[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





                   INNOVATIVE DESIGN PROTECTION AND 
                         PIRACY PREVENTION ACT

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         INTELLECTUAL PROPERTY,
                     COMPETITION, AND THE INTERNET

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                                   ON

                               H.R. 2511

                               __________

                             JULY 15, 2011

                               __________

                           Serial No. 112-46

                               __________

         Printed for the use of the Committee on the Judiciary








      Available via the World Wide Web: http://judiciary.house.gov





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                       COMMITTEE ON THE JUDICIARY

                      LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina         JERROLD NADLER, New York
ELTON GALLEGLY, California           ROBERT C. ``BOBBY'' SCOTT, 
BOB GOODLATTE, Virginia                  Virginia
DANIEL E. LUNGREN, California        MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio                   ZOE LOFGREN, California
DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana                  MAXINE WATERS, California
J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona                  Georgia
LOUIE GOHMERT, Texas                 PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio                     MIKE QUIGLEY, Illinois
TED POE, Texas                       JUDY CHU, California
JASON CHAFFETZ, Utah                 TED DEUTCH, Florida
TIM GRIFFIN, Arkansas                LINDA T. SANCHEZ, California
TOM MARINO, Pennsylvania             DEBBIE WASSERMAN SCHULTZ, Florida
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
[Vacant]

      Sean McLaughlin, Majority Chief of Staff and General Counsel
       Perry Apelbaum, Minority Staff Director and Chief Counsel
                                 ------                                

  Subcommittee on Intellectual Property, Competition, and the Internet

                   BOB GOODLATTE, Virginia, Chairman

                   BEN QUAYLE, Arizona, Vice-Chairman

F. JAMES SENSENBRENNER, Jr.,         MELVIN L. WATT, North Carolina
Wisconsin                            JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina         HOWARD L. BERMAN, California
STEVE CHABOT, Ohio                   JUDY CHU, California
DARRELL E. ISSA, California          TED DEUTCH, Florida
MIKE PENCE, Indiana                  LINDA T. SANCHEZ, California
JIM JORDAN, Ohio                     JERROLD NADLER, New York
TED POE, Texas                       ZOE LOFGREN, California
JASON CHAFFETZ, Utah                 SHEILA JACKSON LEE, Texas
TIM GRIFFIN, Arkansas                MAXINE WATERS, California
TOM MARINO, Pennsylvania             DEBBIE WASSERMAN SCHULTZ, Florida
SANDY ADAMS, Florida
[Vacant]

                     Blaine Merritt, Chief Counsel

                   Stephanie Moore, Minority Counsel














                            C O N T E N T S

                              ----------                              

                             JULY 15, 2011

                                                                   Page

                                THE BILL

H.R. 2511, the ``Innovative Design Protection and Piracy 
  Prevention Act''...............................................   133

                               WITNESSES

Lazaro Hernandez, Designer and Co-Founder, Proenza Schouler
  Oral Testimony.................................................     3
  Prepared Statement.............................................     5
Jeannie Suk, Professor of Law, Harvard Law School
  Oral Testimony.................................................    13
  Prepared Statement.............................................    15
Christopher Sprigman, Professor of Law, University of Virginia 
  School of Law
  Oral Testimony.................................................    74
  Prepared Statement.............................................    77
Kurt Courtney, Manager, Government Relations, American Apparel & 
  Footwear Association
  Oral Testimony.................................................    91
  Prepared Statement.............................................    92

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable Bob Goodlatte, a 
  Representative in Congress from the State of Virginia, and 
  Chairman, Subcommittee on Intellectual Property, Competition, 
  and the Internet...............................................     1
Prepared Statement of the Honorable Melvin L. Watt, a 
  Representative in Congress from the State of North Carolina, 
  and Ranking Member, Subcommittee on Intellectual Property, 
  Competition, and the Internet..................................    10

                                APPENDIX
               Material Submitted for the Hearing Record

Response to Post-Hearing Questions from Lazaro Hernandez, 
  Designer and Co-Founder, Proenza Schouler......................   102
Response to Post-Hearing Questions from Jeannie Suk, Professor of 
  Law, Harvard Law School........................................   105
Response to Post-Hearing Questions from Christopher Sprigman, 
  Professor of Law, University of Virginia School of Law.........   116
Response to Post-Hearing Questions from Kurt Courtney, Manager, 
  Government Relations, American Apparel & Footwear Association..   125
Letter from Stephanie Lester, Vice President, International 
  Trade, Retail Industry Leaders Association.....................   130

 
         INNOVATIVE DESIGN PROTECTION AND PIRACY PREVENTION ACT

                              ----------                              


                         FRIDAY, JULY 15, 2011

              House of Representatives,    
         Subcommittee on Intellectual Property,    
                     Competition, and the Internet,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:08 a.m., in 
room 2141, Rayburn House Office Building, the Honorable Bob 
Goodlatte (Chairman of the Subcommittee) presiding.
    Present: Representatives Goodlatte, Quayle, Coble, Chabot, 
Marino, Watt, Conyers, Chu, Lofgren, and Jackson Lee.
    Staff Present: (Majority) Blaine Merritt, Subcommittee 
Chief Counsel; Olivia Lee, Clerk; and Stephanie Moore, Minority 
Subcommittee Chief Counsel.
    Mr. Goodlatte. Good morning.
    The Subcommittee on Intellectual Property, Competition, and 
the Internet will come to order. I want to welcome our 
witnesses for this hearing on the ``Innovative Design 
Protection and Piracy Prevention Act.''
    I am going to submit my opening statement for the record 
and I believe that the Ranking Member, Mr. Watt, who I believe 
will be here shortly, and the Ranking Member of the full 
Committee, Mr. Conyers, have indicated an interest in doing the 
same in order to get to our witnesses as quickly as possible.
    Our reason for doing that is because we are expecting votes 
around 11. Once they come, they are going to be very lengthy, 
and we may have to conclude before then. We will gauge that at 
11.
    [The prepared statement of Mr. Goodlatte follows:]
Prepared Statement of the Honorable Bob Goodlatte, a Representative in 
  Congress from the State of Virginia, and Chairman, Subcommittee on 
          Intellectual Property, Competition, and the Internet
    Article I, section 8, of the Constitution lays the framework for 
our nation's copyright laws. It grants Congress the power to award 
inventors and creators for limited amounts of time exclusive rights to 
their inventions and works. The Founding Fathers realized that such an 
incentive was crucial to ensure that America would become the world's 
leader in innovation and creativity. This incentive is still necessary 
to maintain America's position as the world leader in innovation.
    Most industrialized nations provide legal protection for fashion 
designs. However, in the United States, the world's leader in 
innovation and creativity, fashion designs are not protected by 
traditional intellectual property regimes. Copyrights are not granted 
to apparel because articles of clothing, which are both creative and 
functional, are considered useful articles, as opposed to works of art. 
Design patents are intended to protect ornamental designs, but clothing 
rarely meets the criteria of patentability. Trademarks only protect 
brand names and logos, not the clothing itself. And the Supreme Court 
has refused to extend trade dress protection to apparel designs. Thus, 
a thief violates Federal law when he steals a creator's design, 
reproduces and sells that article of clothing, and attaches a fake 
label to the garment for marketing purposes.
    But it is perfectly legal for that same thief to steal the design, 
reproduce the article of clothing, and sell it, provided he does not 
attach a fake label to the finished product. This loophole allows 
pirates to cash in on the sweat equity of others and prevents designers 
in our country from reaping a fair return on their creative 
investments.
    The production lifecycle for fashion designs is very short. Once a 
design achieves popularity through a fashion show or other event, a 
designer usually has a limited number of months to produce and market 
that original design. Further complicating this short-term cycle is the 
reality that once a design is made public, pirates can immediately 
offer identical knockoffs on the Internet for distribution.
    Again, under current law, this theft is legal unless the thief 
reproduces a label or trademark. And because these knockoffs are 
usually of such poor quality, they damage the designer's reputation as 
well. Common sense dictates that we should inhibit this activity by 
protecting original fashion works.
    Our undertaking is similar to action taken by Congress in 1998 when 
we wrote Chapter 13 of the Copyright Act, which offers protection for 
vessel hull designs. The ``Innovative Design Protection and Piracy 
Prevention Act'' amends this statutory template to include protections 
for fashion designs. Because the production lifecycle for fashion 
designs is very short, this legislation similarly provides a shorter 
period of protection of three years that suits the industry.
    The bill enjoys support among those in the fashion and apparel 
industries. While concerns have been expressed about the scope of 
previous versions of this legislation, my office has engaged in 
discussions through the years with interested parties to ensure that 
the bill does not prohibit designs that are simply inspired by other 
designs; rather, the legislation only targets those designs that are 
``substantially identical'' to a protected design. Other provisions, 
including a ``home-sewing'' exception and a requirement that a designer 
alleging infringement plead with particularity, ensure that the bill 
does not encourage harassing or litigious behavior.
    H.R. 2511 is identical to legislation reported by the Senate 
Judiciary Committee last December. Between this event and the growing 
coalition of stakeholders coalescing around our bill, I am optimistic 
that we can enact fashion piracy reform in the 112th Congress.
    I look forward to hearing from our witnesses, and I now recognize 
the Ranking Member from North Carolina for his opening statement.
                               __________

    Mr. Goodlatte. In the meantime, let me go ahead and welcome 
our witnesses and introduce them. We have a very distinguished 
panel of witnesses today.
    Each of the witnesses' written statements will be entered 
into the record in its entirety. I ask that each witness 
summarize his or her testimony in 5 minutes or less.
    To help you stay within that time, there is a timing light 
on your table. When the light switches from green to yellow, 
you will have 1 minute to conclude your testimony. When the 
light turns red, it signals that your 5 minutes have expired.
    And it is the custom of this Committee to swear in our 
witnesses.
    So I would ask that the witnesses rise.
    [Witnesses sworn.]
    Mr. Goodlatte. Thank you very much. Please be seated.
    Our first witness is Lazaro Hernandez, who co-founded 
Proenza Schouler, a New York-based modern luxury women's wear 
and accessory label, in 2002. The company has won a number of 
industry honors from the Council of Fashion Designers of 
America, including the 2003 Perry Ellis Award for New Talent, 
the 2004 Vogue Fashion Fund Award, and the 2007 and 2011 
Women's Wear Designer of the Year Award.
    Proenza Schouler is sold in more than 100 outlets worldwide 
and has collaborated with Target and J Brand Jeans, among other 
retailers. The company has also developed working relationships 
with a number of celebrities such as Kristen Stewart, Sarah 
Jessica Parker, Gwyneth Paltrow, Kirsten Dunst, and Julianne 
Moore.
    Originally a pre-med student from South Florida, Mr. 
Hernandez dropped out of the University of Miami and enrolled 
in the Parsons School of Design, from which he graduated 9 
years ago.
    Our next witness is Jeannie Suk, professor of law at 
Harvard Law School. Professor Suk specializes in criminal law 
and family law, while also teaching art and entertainment law. 
Prior to her current duties, Professor Suk served as a law 
clerk for Judge Harry Edwards of the U.S. Court of Appeals for 
the D.C. Circuit and for Justice David Souter on the United 
States Supreme Court. She also worked as an Assistant District 
Attorney in Manhattan and was a fellow at the New York 
University School of Law.
    Professor Suk studied ballet at the School of American 
Ballet and piano at the Juilliard School before earning her 
B.A. From Yale, a Doctor of Philosophy from Oxford as a 
Marshall Scholar, and her law degree from Harvard.
    Our next witness is Christopher Sprigman, professor of law 
at the University of Virginia School of Law. He teaches 
intellectual property, antitrust, competition policy, and 
comparative constitutional law. Prior to joining the Virginia 
faculty in 2005, Professor Sprigman clerked for Judge Steven 
Reinhardt of the Ninth Circuit Court of Appeals and for Justice 
Lawrence Ackerman of the Constitutional Court of South Africa. 
He also taught law in Johannesburg, worked in the Antitrust 
Division of the U.S. Department of Justice, practiced law in 
Washington, and served as a residential fellow at the Center 
for Internet and Society at Stanford Law School. Professor 
Sprigman earned his B.A. From the University of Pennsylvania 
and his law degree from Chicago.
    Our final witness is Kurt Courtney, manager of government 
relations at the American Apparel & Footwear Association since 
2007. In that capacity, he handles a wide variety of issues 
affecting the industry. That includes intellectual property, 
health care, taxes, ports, and government contracts.
    Before joining AAFA, Mr. Courtney spent 5 years on Capitol 
Hill working for Representatives Zack Wamp, Buck McKeon, and 
Ileana Ros-Lehtinen. A native of Los Angeles, Mr. Courtney 
graduated from the George Washington University in 2000 with a 
Bachelor of Arts Degree in International Affairs.
    I want to welcome all of you.
    Mr. Hernandez, we will begin with you.

TESTIMONY OF LAZARO HERNANDEZ, DESIGNER AND COFOUNDER, PROENZA 
                            SCHOULER

    Mr. Hernandez. Hello. Good morning, Chairman Goodlatte, 
Members of the Subcommittee.
    I am pleased to be here today to testify in support of H.R. 
2511, or the ID3PA, on behalf of the Council of Fashion 
Designers of America. The CFDA is the leading trade 
organization representing the American fashion industry. Over 
85 percent of its members are small businesses that are 
creating jobs across the country, as fashion has grown to a 
$340 billion industry in the United States.
    My design firm, Proenza Schouler, began as a senior project 
simply at Parsons School of Design. In 1998, I met my design 
partner, Jack McCollough, who is here today. In our senior year 
at Parsons, we designed our first collection. And the entire 
collection was, remarkably, bought by Barney's New York. As a 
result, at the age of 23, we launched our independent label, 
Proenza Schouler, which is named after our mother's maiden 
names.
    I would like to thank the Committee for taking up the 
important issue of fashion piracy in this legislation. The 
fashion business is already a tough business, and it is getting 
tougher because of piracy. It takes tens of thousands of 
dollars to start a business and even more to sustain it. Just 
one of our collections--and we produce four collections a 
year--cost about $3.8 million. The cost of a typical show is 
approximately $320,000. So you can see a significant amount of 
money has been spent before a designer has received their first 
order.
    As designers, we expect many challenges. And we can handle 
most of them. However, we are helpless against copyists who 
prey on our ideas. Established or undiscovered, all designers 
have been touched by fashion design piracy. Fashion design is 
intellectual property that deserves protection.
    Fashion is different from basic apparel. Our designs are 
born in our imaginations. We create something from nothing at 
all. But by far, the majority of apparel is based on garments 
already in the public domain. Nothing about this proposed 
legislation will change that. Nobody will ever be able to claim 
ownership of a T-shirt or something as simple as a pencil 
skirt.
    When designers produce basic garments that complement their 
original designs in their collection, we know the difference 
between that and what is new. And so do the design pirates. 
This bill is intended to protect only those designs that are 
truly original.
    Our PS 1 satchel has been knocked off repeatedly. We have 
attempted to assure our rights and fight this piracy, but 
without success, because, unfortunately, it is currently legal 
under U.S. law to pirate a design that happens to be the key to 
our business. Every other developed country other than China 
has a law on the books to protect fashion, except the U.S. As a 
result, the U.S. has become a haven for copyists who steal 
designers' ideas and sell them as their own with no fear of 
consequences. It has also become the weak link of international 
IP protection and the first if not only market for Chinese 
exporters of pirated designs. This is completely unacceptable.
    The problem is worsening with new technologies. Today, 
digital images from runway shows in New York or red carpet in 
Hollywood can be uploaded to the Internet within minutes, 
viewed at a factory in China, and be copied and offered for 
sale online within days, which is months before the designer is 
able to deliver the original garments to stores.
    Piracy can wipe out young careers in a single season. The 
most severe damage from lack of protection falls upon emerging 
designers, such as ourselves, who everyday lose orders and 
potentially our entire businesses. While salvage designers and 
large corporations with wide recognized trademarks can better 
afford to absorb these losses caused by copying, very few small 
businesses can compete with those who steal their intellectual 
capital. It makes it harder for young designers to start up 
their own companies. And isn't that the American Dream?
    Ever designer must develop their own DNA in order to make a 
lasting and recognizable impact on consumers. It is like 
developing their hit song. Imagine if a starting songwriter's 
first song was stolen and recorded by someone else, with no 
credit to the songwriter. And worse, it becomes a hit. They 
hear it on the radio every day, and they are never credited. 
That is what happens to many young designers whose ideas are 
stolen and rendered by others. It is very hard to survive when 
you become the victim of this type of theft.
    I thought it would be helpful to talk a little bit about 
the economics of the industry. Designers don't make a profit 
selling a small number of high-priced designs, but only after 
they offer their own more affordable ready-to-wear lines based 
on their high-end collections. Just like other businesses, they 
can lower their prices based on volume. Design piracy makes it 
difficult for a designer to move from higher-priced fashion to 
developing affordable renditions for a wider audience. It also 
makes it impossible to sell collections to stores when the 
clothes have already been knocked off for less. And licensing 
deals are then no longer an option. In other words, fashion 
designers should have the chance to knock off their own designs 
before others do it for them.
    Proenza Schouler is an example of successful licensing 
deals. Several years ago, we designed a collection for Target. 
There are many more examples of successful partnerships between 
American designers and large American retailers, including 
discount retailers. There is no reason that real innovation, 
rather than knockoffs, shouldn't be available for everyone. The 
average consumer can wear affordable new designs created by 
true designers rather than poor copies of the real thing made 
by pirates in China.
    In order for this bright future to happen, we desperately 
need the ID3PA passed into law. The ID3PA has been narrowed 
significantly from previous Congresses. Apparel manufacturers 
had legitimate concerns, so designers began negotiations with 
the association representing U.S. apparel and footwear 
manufacturers, the AAFA. We are pleased that the results of 
those negotiations is the legislation recently introduced.
    We will need this bill to be enacted. Our industry is 
growing opportunities all across the country and many in your 
districts. We can't compete against the pirates. And piracy is 
worsening. Without this legislation, this creativity and 
innovation that has put American fashion in the position of 
leadership will dry up. We ask you to please pass this 
legislation quickly. Thank you for your time.
    [The prepared statement of Mr. Hernandez follows:]
                Prepared Statement of Lazaro Hernandez, 
             Fashion Designer & Co-Founder, Proenza Shouler
                              introduction
    Good morning Chairman Goodlatte, Ranking Member Watt and other 
Members of the Subcommittee. I am pleased to be here today to testify 
in support of the Innovative Design Protection and Piracy Prohibition 
Act, or ID3PA, on behalf of the Council of Fashion Designers of America 
(CFDA). CFDA is a leading trade organization representing the American 
fashion industry. Our members are prominent household names and 
primarily up and coming talent. The vast majority--over 85%--are small 
businesses. These small businesses are creating jobs across the country 
as fashion has grown to a $340 billion industry in the U.S. The CFDA 
also counts among its fashion constituents publishing, communications, 
retail, manufacturers and production whose success is contingent on the 
success of designers.
    My design firm, Proenza Schouler, began simply as a senior project 
at Parsons School of Design. It was there that, in 1998, I met my 
design partner Jack McCollough. For three years we each designed 
independently. During those years we were fortunate to have our talent 
cultivated by some of the great names in the fashion industry; Jack was 
mentored by Marc Jacobs, I by Michael Kors. In our senior year at 
Parsons, we designed our first collection. It received the Golden 
Thimble award for best student collection and remarkably, the entire 
collection was bought by Barneys New York. As a result, at the age of 
23, we launched our own independent label, Proenza Schouler, named 
after our mothers' maiden names.
    In just five years, we grew from a company of three people to fifty 
with total annual operating costs of $15.2 million. Ours is not a 
typical story and it may sound like success came easily for us. It 
didn't. Proenza Schouler is the result of tens of thousands of hours of 
very hard work, a lot of determination, talent and a little luck.
                     costs of the fashion business
    The fashion business is a tough business. With each new season, 
designers put their imagination to work, and their resources at risk. 
It takes tens of thousands of dollars to start a business and even more 
to grow and create new collections and shows to showcase them. Just one 
of our collections--and we produce 4 collections a year--costs $3.8 
million. The cost of a typical show is approximately $320,000. So, 
before a designer has even received that first order, they've spent a 
significant sum of money.
    As designers we expected many of the challenges we face; the 
challenges of securing funding, convincing retailers to carry our 
collections, meeting deadlines, delivering our clothes in time to 
stores, finding studio space, attracting talented employees. We can 
handle all of those. However, we are helpless against copyists who prey 
on our ideas. Our story of long hours and sacrifice, pinching pennies 
to grow a business, is the same story told by countless small designers 
who are working as entrepreneurs to build businesses based on their own 
intellectual capital. We were fortunate to win awards and gain 
notoriety early but there are countless, undiscovered small designers 
across America working in their studios waiting to have someone buy 
their clothes or accessories. Established or undiscovered--we all have 
been touched by fashion design piracy. We luckily survived despite its 
disastrous effects, but many colleagues whose names you will never 
hear, had to close down.
             fashion, inspiration and intellectual property
    I thought it might be helpful to describe the fashion design 
process and how it is so much like other creative pursuits that today 
enjoy copyright protection. Fashion is not protected under current law 
because of the general rule exclusion of useful articles from the scope 
of copyright protection. In other words, we all must wear clothes. 
While there are other means of protecting various components of 
intellectual property relative to fashion, the protection of fashion 
design falls between the cracks: neither trademark (protecting the 
brand) or trade dress (requiring such recognition as constituting 
secondary meaning), or design patent (which involves such a lengthy 
process that it offers no protection against the fast creative fashion 
cycle) provide adequate protection.
    But designing a fashion collection is no different from the 
intellectual process involved in creating a painting or a song except 
perhaps its lengthy process. The development of a collection usually 
begins 10 months before it is launched. We draw inspiration from the 
world around us. Personally, we do research and development, not in a 
lab, but through the cultures we observe through travel, the books we 
read or the music we listen to. For example, work on our fall 
collection took place in the American West. We spent time in Wyoming, 
Colorado and New Mexico exploring Native American history and their 
crafts and were inspired by Navajo textiles. When you look at our 
designs you won't see knockoffs of Navajo crafts. Instead you will see 
that we incorporated their feel and some of their elements to create 
our own originals.
    Our designs are born in our imaginations, unlike the production of 
most basic apparel. While we create something from nothing, by far, the 
majority of apparel is based on garments already in the public domain. 
Nothing about the proposed legislation will change that. Nobody will 
ever be able to claim ownership of the t-shirt or the pencil skirt. 
When designers produce basic garments to complement the original 
designs in our collections and create complete outfits, we know the 
difference between what is new and what is based on a common template--
and so do design pirates. The bill is intended to protect only those 
designs that are truly original.
           new technologies & lack of a u.s. law fuels piracy
    In recent years America's fashion designers have become some of the 
most sought after throughout the world. The level of originality seen 
on runways each season continues to surpass and surprise. However, with 
the accolades American designers are receiving comes the devastating 
blow of fashion piracy.
    One of our most popular designs has unfortunately become a typical 
example of the problem we highlight. Our PS1 satchel is one of the most 
knocked off designs on the market today. We have attempted to assert 
our rights and fight this piracy--but without success--because 
unfortunately it is currently legal under U.S. law.
    Current U.S. intellectual property law supports copyists at the 
expense of original designers, a choice inconsistent with America's 
position in fields of industry like software, publishing, music, and 
film. Internationally, design protection is the norm. Every other 
developed country, other than China, has a law on the books to protect 
fashion except the U.S. As a result the U.S. has become a haven for 
copyists who steal designers' ideas and sell them as their own with no 
fear of consequences. It also has become the weak link of international 
IP protection and the first, if not only, market for Chinese exporters 
of pirated designs.
    With every passing year, the problem of copying worsens. It is 
growing with new technologies. Just as the Internet has transformed 
industries like music, books and motion pictures, and created new 
opportunities for piracy, it has done the same for fashion. Today, 
global changes in both the speed with which that information is 
transferred and the location where the majority of clothing and 
textiles are produced have resulted in increased pressure on creative 
designers. Digital photographs from a runway show in New York or a red 
carpet in Hollywood can be uploaded to the Internet within minutes, the 
360 degrees images viewed at a factory in China, and copies offered for 
sale online within days--months before the designer is able to deliver 
the original garments to stores.
                         piracy harms designers
    I have heard the argument that somehow fashion piracy doesn't harm 
the industry, but rather helps it. This is akin to the concept that 
stealing from legitimate owners encourages them to replace their 
property and thus boosts the Gross National Product. Those suggesting 
that it helps designers to have their works knocked off have certainly 
never stood in my shoes. Far from helping the designer, design piracy 
can wipe out young careers in a single season. The most severe damage 
from lack of protection falls upon emerging designers, who every day 
lose orders, and potentially their businesses, because copyists exploit 
the loophole in American law. While established designers and large 
corporations with widely recognized trademarks can better afford to 
absorb the losses caused by copying, very few small businesses can 
compete with those who steal their intellectual capital.
    Every designer must develop their own DNA in order to make a 
lasting and recognizable impact on consumers. It's like developing 
their ``hit song'' or anthem. Imagine if a starting songwriter's first 
song was stolen and recorded by someone else with no credit to the 
songwriter and worse, it becomes a hit. They hear it on the radio every 
day and they are never credited. That's what happens to many young 
designers whose ideas are stolen and rendered by others. It's very hard 
to survive when you become a victim of this type of theft.
                       the economics of fashion--
                licensing deals make fashion accessible
    Some designers make their names in high end collections, where they 
sell a very small number of rather expensive designs. While the designs 
can be high priced, the designer never recoups development costs for 
the designs because he or she sells so few garments. Designers are only 
able to recoup their investments when they later offer their own 
affordable ready-to-wear lines based on those high end collections. 
They then can lower the prices at which their designs are sold because 
they sell more of them. Just like other businesses--it's dependent on 
volume. Design piracy makes it difficult for a designer to move from 
higher priced fashion to developing affordable renditions for a wider 
audience. It also makes it impossible to sell collections to stores 
when the clothes have already been knocked off. Licensing deals are 
then no longer an option. In other words, fashion designers want the 
chance to knock off their own designs before others do it for them.
    Proenza Schouler is an example of successful licensing deals. 
Several years ago we designed a capsule collection of clothing and 
accessories for the Target GO International campaign. To those who 
argue that protecting fashion will drive up costs, accessibility and 
ultimately harm consumers, our experience disproves this myth. In the 
past few years we have seen a proliferation of partnerships between 
American designers and large American retailers including discount 
retailers. In addition to us, some other American designers who have 
collaborated with such retailers are Isaac Mizrahi at Target, Isabel 
Toledo at Payless, Norma Kamali at Wal-Mart, Mary Kate and Ashley Olsen 
at JC Penney, Billy Reid at J.Crew, Diane von Furstenberg at Gap and 
Vera Wang at Kohl's. These stores have all seen the value of making the 
works of American designers available in their stores through licensing 
deals so that designers get paid for their innovation and creativity. 
This proves that the real growth of American fashion is in the lower to 
mid price range.
    This bill will make it easier for all designers, not just the big 
names, to make their designs available at a variety of prices in a 
variety of stores. There are some in the industry who have become 
comfortable with the status quo. They see no need for a new law and 
fear that they might have to change the way they do business. To those 
companies I say, talk to all of the small designers put out of business 
by your current practices and business models.
    There is no reason that real innovation, rather than knockoffs, 
shouldn't be available for everybody. Consumers can have more choices 
precisely because of innovation. The average consumer can wear new 
designs, created by true designers rather than poor copies of the real 
thing made by pirates in China. As I stated before, fashion in America 
is a $340 billion industry, in n this economic downturn we should 
encourage growth in this sector. More competition and growth won't 
occur simply by everybody distributing the identical product around the 
world because copying isn't illegal. Growth won't occur because 
somebody can steal a designer's creation and then go sell it for a 
third of the price. Because innovation is the fuel of the U.S. economy, 
in the long term, lack of protection will shrink American businesses 
and provoke the loss of American jobs.
                    the id3pa is desperately needed
    Congress has passed laws to protect against counterfeits. One in 
three items seized by U.S. Customs is a fashion counterfeit. Congress 
has made it illegal to traffic in the labels that are used in 
counterfeit goods. But a copy of a design is really a counterfeit 
without the label. If no design piracy existed, there could not be 
counterfeiting. Both must be addressed or else the small designer with 
no brand recognition is left defenseless to the devastating problem of 
piracy, leaving only famous brands and big companies protected.
    It is for all these reasons that we are here today to strongly 
support your efforts to pass the Innovative Design Protection and 
Piracy Prevention Act.
    The legislation will provide three years of protection to designers 
for original designs. That is far less than the life of the author plus 
70 years granted to other copyrighted works. However, because of the 
unique seasonality of the fashion industry, a shorter term of 
protection is reasonable. In three years a designer will have time to 
recoup the work that went into designing the article, develop 
additional lines, or license lines to retailers.
    The CFDA first came to Congress five years ago to ask for a new 
law. At the time we heard legitimate criticisms from apparel 
manufacturers who were fearful of the impact of new legislation. 
Designers began negotiations with the association representing U.S. 
apparel and footwear manufacturers--the AAFA. We are pleased that the 
result of those negotiations is the legislation recently introduced by 
Chairman Goodlatte, and Representatives Nadler, Sensenbrenner, Coble, 
Sanchez, Issa, Jackson Lee, Waters and others. In short, we:

          Addressed concerns that a new law could encourage 
        needless and expensive litigation by crafting a special pre-
        trial proceeding--pleading with particularity--during which a 
        plaintiff would have to prove the copied design is protected 
        and that the alleged copyist had the opportunity to have seen 
        the design or an image of it. Designers as well as 
        manufacturers had concerns that they could be on the receiving 
        end of lawsuits and this new procedure provides important 
        protection.

          Included penalties for false representations to deter 
        frivolous lawsuits.

          Protected only unique and original designs. Anything 
        already created by the time of its enactment would be in the 
        public domain and available to copy. It is a high standard to 
        qualify for protection, amounting to originality plus novelty. 
        New and unique designs will qualify for protection, while 
        everything else remains in the public domain.

          Addressed concerns that it is too difficult to tell 
        if something is infringing by limiting the scope to copies that 
        are ``substantially identical.''

          Included the doctrine of independent creation as a 
        defense to infringement. This makes clear that if someone 
        independently designs an article of apparel that meets the 
        standard for infringement, (without any knowledge of the 
        protected design) no infringement occurs.

    I am not a lawyer but we have relied on one who is an expert in 
fashion law heavily during this process, Professor Susan Scafidi of 
Fordham, the academic director of the Fashion Law Institute. As she 
told this subcommittee in 2006, the first version of this bill was ``a 
measured response to the modern problem of fashion design piracy, 
narrowly tailored to address the industry's need for short-term 
protection of unique designs while preserving the development of 
seasonal trends and styles.'' The lengthy negotiations between the CFDA 
and the AAFA have resulted in an even more narrowly and precisely 
tailored way to support the entire American fashion industry.
    We need your help to get back to the business of designing. We're 
all entrepreneurs who create our fashion with the hope of designing 
something that will catch on and capture the imagination of U.S. 
consumers. Success that starts in our individual design studios grows 
opportunities all across the country for fabric manufacturers, 
printers, pattern makers, the shippers and truckers who transport the 
merchandise, design teams, fabric cutters, tailors, models, 
seamstresses, sales people, merchandising people, advertising people, 
publicists, and those who work for retailers. This is a big employment 
business today. We are creating jobs across this country.
    However, we can't compete against piracy. Without this legislation, 
the creativity and innovation that has put American fashion in a 
leadership position will dry up. Innovation is an investment but we 
can't innovate without protection and urge you to quickly pass this 
legislation. Thank you for your time.
                               __________

    Mr. Goodlatte. Thank you, Mr. Hernandez.
    Before we go on to Professor Suk, I want to acknowledge the 
presence of the Ranking Member. The gentleman from North 
Carolina, Mr. Watt--the Ranking Member of the full Committee 
and I have submitted our testimony for the record.
    If you are satisfied with that, we will proceed to the next 
witness.
    [The prepared statement of Mr. Watt follows:]
    
    
    
                               __________

    Mr. Conyers. Mr. Chairman, can we recognize the presence of 
Judy Chu as well?
    Mr. Goodlatte. We absolutely welcome her and the other 
gentlewoman from California, Ms. Lofgren.
    And the gentleman from Ohio, Mr. Chabot.
    We will now turn to Professor Suk.
    Welcome.

          TESTIMONY OF JEANNIE SUK, PROFESSOR OF LAW, 
                       HARVARD LAW SCHOOL

    Ms. Suk. Chairman Goodlatte, Ranking Member Watt, and 
Members of the Subcommittee, thank you for holding this hearing 
and for inviting me to speak to you today.
    I am Jeannie Suk, professor at Harvard Law School, where I 
conduct research on law and innovation in the fashion industry. 
My testimony today is based on my scholarly work with Professor 
Scott Hemphill of Columbia Law School, and I have submitted our 
article, ``The Law, Culture, and Economics of Fashion,'' which 
was published in the Stanford Law Review. I have submitted that 
along with my written testimony.
    Like all of the arts, fashion design involves borrowing and 
influence from existing works and themes in our culture. Even 
the most original creation in the arts is indebted to prior 
work. And so, appropriately, Federal copyright law does not 
consider most of the similarity or even copying in the arts to 
be copyright infringement.
    When there is a trend in fashion, just as in movies, books, 
music, and culture, many people are converging on similar ideas 
through conscious and unconscious influence by work from the 
past and the present.
    But these common forms of borrowing do not require blatant 
replication of another's work product, a practice that takes 
profits from the original producer and thus undermines the 
incentive to create that Federal copyright law aims to foster.
    The ID3PA protects the incentive to create but also 
safeguards designers' ability to use a large domain of creative 
influences and to participate in fashion trends. Deviating from 
the ordinary copyright infringement standard with a much 
narrower substantially identical standard for infringement, the 
Act allows plenty of room for designers to draw inspiration 
from others, much more room than producers of books, movies, 
and music currently have. At the same time, it prohibits 
copyists from selling near exact copies of original designs. In 
short, the ID3PA strikes an effective balance between the 
significant public interest in incentivizing the creation of 
original design and the equally important public interest in 
leaving designs largely available for free use.
    A key distinction to recognize is the distinction between 
products that are inspired by a designer's work and products 
that replicate or knock off a designer's work without any 
effort at modification. For simplicity, I am going to call 
these ``inspired-bys'' and ``knockoffs.''
    If you have difficulty telling the difference between two 
designs, you are looking at a copyist's
    Knockoff, not an inspired-by. This is a crucial difference 
as a matter of innovation policy because knockoffs cannot 
plausibly claim to be forms of innovation, whereas inspired-bys 
can. Knockoffs directly undermine the market for the original 
designs and reduce the designer's incentive to innovate in ways 
that inspired-bys do not.
    The ID3PA is therefore a highly moderate bill that only 
targets businesses that produce and sell knockoffs of original 
designs. The vast majority of the apparel industry will not be 
affected. If retailers are not selling knockoffs, they have 
nothing to fear from this bill. And even if they are, they are 
still safe if the design that they knock off is in the public 
domain or is not itself original, or if they are unaware that 
the items that they sell are knockoffs. And even if the copied 
design is original, knockoff sellers can simply wait 3 years 
for the copyright term on a particular original design to end.
    The ID3PA reflects a judgment that knockoffs are not 
necessary to the business model of high-volume sellers of
    on-trend clothing at a low price point. This judgment is 
correct. Current knockoff sellers would need to adapt their 
businesses to focus on selling inspired-bys instead. They would 
have to innovate and invest somewhat in design rather than only 
replicate others' work in full.
    Does this mean consumers would no longer have low-price 
access to designs by great designers? No. Many extremely 
talented designers, such as Mr. Hernandez and his colleagues, 
have partnered with high-volume retailers, such as Target and 
H&M, to offer their designs in large numbers at a low price. 
The ID3PA encourages this kind of partnership because this 
allows designers to profit from the creative labor they invest 
in their original designs. If retailers wish to sell these 
designs with minimal or no modification, under the Act, they 
would have to reach an arrangement with the designer to do so, 
or face liability.
    Our current intellectual property system unintentionally 
creates an unfortunate bias in favor of the most established 
famous fashion firms and against smaller emerging designers who 
have the most potential for innovation in design. Established 
firms like Louis Vuitton have the benefit of trademark and 
trade dress protection. Their advertising promotes and protects 
their brand image, as does the use of high-end materials and 
workmanship that are very difficult to copy at a low cost. They 
have a clientele that does not often overlap with the discount 
shoppers. And all of this means that the established luxury 
firms suffer comparatively less from the design knockoffs than 
their smaller, not as established counterparts.
    Emerging designers do not have the advantages just 
described. Their products are not well enough recognized to 
qualify for trademark or trade dress protection, nor do they 
have the money to advertise and reinforce their brand image. 
But what these designers do have to offer consumers is their 
innovative designs. They cannot command the same prices as the 
famous luxury firms. Thus, emerging designers are more likely 
to be in competition with their copyists as their consumer 
bases are more likely to overlap. A design that retails for 
hundreds instead of thousands is within the reach of many 
consumers who might well opt for the still less expensive 
knockoff. Thus, knockoffs are particularly devastating for 
emerging and mid-range designers who face significant entry 
barriers and struggle to stay in business.
    This act helps level the playing field, which is currently 
skewed to the protection of luxury and brands rather than 
innovation in design. The ID3PA strikes an appropriate balance 
between giving incentives to create and leaving designers free 
to draw upon influences. If enacted, it would serve its purpose 
to push the fashion industry toward innovation rather than 
substantially identical copying. It represents a wisely 
balanced and a carefully tailored response to the problems of 
this industry.
    Thank you, and I look forward to your questions.
    [The prepared statement of Ms. Suk follows:]
         Prepared Statement of Jeannie Suk, Professor of Law, 
                           Harvard Law School
    Chairman Goodlatte, Ranking Member Watt, and Members of the 
Subcommittee, I am Jeannie Suk, Professor of Law at Harvard Law School. 
Thank you for this opportunity to testify about the Innovative Design 
Protection and Piracy Prevention Act (``IDPPPA''). My remarks draw on 
my ongoing research with Professor Scott Hemphill of Columbia Law 
School on law and innovation in the fashion industry.\1\ Along with my 
testimony, I submit our Stanford Law Review article, The Law, Culture 
and Economics of Fashion. We have also written on the Act's 
predecessors: two iterations of the Design Piracy Prohibition Act,\2\ 
and the Innovative Design Protection and Piracy Prevention Act 
introduced in the Senate last Term.\3\ I submit one of these articles, 
published in the Wall Street Journal.
---------------------------------------------------------------------------
    \1\ C. Scott Hemphill & Jeannie Suk, The Law, Culture, and 
Economics of Fashion, 61 Stan. L. Rev. 1147 (2009); C. Scott Hemphill & 
Jeannie Suk, Reply: Remix and Cultural Production, 61 Stan. L. Rev. 
1227 (2009); C. Scott Hemphill & Jeannie Suk, The Squint Test, How to 
Protect Designers like Jason Wu from Forever 21 Knockoffs, Slate, May 
13, 2009, http://www.slate.com/id/2218281/(last visited Jul. 10, 2011); 
C. Scott Hemphill & Jeannie Suk, Schumer's Project Runway, Wall Street 
Journal, Aug. 24, 2010, available at http://online.wsj.com/article/
SB10001424052748704504204575445651720989576.html (last visited Jul 10, 
2011).
    \2\ Design Piracy Prohibition Act, S. 1957, 110th Cong. (2007); 
Design Piracy Prohibition Act, H.R. 2033, 110th Cong. (2007)
    \3\ Innovative Design Protection and Piracy Prevention Act, S. 
3728, 111th Cong. (2010).
---------------------------------------------------------------------------
    Like all of the arts, fashion design inevitably involves degrees of 
borrowing and influence from both specific existing works and general 
themes in our culture. Even the most original creative work in the arts 
has important debts to prior work. Appropriately, federal copyright law 
does not consider most of the borrowing and similarity that occurs in 
the course of creative production to be copyright infringement. A trend 
in fashion--just as in movies, books, music, and culture--is the 
convergence on similar themes by many different producers who are 
consciously and unconsciously influenced and inspired by other work 
from the past and the present. But these common forms of borrowing in 
the arts do not require blatant replication of another's work, a 
practice that most directly takes profits from the original producer 
and thus most undermines the incentive to create that federal copyright 
law aims to foster.
    The goal of a law addressing copying in fashion design should 
indeed be to give an incentive to create, but also to safeguard 
designers' ability to draw upon a large domain of creative design 
influences and to participate in fashion trends. The IDPPPA, in its 
current form, achieves this goal. By deviating from the ordinary 
copyright infringement standard with the much narrower ``substantially 
identical'' standard for infringement, it allows plenty of room for 
designers to innovate by drawing inspiration from others--much more 
room than producers of books, music, and film currently have. At the 
same time, it prohibits copyists from making exact or near-exact copies 
of original designs. It rewards designers who produce original work 
with legal protection against copyists, but limits frivolous litigation 
through heightened pleading requirements. It protects creative 
designers' ability to profit from their original work, but maintains, 
or even expands, consumer choice. In short, the IDPPPA strikes an 
effective balance between the significant public interest in 
incentivizing the creation of original design and the significant 
public interest in making existing design vocabularies largely 
available for free use.
                          effects on retailers
    A key distinction that must frame an analysis of the IDPPPA is the 
difference between products that are inspired by a designer's work and 
products that replicate a designer's work without effort at 
modification. The IDPPPA most squarely affects clothing producers and 
sellers known as ``fast fashion'' firms. Many simply think of these 
firms as blind copiers of the latest trendy designs, but fast fashion 
firms actually fall into two distinct categories: designers and 
copyists. Fast fashion designers, like H&M and Zara, usually take the 
latest trends and adapt or interpret them. The result is a relatively 
inexpensive product that is clearly inspired by, but not identical to, 
other designers' products. By contrast, fast fashion copyists, like 
Forever 21, choose particular designs to copy, and replicate those 
specific designs as best they can. These firms make no effort to modify 
the original design.
    I am going to call fast fashion designers' products ``inspired-
bys,'' and fast fashion copyists' products ``knockoffs.'' Put simply, 
if you have difficulty telling the difference between two designs, you 
are looking at a copyist's knockoff, not a designer's inspired-by. The 
difference between inspired-bys and knockoffs is crucial. It is a 
distinction that can be easily grasped by designers, retailers, and 
consumers. We need to allow the inspired-bys while stopping the 
knockoffs, which directly undermine the market for the original designs 
that copyists target and which reduce the incentive to innovate. The 
IDPPPA's narrow infringement standard is designed to do just that--to 
distinguish between those who engage in interpretation of others' work 
and participate in a fashion trend, and those who slavishly copy a 
particular original design.
    Retailers who sell clothing that is on trend but not an exact copy 
need not fear this Act. But the IDPPPA would undoubtedly harm those 
retailers whose businesses rely upon selling exact knockoffs of 
particular designs. This is what the Act is intended to do. Those 
retailers would no longer be able to avoid design costs by freely 
taking another's design in its entirety. Current retailers of copyists 
would have to adapt to the IDPPPA's requirements. They could do so in 
several ways. First, knocking off is not necessary to the business 
model of high-volume sellers of on-trend clothing at a lower price 
point. Sellers of knockoffs could become sellers of inspired-bys. They 
could employ designers--or direct the designers they currently employ--
to engage and modify other designers' original designs. Such work would 
not be infringing, as it would not be ``substantially identical'' to a 
protected original design. And even where the copies are substantially 
identical, the copied design may not meet the high standard for 
originality that is needed for protection under the IDPPPA. Second, 
fast fashion firms could partner with designers, and sell the resulting 
products inexpensively. Fast fashion firms do engage in many such 
partnerships already. The IDPPPA would bring the sellers of knockoffs 
into the fold such that they would need the designers' authorization to 
make knockoffs of original designs.
    While our current intellectual property regime does not provide 
protection for fashion design, it does provide protection for fashion 
firms' trademark and trade dress. Large, well-known firms like Louis 
Vuitton and Chanel have the benefit of trademark and trade dress 
protection. Their advertising promotes and protects their brand-image, 
as does the use of high-end materials and workmanship that are 
difficult to copy at low cost. They also have a wealthy clientele that 
does not often overlap with the shoppers at Forever 21. All this means 
that established luxury firms suffer comparatively less from the 
practice of knocking off than their smaller, not as famous 
counterparts. Young and emerging designers do not have all the 
advantages just described. Young designers' products are generally not 
well enough recognized to qualify for trademark or trade dress 
protection. Nor do they have the money to advertise and reinforce their 
brand image. They cannot command the same premium for their products as 
the famous high-end luxury firms. Thus emerging designers are more 
likely to be in direct competition with their copyists, as their 
customer bases overlap. A designer's dress that retails for $300 
instead of $3000 is within the reach of many consumers who might well 
opt for the still less expensive knockoff. Thus, knockoffs are 
particularly devastating for emerging designers, who face significant 
entry barriers and struggle to stay in business. This Act would help 
level the playing field with respect to protection from copyists and 
allow more such designers to enter the market, create, and flourish. 
Such an increase in emerging and smaller designer market participation 
would ultimately benefit retailers who sell the smaller designers' 
products, such as department stores.
    That many less-established designers may lack resources to hire 
lawyers and sue copyists does not change this analysis. First, even 
under current law, smaller designers already do file suit against 
copyists, attempting to cobble together some semblance of protection 
against design copying by relying on currently existing intellectual 
property protections in trademark and copyright. There is little reason 
to doubt that small designers would utilize protection for design, 
which is after all what they are really after in the lawsuits they 
currently file. Second, litigation by large fashion firms against 
copyists making knockoffs could have positive collateral consequences 
for small designers. For instance, if Forever 21 had to change its 
business model because it could no longer create replicas of products 
by Louis Vuitton--which does have the resources to litigate under the 
IDPPPA--that change in the culture and norms of fashion design would 
also work to small designers' benefit. Such enforcement by larger 
plaintiffs, in other words, may produce systemic changes that would 
work to smaller entities' advantage. Finally, while small designers 
often lack the resources to hire lawyers on an hourly basis, nothing in 
the Act prohibits contingent fee arrangements. Such arrangements would 
allow small designers to vindicate their rights, even if they could not 
afford to pay a lawyer's usual hourly fees.
                       effects on consumer choice
    Unquestionably the IDPPPA would change the consumer's playing 
field. Because fast fashion copyists could no longer sell inexpensive 
knockoffs without authorization, consumers may lose the low-price 
alternative knockoffs now offered. In an IDPPPA regime, such consumers 
may not have access to those exact designs at the knockoff price. For 
some, this will seem a significant limitation, especially since the 
customer who shops for the knockoff of a Louis Vuitton item is not the 
same customer who would buy the genuine article.
    This limitation, however, is not as substantial as it may appear. 
First, the IDPPPA's protections would move fast-fashion designers to 
engage with those designs--that is, innovate--rather than simply 
replicate them. Indeed, the modifications copyists would be required to 
make under the IDPPPA would serve to expand consumer choice as high-
volume sellers shifted their efforts toward inspired-bys and away from 
knockoffs. The increase in the variety of inspired-by designs would 
more than offset the loss of choice from prohibiting knockoffs.
    Second, many high-end designers have partnered with higher-volume 
discount retailers such as Target and H&M to offer their goods at a 
lower price point. The IDPPPA encourages this kind of partnership. 
Under the Act, discount retailers would have even more incentive to 
pair with designers if they wished to sell others' designs with minimal 
or no modification.
    Therefore, while the IDPPPA would restrict consumer choice in terms 
of easy availability of unauthorized knockoffs at a low price, it would 
increase consumer choice in terms of selection of goods. Fast-fashion 
copyists would have to become fast fashion designers who engage with 
designers' output, and thereby produce new options for consumers.
                         effects on litigation
    Last Term, when the Senate Judiciary Committee considered a version 
of the IDPPPA identical to this Act, one Member raised the concern that 
the IDPPPA might produce a flood of litigation.\4\ The Member pointed 
to two elements of the Act in support of this concern. First, the Act 
gives designers the ability to protect their designs, without any 
registration requirement. Hence, any designer could claim that any 
design was protected, and so could attempt to litigate under the 
statute. Second, some of the statute's language--specifically the 
``substantially identical'' and ``non-trivial'' requirements--may 
require significant judicial interpretation. Hence, designers and 
copyists alike would have an incentive to litigate, in an effort to 
define their rights and liabilities under the statute. Combined, the 
Member suggested, these factors might lead to a flood of litigation in 
the already busy federal courts.
---------------------------------------------------------------------------
    \4\ United States Senate, Committee on the Judiciary, Executive 
Business Meeting 53:14 (Dec. 1, 2010), http://judiciary.senate.gov/
hearings/hearing.cfm?id=e655f9e2809e5476862f735da
165262f (last visited Jul. 10, 2011) (comments of Senator John Cornyn).
---------------------------------------------------------------------------
    This concern is overstated. First, the Act requires that plaintiffs 
plead each element of a design infringement claim with particularity. 
This requirement will curtail many frivolous lawsuits before they 
begin, and will cull others out at an early stage. Second, the Act's 
``substantially identical'' standard for infringement is a high bar, as 
is the Act's stringent standard for originality. Litigation under the 
Act will be concentrated around knockoffs, leaving inspired-bys 
relatively untouched. Even under the current intellectual property 
regime, we see far greater numbers of lawsuits by designers against 
sellers of knockoffs than against sellers of inspired-bys. From 2003 to 
2008, at least fifty-three lawsuits alleging trademark and copyright 
infringement were filed against Forever 21.\5\ By contrast, two were 
filed against H&M and none were filed against Zara.\6\ Under the 
IDPPPA, we could similarly expect to see sellers of inspired-bys remain 
relatively untouched, and the sellers of knockoffs would either have to 
adapt their business strategy or face liability.
---------------------------------------------------------------------------
    \5\ The Law, Culture, and Economics of Fashion, supra note 1, at 
1173.
    \6\ Id.
---------------------------------------------------------------------------
    Nor is it likely that large fashion firms, recognizing less-
established designers as competition, would succeed in driving those 
designers out of business by saddling them with litigation costs 
through baseless suits. IDPPPA plaintiffs must plead with particularity 
that the allegedly infringing article is ``substantially identical in 
overall visual appearance to . . . the original elements of a protected 
design,'' or is not ``the result of independent creation.'' To plead 
with particularity that a copy is ``substantially identical'' when the 
allegedly offending garment is not easily mistaken for the original 
would be extremely difficult. A baseless suit would be subject to early 
dismissal. Moreover, a suit filed simply to harass or lacking the 
requisite particular facts, might lead to sanctions against the firm 
and its lawyers.\7\ These factors--the ``substantially identical'' 
standard, the heightened pleading requirement, and the prospect of 
sanctions--create a strong deterrent against suits meant to drive 
upstart designers out of business by imposing litigation costs.
---------------------------------------------------------------------------
    \7\ See Fed. R. Civ. P. 11(b)(1), (c) (imposing sanctions for 
complaints presented for an improper purpose).
---------------------------------------------------------------------------
    Of course, there would be litigation under the IDPPPA, and courts 
would have to interpret the language in the Act and sometimes draw 
difficult lines. But this is the natural consequence of Congress's 
passing any law. The IDPPPA's internal controls on litigation would 
discourage litigiousness and stem the flood of litigation that some 
fear.
    The IDPPPA strikes an appropriate balance between giving incentives 
to create original designs and leaving designers free to draw upon 
influences, inspirations, and trends. If enacted, it would serve its 
purpose, to push the fashion industry toward innovation rather than 
substantially identical copying. The new law would harm fast fashion 
copyists but not retailers as a whole--and even then, only by 
compelling firms to change their businesses in ways consistent with 
Act's purpose. It would increase consumers' choice of designs that are 
inspired by other designs and that participate in trends, while 
limiting their ability to buy exact knockoffs of designs. It would not 
promote unnecessary litigation, but to the contrary, represents a 
wisely balanced and carefully tailored response to the problems of a 
distinctive industry.
    Thank you for the opportunity to discuss this important Act with 
the Subcommittee. I look forward to your questions.
    Published works submitted:

  C. Scott Hemphill & Jeannie Suk, The Law, Culture, and Economics of 
        Fashion, 61 Stan. L. Rev. 1147 (2009), http://papers.ssrn.com/
        sol3/papers.cfm?abstract
        _id=1323487

  C. Scott Hemphill & Jeannie Suk, Schumer's Project Runway, Wall 
        Street Journal, Aug. 24, 2010, http://online.wsj.com/article/
        SB10001424052748704504204
        575445651720989576.html

                              ATTACHMENT 1




                              ATTACHMENT 2



                               __________

    Mr. Goodlatte. Thank you, Professor Suk.
    Professor Sprigman, welcome.

TESTIMONY OF CHRISTOPHER SPRIGMAN, PROFESSOR OF LAW, UNIVERSITY 
                   OF VIRGINIA SCHOOL OF LAW

    Mr. Sprigman. Thank you.
    I want to start by thanking the Subcommittee and especially 
Chairman Goodlatte and Ranking Member Watt for inviting me 
today. For the past 6 years, along with my friend and colleague 
Kal Raustiala from the UCLA Law School, I have studied 
innovation and competition in the fashion industry. Professor 
Raustiala and I have written an academic article on the topic 
entitled, ``The Piracy Paradox: Innovation and Intellectual 
Property in Fashion Design,'' and a followup article, ``The 
Piracy Paradox Revisited.'' I have also given testimony on this 
issue before this submitted before back in 2006. I testified in 
a predecessor to the current ID3PA.
    So I have some new data for you, but before I get
    there--and I have some slides--I want to talk about a bit 
of history. The issue of protection for fashion design is not 
new. Since the end of World War II, Congress has considered 
providing some sort of copyright protection for fashion designs 
on about a dozen occasions. And each time they declined to do 
so, I believe there was wisdom in that.
    The U.S. fashion industry has grown and thrived over the 
past half century--and it continues to do so today. Sales of 
apparel and shoes have registered virtually uninterrupted 
annual increases since 1945, growing during this period more 
than twentyfold. The fashion industry in the U.S. is a leader 
in the world. It produces a huge variety of apparel. Innovation 
occurs at a pace that is unheard of in other industries. Styles 
change rapidly. Goods are produced for consumers at every 
conceivable price point. In short, the fashion industry looks 
exactly as we would expect a healthy, competitive, creative 
industry to look.
    The important point here is that all of the fashion 
industry's growth and innovation has occurred without any 
intellectual property protection in the U.S. for its designs. 
Indeed, never in our history has Congress granted legal 
protections for designs of fashion goods. The fashion industry 
enjoys trademark protection for brands. It enjoys copyright 
protection for its fabric designs. But the shape, the cut, the 
style of a garment is not protected by copyright law or any 
other form of IP in this country.
    But unlike in the music or film or publishing industries, 
copying of fashion designs has never emerged as a threat to the 
survival of the fashion industry. And why is that? Well, it is 
because of something we all know instinctively about fashion. 
And Shakespeare, as usual, put it best: The fashion wears out 
more apparel than the man. That is, many people buy new clothes 
not because they need them but because they want to keep up 
with the latest style. And this simple truth lies at the 
foundation of the fashion industry. It makes copying an 
integral part of that industry's success.
    So why is that? Well, without copyright restrictions, 
designers are free to rework an appealing design. The result is 
fashion's most sacred concept: The trend. Copying creates 
trends. And trends are what sell fashion. Every season, we see 
designers take inspiration from others. Trends catch on. They 
become overexposed. And then they die. New designs take their 
place. This cycle is familiar. But what is rarely recognized is 
that the cycle is accelerated by the freedom to copy.
    In our articles, Professor Raustiala and I explain how 
copying and creativity actually work together in the fashion 
industry. For fashion, copying does not deter innovation. It 
speeds it up.
    Now I want to take a look at some new data that we have 
uncovered that supports our views.
    Can I have the first slide?
    So I have been working data from the Consumer Price Index, 
our government's official measure of inflation. We have been 
looking to see if the changes over time in the prices of 
apparel suggest any significant effect on the fashion industry 
from the copying of fashion designs. To do this, we collected 
data on the prices of women's dresses from 1998 to the present. 
This is hundreds of thousands of observations of prices. We 
then divided the dresses into 10 categories--we created 10 
categories ranging from the cheapest 10 percent of dresses, 
like apparel on discount racks, to the most expensive 10 
percent, like for example, Mr. Hernandez' designs.
    Here is a graph illustrating what we found. What you see is 
price stability over the entire period for every category 
except one, the top category, the most expensive women's 
dresses. What happened there? The average price of the most 
expensive 10 percent of women's dresses went up substantially 
over the data period. Now, actually, the ninth decile, which 
isn't shown here, behaved the same way as the tenth--the most 
expensive 20 percent of women's dresses have gotten much more 
expensive since 1998. Everything else has gotten cheaper or 
stayed the same.
    And what does this mean? Well, if cheap fashion copies were 
competing with the more expensive garments they are imitating, 
we would expect to see some effect on the prices of high-end 
garments. In short, competition from cheap copies would tend to 
depress the prices paid for the high-end origins. But that is 
not happening. The high-end originals are the only garments 
that have any price growth during this period. And the price 
growth of the segments is very healthy.
    This is particularly impressive when you look at this next 
graph. This is in percentage terms. We have a 250 percent price 
growth over the period for the most expensive garments. The 
second decile, the second tenth, behaves about the same. That 
means that for the top designers as well as for the entry 
designers in high-level fashion, prices are very robust.
    So the takeaway from this is I don't think the ID3PA is 
necessary. We have a healthy competitive industry. During the 
question period, I would like to explain, so I don't take too 
much time, why I think the ID3PA could cause some mischief. It 
is not only that it is unnecessary, but it could lead to a lot 
of litigation. This isn't going to create jobs, I think, except 
for lawyers. I can explain more about that if anyone cares to 
know.
    Thank you very much.
    [The prepared statement of Mr. Sprigman follows:]
    
    
                               __________

    Mr. Goodlatte. Thank you, Professor Sprigman.
    We will now turn to Mr. Courtney.
    Welcome.

  TESTIMONY OF KURT COURTNEY, MANAGER, GOVERNMENT RELATIONS, 
            AMERICAN APPAREL & FOOTWEAR ASSOCIATION

    Mr. Courtney. Thank you, Chairman Goodlatte, Ranking Member 
Watt, Ranking Member Conyers, and Members of the Subcommittee, 
for inviting the American Apparel & Footwear Association to 
testify today in support of the Innovative Design Protection 
and Piracy Prevention Act.
    My name is Kurt Courtney and I am manager of government 
relations for AAFA, where I work on a range of intellectual 
property rights issues for the apparel and footwear industry. 
My written statement goes into further detail about our 
members. But in summary, AAFA's collective membership 
represents the largest cross section of the fashion industry 
across all price points for consumers worldwide. Our industry 
accounts for more than 1 million U.S. employees and more than 
$340 billion at retail each year.
    Ensuring strong protection of intellectual property has 
always been a key priority for AAFA and its member companies. 
Our members fight endlessly to protect their trademarks and 
brand names in the U.S. And throughout the world. It is with 
this in mind that we are pleased to appear before you today.
    Mr. Chairman, in 2006, you introduced the Design Piracy 
Prohibition Act, the DPPA, which sought to offer new copyright 
protection for original fashion designs. As AAFA's legal team 
evaluated the bill, we wholeheartedly understood the narrow 
problem the legislation was trying to solve, but we 
fundamentally disagreed with its overly broad definitions, 
which industry experts and legal counsel feared would have 
opened a Pandora's box of litigation that would have been very 
detrimental to the industry.
    At that time, Mr. Chairman, we expressed these concerns to 
you and you challenged us to help develop a more targeted bill 
to protect original fashion designs and not increase the 
prevalence of lawsuits in our industry. So we went to work. In 
conjunction with the Council of Fashion Designers of America, 
CFDA, we worked with your office and New York Senator Charles 
Schumer to develop the ID3PA. This legislation represents a 
targeted approach that will solve this narrow design piracy 
problem without exposing any innocent actor in the fashion 
industry to confusing rules and frivolous legal claims.
    Throughout the process, we realize that there were a number 
of misconceptions that had to be dismissed.
    First, many in the media, academia, and even in the 
industry continue to believe that the ID3PA addresses the much 
larger and more virulent problem of trademark counterfeiting. 
It does not. By copying both trademarks and their associated 
designs, whether those designs are original or not, trademark 
counterfeiters attempt to profit on the good names and 
reputations that our members have spent decades building with 
their customers. This practice is illegal worldwide and leads 
to billions of dollars in losses each years. It represents a 
major enforcement priority of the United States Government, as 
Customs and Border Protection recently reported that footwear, 
apparel, and fashion accessories--like handbags--were the 
first, third, and fourth most seized counterfeit items by value 
at our borders last year.
    The second misconception arose concerning the relationship 
between AAFA and CFDA. With our association's initial 
opposition to the CFDA-supported DPPA, it lead many to believe 
that AAFA was protecting the copyists. As we have explained 
previously, CFDA and AAFA have many of the same members, and in 
many instances, CFDA designers often work directly with or 
license their brand name to one or more of our members. Neither 
association wanted to back legislation that would make it 
harder to design apparel and footwear or give lawyers a hand in 
the design process.
    Third, there remains a deep misconception about the scope 
of this legislation. And I want to be very clear on this point. 
The ID3PA will not cover everything in the fashion world. In 
fact, it will only cover those original articles which are so 
truly unique that they come closer to art than functionality. 
To put even a finer point on this, by definition, the bill 
states that nothing in the public domain, which is the 
collective works of thousands of years of fashion history, can 
be protected under this bill.
    Fourth, very few companies will have to worry about 
possible accusations of infringements. To infringe an article 
must, among other things, be substantially identical to an 
original article. The substantially identical standard is 
tighter than what had appeared in the ID3PA and is defined as 
so close in appearance that it would likely be mistaken for the 
original. While the substantially identical standard may be 
easily met for basic garments--the blue jeans or underwear in 
your dresser--it is a very high threshold when compared against 
never-before-seen fashion articles discussed above.
    We address a fifth misconception, that the new legislation 
will lead to frivolous lawsuits. The ID3PA includes a 
heightened pleading process where the burden falls entirely on 
the plaintiff to plead with particularity before any legal 
action can commence. And in that pleading, the plaintiff must 
show, number one, facts that his or her design is original; 
number two, that the potential defendant's design is 
substantially identical to his or her design; and number three, 
facts showing that the defendant had some access to the design 
and must have seen it before making the infringing design.
    In closing, AAFA believes the ID3PA provides a targeted fix 
to the narrow design piracy problem. The legislation provides 
designers with a clear and easily understandable framework so 
they can enforce their own original designs. At the same time, 
it contains multiple protections to ensure that those same 
designers can seek inspiration and harness fashion trends 
without the chilling effect of frivolous lawsuits.
    I want to thank you again for the opportunity for allowing 
me to testimony today, and I look forward to answering any 
questions.
    [The prepared statement of Mr. Courtney follows:]
  Prepared Statement of Kurt Courtney, Manager, Government Relations, 
                American Apparel & Footwear Association
    Thank you, Chairman Goodlatte, Ranking Member Watt and members of 
the subcommittee for inviting the American Apparel & Footwear 
Association (AAFA) to testify today in support of the Innovative Design 
Protection and Piracy Prevention Act or ID3PA.
    My name is Kurt Courtney, and I am Manager of Government Relations 
for AAFA, where I work on a range of intellectual property rights 
issues for the apparel and footwear industry.
    Our membership includes some of the most recognizable apparel and 
footwear brands serving virtually every market segment--ranging from 
haute couture to mass market. Our membership includes a diverse group, 
including some of the largest and some of the smallest companies in the 
industry. They are located in many states, including a number of 
traditional manufacturing hubs in New York, Los Angeles, the North East 
and the Southeast. Our members employ thousands of designers across the 
United States. Collectively, AAFA's membership represents the largest 
cross section of the fashion industry across all price points for 
consumers worldwide. Our industry accounts for more than one million 
U.S. employees and more than $340 billion at retail each year.
    Ensuring strong protection of intellectual property has always been 
a key priority for AAFA and its membership. Our members fight endlessly 
to protect their trademarks and brand names in the U.S. and throughout 
the world. It is with this in mind that we are pleased to appear before 
you today.
    Mr. Chairman, in 2006, you introduced the Design Piracy Prohibition 
Act (DPPA), which sought to offer new copyright protection for original 
fashion designs. As AAFA's legal team evaluated the bill, we 
wholeheartedly understood the narrow problem the legislation was trying 
to solve. But we fundamentally disagreed with its overly broad 
definitions, which industry experts and legal counsel feared would have 
opened a Pandora's box of litigation that would have been detrimental 
to the industry.
    At that time, Mr. Chairman, we expressed these concerns to you and 
you challenged us to help develop a more targeted bill to protect 
original fashion designs and not increase the prevalence of lawsuits in 
our industry. So we went to work. In conjunction with the Council of 
Fashion Designers of America (CFDA), we worked with your office and New 
York Senator Chuck Schumer to develop the Innovative Design Protection 
and Piracy Prevention Act. This legislation represents a targeted 
approach that will solve this narrow design piracy problem without 
exposing any innocent actor in the fashion industry to confusing rules 
and frivolous legal claims.
    Throughout the process, we realized that there were a number of 
misconceptions that had to be dismissed.
    First, many in the media, academia and even in the industry 
continue to believe that the ID3PA addresses the much larger, and more 
virulent problem of counterfeiting. It does not. By copying both 
trademarks and their associated designs (whether original or not), 
counterfeiters attempt to profit on the good names and reputations that 
our members have spent decades building with their customers. This 
practice is illegal worldwide and leads to billions of dollars in 
losses each year. It represents a major enforcement priority of the U.S 
Government, as Customs and Border Protection recently reported that 
footwear, apparel and accessories like handbags were the first, third 
and fourth most seized counterfeited items by value at our borders last 
year.
    I would note that the so-called ``rogue website'' legislation 
currently before the Senate and being separately developed in the House 
will help address one of the more onerous ways counterfeiters steal 
from legitimate companies--by establishing fake websites to fool 
consumers into thinking that they are buying legitimate products. As we 
move forward on ID3PA, we look forward to continue working with you and 
your staff on this very important issue and other ways to combat 
counterfeiting.
    The second misconception arose concerning the relationship between 
AAFA and CFDA. With our association's initial opposition to the CFDA-
supported DPPA, it led many to believe that AAFA was protecting the 
copyists. As we have explained previously, CFDA and AAFA have many of 
the same members and in many instances CFDA designers often work 
directly with or license their brand name to one or more of our 
members. Neither association wanted to back legislation that would make 
it harder to design apparel and footwear or give lawyers a hand in the 
design process.
    Third, there remains a deep misconception about the scope of the 
legislation. I want to be very clear on this point. ID3PA will not 
cover everything in the fashion world. In fact, it will cover only 
those original articles, which are so truly unique that they come 
closer to art than functionality. To put an even finer point on this, 
by definition, the bill states that nothing in the public domain--the 
collective works of thousands of years of fashion history--can be 
protected under this bill.
    Fourth, very few companies will have to worry about possible 
accusations of infringements. To infringe, an article must, among other 
things, be substantially identical to an original article. The 
``substantially identical'' standard is tighter than what had appeared 
in the DPPA and is defined as so close in appearance that it would be 
likely mistaken for the original. While this ``substantially 
identical'' standard may be easily met for many basic garments--the 
blue jeans or underwear in your dresser--it is a very high threshold 
when compared against never-before-seen fashion articles discussed 
above.
    We address a fifth misconception--that the new legislation will 
lead to frivolous lawsuits. ID3PA includes a heightened pleading 
process where the burden falls entirely on the plaintiff to plead with 
particularity before legal action can commence. In that pleading, the 
plaintiff must show:

        1) Facts that his/her design is original

        2)  The potential defendant's design is ``substantially 
        identical'' to his/her design

        3)  Facts stating that the defendant had some access to the 
        design to have seen it, before making the infringing design

    A sixth misconception revolves around the lack of a searchable 
database. Frankly, we felt that a database--especially with the well 
documented problems associated with the Copyright Office--would only 
cause confusion. Searchable databases in use in other countries reveal 
registration for common items like plain white t-shirts. Designers can 
still assert originality by including a symbol on the article and can 
work to enforce those claims, but only if they can meet the high 
threshold established by the three-part pleading process.
    In closing, AAFA believes the ID3PA provides a targeted fix to the 
narrow design piracy problem. The legislation provides designers with a 
clear and easily understandable framework so they can enforce their own 
original designs. At the same time, it contains multiple protections to 
ensure that those same designers can seek inspiration and harness 
fashion trends without the chilling effect of frivolous lawsuits.
    Thanks again for allowing me this opportunity to speak and I look 
forward to answering any questions.
                               __________

    Mr. Goodlatte. Thank you, Mr. Courtney, for your very 
helpful testimony. We have since been advised that we may be 
extremely short of time. Votes may be called in a matter of 5 
or 10 minutes. As a result of that, Ranking Member Watt and I 
have agreed to defer our questions. We'll either submit them to 
you in writing, or if there is time at the end, we'll come back 
to those.
    In light of that, we'll recognize Members for 3 minutes a 
piece and see how many we can get through. We'll begin the 
Vice-chairman of the Committee, the gentleman from Arizona, Mr. 
Quayle.
    Mr. Quayle. Thank you, Mr. Chairman.
    Professor Sprigman, I was just trying to--in your 
testimony, you were talking about back in the 1920's and 
1930's, there has always been copying, and there has always 
been complaining about copying, yet the design community has 
continued to thrive. And trends become trends because of the 
copying.
    Now, in Mr. Hernandez' testimony, he also stated that if 
you have, right now, because of the Internet and because of 
digital photography, that within minutes or within hours after 
a runway show or a red carpet in Hollywood, that that design 
can actually be put into production overseas within a matter of 
hours and actually make it to the streets prior to the designer 
being able to get his or her design out there. So do you think 
that now is the time to be able to put that forth because of 
the changing with the technology so that the designers can 
actually profit from their own designs?
    Mr. Sprigman. I think speed of copying hasn't really 
changed very much in 20 years. So I think the fax machine 
really changed speed of copying. You could take a photograph at 
a runway show and you could fax it. I think the Internet makes 
photos from fashion shows a bit more available. But within the 
industry--Women's Wear Daily runs a lot of photos. These things 
have been available.
    The industry has a 6-month lead time. All right. So they 
have shows in the fall for apparel that's going to hit the 
stores in the spring, and shows in the spring for apparel 
that's going to hit the stores in the fall. If the speed of 
copying was really a worry, we would see some pressure on that 
6-month lead time that the industry has. We don't see it. The 
6-month lead time has stayed.
    Can I have the slides up again? I would like to have the 
last slide up.
    Mr. Quayle. Actually, one other question. Mr. Courtney was 
stating that he believes that the concise definition in the new 
bill is actually very concise and won't lead to frivolous 
lawsuits. But do you agree or disagree with that? Because in 
your opening statement, you were stating that you believe this 
is going to increase litigation.
    Mr. Sprigman. I disagree. Before I became an academic, I 
spent a long time as a lawyer. And I litigated a lot of 
intellectual property cases. The question in this bill is 
whether the garment that is the defendant's garment is likely 
to be mistaken for the plaintiff's garment. Most people who 
would be on a jury, most Federal judges, are not particularly 
attuned to fashion, not particularly interested in it. If a 
garment looks generally alike, I think in the run of cases 
likely to condemn it, we'll get inconsistent verdicts. We'll 
get lawsuits being threatened. We'll get cease-and-desist 
letters. That is all going to, I think, redound to the 
detriment of the young designer, the new designer, who doesn't 
have the money to fight this.
    Wells Fargo Bank recently, which loans a lot of money to 
the fashion industry, said in a statement a couple of weeks ago 
that they are worried about this bill because if this becomes 
law, they are going to have to check twice, they are going to 
have to check three times before they lend to a design firm 
that can't indemnify them. And it is the small fry that can't 
indemnify. So this will create barriers.
    Mr. Quayle. Thank you.
    Thank you, Mr. Chairman.
    Mr. Goodlatte. The Ranking Member of the full Committee, 
Mr. Conyers, is recognized for 3 minutes.
    Mr. Conyers. I want to beginning by thanking both you and 
Mr. Watt, Mr. Chairman, for your expediency in allowing us to 
question our witnesses. This is fascinating stuff here.
    The passion of Mr. Hernandez can't be undervalued.
    I don't agree with you, but you are very impressive in your 
testimony.
    What I am trying to find out is things are really going 
along. This is a booming industry right now. And I just want to 
ask Professor Sprigman, what other mischief might inadvertently 
be produced if this bill were to become law, sir?
    Mr. Sprigman. I want to show you an example. Could I have a 
picture of those handbags up, please? It is a slide with two 
handbags on it. This is the mischief that I am worried about.
    So on the left, you have the Proenza Schouler PS 1 bag. 
This is the bag Mr. Hernandez talked about. On the right, you 
have the Mulberry Alexa. The Mulberry Alexa appeared on the 
market before the Proenza Schouler PS 1. So, Mr. Hernandez 
says, Well, I create out of nothing. No. No one in the fashion 
industry creates out of nothing. People in the fashion industry 
create out of what happened in the past.
    The Proenza Schouler PS 1 has some substantial similarities 
to the Mulberry Alexa. I think in a world in which the ID3PA 
had been law, when the Proenza Schouler PS 1 came out, I think 
Mr. Hernandez could have found himself on the receiving end of 
a cease-and-desist letter. This is what I worry about.
    When I look at these bags, I see differences. I see a 
lovely bag being made by Proenza Schouler that was hot because 
it was very attractive. But a copyright plaintiff's lawyer is 
going to see a potential settlement. And this is what I worry 
about.
    There's some wedding dresses as well. Could you show those 
wedding dresses?
    Mr. Conyers. As they say in our community, I get your 
drift.
    Mr. Sprigman. I'll leave it there.
    Mr. Conyers. I am with you.
    I want to compliment Professor Suk for her testimony.
    We are always glad, of course, to see Mr. Courtney.
    I yield back.
    Mr. Goodlatte. The gentleman from Pennsylvania, Mr. Marino, 
is recognized for 3 minutes.
    Mr. Marino. I have no questions.
    Mr. Goodlatte. Thank you.
    The gentlewoman from California, Ms. Lofgren, is recognized 
for 3 minutes.
    Ms. Lofgren. Just one additional question for Professor 
Sprigman. You have been very clear about the amount of 
litigation that could result. And what we want to do is take 
steps to promote a healthy economy and creativity and the like. 
So we want to get this right. I am from Silicon Valley, and one 
of the issues that has been of concern there--if you are an IP, 
you know this--is the issue of trolls, where you have got 
rights that are assigned and the only--really, the only thing 
that some of these firms do is they buy it so they can 
litigate. Do you see the potential for that in this arena?
    Mr. Sprigman. I think the unfortunate truth here that is 
the ID3PA is going to give rise to copyright trolls. So think 
about it if you are a retailer. You can be held liable if you 
reasonably should have known that you are dealing in infringing 
garments. So the fashion industry puts out so many thousands of 
designs every year. This bill doesn't create any kind of 
registry as a precondition for claiming protection. I could 
imagine a law firm going into business as a copyright troll, 
basically buying the right to litigate designs against 
department stores. And if you think about the department 
stores' reaction to this, the idea of receiving a whole bunch 
of cease-and-desist letters every season, the department 
store's reaction is going to be, I want indemnification.
    The big guys can live in that world. The little guys are 
going to be the ones that suffer in that world. That is what I 
am worried about--just raising the cost of doing business. If I 
thought that it was necessary to do this in order to get 
innovation in fashion, I would say, Go for it. But we see a 
fashion industry that is about as innovative as it could be, 
and we see people at the high end of the industry raising their 
prices, profiting. There's nothing to fix that I can see.
    Ms. Lofgren. It seems to me, and then I'll stop, that there 
is a legitimate trademark issue, because if somebody thinks 
they are buying a high-end product that is really a cheap 
knockoff, that is a completely different issue than this one.
    Mr. Sprigman. That is fraud.
    Ms. Lofgren. That is fraud.
    Mr. Sprigman. We have a trademark law that helps in that 
case and, you know, enforce that. If people are defrauded, go 
after them.
    Ms. Lofgren. Thank you, Mr. Chairman. I will yield back.
    Mr. Goodlatte. Professor Suk, did you want to respond that 
that point about how this affects smaller designers?
    Ms. Suk. Yes, I did. Yes, thank you. I think that, for one 
thing, the new data that Professor Sprigman presented--first of 
all, everything is in the interpretation. And I believe that 
Christopher Sprigman's interpretation of that data is 
incorrect.
    I would have an alternative explanation. When you are 
seeing high prices at the high end going up, why are rising 
prices at the high end considered signs of health rather than 
signs of splitting consumers so that you have the midrange 
designers in direct competition with the lower-end companies? 
And so, therefore, those midrange companies are less able to 
compete, and so then you have got the higher-end designers 
raising their prices.
    So if you have a $500 dress that is going away because of 
competition from copyists, then what is left is the higher-
priced dresses. And in many ways, if you see just the high end 
going up like that, it can be interpreted as a sign of producer 
desperation rather than a sign of health by those designers. So 
I think that the interpretation is definitely up for grabs. I 
think it would be really helpful to have Professor Sprigman's 
data rather than just his interpretation.
    Mr. Goodlatte. Go ahead.
    Ms. Suk. As for the idea of different bags having similar 
looks and there being trolls, for many people who don't know 
classical music, the difference between Bach and Handel, one 
piece of Baroque music is much like any other. It is true that 
for some people, whatever the industry, whether it is painting, 
whether it is books, poetry, you are going to have a problem 
that if you are not that attuned, you might think that it is 
all the same. But that is not unique to the fashion industry. 
There are meaningful differences between products that may look 
similar to some people. And it is because we care about 
innovation within this industry at the level of detail that the 
industry actually produces that we would have a law that says 
``substantially identical.''
    Mr. Goodlatte. Thank you.
    I want to get to the gentlewoman from Texas, Ms. Jackson 
Lee, for 3 minutes.
    Ms. Jackson Lee. Thank you very much, Mr. Chairman.
    And thank you to the Ranking Member for your courtesies 
extended.
    Mr. Hernandez--and thank you, I was delayed in another 
meeting on debt ceiling issues. But I come to this Subcommittee 
with a great passion about creating jobs.
    Tell me how important and how do you define your work as a 
property right, as something to be protected so that you can 
create jobs and you can have a product that is protected?
    Mr. Hernandez. Well, we employ about 50 designers at the 
moment, who sort of design products all day, every day. We are 
having the problem at the moment where a lot of our designs are 
being copied on a much more accessible price point level. And I 
think an interesting thing, interesting point that is being 
brought up today is this whole point of designers raising their 
prices really high. That is not so much a function of margins 
as it is a function of us having to keep on pushing the design 
level and pushing further and further and kind of pushing 
design and getting a little more experimental and having to 
kind of push the design level further and further and that 
brings the price point up.
    Ms. Jackson Lee. And that's because your product is stolen 
or redone or copied.
    I only have a short period of time. So I want to go to 
Professor Sprigman and just say that when we started out this 
in country, we copyrighted books and maps and charts. But we've 
moved progressively on, for example, into technology and 
otherwise. So what would be the aversion to, as this property 
is being demeaned, to not move in that direction if we had 
protections for those very entities of which you have just 
spoken? It is a valuable asset that fashion designers have.
    Mr. Sprigman. It's a valuable asset. My only argument and I 
think it's the argument that the Framers of our Constitution 
made, we have copyright, we have patent to promote the progress 
of useful arts and sciences.
    The fashion industry has been promoting progress in 
beautifully clothing Americans for a long time without any 
copyright protections for its designs. Progress is being 
promoted through free competition.
    For reasons I explain in my academic work, the fashion 
industry doesn't depend on property rights as the engine of 
innovation.
    Ms. Jackson Lee. But change has come about, has it not? 
Paintings now are protected, and otherwise.
    Mr. Chairman, I'm going to yield back and just simply say I 
think we have a good product here, but I think we need take a 
great interest in the points the professor has made in 
protecting other elements.
    But we need to protect you, Mr. Hernandez. We want you to 
produce, produce, produce, create jobs, and be successful as an 
industry.
    I yield back.
    Mr. Goodlatte. I thank the gentlewoman.
    We have about 5 minutes remaining in the vote that has been 
called. Does the gentleman--well, I'll just ask one question.
    Mr. Hernandez, critics of fashion design protection argue 
that all fashion is derivative of something that came before 
it. They believe that unfettered copying actually drives 
fashion cycles and results in more creativity. So, two 
questions. Is that how it works? And to the extent that it is, 
is that fair? And tell us how that connects to your own----
    Mr. Hernandez. I think, historically, most artists and 
designers are obviously inspired by history and things that 
have happened before that. I don't think anyone is sort of 
speaking about that being a problem. I think that is a normal 
thing that happens amongst artists and designers.
    I think the problem is in someone copying, stitch for 
stitch, what you have already created. There is a difference 
and a very big difference between being inspired by something 
and copying something. And I think what has happened in the 
modern world is the advent of the Internet, as opposed the 
advent of the fax machine, for example, is that there's Web 
sites now where you get a runway show, and they can literally 
zoom in to the garment front and back, copy stitch for stitch, 
and pretty much print it and make it in a couple days flat and 
ship it before we ourselves can even take orders on the 
product.
    And I think that's something that's happened in the last 10 
years that has changed the game 100 percent. The protection 
hasn't caught up to the level of technology. There's been sort 
of a disconnect there. Before, it was a little more--we were a 
little bit more protected in terms of the product wasn't as 
visible to so many people from such an early stage. Now it is.
    Mr. Goodlatte. Thank you. Mr. Courtney, you believe that 
this bill has been substantially changed and improved to 
address it in the manner that Mr. Hernandez describes, maybe 
not literally stitch for stitch, but very close to that, in 
order to get the protection of the bill, as opposed to just 
general ideas and general trends.
    Mr. Courtney. Yes, thank you, Mr. Chairman.
    The thing to remember, as I said in my testimony, this is 
not intended to cover that anything that anyone is wearing 
right now in this room or anything that exists up until 
enactment of this bill. But we have to give designers the 
opportunity once this bill becomes law to, if they can meet the 
very tight definitions that are in the bill of originality, 
that is going to spur innovation. That is going to enable 
designers to come up with something that really is truly 
unique. If they are able to do that, then absolutely they 
should be able to get protection for that for 3 years. That is 
the reason why we are supporting this bill. We have eliminated 
as far as----
    Mr. Goodlatte. I am going to cut you short because I want 
to give the gentleman from North Carolina the last word.
    Mr. Watt. Thank you, Mr. Chairman.
    Let me apologize to the witnesses and to the Chairman for 
being late. I got consumed with this debt ceiling stuff that we 
were involved in and just lost track of time. So I apologize 
because I feel responsible for holding--getting us in the time 
bind that we are in.
    Ms. Suk, Professor Suk, I think you probably won't be able 
to respond to this, except in writing. I practiced law for a 
long time before I got here, 22 years, and I am just trying to 
conceive of a set of jury instructions that you would give to 
12 people sitting on a jury that defines clearly the 
distinction between inspired by--that is one term you used--and 
substantially identical. That is the other term you used. Could 
you give some thought to that at some point and perhaps give me 
a written set of jury instructions? Because I think if we are 
going to respond to Professor Sprigman's concern about 
increasing litigation, which could be a substantial deterrent 
to innovation--and I see that deterrence acting between small 
people like you, Mr. Hernandez, and large people who are 
already out there. I don't want you tied up in protracted 
litigation against Louis Vuitton or whoever you are competing 
against. I guess you don't compete against Louis Vuitton. Maybe 
you do. I don't know. I don't know enough about this industry.
    But that illustrates a point that I'm making because 12 
people sitting on a jury are not going to know a darn thing 
about this industry either. You know the distinctions, and the 
proof in a case is going to rely on 12 uneducated, 
unsophisticated design people making those kinds of 
distinctions. And unless that can clearly be drawn, you're just 
going to have endless litigation about this. And that's the 
concern I have. And that litigation will be more--could be more 
of a deterrent to innovation or bringing things to the market 
because you'll be just afraid that you're going to get into the 
middle of litigation about these things.
    So this can't be resolved right now. Maybe I should ask 
both the professors to think about that and give me their 
thoughts about it in writing. That would be very helpful.
    Mr. Goodlatte. I thank the gentleman. And I thank all of 
the witnesses for their valuable testimony today.
    I apologize also for the Committee for the tightness of the 
time here, but we don't control the action on the floor.
    Without objection, all Members will have 5 legislative days 
to submit to the Chair additional written questions for the 
witnesses, which we will forward and ask the witnesses to 
respond as promptly as they can so that their answers may be 
made a part of the record. Without objection, all Members will 
have 5 legislative days to submit any additional materials for 
inclusion in the record.
    With that, again, I thank the witnesses and the hearing is 
adjourned.
    [Whereupon, at 11 a.m., the Subcommittee was adjourned.]
                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record

       Response to Post-Hearing Questions from Lazaro Hernandez, 
               Designer and Co-Founder, Proenza Schouler






Response to Post-Hearing Questions from Jeannie Suk, Professor of Law, 
                           Harvard Law School



Response to Post-Hearing Questions from Christopher Sprigman, Professor 
              of Law, University of Virginia School of Law




        Response to Post-Hearing Questions from Kurt Courtney, 
 Manager, Government Relations, American Apparel & Footwear Association



  Letter from Stephanie Lester, Vice President, International Trade, 
                  Retail Industry Leaders Association




                                 
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