Fashion fission over anti-knockoff bill: L.A. manufacturers break with N.Y. on reform effort.

You'd think L.A.'s big fashion industry would favor the Design Piracy Prohibition Act currently working its way through the U.S. Senate. After all, the act would prevent knock-off artists from copying designers" work.

Think again.

Many in the local fashion industry are gearing up to fight the bill because it would threaten one of their core businesses: creating clothes inspired by what's on the runway. Or, as some would say, knocking them off.

Although Los Angeles has some big designers, it also has many small apparel manufacturers that specialize in jumping on fashion designs as they emerge. Some call that trendy; others believe it comes close to infringing on designers' creativity.

As a result, the bill has created a schism between the major New York and Los Angeles fashion trade organizations.

The New York-based Council of Fashion Designers of America and an array of top designers argue that the bill will protect the creativity of their work and allow designers to recapture profits that they lose when manufactures make less expensive garments that look like their own.

But the California Fashion Association and some Los Angeles manufacturers counter that the bill will have an adverse affect on business and dramatically increase the number of lawsuits in the industry.

"If Donna Karan comes out with a single garment, and someone picks up on it, by the very nature of the business a trend develops," said Ilse Metchek, executive director of the California Fashion Association. "It's not a single garment that creates a trend."

But under the proposed law, any manufacturers that follow that trend may open themselves up to lawsuits.

That's because the act would allow designers to copyright their whole garment for three years--from the cut of the cloth to such details as the placement of the button holes. That goes well beyond the current law that protects mainly designer labels and print designs.

In essence, the bill stipulates that a designer can take a picture of the front and back of a garment and claim ownership over the design through copyright, making substantially similar designs illegal.

Knock-off artists who view new designs at fashion and trade shows and quickly duplicate them or make something similar to sell to retailers would be forced to be more creative, said Susan Scafidi, a law professor at Fordham University in New York who supports the passage of the bill.

Metchek said that both Los Angeles and New York manufacturers create knock-offs. "When you see knocking-off, you are taking inspiration and defining a forward trend," Metchek said. Even designers like Liz Claiborne knock off designs, like those of Stella McCarmey, on a regular basis, she said.

The very nature of the fashion industry is to feed off of itself, said Kal Raustiala, a law professor at UCLA. Designers draw inspiration from current collections, past styles and trends, films, television, and any number of other mediums, he said. Nearly everything has been done before.

Douglas Lipstone, an intellectual property attorney who works in trademarks and copyrights for Buchalter Nemer LLP said, "The couture designers go shopping in Europe and see trends and concepts and work off of them. Why are they more entitled to protection in the marketplace than a West Coast designer who sees inspiration not in Europe but here in the U.S.?"

Lipstone is working with the California Fashion Association against the bill.

Lawsuits over suits

However, advocates of the bill emphasize that it will protect only the unique designs of fashion designers. Items such as plain t-shirts and hoodies are in the public domain and would not be copyrightable.

"Some people think there is going to be a lawsuit over every garment with two sleeves," said Scafidi of Fordham University. "But there is a huge public domain in fabric. This bill isn't going to change that in any way. It isn't cost effective to sue everyone who makes a kneelength white dress."

But opponents aren't so sure. The bill doesn't go into exactly what makes a design unique enough to copyright it, or how different another garment has to be to avoid legal action taken against it.

In fact, some local companies worry that if the bill passes, it would open a stream of litigation against Los Angeles companies and others who specialize in knocking-off.

"I firmly believe that if this bill were to pass, it would crush or squeeze out a significant portion of the L.A. apparel industry, especially the small to medium companies," said Lipstone.

He argues that if designers are allowed to copyright a design, they will sue anyone and everyone who makes a similar design, causing a rash of ill-conceived and frivolous lawsuits that will cost the designers and manufacturers time and money.

To some extent, size is an issue. The New York fashion industry has more big-name designers, who are in theory more susceptible to knock offs.

But Los Angeles is populated by many smaller and mid-size firms. Even more than their East Coast brethren, they rely on "factoring," which is a specialized form of lending to the apparel industry, said Metchek. The smaller L.A. manufacturers often borrow up to 80 percent of the cost from the "factor"--large financing companies such as GMAC Commercial Credit LLC--to produce an order. They pay the loan back months later, after the goods have been manufactured, shipped, and paid for by the buyer, usually the retailer.

"If the manufacturer sends that merchandise to a retail store and then a designer sees it and suggests that the design is their own, the retailer will get a letter that says they must cease and desist selling it, or they will be sued," said Metchek.

Because the retailer doesn't want to get involved, they pull the clothes and send them back to the manufacturer, she said. The factor charges the manufacturer large amounts of money if this occurs.

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"This is L.A.'s kind of manufacturing, and the manufacturers are clearly in the middle," said Metchek.

Trouble ahead?

Lonnie Kane, the president of Los Angeles-based Karen Kane Inc. which designs and manufactures in the area, sees trouble ahead if the bill passes.

"Someone's interpretation of what they do and what someone else does is blurry," Kane said. "How easy is it to litigate any item when someone says, 'I did that,' or 'they shouldn't have done that'?"

He said he would, nonetheless, copyright his company's clothes if the bill were to pass to protect his designs from litigation.

"We wouldn't be copyrighting so that we could sue," he said.

However, Alain Coblence, a New Yorkbased attorney with Coblence and Associates who helped author of the bill, called the claim that there will be an increase in lawsuits a red herring. He noted that France, Italy, and Japan have fashion copyright laws and their industries manage to compete globally.

"When you look at what is happening in countries that have laws against copying," Coblence said, "there are few lawsuits because they know it is illegal and they don't do it."

The law would protect designers like Los Angeles-based Kevan Hall who designed the gown that Felicity Huffman wore when she won an Emmy as best actress in a comedy series, Coblence said. Knockoffs of the dress were created before Hall could make a lowerend version of the dress for sale and make money.

"He almost went out of business," Coblence said. "We want to protect the livelihood of these designers."

Similar legislation has been put forward in the past but has never been passed. This time around, some professionals think things will be different because there is more urgency.

"It used to take months to copy a fashion, so designers had time to sell their original design and capture their business. But with the Inter net, the fakes are getting into the stores before the original designs," said Scafiti. "Designers have no time to recapture their design. The Internet has made it much more urgent."

Though some Senators have shown skepticism toward the bill, some Democratic and Republican senators are in support, including Hillary Clinton and Charles Shumer (both DNew York), Kay Bailey Hutchinson (R-Texas) and Dianne Feinstein (D-Calif.).

"All too often, fashion designs are being pirated and copied before the garments have even hit the racks," Feinstein said in an e-mail. "Designers deserve to reap the benefits of their innovation. If this piracy isn't controlled, the fashion industry will continue to lose billions of dollars annually and the ability to produce new designs will be diminished."

The California Fashion Association sent a letter to Feinstein to protest the bill.

The bill was introduced in the House in the Spring and the Senate a month ago. The routine is for bills to get hearings in each chamber, followed by markups and votes.

BY SARAH FILUS

Staff Reporter