrations during this period. So we don't see this database being used, and reality backs us up. We don't see the lawsuits. And the copyists in Europe thrive just as well as they do here. Topshop, Zara, H&M, these are fast-fashion firms that are often said to take inspiration, and designers do the same thing, so no working difference in the way the industry operates. Mr. Smith. The gentleman's time has expired. We will go to the gentleman from California, Ms. Issa, for his questions. Mr. Issa. Thank you, Mr. Chairman. Ms. Scafidi, who made your outfit you are wearing today? Ms. Scafidi. Narciso Rodriguez, an American designer who has in fact been copied and has suffered losses from that copying, probably not of this suit, but of a much more unique gown and several other of his items. Mr. Issa. And, you know, always on these Committees, at a hearing you kind of look at who is for and against the bill and so on, but in this case, I am sort of looking at academia and the legal profession versus the folks that have to try to make this thing work for designers, but I am concentrating on you first. From a constitutional law standpoint, and I keep it as simple as can be and so did the founding fathers, it said to promote the progress of science, well, scratch that out, and useful arts, we will assume that applies, by securing for limited times to, and we will scratch out ``authors,'' and say ``inventors.'' Now, a dress designer is an inventor by anyone's standard, and I think dresses are clearly, let's be honest, it's art. Otherwise, we would all be wearing something that looks like the Russians wore during the Soviet period or worse. Clearly, there is a constitutional obligation for us to secure for a limited period of time for these creations. I guess the question is, how are we meeting that standard if not for this type of legislation? This legislation does not, although, you know, we are certainly talking about promoting commerce, this is not promoting commerce in the statute. This is a protection that promotes people inventing. It has nothing to do with whether or not we are promoting their financial well being. We are simply incentivizing them to have the pride of inventorship for a limited period of time, which sometimes people miss, and they assume they have to be commercially make it viable. Well, in patents you don't have to be able to market the product and make a bloody penny. You have a right for 20 years from invention to keep it to yourself. Would you agree with that? Ms. Scafidi. I would agree that there is a constitutional obligation, and moreover that it is to the benefit of the American economy to incentivize and to protect these young designers. Mr. Sprigman has said that there is no harm to the industry even if there is harm to individuals. Individuals are the industry and it is a loss of human capital and a personal tragedy when designers are driven out of business because they are copied. Mr. Issa. Now, with all due respect to the laymen here, your outfit looks very classic to me. Ms. Scafidi. Thank you. [Laughter.] Mr. Issa. It looks less classic. However, it certainly seems to have inspiration that dates back well to black and white movies and to early color. Would you agree? Ms. Scafidi. I would agree that particularly in the area of more formal wear, men's and women's, you have a greater degree of standardization than you do in the more fanciful clothing that a woman might wear in the evening, for example. Mr. Issa. So men are at a considerable disadvantage, unfortunately, on the whole of really appreciating this. I dress to be proven no exception. But if I understand basically the bill, not the nuances we may change in a markup, but basically the bill, we want to give 3 years of broad protection to those who create, while leaving 100 years or more of fashion to inspire the copycats. Anyone on this panel want to disagree with the basic intent of the bill? Mr. Sprigman. Oh, yes. Mr. Issa. Well, we will let you wait for a second. Anyone else want to disagree with that? Mr. Wolfe. I have such a problem with the bill because---- Mr. Issa. No, no, no. The intent--I am thrilled to death to talk about modifications, but then is there anything wrong with in fact a very limited period of time, much more limited than other pieces of art. Let's be honest, Mickey Mouse and Donald Duck get 100 years more or less of protection for a drawing. Right? Mr. Wolfe. Right. Mr. Issa. Okay. And I am an inventor with 37 or so patents that are still worth something, and I get either 17 years from granting or 20 years from application, depending upon when I did them. We are talking a fraction of that. Is there anyone that says that the basic intent of this bill is inappropriate? I think you don't like the bill, but you don't say the intent is inappropriate. You have said sort that it is already being met, right? Mr. Wolfe. I think it is impossible because the bill is predicated on the fact that fashion design is original and it is not. So that is where it is stuck. It is not an invention. Mr. Issa. We will take it as, you know, the Mona Lisa is already settled. The question of women's smiles, and that everything else is not original for a moment, and we will accept that that is your position. My time is expiring, but you were so animated, Mr. Sprigman. In short, because it is limited, what is it that is inherently wrong, not unachievable in your and Mr. Wolfe's opinion, but what is inherently wrong with this fraction of the time that we give to pieces of electronics like mine or works of art like a drawing of Mickey Mouse or Donald Duck? Mr. Sprigman. Because fashion is not music and it is not film. It has its own particular innovation dynamic which should be respected because it works. And this bill takes that innovation dynamic and applies rules to it which aren't going to do any good and may do it some harm. So if your intent is to help, leave it alone. Mr. Issa. So you, just to summarize, you are saying that protection is fine, but the rules are wrong in this bill. Mr. Sprigman. No. I am saying that you protect the industry by letting it alone. If you want to regulate it, you are likely to do it harm. This is not film. This is not books. This is not music. Mr. Issa. Mr. Chairman, I would just close by saying that in fact we protect individuals, not some industry and we are here today to talk about individuals protected under the Constitution. Thank you, Mr. Chairman. Mr. Smith. Thank you, Mr. Issa. I am going to recognize additional Members who are here for their questions, but I also want to remind the other Members who are present that we had intended to mark up a bill at 10:30, and I would like to conclude our hearing as quickly as we possibly can. The gentlewoman from California, Ms. Waters, does she wish to be recognized for questions? She is. Ms. Waters. Thank you very much, Mr. Chairman and Members. I would like to thank our panelists for being here today. The first question that I have is I want to know from Mr. Jeffrey Banks whether or not there is a consensus in the industry wanting protection and basically in support of this legislation? Mr. Banks. I would say yes, there is, certainly among designers I am associated with and designers that I have spoken with. I am on the board of the Council of Fashion Designers of America which represents almost 300 designers, men's wear, women's wear, accessory designers, fabric designers, not only in New York, but across the country. And when we told them that we were going to be working on this bill, I got a plethora of e-mails supporting not only the idea of the bill, but also supporting, and telling me that they have in fact been copied on many occasions. I would say from my point of view and from the point of view of my colleagues that I have spoken to, there is a groundswell of support for this bill. Ms. Waters. Thank you. Mr. Sprigman, you are an associate professor at the University of Virginia? Mr. Sprigman. Correct. Ms. Waters. Why do you believe that your knowledge and background should supersede the wishes of the industry? Why do you think you know more than they do? And what is unique about you and your knowledge that could convince us that someone who is not in the creative industry understands it better than the designers? Mr. Sprigman. Sure. The designers design clothes. I study innovation. So I don't claim to be a better designer or clothes. I also don't claim to be a fashion design expert in the sense that I am not here to tell you, you know, what designs are inspired by others in particular ways. But what I do know, and what I have researched for a long time, and my training gives me expertise in, is how firms innovate. If you look at the way firms innovate, if you go shopping, which everybody does, you will see lots and lots of clothes that are working this season and every season off the same design themes, powerfully common-sensical. Why are these clothes working off the same design themes? Because in the last few months, as runway shows have happened and as the fashion press has talked, designers and the industry have identified some themes that they think are going to be this year's trends and they copy them. Ms. Waters. If I may interrupt you for a moment, I am trying to follow your argument, but let's take a look at Diane von Furstenberg's dresses. Mr. Sprigman. Sure. Ms. Waters. Of course, that design has been around for many, many years, and a lot of people have copied the design. Many of those who copied the design do it badly. They do it poorly. The dresses don't fit. As a matter of fact, they use very cheap material in some of the dresses; the patterns that they choose are an insult to the work that she has done. And people think they are getting the same thing, and then they get disgusted when they take this product home. I think there is probably something called pride in your work, and you don't want it to be undermined by those who would do it poorly, do it badly and have people think it is all one and the same. What do you know about that? Mr. Sprigman. I would ask what Congress knows about that. My suggestion would be that that argument for putting Congress in charge of quality control in the fashion industry is not particularly one I am attracted to. Copyright law in the United States is there to incent individuals to engage in innovation. In the fashion industry, we have high levels of innovation because we have the ability to take inspiration, designers have the ability to feed from one another's work. That is the source of inspiration. If you want to dam up that source, go ahead. Ms. Waters. Well, you asked what does Congress know about that. Well, when we talk about women's fashion and design, fortunately there are a lot of women in Congress now. We know a lot about it. We shop. We buy these labels. We understand I think more than a professor from the University of Virginia who comes and gives us an intellectual argument about creative product. And so I don't think designers in this industry are trying to legislate in the field of law. None of them would try and determine a lot about your business. And while I have great respect for the fact that you have worked here in Government, to be so adamantly opposed to what the designers want, while there is a consensus, and then to make the case that your profession will exploit it by bringing in too much litigation is just not something that I can, you know, receive here very lightly. And let me just say, this is just for 3 years. The protection is just for 3 years, not 10 years, not 25 years, not 50 years. I don't think the argument that you make about litigation and how it is going to explode and your profession is to exploit this opportunity really holds water here. I yield back the balance of my time. Mr. Smith. The gentlewoman yields back the balance of her time. Thank you, Ms. Waters. The gentleman from Florida, Mr. Keller, is recognized for his questions. Mr. Keller. Thank you, Mr. Chairman. My wife just made me go see ``The Devil Wears Prada.'' [Laughter.] I observed that Meryl Streep was even meaner and tougher than Sensenbrenner. [Laughter.] That fully exhausts my knowledge of the fashion industry, and I will yield back the balance of my time. Mr. Smith. Thank you. [Laughter.] Thank you, Mr. Keller. Your incisive and brief comments are appreciated. The gentleman from California, Mr. Schiff, do you have questions? If so, the gentleman is recognized. Mr. Schiff. I do, Mr. Chairman, although I have to confess I don't know much more about fashion than Mr. Keller. I wore a seersucker suit for the first time yesterday, and people asked me for a scoop of ice cream. [Laughter.] I wanted to ask whether there are any unique challenges posed by intellectual property protection for fashion in the sense that will it present questions of first impression for the examiners in this area or the potential litigants in this area about whether design is sufficiently unique and innovative to qualify for protection, or to have been copied? I assume if a designer comes out with bell-bottoms, that is not intellectual property protected, but at what point do those bell-bottoms become stylistically individualistically distinct enough to warrant protection? Is this different in-kind than other issues that we have wrestled with in this area? Or is it something we have a lot of experience in by analogy? And the second question I had is, if you could comment a little bit, I know there is a difference of opinion on how successful protection has been in Europe, and I would be interested to hear more of your thoughts on that subject. Whoever would care to comment. Ms. Scafidi. Yes, I think that there is very little difference in the way that a court or any other trier of fact would approach the question of whether two fashions are different, or whether something is part of a trend. There is a huge public domain of fashion. Everything that has ever been made is currently now in the public domain. And if we make the analogy to an area like novels and publishing, when you have a John Grisham come along and write a legal thriller and it becomes a bestseller, all of a sudden the publishing industry is very excited about legal thrillers and we get a spate of legal thrillers published. None of those authors can plagiarize John Grisham and any court that had to compare an alleged plagiarism would be able to compare the two the way they would compare two paintings or anything else. So it is not that difficult or that different an approach in this area. And so I don't think it would raise those kinds of issues in a difficult way. Mr. Schiff. With a novel, you can compare how many characters are the same, how many passages are word for word. With a design, are the facets of that design so unique that they can be identified that way? I suppose if you have a yellow lapel and you have another yellow lapel, is that equivalent to having a sub-plot that is the same? Ms. Scafidi. Fashion is a visual medium like sculpture or painting. And it has its own system of recordation of elements. We have words to describe lapels. We have a color system to describe shades of colors. An expert in the field would have no difficulty making those very specific comparisons using the notion of the industry in which we are not all literate, but we all have a sense of how it works. When a fashion magazine like Marie Claire publishes an original and a knockoff next to one another, the public recognizes that that is a knockoff, whether or not it is a literal line-for-line copy or whether it is something that is substantially similar. Mr. Schiff. Would anyone else like to express a contribution? Mr. Banks. I would also like to say, designers don't create trends. Trends are remarked on by people such as my colleague next to me. That is what he does. He goes out. He looks at the market. He looks at what designers have done, what manufacturers have done. If he sees that there is a recurring theme such as the color black or short lengths, he makes the decision that that is a trend. He along with his other colleagues like fashion editors and buyers for stores, they see the prevalence of short lengths or of the color black or of sequins and they say that the trend for this fall is black sequined short dresses. Designers do their own thing creatively and sometimes there is a similarity because we all go to the same fabric resources or we all are inspired by the same films, or we all travel to the same art exhibitions. Mr. Schiff. Which way does that cut, though? I mean, that seems to say there is going to be a merger of fashion in a certain direction which would make it more difficult, potentially, to distinguish one from another. Mr. Wolfe. I think it makes it impossible. I think that is the problem. I think the major problem is that there is nothing new about black, there is nothing new about sequins, there is nothing new about short. So how can the first designer of the season who makes the black short sequined dress, is that the one that gets protected and no one else can make another? Everything is in public domain in fashion. Everything. Mr. Sprigman. There is an example in our paper. Mr. Smith. The gentleman's time has expired. You will, without objection, be recognized for an additional minute. Mr. Sprigman. There is an example in our paper in spring 2005 of something called the ``driving shoe,'' which is a shoe that has--it is like a moccasin, and it has a sole that runs up the back. So it is a rubber sole that runs up the back. And suddenly in spring 2005, if you walked into Nordstrom, you saw a table in the Nordstrom that I walked into right here in D.C., you saw a table, and around the table were about 40- some-odd versions of this driving shoe. And they are all different, right? Mr. Schiff. If I could ask Ms. Scafidi, would that driving shoe be copyright-protected, that little run of strip up the back? Ms. Scafidi. I think what we have here is a clear example of the idea-expression dichotomy, which all of copyright has to deal with. Ideas are never protected; very specific expressions are. I am not an expert in driving shoes, but I think that would be the nature of the inquiry. Mr. Sprigman. I think it is clearly protectable subject matter under this bill. It is a design. A design is for the sole. And if you get all these driving shoes that are different, but they are using that design and adding new creativity to it, the point of that is the industry is establishing a trend in driving shoes. It is driving the consumption by men of footwear. Now, many are generally insensitive to footwear and this is how the industry gets them to pay attention, by innovating something. That process is going to be interfered with under the substantial similarity standard in this bill. That is what I worry about. Mr. Schiff. Okay. Thank you, Mr. Chairman. Mr. Smith. The gentleman's time has expired. Thank you for yielding back. That concludes our hearing. I want to thank our witnesses for a very, very interesting hearing and for lots of good information for us to consider. We stand adjourned on the hearing, and I would ask Members to stay right where they are, if they would. We are going to stand adjourned for about 3 minutes, and then reconvene in order to mark up a piece of legislation. Thank you all again. [Whereupon, at 10:45 a.m., the Subcommittee was adjourned.] A P P E N D I X ---------- Material Submitted for the Hearing Record Prepared Statement of the Honorable Howard L. Berman, a Representative in Congress from the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property Mr. Chairman, Thank you for scheduling this hearing on H.R. 5055 which would extend copyright protection to fashion designs. I am open minded about this issue and see the Copyright Office, in their written testimony, has raised the core question for discussion today: is there a need for this legislation and what evidence is available for quantifying the nature and extent of the harm suffered by fashion designers due to the lack of legal protection for their designs. The global fashion industry is said to have revenues of $784 Billion. According to the NPD Group, total U.S. apparel sales reached $181 Billion in 2005. California alone produces over $13 billion in apparel products and employs 204,000 direct employees and 59,000 indirect workers. Reportedly, apparel and footwear losses due to counterfeiting have been estimated to be $12 Billion annually. The fashion designers are seeking this protection in order to prevent the rampant piracy of their fashion designs, as well as to maintain the incentive for designers to continue to develop new original fashion designs. This protection would last only three years allowing original designers sufficient time to recoup the expenses incurred in designing and developing their fashion works. Current copyright law only provides protection to those design elements of a useful article that are separable and independent of the utilitarian function of the article. Therefore, fashion works have traditionally been denied copyright protection on the ground that they are considered to be ``useful articles.'' Fashion designers do have access to some other Intellectual Property rights both in trademark and patent law. However, trademark law protects the elements of a design that indicate the source of the product but does not provide general protection for designs. In patent law, there is the potential for design patents, but this route of protection often is not practical for designers because of the length of time it takes before the patent issues combined with the typical life span of a fashion design which is only a single season, maybe 3 to 6 months. Further, design patents require a level of novelty and originality that has generally been held to be higher that which is achieved by fashion works. The fashion industry is unique, in that it epitomizes the ultimate paradox of Intellectual Property protection. The arguments I have heard illustrate both sides of the debate. Is a high level of protection necessary to promote innovation, or does the lack of a high level of protection for fashion designs actually spur increased creativity in the fashion industry? Furthermore, in part as a result of the great speed with which fashion trends come and go, new fashions are available in the high end designer stores and in the low end retail outlets, making these fashions available to virtually all individuals regardless of their income level. Will an increased level of protection for designers, be at the detriment of the retailers and the public? In the past, Congress has demonstrated flexibility in expanding the Copyright laws, for example providing design protection for buildings (through the Architectural Works Copyright Protection Act (AWCPA)), and providing protection specifically for semiconductor ``mask works'' and boat hulls. Should we be extending copyright protection to fashion designs and are there other areas which we should also consider extending protection to such as, for example, the furniture and auto part industries. I look forward to understanding the extent of the problem of fashion design knock-offs, and what the impact is on the high end market, for example is there fear of lost sales in the couture market as a result of production in retail stores? In addition I would like for the witnesses to describe what constitutes a design that is ``substantially similar.'' Is it an exact copy? Is it a mere inspiration of a current trend? And how does one determine if it is something in between? I yield back the balance of my time. __________ Prepared Statement of the Honorable Maxine Waters, a Representative in Congress from the State of California Chairman Smith, Ranking Member Berman, thank you for holding this legislative hearing, and I appreciate the time and testimony of our witnesses. I commend the gentlemen from Virginia [Mr. Goodlatte] and from Massachusetts [Mr. Delahunt] for their leadership in introducting the legislation before this Subcommittee, H.R. 5055, which would amend Title 17 of the United States Code to provide protection for fashion design. The Ranking Member would undoubtedly attest that our respective shares of Los Angeles, California are home to numerous stakeholders in the fashion design industry. As such, it is important that this Subcommittee consider legislation to address the issue of piracy as it relates to their primary means of income and thus, their livelihood. My Congressional District is contiguous with the LA Fashion District--a 90-block section of downtown Los Angeles where the apparel industry comprises 80% of the Fashion District, and is responsible for over $7 billion in annual wholesale revenues that support the City treasury. Over 1.5 million people travel to Los Angeles from around the world to patronize the fashion apparel portion of the Fashion District. The LA Fashion District is truly a part of the new global economy. Legislation that would reduce design piracy is of extreme importance to the primary, secondary, and tertiary beneficiaries of the revenues generated from this industry. Allowing piracy to persist will cause this industry to diminish at a quick pace--given the ease with which designs can be copied, reproduced, and implemented using the internet and other digital communications technology. The LA Fashion District must be rewarded for the ingenuity of its designers, rather than made obsolete by the mercenary tactics of those who violate law designed to protect creativity and intellectual property. From a legislative perspective, extending Title 17 protection to fashion designs marks a modernization of the United States Code. As the testimony presented by the United States Copyright Office states, design protection legislation for industrial products has passed the House since the 71st Congress--back in 1930. A student of history knows that fashion design has undergone breakthrough changes over the past seven decades and continues to develop. If we want innovation to continue at its current pace, we must allow designers to protect their work. The three-year registration term for fashion designs--as compared to the ten-year period established for vessel hulls, is small and represents a reasonable concession. I support the legislation that we now consider and urge my Colleagues to support H.R. 5055, lest we lose another industry to global competitors. I yield back the balance of my time. Prepared Statement of the United States Copyright Office, Washington, DC
Prepared Statement of the American Free Trade Association, Miami, FL BACKGROUND This statement is offered on behalf of the American Free Trade Association (AFTA). AFTA is a not-for-profit trade association of independent American importers, distributors, retailers and wholesalers, dedicated to preservation of the wholesale and discount marketplace to assure competitive pricing and distribution of genuine and legitimate products for the benefit of all American consumers. AFTA has been an active advocate of consumer interests for nearly twenty years. It has appeared as amicus curiae in the two leading Supreme court cases affirming the legality of parallel market trade under the federal trademark, customs and copyright acts (the 1985 Kmart case and the 1998 Quality King case) and in numerous lower court decisions. SUMMARY POSITION AFTA strongly opposes HR 5055. H.R. 5055 is not legislation intended to rightfully prosecute pirates stealing logos and trademarks, which activities this Committee is already aware AFTA aggressively combats and rejects. On the contrary, H.R. 5055 is about expanding our U.S. Copyright laws to federally protect what our laws have insisted for 40 years should not be protected at all. H.R. 5055 intends to protect vague concepts of the ``overall appearance'' of a product, without requisite proof of distinctiveness, uniqueness or its impact on the American marketplace. AFTA has consistently, for more than 20 years, advocated on behalf of American businesses and American consumers to ensure that protectionist intellectual property laws are not used to deprive consumers and the American marketplace of legitimate products. Manufacturers and intellectual property rights owners must not be empowered--by this Congress or otherwise--to dictate what is sold beyond the rational limits of intellectual property rights and protections. GENERAL DISCUSSION Section 102(b) of the Copyright Act states ``in no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle or discovery, regardless of the form in which it is described, explained, illustrated or embodied in such work.'' Relying upon this standard, garment designs have sometimes been deprived copyright protection because they have been said to be ``useful articles,\1\'' impossible to separate the utilitarian aspects from aesthetic parts. In Jane Galiano and Gianna Inc., v. Harrah's Operating Company, Inc.; Harrah's Entertainment, Inc (5th Cir 2005), the Court explained the standard as follows: ``There is little doubt that clothing possesses utilitarian and aesthetic value. It is common ground . . . among the courts that have examined this issue [that the 1976 Copyright Act's provisions were] intended to distinguish creative works that enjoy protection from the elements of industrial design that do not.'' See Pivot Point Int'l, Inc. v. Charlene Prods., Inc., 372 F.3d 913, 920-21 (7th Cir. 2004) (en banc). ``The hard questions involve the methodology for severing creative elements from industrial design features.'' --------------------------------------------------------------------------- \1\ ``A ``useful article'' is defined in 17 U.S.C. Section 101 as ``an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.'' --------------------------------------------------------------------------- Recognizing, then, that the Copyright Act offers no federal protection for garments not employing some degree of aesthetic value, separable from other utilitarian aspects of the design, designers have lobbied Congress to draft H.R. 5055 to, instead, provide federal protection simply for the ``overall appearance'' of each and every design, without definition, limitation for ordinary features or even examination for prior art. This is the exact broadening of existing intellectual property laws in the same type of blatant, undisguised claim of entitlement against which AFTA has advocated time and again. If H.R. 5055 protects fashion designs why would any other industry's designs still be considered useful embodiments of ideas or discoveries which the Copyright Act is not intended to protect? Why would designers of food packages not believe that the overall appearance of their cartons deserve federal protection? Or designers of shampoo bottles or hair spray cans? What is the difference between the overall appearance of articles of fashion and the overall appearance of lipstick cases or soft drink bottles? In 2001, the Supreme Court clearly stated that the danger of anticompetitive overprotection is especially high in the case of product design. The Court in Wal-Mart v. Samara Bros., said ``It seems to us that design, like color, is not inherently distinctive . . . Consumers should not be deprived of the benefits of competition with regard to utilitarian and aesthetic purposes that product design ordinarily serves by a rule of law that facilitates plausible threats of suit against new entrants.'' Although that case involved a determination of protectibility under the Trademark Act, the Court's opinion about the role of federal law in protecting product designs is clear and indisputable. This Congress, via H.R. 5055, seeks to contradict that opinion--with the bill's sponsors insisting only that protection of clothing designs is long overdue. This is insufficient evidence to support passage of a law that impacts many product designs and the ability of American consumers to obtain economical alternatives of products inspired by designers' creations otherwise out of their economic reach and otherwise not available to them. Thus, the problem with H.R. 5055 is that it tips the balance of intellectual property protection overwhelmingly in favor of fashion and other product designers. A fashion design copyright will be relatively easy to obtain because no official with the Copyright Office conducts an examination of prior art to ensure the application's originality. In addition, the copyright would be relatively easy to prosecute. The designer would merely need to show that the copyrighted design is ``substantially similar'' to the allegedly infringing design. And, because there is no criteria of what constitutes either protectable ``appearance'' or what will be considered ``substantially similar'' to that appearance, the one promise that will be realized is the promise of protracted and expensive litigation. Very little in the world of fashion design is truly original. Fashion designers frequently draw inspiration from one another and inspired designs often bear a similarity to the so-called ``original.'' For this reason, cases brought pursuant to a fashion design copyright would be very difficult to defend and mass marketers would very likely be discouraged from taking the legal risk of offering inspired fashions. Thus, the real losers will be the American consumers, who will be cheated out of access to the latest fashions at prices they can afford. Consumers care about the impact of HR 5055. The Internet is swarming with people--your constituents--critical of the efforts of this Congress to act as ``fashion police.'' Two examples should suffice to show the sentiments being expressed in this wide-spread electronic forum. ``Capital Eye'' distributed by FYI News Service at www.fyi-net includes an article ``Copyrighting Fashion Not Only Impossible, But Silly'' written by Randi Bjornstad and posted the week of April 9, 2006. ``Now, let's be serious,'' she says, ``when was the last time someone designed a dress--or coat, or shoe, or a pair of boxer shorts, for heaven's sake--that was so unusual that anyone would say, ``Wow, I've never seen anything like that before. . . . The fact is, in the world of art, everything's derived from everything else, recycled, given a new name and embraced as something new and different and really out there.'' At www.reason..com.hitandrun/2006/03/be--serious-- dahl.shtml, Julian Sanchez writes: ``Is this necessary? The idea behind intellectual property is supposed to be to provide creators with an incentive to innovate. Are we supposed to believe that Sears is digging into Armani's profits to the point where they're putting out fewer items each year? Are we supposed to believe that this effect is so pronounced that the loss in novelty outweighs the benefit to consumers of inexpensive, attractive clothing?'' AFTA, whose members include major distributors to retailers, are forthright in their analysis and objections to this or any other bill which would eliminate the creation, distribution and sale of competitively priced genuine goods in the US marketplace. The obvious result of H.R. 5055 would be to diminish the right of American consumers to a freely competitive marketplace while providing heretofore unprecedented and uncontrollable dominance of distribution and pricing to a small cadre of designers. There is no method to defend against a claim that one has copied the ``overall appearance'' of any product design--because there are no standards or criteria in the bill that distinguish distinctive design elements from those that are merely common place or ordinary. And while originally consumers were promised that Section 13 of the Copyright Act was passed only to protect boat hull designs--about which, frankly, not many people could even feign much interest. Now this Congress wants the Copyright Act to also protect the overall appearance of articles of fashion. Tomorrow, then, it could be argued that Congress will have little reason not to permit copyrighting of the ``overall appearance'' of cosmetic bottles, earring holders or cereal boxes. AFTA understands that the American fashion industry may feel slighted because protection of fashion design in Europe is greater than currently offered under American intellectual property laws. AFTA knows that the European Union offers a type of community design protection which would certainly cause the envy of our domestic designers looking to protect ordinary features of their products.\2\ But, our Congress should never merely mimic the laws of Europe. Our Congress should strike a balance between rights of the American consumer, American industry and American ingenuity, and if it does so, we believe it will reject the EU model and reaffirm our existing law which provides the needed incentives for original design based upon fair use of past creativity. --------------------------------------------------------------------------- \2\ A registered Community design right may provide protection for the appearance of a product or part of a product. The appearance can result from the shape, lines, contours, ornamentation, colours, texture or materials of the product. In this context, a product means any industrial or handicraft item except a computer program, and includes parts intended to be assembled into a complex product, packaging, ``get-up'', graphic symbols or typefaces (see http:// www.hindlelowther.com/design2.htm). --------------------------------------------------------------------------- There is no reason to believe that our countries' top fashion designers are suffering economically because others draw inspiration from their designs. Nevertheless, H.R. 5055 seeks not only to ensure continued and increased prosperity for such designers, but also, to deprive American consumers of the less-expensive, alternative fashions inspired by it. H.R. 5055 damages rather than protects the American consumer; it does not provide protection for creativity, but stifles future creativity by extending the control of a few designers. AFTA urges this respected Committee not to cede to the interests of the fashion designers to the detriment of all that was intended to be protected by strong intellectual property protection in this country. Do not deviate from the need to protect our country against counterfeiters and thieves. Do not distort the importance of your mission to protect against misappropriation of distinctive creations and original works of art. H.R. 5055 is legislation guaranteed to generate out of control litigation and a bill that would impede our society's ability to rely upon prior art to create new and better inventions. There is a necessary balance between inventions that need to be rewarded in order to generate greater inspiration and mere product designs deserving no such protection against future amendment or reproduction. The Copyright Act already recognizes such a distinction by refusing protection for useful designs--even those qualifying as articles of fashion under H.R. 5055. AFTA, its members and its supporters sincerely hope that the respected members of this Committee carefully consider the needs of the American consumer against the needs of fashion and other product designers. Subcommittee members are invited to contact AFTA's General Counsel, Gilbert Lee Sandler, Esq., should they wish to discuss any matter raised in this statement in more detail or in the event there are any remaining questions or doubts regarding the intent or detrimental impact of H.R. 5055 on the American consumer or the competitive, domestic marketplace. We thank you for providing us with this opportunity to have our testimony made a part of the record of today's hearing.