I was recently interviewed by Marc Karimzadeh of the Council of Fashion Designers of America, where I sit on an advisory board (advising the fellows of the Elaine Gold Launch Pad program, a collaboration between the CFDA and the Accessories Council).

The information provided in this informal q&a may be helpful to fashion startup founders and designers.

Below is an excerpt from that interview.

• • •

What interests you in working with start-ups?

I enjoy working with start-ups because it allows me to paint on a clean canvas. During my career, I was often tasked with cleaning up years of disorganization at the substantial expense and disruption of a client. Working with a start-up presents a unique opportunity to establish good habits at the earliest and perhaps most significant stages of a company’s existence. While the founders pursue business opportunities, I focus on maintaining the legal integrity of the company and developing its intellectual property portfolio. A solid corporate structure that follows legal formalities, a record of consistent legal compliance, and a comprehensive intellectual property portfolio are attractive to prospective investors, shareholders, lenders and collaborators.

What is the most popular legal issue you see emerging designers running into?

The most popular legal issues for emerging designers tend to center around intellectual property. They may unwittingly spend time and resources developing a concept or a brand that is vulnerable to an allegation of infringement. Likewise, emerging designers may find their intellectual property being infringed, often by a designer that is more established and perhaps better-funded. These situations may result in legal issues that at best are expensive to handle and at worst could break a company before it has a chance to take off.

What do you hope the designers will take away from you as an advisory board member for Elaine Gold Launch Pad?

Creatives and business people often have a reluctance to involve attorneys, perhaps out of a fear that attorneys will unnecessarily complicate matters. However, not working with a competent attorney can present significant issues – some of which are not easy or even possible to later remedy. That said, not all attorneys are alike. Designers should seek out attorneys who take practical approaches to legal issues and understand how to balance risks against objectives. An attorney with significant in-house experience, who can inform without relying on legal-jargon, whose focus is to help his or her client meet objectives, and has a proven track record of identifying creative and legally compliant solutions, is both invaluable and difficult to find. But I want the designers to know that we do indeed exist.

• • •

The entire Q&A can be accessed here.

* * *

©2017 Fabio R. Silva. All Rights Reserved.

Young companies should be aware that they can apply to register a trademark with the United States Patent & Trademark Office (“USPTO”) even before they start using it.  This isn’t news to established companies and certainly not to trademark practitioners, but it is indeed news to many startups.

Why should I file early?

What I have found is that young companies will start investing time and money into a trademark that (a) could perhaps already be in conflict with an existing trademark, or (b) could be taken from them by another company that files first — creating a lengthy and costly conflict.

For these reasons I regularly advise my clients to start the trademark application process early in order to confirm that there are no existing and conflicting trademarks and to establish priority over later applicants.  An early application may also serve as a sufficient deterrence against later applicants.

What is involved in an intent-to-use application?

The intent-to-use application (also referred to as a “Section 1(b)” application) has filing fees identical to an actual-use application (also referred to as a “Section 1(a)” application), namely filing fees of $225 to $275 per class. However, they differ in this key aspect: At the time of the intent-to-use application, submitting proof of actual use is not required.  You merely have to indicate that you have a bona fide intention to use the trademark in commerce.

When you eventually make use of the trademark, and that use matches the use claimed in the application, a specimen proving actual use must be submitted to the USPTO.  This Statement of Use (“SOU”) comes with a filing fee of $100 per class.

How long do I have before I have to start making use of the trademark? 

Subsequent to filing an Intent-to-use application, the USPTO will examine the application to confirm that it meets all technical requirements. This review includes conducting a comparison with existing federal trademark registrations and raising any concerns over a likelihood of confusion.

Assuming the application clears the examination, the application will be published for opposition for a period of 30 days (allowing any concerned third parties to raise their concerns). Passing the publication period without any objections means you now have 6 months to prove use of the trademark by submitting an SOU.

What if I am not yet using the trademark within the 6-month deadline?

No need to worry if your plans to use the trademark were delayed. The USPTO freely grants time extensions. By “freely” I do not mean “for free”, I mean that they do so quite willingly. The USPTO will charge a filing fee every time you file for an extension of time (i.e. $125).  Also, you will be limited as to how many extensions you can secure.  The USPTO usually grants 6-month extensions for up to 5 years.

What if I haven’t yet committed to a particular trademark?

I have found in many cases that clients have settled on a word, but have not yet settled on its appearance (e.g. font, colors and design elements). Not having yet settled on the look and feel of the word, they assume they still are not ready to apply to register their trademark.  This is wrong.

The USPTO allows you to submit an application for the trademark in standard characters (protecting the text), irrespective of the look and feel (which could still be in its development stages).

Later, when you settle on the look and feel of the trademark, you can submit a second application to protect its design elements (if they are worthy of protection).  In other words, do not delay your trademark application if you have already settled on a word but are not yet settled on its appearance.

Your time and resources are valuable, so get things right the first time and protect your hard work.

* * *

©2017 Fabio R. Silva. All Rights Reserved.

I attended a panel discussion last night at Parsons on the subject of cultural appropriation in fashion.*

While the panelists all spoke powerfully, most of what they shared was anecdotal. Their stories were mostly of being that one person in the room who had to speak up in order to stop a train wreck. I believe most POC placed in positions of power can relate.

As an attorney, I was trying to find a legal solution to all this – one that would raise the stakes and take the burden off POC to be the voice of reason in the room. But I don’t believe one exists. This is an ethical issue. And in many ways, violating the ethics or boundaries of borrowing from cultures can have greater consequences than a civil suit. With the power of social media, the damage can be both intense and immediate. Fashion companies are just a few key strokes and hashtags away from a PR nightmare.

What the fashion industry needs is a written cultural appropriation code of conduct. A non-binding code that at a minimum details a methodology that designers are advised to follow in order to avoid cultural appropriation. It is not sufficient to simply tell designers to “Google” each of the design elements of a particular collection before it hits the runway or stores. The only way to get designers to consistently and effectively avoid this minefield is to give them a written code that they can choose to adopt and internalize into their organization.

But which organization or organizations should prepare it? (I ask this question because I honestly do not know.) Writing the code is a minefield of its own. Certainly not everyone would be happy. That said, I don’t think that’s reason enough not to make an attempt and at a minimum issue industry guidelines. Designers can follow them or completely ignore them, but what they cannot then do is claim ignorance.

The panelists all spoke very eloquently about situations they were each in when they had to speak up and inform a client or designer that what was intended to be placed on the runway or in fashion magazine was simply not okay. Clearly, if designers object to a written code of conduct or even guidelines, then they should closely examine the composition of their design teams. Designers should include and expect more diversity on their design teams. And their entire team should be empowered to speak up when something just doesn’t smell right.

*Panelists included Elaine Welteroth, Editor-in-Chief of Teen Vogue; Aurora James, Creative Director of Brother Vellies; Amy Farid, Fashion industry hairstylist; and Anastasia Garcia, Photographer and body positive activist. Kim Jenkins, part-time lecturer at Parsons School of Design, was the moderator.

#FashionJustice #Parsons #FashionLawyer #FashionLaw #FRSilvaLaw #CulturalAppropriation #CFDA #RetailLaw #StanfordLaw

©2017 Fabio R. Silva. All Rights Reserved.

With more of the labor pool moving into the gig economy, a new law protecting freelancers has gone into effect in New York City.

The Freelance Isn’t Free Act (“FIFA”) is a straight-forward piece of legislation that makes it easier for freelancers to file claims against your company. The odds are good that other jurisdictions will adopt similar protections, so adopting a legally compliant approach to engaging and dealing with freelancers should be on your company’s to-do list.

When does FIFA apply to your company?

If your freelancer is domiciled in NYC, the contract is governed by NY law or the work is performed in NYC, you may have to answer to any complaints raised by a freelancer under FIFA.

A “freelancer” is any person or one-person entity your company has engaged to provide services, with the exception of a sales representative, an attorney or a medical professional. This means that the graphic artist, stylist, photographer or web designer you hired could fall under the protections of FIFA.

For FIFA to apply, the value of the services have to be at least $800 over a 6-month period, even if the services are for varied and unrelated projects. In other words, cumulative obligations to pay a freelancer at least $800 over a 6-month period are sufficient to meet the amount-in-controversy requirement.

If FIFA is applicable, what must your company do?

Your company must:

1. provide the freelancer with a written contract, containing at a minimum (a) the identity of the parties, (b) a description of the services to be provided, and (b) the payment obligations (i.e. amount and timing). (If the payment timing is not included, the law will assume payment terms of Net 30.)
2. make payments to the freelancer on time.
3. not condition timely payment on the freelancer accepting an amount that is lower than what was originally negotiated.

Why should your company be concerned over FIFA?

Under FIFA, a successful plaintiff will be awarded her damages and attorney fees. This means the historical barrier to these disputes has been removed. Plaintiff’s attorneys will now express an eagerness to represent freelancers, sensing a much better chance of getting paid if the matter has merit. Your company could therefore see an uptick in formal claims brought by freelancers, represented by hungry and aggressive counsel.

Also, under certain circumstances the freelancer will have the right to be awarded double the damages alleged. In addition, where there is evidence of a pattern or practice of violations, there could be a civil penalty up to $25,000.

While the amounts here may be small in comparison to your company’s overall labor expenses, keep in mind the public relations aspect. The damage caused to your company’s reputation for having stiffed a freelancer could be significant. In the early life of FIFA, companies caught up in these claims could be used as examples in the media by the Department of Consumer Affairs.

How can your company avoid liability under FIFA?

In order to avoid liability, do the following:

1. have your attorney prepare a template freelancer agreement and make it your company’s policy to use it every time you hire a freelancer.
2. pay your freelancer the negotiated amount and make those payments on time.
3. do not retaliate against a freelancer who has filed a complaint against your company under FIFA.
4. do not ignore informal demands made by freelancers for non-payment or failure to pay the total amount negotiated.

©2017 Fabio R. Silva. All Rights Reserved.

The Federal Trade Commission (FTC) through its Acting Chairman, Maureen K. Ohlhausen, has been both vocal and transparent over the FTC’s more relaxed approach to certain regulations, taking a cue from the new administration. However, the FTC continues to aggressively pursue retailers of consumer goods and services for misleading advertisements in social media. This includes failures by influencers on social media to disclose their connections to the brands they endorse.

In a press release issued April 19, 2017, the FTC disclosed that it had “sent out more than 90 letters reminding influencers and marketers that influencers should clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media.”

Putting aside for now the question of how the FTC managed to select 90 influencers and marketers from thousands, what is meant by (1) “clearly and conspicuously”, (2) “relationships” and (3) “promoting or endorsing”?

Let us examine them here (in reverse order).

“promoting or endorsing”

According to the FTC, an endorsement means “any advertising message . . . that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser, even if the views expressed by that party are identical to those of the sponsoring advertiser.”

In other words, any reference to your company, your goods or your services, by anyone other than your company and through their social media account, is an endorsement. Note that even a neutral reference would still be an endorsement, according to the FTC. This is likely because the FTC recognizes that consumers could nonetheless be persuaded even by an influencer making a neutral reference to your company’s goods or services.

“relationships”

A relationship is any “material connection” between your company and its endorser that could “materially affect the weight or credibility of the endorsement”. This essentially means that any connection that might reasonably be perceived by a consumer to affect the impartiality of an influencer is a “relationship” that should be disclosed – even if the influencer was sincerely not influenced by the relationship.

Either monetary or in-kind compensation is sufficient to form a relationship that must be disclosed. This includes your provision to the influencer of free samples of your goods or services.

“clearly and conspicuously” 

In the event your company does indeed have a relationship with an influencer who is promoting or endorsing your goods or services through his or her social media account(s), then your FTC liability can only be reduced by requiring the influencer to clearly and conspicuously disclose that relationship.

What your company instructs the influencer as to how to disclose the relationship depends on a variety of factors and your legal adviser’s good judgment. However, here are four points that will help guide you to a clear and conspicuous disclosure:

1. “#Ad” or “#Sponsored” must be referenced clearly and frequently. Cryptic abbreviations (e.g. “#Sp”) or ambiguous alternatives (e.g. “#Promotion”) must be avoided.
2. Disclosures must not be buried within a multitude of other hashtags.
3. Disclosures must be made repeatedly if your influencer is engaged in a dialogue over social media. As the exchange continues over social media, your influencer must regularly make the disclosure as new participants join and prior disclosures get buried.
4. Disclosures should not require any additional clicking.  For example, your influencer’s followers should not have to click on “more” in order to reveal the disclosure.

Think early, clearly and often when it comes to disclosures on social media.

©2017 Fabio R. Silva. All Rights Reserved.

So you are ready to open your first physical store.  You have chosen the right space, in a great location, and just the right size.  It can be incredibly exciting, until you receive a 30-page document from the landlord’s attorney, written in small print and heavily peppered with legal terminology.

Your initial instinct may be to place it in a corner of your desk and to ignore it.  This approach is not recommended.

Whether you choose to seek the assistance of legal counsel or not, there are things you can do to get yourself closer to a signing date, lower your risk, keep your stress level in check and perhaps decrease your dependence on external legal.

Here are 10 steps to keep in mind.

1. Keep notes of all the points you have negotiated with the prospective landlord. These notes will be helpful as you get to the end of what could be lengthy negotiations.
2. When negotiations have ended, ask the landlord for a “letter of intent” or “term sheet.” This is a non-binding document that memorializes the parties’ negotiated terms (e.g. rent, start date, free rent period, security deposit, term, broker fees, store opening date, etc.). Confirm that the letter of intent accurately reflects the tentative deal as you have come to understand it.  A reasonably detailed letter of intent will be helpful to have on hand once you receive the first draft of the lease.
3. The prospective landlord may ask you to sign the letter of intent, to acknowledge receipt. This is fine, but you should ask that a paragraph indicating its non-binding nature first be added to the document. In some jurisdictions a letter of intent could be legally binding, so you want to make sure it is not.
4. When you receive the first draft of the lease from the prospective landlord, compare it to the letter of intent. Make sure that the lease accurately reflects all the terms you negotiated. If you find any discrepancies, simply point them out.  They could be honest errors, so avoid making any accusations.  Remember, you want the space and no good could come from accusing your prospective landlord of dishonesty.
5. Some paragraphs are entirely legal creatures (e.g. indemnification, subordination and condemnation), and you may feel uncomfortable reviewing and approving those provisions. This is where a real estate attorney, specializing in retail leasing, may be of assistance. Provide your attorney with the letter of intent and indicate what, if anything, is still not reflected accurately in the draft lease.
6. Provide your attorney with as much background as possible in your initial meeting. An hour spent here will a go a long way toward keeping legal costs down and getting to a final version of the lease sooner. Avoid simply dumping documents on your attorney, because he or she will charge you for time spent trying to figure out the context of all these documents.
7. Provide a copy of the draft lease to your insurance broker. The draft lease likely has insurance obligations and your prospective landlord may require that you produce proof of insurance once the lease is signed. Your broker may wish to modify some of the language, in order to reconcile any discrepancies between what the prospective landlord is requiring and what you can truthfully provide under your policy.  If you have chosen to hire counsel to assist you, provide your attorney with the contact information of your insurance broker.
8. Work closely with your contractor, because the draft lease will likely have obligations that would affect how your contractor performs any work on the premises. Confirm that your contractor is capable of complying with these proposed requirements.  If there is a conflict, make an attempt to modify the language.  Your prospective landlord may agree.  Otherwise, there may be a compromise that is workable for both sides.  If you have chosen to hire counsel to assist you, provide your attorney with the contact information of your contractor.
9. When you have received and approved the final version of the lease, initial all pages (including exhibits) and sign where indicated on the signature page. Do not forget to keep an original and mutually-executed version of the lease for your records. You have no idea how often I have come across situations where a client has signed a lease or a contract and failed to secure a fully-executed copy for his or her records.  Don’t consider the deal done until you have received a fully-executed signed original!
10. File away the fully-executed original and include all your notes, including a copy of the letter of intent. I would also suggest that before filing these documents away, have them scanned and archive the digital copies.

Now focus on getting that store built out in time for your grand opening!

©2016 Fabio R. Silva. All Rights Reserved.