What if our top-downloaded shopping app, Temu, is our modern-day Audrey II? Temu is experiencing explosive growth in various locations, fueled by millions of Seymours – or users – worldwide. However, unlike Audrey II, which feeds on human blood, Temu thrives on our data. It is not just the Big Tech giants like Google, Instagram, Facebook, YouTube, and TikTok that have enormous power to shape our unconscious habits by collecting and manipulating user data to program us on a deeper level. Clothing e-commerce platforms, like those in the tech industry, are designed to be as addictive and revealing about ourselves. The more we shop, the larger the data set; the greater the insights about consumers, the bigger the corporation becomes.

In our context, the potential destruction of humanity may take on a different meaning. It can signify the erosion of what makes us human – our freedoms and autonomy. Put simply, the destruction of humanity equates to the invasion of our ownership rights to our Personally Identifiable Information (PII).[i] The unchecked power wielded by companies over our PII threatens these core aspects, potentially undermining the very fabric of who we are. If left unregulated, this infringement upon our privacy could prove as devastating as Audrey II, consuming our data to grow uncontrollably and exert dominance over our lives.

In the realm of fashion law, the emergence of digital platforms like Temu raises significant legal considerations regarding consumer privacy, data protection, and ethical business practices. As fashion retailers increasingly adopt e-commerce and digital marketing strategies, it is imperative for legal frameworks to swiftly adapt to these rapidly evolving technological landscapes, safeguarding the rights and interests of consumers within the fashion industry from potential threats akin to Audrey II.

Shopping Addiction Designed by Manipulation of User Data

Big Brother is watching us.

Ultra-fast fashion relies heavily on e-commerce and on data analytics to understand fashion trends, purchasing habits, and market trends. Strategies employed like SEO, social media, and targeted ads require data to attract customers and boost sales. This data-driven approach helps companies optimize products, pricing, and marketing. Consequently, e-commerce platforms like Temu can be addictive in ways similar to tech companies because they, too, often utilize strategies to keep users engaged and encourage repeated visits and purchases. For instance, both Temu and Instagram use algorithms to analyze user actions and suggest relevant content or products, while also sending notifications to encourage repeated visits and purchases.

Ultra-Fast Fashion Business Model and Global Expansion of Temu

China is rapidly becoming the market of the world.

PDD Holdings, owner of Pinduoduo and founder of Chinese e-commerce site Temu,[ii] may not have the same evil plan as Audrey II – world conquest – but we are witnessing Temu’s aggressive global expansion. Since its launch in September 2022[iii], Temu has expanded into 67 countries[iv], signifying its ambition to become a leading player in the global e-commerce market within a short span.

In the United States, for instance, Temu has quickly become a favorite among consumers for ultra-fast fashion, consistently topping app store charts and offering lower prices than its fast-fashion competitor Shein.[v] Last year, the Temu app became the most downloaded e-commerce application in the U.S. on both iOS and Android platforms, with total downloads surpassing 122 million.[vi] It even overtook TikTok as the most downloaded app in the U.S. App Store, with global downloads increasing to 31.77 million from just 450 thousand in September 2022.[vii]

Temu App: Designed to Hack and Be Hacked?

1. Improper Access to Consumer Data

With great power comes great data.  

Temu’s rapid rise in the U.S. market, surpassing major global apps in user numbers, has raised concerns about its privacy practices, echoing Pinduoduo’s past malware issues.[viii] Cybersecurity experts classify the Pinduoduo app as malware, as it bypassed phone security measures to monitor activity on other apps, check notifications, read private messages, and alter settings.[ix] Moreover, most of the engineers who developed these data-collecting exploits without user consent work for Temu.[x]

Currently, Temu is facing class action lawsuits in New York and Illinois over data privacy. Plaintiffs allege that Temu embeds spyware and malware to collect sensitive information.

The New York lawsuit claims Temu’s app uses “self-compiling software” to bypass malware detection and steal private data, as warned by the Better Business Bureau.[xi] Temu extensively collects personal information, including names, phone numbers, addresses, birthdates, social media photos, and social security numbers, as well as automatically collects data from users’ phones, tablets, or laptops, such as operating system details, browsing history, and location data.[xii]

The Illinois lawsuit asserts that Temu’s app exceeds authorized data access, with experts stating that the app grants Temu access to “literally everything on your phone”[xiii] and labeling it “the most dangerous malware/spyware package currently in widespread circulation.”[xiv]

2. Unauthorized Secondary Use of Personal Information

Data is as valuable as money.

Plaintiffs also allege that Temu’s cost-cutting compromised security, making personal information vulnerable to hackers.[xv] If true, Temu is not only a dangerous spyware tool but also overcharges consumers by denying them the privacy protections they paid for.[xvi]

We expect online vendors to follow industry-standard measures to protect our PIII as part of the services we purchase. Identity theft involves using personal information without authorization to commit fraud.[xvii] Thieves can open new accounts, receive benefits, and incur charges in the victim’s name, harming credit ratings and requiring significant time and effort to resolve.[xviii]

Today, personal information is a valuable commodity. Companies monetize user data by selling it to advertisers, marketers, and data brokers. These entities have great incentives to pay significant amounts for access to user profiles, preferences, behavior patterns, and other valuable insights. Some now offer consumers the option to sell their information, giving individuals more control over their data and its recipients. [xix]

Broader Implications of Chinese Technology’s Expanding Global Role

Many a little makes a mickle.

In a recent report from the U.S.-China Economic and Security Review Commission, Policy Analyst Nicholas Kaufman highlights the challenges presented by Chinese “fast-fashion” platforms such as Shein and Temu. These platforms, along with other emerging Chinese e-commerce companies like Cider, Urbanic, ChicV, Doublefs, Cupshe, and JollyChic, are aiming to enter the U.S. market by emulating the strategies of Shein and Temu.[xx] Given the rapid growth of Shein and other Chinese e-commerce firms in the U.S., he warns the U.S. government to ensure that these companies comply with U.S. laws and regulations and do not gain unfair advantages over American firms.[xxi]

Indeed, China is expanding its presence in global markets, gradually gaining significant influence and economic power. Each small advancement in market share, consumer base, and brand recognition contributes to a larger, more influential presence on the world stage. This incremental approach allows China to effectively utilize its soft power, demonstrating its ability to shape global markets and consumer behavior through consistent, small-scale efforts that collectively have a substantial impact.

Therefore, security officials have valid reasons to be concerned about the rapid rise of Temu in the West, prompting countries to reconsider their reliance on Chinese technology. Since technology has become a central tool for exerting influence, allowing data to be accessed by an authoritarian government with conflicting national security and economic interests may have long-term detrimental consequences.

Conclusion

The impact of Temu may not be as dire as Audrey II’s world domination. Nevertheless, mobile apps are integral to modern life, and online retailers like Temu possess the capability and the data to entice us and shape our addictive shopping behaviors. Yet, more significantly, they can wield control over our PII, manipulate our choices, invade our privacy, and compromise our security. In essence, the unchecked collection and misuse of PII by companies like Temu could result in a society where privacy is obsolete, and personal autonomy is undermined.

However, Temu is not the only “Audrey II” out there. Similar entities exist globally in various digital guises. What they share in common is the presence of their apps on our smartphones, eagerly awaiting installation and feeding on our data.

So, what’s your Audrey II? That digital stalker who knows too much about you.

Many vital things in life elude the naked eye: the air we breathe, the love we share, the beliefs that guide our actions, the lost soul longing to be saved.

And your data, adrift somewhere, in that little shop of horrors.

References:

[i] Martin A. Nemzow, Requiring Personal PII Ownership, Fed. Trade Comm’n, (July, 1, 2010),  https://www.ftc.gov/sites/default/files/documents/public_comments/preliminary-ftc-staff-report-protecting-consumer-privacy-era-rapid-change-proposed-framework/00191-57181.pdf.

[ii] Compl. ¶ 29-30, Hu v. Whaleco, No. 1:23-cv-06962 (E.D.N.Y. Sept. 20, 2023).

[iii] BETTER BUS. BUREAU, https://www.bbb.org/us/ma/boston/profile/online-shopping/temucom-0021-553943 (last visited May 25, 2024).

[iv] Region Setting, TEMU, https://www.temu.com/bgp_region_setting.html (last visited May 25, 2024).

[v] Hu v. Whaleco, ¶ 21.

[vi] Explore Top Temu Statistics (2024), ANALYZIFY, https://analyzify.com/hub/temu-statistics (last updated Apr. 17, 2024).

[vii] Id.

[viii] Hu v. Whaleco, ¶ 31.

[ix] Id. at 33.

[x] Id. at 34.

[xi] Id. at 37, 53.

[xii] Id. at 53.

[xiii] Id. at ¶ 5.

[xiv] Id. at ¶ 7.

[xv]  Hu v. Whaleco, ¶ 3, 5.

[xvi] Id. at 73.

[xvii] U.S. Gen. Accountability Office, GAO-07-737, Data Breaches Are Frequent, But Evidence Of Resulting Identity Theft Is Limited; However, The Full Extent Is Unknown, U.S. Gov. Accountability Office, http://www.gao.gov/new.items/d07737.pdf (June 2007).

[xviii] Id.; Hu v. Whaleco, ¶ 62, 74.

[xix] Hu v. Whaleco, ¶ 69.

[xx] Nicholas Kaufman, Shein, Temu, and Chinese E-Commerce: Data Risks, Sourcing Violations, and Trade Loopholes, U.S.-China Econ. & Sec. Review Comm’n, (Apr. 14, 2023), https://www.uscc.gov/sites/default/files/2023-04/Issue_Brief-Shein_Temu_and_Chinese_E-Commerce.pdf.

[xxi] Id.

Note: The views expressed above are of the Author.

The post Little Shop of Data: Temu appeared first on Fashion Law Journal.

The term “thrifted” has gained significant popularity in fashion circles, especially among younger generations and within the sustainable fashion movement. Influencers and fashion-forward individuals frequently highlight their thrifted finds, inspiring others to explore thrift stores and adopt second-hand fashion. Some experts even predict that the second-hand market could surpass fast fashion as a trendy alternative for the new generation.[1]

This resurgence of thrift reflects a broader shift towards a circular economy – a model where resources are continuously reused, recycled, or repurposed rather than discarded. In this system, the lifecycle of clothing is extended, minimizing waste and reducing environmental impact. The practice of thrifting, rooted in centuries-old traditions, aligns with this sustainable approach, blending past and present in a fabric of conscious consumption.

By choosing thrifted items, we are more than ever helping to close the gap – or rift – between consumerism and sustainability, contributing to the health of the planet. Yet, this growing enthusiasm for second-hand fashion is not without its challenges. The rapid expansion of the resale market has brought to light several issues that threaten its sustainability and integration into the mainstream. Additionally, the tension between promoting sustainable practices and maintaining economic growth raises difficult questions about the future of the fashion industry.

The Industrial Revolution and the Emergence of the Resale Market

The Industrial Revolution, beginning in the late 18th century, brought about significant changes in clothing production methods. The rise of factories, mass production, and technological advancements drastically reduced the cost of clothing, making it more affordable and accessible to a broader population.[2] As a result, people began discarding garments more readily, creating a surplus of used clothing and laying the groundwork for the resale market.[3]

By the late 19th century, this trend accelerated due to rapid urbanization in Europe and North America. The migration of people to cities in search of work led to dense urban populations, which in turn strained living conditions and available space. With limited room to store excess goods, including clothing, there was a growing need for effective waste management solutions.[4] This necessity contributed to the emergence of the early secondhand market, where discarded but still usable items found new life.[5]

The Evolution of Thrift and Consignment Stores

Secondhand clothing initially carried a stigma, associated with poverty and bias against sellers.[6] For instance, used clothes were often sold from pushcarts, predominantly by Jewish immigrants whose professional options were limited by anti-Semitism.[7]

However, Christian organizations like the Salvation Army and Goodwill recognized the potential to generate significant income in the thrift business.[8] They adopted the resale model to fund charitable efforts, employing the poor and disabled to collect and repair goods for resale.[9] These shops also provided immigrants with affordable clothing and a means to “Americanize.”[10]

By the 1920s, thrift stores had become as organized as department stores.[11] Goodwill, for example, operated a fleet of trucks collecting goods from over 1,000 households.[12] The term “thrift” even replaced “junk shops,” appealing to middle-class housewives who felt virtuous buying secondhand items because it supported a good cause.[13]

By the 1930s, the Salvation Army and Goodwill had become prominent, thriving during the Great Depression and the post-WWII surplus.[14] As post-war prosperity grew, people donated more clothes to refresh their homes and wardrobes with better-quality synthetic fibers and vibrant new fashions.[15]

In the 1950s, consignment stores emerged, offering high-end fashion at lower prices.[16] Unlike thrift stores that primarily relied on donations, consignment stores

allowed people to sell their gently used luxury items and receive a portion of the sales proceeds, thus appealing to both sellers and buyers looking for value.[17] Since wealthier consumers began to covet “vintage” clothes, the thrill of finding couture at a more affordable price has endured ever since.[18] 

The Internet and the Rise of Online Platforms

In the mid-90s, just a few years after the internet was made public, online resale platforms such as eBay began to emerge. These platforms revolutionized the resale market by expanding its reach and enabling individuals to easily buy and sell unique or vintage items.

Over time, specialized resale platforms like Poshmark, The RealReal, and Depop developed, focusing specifically on fashion. These platforms offered a curated experience tailored to various markets such as luxury fashion, streetwear, or vintage items, attracting consumers in search of particular styles and brands. This shift has led to the flourishing of high-end resale markets, making second-hand luxury fashion more accessible, acceptable, and popular.

Eventually, two primary business models emerged in the resale market: peer-to-peer marketplaces, where individuals handle the entire selling process, and managed marketplaces, where the platform manages most of the process.[19] Additionally, hybrid models have developed, combining aspects of both approaches, allowing for flexibility in how goods are sourced, authenticated, and sold.[20]

BUSINESS MODEL

Mainstream Adoption and Sustainability

As awareness of the environmental impact of fast fashion grew, resale became a more mainstream and socially conscious choice. In response to concerns about overconsumption, pollution, and exploitative labor practices, consumers began to view buying second-hand as a way to reduce garment waste, slow down fast fashion, and promote sustainability.

Notably, Gen Z has played a significant role in driving the rapid growth of the resale market.[21] While younger consumers generally have less disposable income than older generations, making them more inclined to buy secondhand, their motivation goes beyond affordability. Research indicates that many in this generation are committed to sustainable living, viewing the resale market as a critical tool for achieving this goal.[22]

By embracing their role as “good thrifters,” Gen Z has helped to dismantle the stigma traditionally associated with buying secondhand.[23] The growing trend of “thrift hauls” on social media platforms like Instagram and YouTube—where Gen Zers proudly showcase their thrifted finds—underscores their dedication to sustainability and their influence in making secondhand fashion more mainstream.[24] As a key demographic, they have significant potential to shape the future of these markets.

The Rise of Circular Fashion

The concept of circular fashion has emerged as a significant evolution in the sustainable fashion movement. This idea began gaining traction around the mid-2010s, with 2017 being a particularly pivotal year. Global Fashion Agenda’s 2020 Circular Fashion System Commitment (2017) launched in Copenhagen Fashion Summit marked a significant industry-wide acknowledgment of the importance of circular fashion.

Unlike the traditional linear model of “take, make, dispose,” circular fashion aims to create a closed-loop system where clothing and textiles are continuously recycled, repurposed, or resold, minimizing waste and environmental impact. Currently, the life cycle of a garment is extended through various practices:

• Design for Longevity: Clothing is designed with durability in mind, allowing items to be worn and reused multiple times.
• Recycling & Upcycling: Garments are either recycled into new materials or upcycled into new designs, giving them a second life and reducing the demand for new resources.
• Rental & Leasing Models: Consumers rent or lease clothing rather than purchasing it outright, which promotes the reuse of garments and reduces the need for constant new production.
• Resale & Redistribution: Items that are no longer wanted are resold, ensuring they stay in circulation rather than ending up in landfills.

Examples of Circular Fashion in Action

Companies Reselling and Renting Their Own Goods

With Gen Z making up 20% of the U.S. population and leading the way in adopting trends in technology and fashion, many companies began to include resale programs to target these environmentally conscious young consumers.[25] On the other hand, some luxury brands have been hesitant to embrace resale, fearing that consumers might “trade down” from new to pre-owned goods with lower profit margins.[26] They also worry that resale customers may not align with their target market.[27] But these concerns are often exaggerated; companies can adopt pricing strategies to reduce the gap between new and used products, as Apple has done, or separate new and resale items on their websites, as REI has with outdoor gear and equipment.[28]

Alongside resale, rental services have become another noteworthy trend, particularly in the luxury sector. In today’s social media age, where users frequently share photos of their outfits and are sensitive to the latest trends, rental programs offer a practical solution. These programs allow consumers to access high-end fashion without the commitment of ownership, offering a more sustainable and yet convenient way to enjoy new styles. Companies like Rent the Runway and HURR have capitalized on this trend, offering curated selections of designer clothing and accessories for rent, making high fashion more accessible and reducing the need for constant new production.

Examples of Resale Programs

Challenges of Sustainable Practices in the Fashion Industry

As the resale market and sustainable fashion practices continue to grow, they face a variety of challenges that could hinder their long-term viability. While second-hand shopping and circular fashion models have gained popularity as eco-friendly alternatives, several underlying issues complicate their integration into the mainstream. These challenges highlight the tension between sustainability goals and economic realities, raising important questions about the future of the fashion industry.

1. Reduced Consumer Spending

The push for sustainability in fashion, while necessary, introduces a paradox: as consumers embrace eco-friendly practices like buying less and extending the lifespan of their clothing, overall consumer spending may decline. This shift poses a significant challenge for economies that rely heavily on consumer-driven growth. For example, the U.S. economy, where consumer spending accounts for about 70% of the gross domestic product (GDP), could face downturns in economic activity if widespread adoption of sustainable practices leads to decreased demand for new products.[29]

2. Declining Quality of Second-Hand Clothing

The rise of ultra-fast fashion has led to an increase in global clothing production and a surge in discarded garments, often of low quality. This trend has resulted in a significant amount of low-quality clothing entering the second-hand market after only a few wears.[30] For example, a 2023 study found that a large Swedish charity incinerates 70% of donated clothing due to poor quality, and 40% of exported clothing to Ghana ends up as waste. [31] This oversupply of low-quality items has diminished the perceived and real value of second-hand goods.[32] Consequently, local resellers face lower profit margins and higher costs associated with sorting, discarding, or trying to sell these less desirable items. Additionally, when consumers dispose of second-hand items too quickly due to poor quality, it defeats the purpose of the second-hand market. Instead of extending the life cycle of garments and promoting sustainability, it perpetuates a cycle similar to fast fashion, where clothing is used briefly and discarded, failing to achieve the intended environmental benefits.

3. High Labor Costs of Second-Hand Processing

Waste is not a free resource; it requires significant effort, labor, and skill to repurpose. The process of sorting, cleaning, repairing, and preparing second-hand items for resale is labor-intensive, which drives up operational costs for second-hand businesses. For example, ThredUp, a leading online consignment and thrift store, has started charging for processing item – a service that was previously free – due to the rising costs associated with these tasks.[33]

In addition, as minimum wages and labor costs rise globally, second-hand businesses face further financial pressures.[34]  This increase in operational expenses is often passed on to consumers, leading to higher prices for second-hand items. In some cases, these prices can exceed those of new items. For instance, in the UK, a used Primark sweater was found to be priced higher than a new one, illustrating how the costs of processing and labor in the second-hand market can distort pricing.[35]

This economic shift challenges the perception that second-hand items are always a cheaper alternative, potentially undermining the appeal of buying resale goods as a cost-effective and sustainable option. The increased prices could deter budget-conscious consumers, thus reducing demand and threatening the viability of second-hand businesses that rely on high turnover to remain profitable.

4. Reliance on New Clothing Sales

Despite its eco-friendly reputation, the resale industry often relies on the sale of new clothing to sustain itself.[36] For example, 80% of items sold on eBay are new.[37] Similarly, the Swedish resale site Sellpy was able to expand to new markets and invest in technology because of its partnership with H&M, whose profits come from selling large amounts of fast fashion.[38]

The reliance on new clothing extends beyond these examples. Some second-hand stores now offer a mix of vintage and new apparel to stay competitive and meet diverse consumer demands. For instance, The RealReal features new, unsold items from designers as part of their “RealReal Exclusives” collection. ThredUp’s “Goody Boxes” allow customers to receive curated fashion items, including some new pieces, alongside pre-owned goods. Furthermore, Poshmark’s “Poshmark Boutique” enables sellers to list new clothing alongside pre-owned items.

Guideline for Future Directions 

Addressing the challenges faced by the fashion industry does not necessarily require drastic, out-of-the-box thinking. Instead, focusing on practical solutions that are within our reach – those that we can realistically implement – should be the target. By making an impact where it is most feasible, we can drive meaningful change.

1. Educate Consumers to Shift Towards Sustainable Fashion

For circular fashion to thrive, we need to shift consumer behavior from valuing instant gratification and shopping addiction – hallmarks of fast fashion – to prioritizing sustainability. Liz Ricketts, co-founder and executive director of The Or Foundation, argues that the fashion industry’s reliance on convenience fuels overconsumption.[39] Convenience, a learned behavior, encourages passive consumption and fuels addiction to fast fashion.[40] To drive this cultural change, both brands and schools must actively promote sustainable fashion as an attractive alternative to fast fashion.[41] By educating consumers, especially younger generations, on the pitfalls of convenience and encouraging them to prioritize meaningful values over instant gratification, we can begin to dismantle the unhealthy consumerism that drives fashion waste.[42]

2. Strengthen Government Involvement in Circular Fashion

Government involvement is crucial in advancing a circular fashion industry, through both regulatory measures and financial support. By setting standards and requiring companies to adopt technologies like scannable tags for efficient sorting or AI-driven inventory management systems, governments can enhance profitability for resellers and support their growth with advanced fulfillment centers and technology.[43] Furthermore, offering tax breaks, low-interest loans, grants, and subsidies for sustainable practices can help lower production costs, benefiting consumers. Rachel Kibbe, CEO of the trade group American Circular Textiles, advocates for government funding to support the second-hand clothing market, particularly for sorting and recycling infrastructure. [44] Such funding would mirror other climate-focused initiatives, aiming to reduce labor costs and improve operational efficiency within the industry.[45]

3. Cut Clothing Production

The root cause of fashion waste is excessive production. The industry’s current model, which prioritizes volume over value, is unsustainable and places a heavy burden on communities like Accra.[46] In these regions, massive amounts of clothing waste from the Global North have led to significant environmental and socio-economic challenges. The textile crisis in Accra, for example, is not due to local overproduction or overconsumption, but rather the overwhelming volume of second-hand clothing imported from major brands in the Global North, including H&M, Zara, Nike, Adidas, and Marks & Spencer.[47]

To address oversupply of new garments, Liz Ricketts argues for establishing production caps. [48] She proposes cutting new clothing production by 40% as a solution to the oversupply of garments.[49] This significant reduction would help alleviate pressure on second-hand markets, making second-hand and upcycled products more competitive and desirable. [50] Moreover, it would not only ease the burden on local waste management systems but also push fashion brands to innovate in upcycling and sustainable design.[51] With a lower volume of new clothes entering the market, brands would be incentivized to explore creative ways to use existing materials, enhancing the industry’s shift towards circularity.

4. Integrate Sustainability with Technology

Leveraging technology is an optimal way to enhance transparency, accessibility, and market reach of secondhand stores. ZZER, one of the largest online platforms and physical stores in China for trading secondhand luxury goods, exemplifies this integration. Located in Shanghai and comparable in size to a Costco store, ZZER allows shoppers to use its app to scan QR codes on items, providing details such as price comparisons, condition reports, and authentication status. The app’s filters enable users to narrow their search by price, range, brand, condition, and more, helping them find items that fit their budget or specific preferences.

The scale of such platforms is important because it amplifies their impact. Its large size enables cost-effective operations, with efficient sorting and processing of items reducing costs and boosting profitability. These savings support further investment in sustainability and platform expansion. Also, ZZER’s extensive reach captures a significant portion of the luxury second-hand market, increasing reuse and decreasing demand for new production, thus mitigating environmental impact. By offering a reliable and convenient platform, ZZER can shift consumer preferences toward sustainable fashion, making pre-owned items more appealing and promoting widespread adoption of sustainable practices.

Pictures of ZZER in Shanghai:

Conclusion

Thrifting plays a crucial role in bridging the gap between unsustainable consumer habits and environmental responsibility, offering a practical and impactful solution to mitigate the environmental damage caused by fast fashion. As the fashion industry navigates the divide between rapid production and sustainable practices, thrifted items emerge as a viable means to “save the Earth” by extending the life cycle of clothing and reducing the demand for new garments. Given the planet’s limited resources, it is imperative for companies to innovate and address their environmental impact through advanced resale technologies and more effective practices.

However, creating a more eco-conscious fashion future is not solely the responsibility of companies; individual actions are equally important. To make a meaningful difference, we should embrace sustainable choices, support brands committed to environmental responsibility, and inspire others to follow suit. By working together, we can reshape the fashion industry towards a more sustainable future, one thrifted item at a time.

References:

[1] Summer Xu, Reshape the Future: The Resale Fashion Trend and Sustainability, GRC INSIGHTS (Feb. 3, 2024), https://insights.grcglobalgroup.com/reshape-the-future-the-resale-fashion-trend-and-sustainability/.

[2] Kate Sanner, Part 1: How Thrift and Consignment Stores Started the Resale Revolution, BENI (Nov. 3, 2023), https://www.joinbeni.com/post/how-thrift-and-consignment-stores-started-the-resale-revolution.

[3] Id.

[4] Id.

[5] Id.

[6] Olivia B. Waxman, People Have Been Reusing Clothes Forever but Thrift Shops Are Relatively New. Here’s Why, TIME (Aug. 17, 2018), https://time.com/5364170/thrift-store-history/.

[7] Id.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Sanner, supra note 2.

[15] Waxman, supra note 6.

[16] Sanner, supra note 2.

[17] Id.

[18] Waxman, supra note 6.

[19] Kate Sanner, Part 2: When Resale Moved Online: Feat. Poshmark, The RealReal, Vestiaire Collective and More, BENI (Nov. 21, 2023), https://www.joinbeni.com/post/when-resale-moved-online-feat-poshmark-the-realreal-vestiaire-collective-and-more.

[20] Id.

[21] Thomas S. Robertson, The Resale Revolution, HARV. BS. REV. (last visited Aug. 22, 2024), https://hbr.org/2023/11/the-resale-revolution.

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Alden Wicker, The Trendy Second-Hand Clothing Market Is Huge and Still Growing – Yet Nobody Is Turning a Profit, BBC (Mar. 4, 2024), https://www.bbc.com/worklife/article/20240301-international-second-hand-clothing-market-profitable.

[31] Id.

[32] Id.

[33] Id.

[34] Id.

[35] Id.

[36] Id.

[37] Id.

[38] Id.

[39] Shonagh Marshall, A Conversation with Liz Ricketts, DENIER (last visited Aug. 29, 2024), https://www.fashiondenier.com/conversations/a-conversation-with-liz-ricketts.

[40] Id.

[41] Id.

[42] Id.

[43] Wicker, supra note 30.

[44] Id.

[45] Id.

[46] Liz Ricketts, Will the Fashion Industry Come Clean on the Data Point That Matters Most for Circularity?, SUSTAINABLE BRANDS (Jan. 16, 2024), https://sustainablebrands.com/read/waste-not/fashion-data-point-matters-most-circularity.

[47] Id.

[48] Id.

[49] Id.

[50] Id.

[51] Id.

The post Th(r)ifted: Bridging the Rift in Fashion’s Evolution to Save the Earth appeared first on Fashion Law Journal.

Thanks to social media, K-pop idols have become pivotal figures in fashion, blending streetwear with high fashion and setting trends adopted by millions. Collaborating with top designers, they create a captivating fusion of music and fashion.

Thus, K-pop idols are not just performers; they are fashion icons who inspire and redefine contemporary design trends. Through platforms like Instagram, they shape cultural norms and set bold, innovative fashion trends. They have become our go-to role models to upgrade our look, draw inspirations from, and aspire to emulate.

The Rise of K-Culture and K-Pop

There is something about music that transcends language barriers. It allows you to fall in love with a song, dance to its melody, and immerse yourself in its rhythm. It’s our ride-or-die companion, whether “rain be pourin’” or “sky keep fallin’.”[2]

But there is something more about K-pop. What makes its unique approach – captivating music, distinctive dance sequences, colorful music videos[3] – even more remarkable is the visual image and styling of the artists. Their hair, makeup, accessories, and clothes attract the audience’s full attention.

As part of this Korean Wave – the Korean pop culture movement that began in the 1990s[4] – K-pop not only encompasses K-food, K-drama, K-beauty, and K-music, but also K-fashion. However, it’s not really K-Fashion. The internet has fostered a significant blending of Western and Eastern styles, with K-pop stars like BLACKPINK’s Jennie influencing global fashion trends and brands embracing diverse cultural aesthetics. This influence is further highlighted by K-pop stars now making appearances at high-profile events like the Met Gala, showcasing their impact on the global fashion stage.[5]

Social Media Amplified Influence of Celebrity Fashion Trends

In the early 2000s, celebrities set trends through music videos and red-carpet appearances, like Britney Spears’ “Baby One More Time” schoolgirl outfit[6], and Jennifer Lopez’s iconic green Versace dress at the 2000 Grammy Awards.[7]

Since the late 2010s, social media has amplified celebrity influence, offering real-time fashion and direct fan interaction. Initially, fan engagement in the K-pop industry was controlled by companies, but over time, fan communities have become more interactive and reciprocal.[8]

For instance, BTS gained their “ARMY” of fans through close interactions on social media, sharing updates, behind-the-scenes content, and live broadcasts on platforms like Twitter, YouTube, Instagram, and VLive.[9] This direct communication has fostered a loyal community that promotes the group and creates fan-generated content like dance covers, makeovers, and fashion styles.[10] Consequently, BTS extend beyond music, impacting global fashion trends as fans emulate their style, amplified by their collaboration with high-end fashion brands like Louis Vuitton.

K-Pop Stars as Fashion House Ambassadors

“BLACKPINK in your area.” – BLACKPINK, “BOOMBAYAH”

Recognizing K-pop’s selling power, luxury fashion houses have revamped their marketing strategies by appointing K-pop stars as brand ambassadors.[11] This trend is exemplified by all BLACKPINK members – Lisa, Jennie, Rosé and Jisoo – serving as global ambassadors for French powerhouses Celine, Chanel, Saint Laurent, and Dior, respectively.[12] Additionally, Lisa represents Bulgari, Jennie for Calvin Klein, Rosé for Tiffany & Co., Jisoo for Cartier, boosting their brands among affluent millennials and Gen Z globally.[13]

JENNIE X Gentle Monster: Redefining Eyewear Fashion Through Collaboration

“Look at you, now look at me. How you ever, ever gonna find someone like this?” – JENNIE, “You&Me”

From “Jenny from the Block” to “JENNIE from BLACKPINK,” cultural power dynamics have shifted, with K-pop becoming a global force. Jennie Kim, a.k.a. ‘Human Chanel,’ excels in brand collaborations and has become a Jensetter for global fashionistas.[14]

For example, Jennie’s collaboration with Gentle Monster (GM) has left a significant mark on global fashion trends. GM, a renowned South Korean eyewear brand recognized for its creative, delicate yet bold designs, partnered with Jennie to launch Jentle Home (2020), Jentle Garden (2021), and Jentle Salon (2024).[15] These initiatives showcased limited-edition eyewear and themed pop-up stores across numerous cities worldwide.[16] Her involvement has been immensely successful, solidifying the brand’s position as a trailblazer in innovative eyewear design.[17]

1. Bold and Playful Look: In collaboration with Jennie, GM broke traditional eyewear design norms by incorporating unconventional shapes like geometric, oversized, and asymmetrical frames as well as unusual combinations of materials such as metal and acetate.[18] Infusing Jennie’s creations with playful colors and pastels, she appealed to a younger audience in search of trendy and fashion-forward eyewear choices.

2. Charm Accessories for Eyewear: The new Jentle Salon collection introduces unprecedented eyewear designs with detachable charms, allowing wearers to customize their glasses.[19] These charms, such as Capybaras, white clouds, bows, and pearlescent hearts, adorn the temples of the glasses, setting a trend for eyewear accessorizing and customizing similar to the popularity of Croc’s jibbitz charms.[20]

3. Innovative Shopping Experiences: Inspired by Jennie’s childhood, themed pop-up stores like Jentle Home set a trend for creating interactive and immersive shopping experiences, where customers can try on the products and engage with the brand and its story on a deeper level.[21] These colorful spaces prioritize social media, with Instagrammable spots and hashtag campaigns encouraging online sharing, expanding the collaboration’s reach and impact globally.[22]

Conclusion

K-pop idols are not just performers but fashion icons who have bridged music and fashion in the creative industry. Social media has amplified their influence, allowing direct interaction with fans and fostering loyal communities that promote their fashion. By collaborating with top fashion brands, such as Jennie’s partnerships, K-pop idols continue to showcase Korea’s lasting influence on global fashion. Their ability to drive sales and popularize brands has made them valuable assets in the fashion industry. As the Korean Wave continues to sweep across the world, K-pop’s impact on fashion remains undeniable, especially among younger generations.

References:

[1] Jungkook, Seven, BigHit Music 2023.

[2] BTS, ON, Map of the Soul: 7, BigHit Entertainment 2020.

[3] Eunsuk Hur, K-fashion E-tailers and Consumption in the Global Market 5, Routledge, (Sept, 2023), https://www.researchgate.net/publication/374170655_K-fashion_E tailers_and_Consumption_in_the_Global_Market.

[4] Id. at 4.

[5] From Seoul to The Met: K-pop Idols Who Graced the Met Gala Red Carpet, ALLKPOP (May 7, 20230), https://www.allkpop.com/article/2023/05/from-seoul-to-the-met-k-pop-idols-who-graced-the-met-gala-red-carpet (last visited June 5, 2024).

[6] Arielle Tschinkel, 45 of the Most Iconic Music Video Looks of All Time, BUSINESS INSIDER (Oct. 15, 2019), https://www.businessinsider.com/most-iconic-music-video-looks-of-all-time#michael-jacksons-red-leather-jacket-in-thriller-1983-is-instantly-recognizable-6.

[7] Leah Dolan, Remember When Jennifer Lopez’s Grammy Awards Dress Helped Invent Google Image Search?, CNN (Feb. 3, 2023), https://edition.cnn.com/style/article/jlo-green-dress-grammys-remember-when/index.html.

[8] Hur, supra note 1, at 4.

[9] Blanca Lucía Ginés Fenoll, K-Pop Idols, Social Media, and the Reinvention of the Fan Phenomenon: A Case Study on BTS, Facultad de Ciencias Humanas y Sociales 1, 8, 24, 26, 28, (May 2021), https://repositorio.comillas.edu/xmlui/handle/11531/47456.

[10] Hur, supra note 1, at 4.

[11] Hyunjeong Rhee & Kyu-Hye Lee, Behind the Scenes of K-Pop and the Luxury Industry: A Cross-Cultural Dynamic Topic Modeling Approach, Hanyang University, (Jan. 27, 2024), https://www.researchgate.net/publication/377747567_Behind_The_Scenes_of_K-Pop_and_the_Luxury_Industry_A_Cross-Cultural_Dynamic_Topic_Modeling_Approach.

[12] Hur, supra note 1.

[13] Rhee, supra note 10; Kriti Nayyar, BLACKPINK brand endorsements: Everything Lisa, Jisoo, Jennie and Rosé represent, LIFESTYLE ASIA, (May 12, 2023), https://www.lifestyleasia.com/hk/culture/music/roundup-of-all-blackpink-brand-endorsements/.

[14] Nayyar, supra note 12.  

[15] 10 things every eyewear lover should know about Gentle Monster, MIA BURTON (July 6, 2023), https://miaburton.com/en/magazine/style/all-about-gentle-monster (last visited June 15, 2024).

[16] Maria Anton, Gentle Monster x Jennie – How you like that?, METAL (last visited June 15, 2024) https://metalmagazine.eu/en/post/gentle-monster-x-jennie; Joanna Elizabeth, Jennie & Gentle Monster’s New Eyewear Collab is Beyond Chic, FASHION GONE ROGUE (Apr. 6, 2024), https://www.fashiongonerogue.com/jennie-gentle-monster-2024-ad/.

[17] Blackpink Sunglasses: Shop Their Style, PRET A VOIR (Mar. 4, 2024), https://pretavoir.co.uk/blogs/news/blackpink-sunglasses (last visited June 15, 2024).

[18] Gentle Monster Sunglasses – Innovative Eyewear Redefining Fashion, PRET A VOIR (Apr. 5, 2023), https://pretavoir.us/blogs/news/gentle-monster-innovative-eyewear-redefining-fashion (last visited June 5, 2024).

[19] Jentle Salon, GENTLE MONSTER, https://www.gentlemonster.com/us/stories/jentle-salon-popup (last visited June 5, 2024).

[20] Megan La Faber, Gentle Monster and BLACKPINK’s Jennie Unveil Their Latest Collaboration, ELLE SINGAPORE (Apr. 25, 2024), https://elle.com.sg/fashion/gentle-monster-jennie-jentle-salon/.

[21] Soo Bin Cho, Gentle Monster x Jennie Popup Space | Jentle Home, CREATRIP (last visited June 5, 2024), https://creatrip.com/en/blog/7669.

[22] The Instagrammable Store: The Promise of a Differentiating Customer Experience, SQLI DIGITAL EXPERIENCE (Mar. 5, 2019), https://www.sqli.com/int-en/insights-news/blog/instagrammable-store-promise-differentiating-customer-experience; Social Media Marketing: How to Amplify Your Street Marketing with Online Platforms, FASTER CAPITAL (Apr. 23, 2024), https://fastercapital.com/content/Social-Media-Marketing–How-to-Amplify-Your-Street-Marketing-with-Online-Platforms.html

The post K-Pop Idols as Fashion Idols: How Artist Collaborations Influence Design Trends appeared first on Fashion Law Journal.

Upcycling has gained popularity, particularly in industries like fashion, as existing materials remain in circulation instead of ending up in landfills.[1] Upcycling creatively repurposes waste materials or discarded products into new ones of higher value, quality, or functionality, showcasing innovative reuse such as transforming old jeans into a denim tote bag.[2] Whereas, recycling involves breaking down waste materials or products into their basic components for creating new products or materials, such as melting plastic bottles to make new plastic products.[3] Although both practices contribute positively to environmental conservation by reducing waste and the demand for virgin resources, upcycling generally requires fewer resources and less energy compared to recycling.[4]

Despite these benefits, upcycling encounters challenges related to intellectual property rights (IPR) when incorporating pre-existing designs, trademarks, or copyrighted materials.[5] Fashion brands may face legal issues when their protected intellectual property is used in upcycled products without authorization. The absence of clear guidelines surrounding upcycled products can also deter designers and brands from fully embracing sustainable initiatives, fearing legal repercussions.

The First Sale Doctrine of Trademark Law

In the context of trademark law, upcycled products lack significant protection by the first sale doctrine. Also known as the exhaustion doctrine, the first sale doctrine is a legal principle that allows the purchaser of a trademarked item to resell, give away, or loan that item without infringing upon the original owner’s IPR.[6] Once a branded product enters the stream of commerce, trademark protection is exhausted and subsequent unauthorized sale of product does not violate trademark protection.[7]

However, there is an exception to the principle of exhaustion when the quality of the product has been altered.[8] The issue arises in upcycling when the upcycled product materially modifies the original item. This means that if you buy a branded shirt, you may not legally transform it into something else, such as a bag, without the brand owner’s permission, if “material differences” exist between the purchased goods and the goods being resold.[9] For instance, if the upcycled bag retains the brand’s logo or distinctive design elements without authorization, it could potentially infringe on the brand’s IPR. The same problem arises if purchasers engage in unauthorized repackaging, reconstruction, and other modifications because the upcycled product is materially different from the original.[10]

Upcycled Products and Trademark Infringement

Trademark infringement occurs when a trademark or service mark is used without authorization in connection with goods and/or services, causing confusion, deception, or misconceptions about the origin of the goods and/or services.[11]

In the context of upcycling, which involves modifying the original product while incorporating or showcasing logos or other protected trademarks, the trademark owner can demonstrate that the upcycler is using the same or similar trademark in commerce without the owner’s consent, and therefore this unauthorized use may lead to a likelihood of consumer confusion.[12] For instance, consumers might mistakenly believe that the product originated from a luxury brand.

Trademark Infringement Found in Upcycled Products

Louis Vuitton Malletier S.A.S. v. Sandra Ling Designs, Inc. No. 4:21-CV-00352 (S.D. Tex. Dec. 1, 2022)

Louis Vuitton sued Sandra Ling Designs (SLD) for trademark infringement related to the sale of apparel, handbags, and accessories made from modified Louis Vuitton goods.[13] Louis Vuitton argued that the material alteration created a risk of customer confusion.[14] SLD countered that customers were unlikely to be confused about the source of its products because each upcycled product included language disclaiming affiliation with Louis Vuitton.[15]

The Southern District of Texas did not rule on counterfeiting because a settlement was reached.[16] While no liability or damages were admitted, the defendants agreed to a permanent injunction and a payment of $603,000, as part of the settled agreement.[17]

Chanel, Inc. v. Shiver and Duke, LLC, No. 1:21-cv-01277-MKV (S.D.N.Y. Nov. 29, 2022)

Chanel sued Shiver + Duke (SD) for trademark infringement, unfair competition, and trademark dilution, citing their use of Chanel buttons in SD’s upcycled jewelry.[18] Chanel argued that the repurposed Chanel buttons were not directly sourced from Chanel, lacked Chanel’s verification of authenticity, and were originally intended for clothing, not jewelry.[19] Moreover, SD’s upcycled products bore similarities to Chanel’s jewelry designs.[20]

Despite receiving a cease-and-desist letter, SD made superficial changes to their products and packaging, such as adding “reimagined” and “reworked,” while continuing to use Chanel’s trademarks without consent.[21] They also incorporated their “SD” markings on the back of the jewelry and tags.[22]

The Southern District Court of New York entered a stipulated judgment in Chanel’s favor, permanently enjoining SD from refashioning Chanel buttons and settling the case, with terms remaining confidential.[23]

Trademark Infringement Not Found in Upcycled Products

Rolex Watch U.S.A., Inc. v. BeckerTime, LLC, No. 4:20-CV-01060, 2022 WL 286184 (N.D. Tex. Jan. 31, 2022)

Rolex obtained a permanent injunction against an upcycler who combined Rolex and third-party parts to create hybrid watches labeled as “Genuine Rolex,” a practice deemed counterfeiting by the Northern District Court of Texas due to the unauthorized use of Rolex’s trademarks.[24]

The upcycler’s watches incorporated at least one Rolex trademark, along with aftermarket bezels and bands, despite lacking Rolex’s endorsement.[25] Although BeckerTime claimed to be a “Certified PreOwned Watch Dealer” with a “Rolex Certified Master Watchmaker,” Rolex had not certified or endorsed them.[26] Furthermore, the parts BeckerTime added to these watches did not bear any markings identifying BeckerTime as the source.[27]

However, Rolex was denied disgorgement of profits due to a delay in legal action known as laches, as Rolex’s attorneys had been aware of the upcycler’s activities for over 10 years before filing suit.[28]

Additionally, the court found that BeckerTime aimed to capitalize on Rolex’s brand recognition but lacked sufficient evidence to prove an intent to infringe on Rolex’s trademarks.[29]

Hamilton Int’l Ltd. v. Vortic LLC, 486 F. Supp. 3d 657 (S.D.N.Y. 2020), aff’d, 13 F.4th 264 (2d Cir. 2021)

The Southern District Court of New York ruled that wristwatches made from genuine parts of pocket watches originally produced and sold in the U.S. under the Hamilton trademark from 1894 to 1950 were unlikely to cause confusion about their origin.[30]

The court emphasized the importance of disclosure in determining confusion caused by modified genuine products.[31] Despite the continued presence of Hamilton marks on some original parts, such as the watch faces, the defendant’s identification on the watch backs and clear disclosures in their advertisements and website clarified the watches’ source.[32]

The Second Circuit upheld this decision, noting Hamilton’s failure to prove confusion among reasonable purchasers regarding the origin of Vortic’s watches.[33]

Conclusion

As upcycling gains momentum as a green solution, the legal red flags in trademarks become increasingly relevant. The cases highlighted herein reveal the delicate balance between innovative reuse and protecting established brands. These instances serve as cautionary tales, emphasizing the need for clear guidelines and boundaries to safeguard both creative expression and brand integrity. While some brands may attempt to disguise themselves as upcyclers and use sustainability as an excuse to unfairly capitalize on a well-known brand’s reputation, it is crucial to strike a balance between encouraging eco-friendly practices and upholding intellectual property rights. This balance is necessary to ensure a fair and ethical marketplace for both creators and consumers alike.

References:

[1] Eda Stark, The Implications of Upcycling Products for Brand and Trademark Owners, IP Watchdog (June 27, 2023, 7:15 AM), https://ipwatchdog.com/2023/06/27/implications-upcycled-products-brand-trademark-owners/id=162671/#.

[2] Karma Thinlay Yolmo, Intellectual Property Challenges in Upcycling and Recycling Fashion: Examining the Legal Implications and Intellectual Property Rights associated with the Transformation of Waste Materials into Sustainable Fashion Products in India, 11 ICJRT. 2 (2023), available at: https://ijcrt.org/papers/IJCRT2307762.pdf.

[3] Id.

[4] Id.

[5] Id.

[6] Irene Calboli, Upcycling, Sustainability, and IP: What It Means for the World of Fashion (July 2023), https://www.wipo.int/wipo_magazine_digital/en/2023/article_0022.html.

[7] Id.

[8] Id.

[9] Id.

[10] Stark, supra note 1.

[11] Id.

[12] Id.

[13] Calboli, supra note 6.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Stark, supra note 1.

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] Bobby Ghajar & Dina Roumiantseva, Upcycled Goods: Considering When Restoration Crosses into Infringement, IP Watchdog (March 26, 2022, 12:15 PM), https://ipwatchdog.com/2022/03/26/upcycled-goods-considering-restoration-crosses-infringement/id=147873/.

[30] Stark, supra note 1.

[31] Ghajar, supra note 29.

[32] Stark, supra note 1.

[33] Id.

The post Trademark Hurdles in Upcycling: Legal Red Flags in Green Solutions appeared first on Fashion Law Journal.

The Hermès Game revolves around the brand’s exclusivity strategy: consumers must pre-spend on an unknown number of ancillary products to qualify for the coveted treasure, a Birkin bag. It is not readily acquirable; hence, all the more desirable. While many luxury brands employ similar tactics, Hermès stands out for its meticulous control over its brand image, distribution channels, and product availability.

In a class action complaint, plaintiffs argue that Hermès has implemented an illegal tying arrangement, directing sales associates to offer Birkins only to consumers with a sufficient purchase history of ancillary products[i]. This tying arrangement, where the sale of one product is contingent upon buying another, can harm competition and consumer welfare.

According to the complaint, the compensation structure for Hermès sales associates is tailored to enforce such a tying arrangement. They are paid hourly plus commission but receive no commission on Birkin bags.[ii] Instead, they earn a 3% commission on ancillary products and 1.5% on non-Birkin bags.[iii] Consequently, sales associates are incentivized to leverage Birkin bags to coerce consumers into purchasing ancillary products to qualify for the “it” bag.

Therefore, plaintiffs allege violations of section two of the Sherman Act (which prohibits acquiring or maintaining a monopoly through anticompetitive means), the Cartwright Act (a California antitrust law that prohibits certain restrictions on commerce and attempts to prevent competition), and Unfair Competition Law (a California law that prohibits unlawful business practices or acts).

Many fashion enthusiasts believe the case will be settled without going to trial. Regardless of the outcome, neither Hermès nor any other business has the unrestricted right to conduct their operations however they see fit; all businesses must adhere to the laws of the jurisdiction in which they operate. Simply citing other brands’ similar practices misses the point—it is ultimately a matter of legality.

Violation of the Sherman Act

In general, four elements must be present to establish a tying arrangement under antitrust laws: (1) distinct products or services, (2) market power in the tying product, (3) actual coercion, and (4) substantial effects on interstate commerce.

Distinct Products or Services

“Tying” refers to tying distinct or dissimilar products or services together when there are separate markets for them. This tactic effectively leverages the desirability of the tying product to drive sales of other tied products.

Hermès has engaged in tying by requiring customers to buy ancillary products that have little or no direct relation to the Birkin bag and belong to separate markets. While some might argue that these products share a fashion accessory category with the Birkin bag, their functions and utility differ significantly. For example, a Twilly scarf may complement the Birkin bag as a fashion accessory, but its association with the bag remains questionable as it serves a different purpose and may appeal to a different set of consumers.

Market Power in the Tying Product

For a tying arrangement to occur, the seller must wield market power in the tying product. Market power denotes the seller’s ability to sway prices, trade terms, or competitive aspects within the relevant market. Although market power can be deduced from factors like market share, it is crucial to recognize that possessing a dominant market share is not the sole indicator of market power. Still, antitrust standards generally do not consider a seller to possess significant market power if their market share in the tying product falls below 30 percent.

Hermès holds significant market power in the luxury handbag sector, particularly with its flagship product, the Birkin bag. While precise market share figures are not publicly disclosed, Hermès’ exclusivity, high pricing, and strong demand indicate its notable presence in this niche market. Despite competition from other high-end brands, Hermès’ distinct positioning, brand prestige, and iconic status contribute to its perceived dominance within the ultra-luxury segment. Thus, while not dominating the entire handbag market, Hermès’ influence and brand strength within the luxury segment could confer market power in tying arrangements involving the Birkin bag.

Actual Coercion

In a tying arrangement, the seller must coerce the buyer into purchasing the tied product, rather than simply encouraging or pressuring them. Coercion can include a refusal to sell the tying product without the purchase of the tied product or pricing that effectively compels a buyer to accept the tying arrangement.

Regarding Hermès, the question arises: is there coercion if customers can bypass the wait by buying from a secondary market? While this may reduce coercion, the presence of a secondary market does not negate Hermès’ practices entirely. The primary market, controlled by Hermès, still influences consumers who prefer buying directly or value the prestige of a new purchase. Moreover, the very existence of a secondary market underscores the demand for Birkin bags, a demand largely fueled by Hermès’ branding and marketing efforts. In addition, the inflated prices often found in the secondary market can act as a barrier for some consumers, effectively compelling them to engage with Hermès’ tying arrangement in the primary market. Hence, while the presence of alternatives may mitigate coercion to some extent, Hermès’ control over the primary market and the enduring allure of its brand still exert considerable influence over consumer behavior.

Substantial Effects on Interstate Commerce

While most anticompetitive behavior impacts interstate commerce to some extent, a tying arrangement under federal antitrust laws must exhibit a substantial effect on interstate commerce, a broad yet not all-encompassing standard.

Given Hermès’ global reach and product distribution spanning state lines and international borders, the tying arrangement likely has a substantial impact on interstate commerce. Transactions involving Hermès products, including the Birkin bag and associated items, affect commerce both domestically and internationally.

Conclusion

The Hermès battle serves as a reminder that no business, regardless of its status, is above the law. While the outcome of this case remains uncertain, it underscores the importance of legal compliance and fair competition in the luxury goods industry. Ultimately, it is not just about upholding brand prestige; it is about ensuring integrity and adherence to legal standards for the benefit of consumers and the marketplace as a whole.

References:

[i] Cavalleri, et al. v. Hermès International, et al., No. 3:24-cv-01707 (N.D. Cal. 2024).

[ii] Id.

[iii] Id.

The post Breaking the Hermès Game: Antitrust Class Action Challenges Exclusive Birkin Bag Access appeared first on Fashion Law Journal.

Despite its global influence, however, the industry lacks comprehensive regulations safeguarding both workers and the environment in New York. The New York Fashion Act and Fashion Workers Act are two bills currently on the national legislative agenda, aiming to address these critical gaps.

New York Fashion Act

The Fashion Sustainability and Social Accountability Act (S7428/A8352)[iii] applies to apparel and footwear companies operating in New York with an annual global revenue of $100 million.[iv] This legislation seeks to make fashion retail sellers and manufacturers accountable for their social and environmental impacts while ensuring their global competitiveness in light of the following findings.

1. Exploitation of Global Labor: The garment industry heavily relies on cheap labor, especially women in the Global South, leading to routine exploitation, inadequate pay, and the risk of sexual abuse.
2. Greenhouse Gas Emissions: The fashion industry contributes 4-8.6% of the global greenhouse gas footprint, surpassing New York and more than France, Germany, and the UK combined. Unchecked growth could exceed a quarter of the world’s carbon budget by 2050.
3. Mishandling of Industrial Chemicals: The fashion industry extensively uses and mishandles chemicals, particularly in textile mills, resulting in toxic waste discharge and impacting the health of workers, consumers, and communities globally.
4. Market Share Competition: Companies prioritize financial gains over sustainability, putting ethical practices at a cost disadvantage. Foreign players like Shein gained 15% of the fast fashion market share in six months by leveraging environmental and labor abuses as a competitive advantage.[v]

To hold retail sellers and manufacturers accountable for their social and environmental impacts, the Act mandates them to:

• Disclose their supply chains by mapping out the entire process
• Identify, prevent, mitigate, and remediate adverse impacts on human rights and the environment
• Reduce carbon footprint aligned with the Paris Agreement
• Collaborate with suppliers to manage chemical use effectively
• Perform mandatory due diligence, coupled with independently verified disclosure around wages and strong enforcement overseen by the Attorney General.[vi]

To regulate and enforce the above requirements, the New York Department of State would collaborate with state agencies to develop regulations, with enforcement overseen by the Attorney General or the designated administrator.[vii] Non-compliance may result in fines of up to 2% of annual revenues, and these funds would benefit workers, communities, and environmental projects.[viii] Fashion companies would also be collectively liable regarding lost wages of garment workers, establishing New York as a leader in corporate accountability and providing a foundational framework for the industry’s future success.[ix]

Fashion Workers Act

New York’s fashion workers constitute 6% of the city’s workforce and contribute to $11 billion in total wages and $2 billion in tax revenues each year.[x] And yet, they lack basic labor protections and benefits.

The Fashion Workers Act (S2477/A5631)[xi] addresses these issues, particularly focusing on models and creatives. The law would regulate model management agencies that escape accountability and create basic protection for these workers from exploitative practices.[xii]

Unlike actors who are hired as employees by production companies, models are often hired as independent contractors through management companies, and therefore unable to unionize.[xiii] Accordingly, modeling and creative agencies are classified as management companies instead of talent agencies under the New York State General Business Law §171(8).[xiv] The “incidental booking exception,” within this framework, excludes the talent represented by these management companies from employee status, thereby exempting them from most of the labor regulations that safeguard workers in other industries.[xv]

Moreover, agencies are usually granted “power of attorney” as part of their agreement to represent talent, providing them with the authority to perform various tasks.[xvi] Agencies negotiate and sign agreements, accept payments, deposit checks, deduct expenses, book jobs, and permit third parties to use the model’s image—all on the models’ behalf and without any obligation to act in their best interests.[xvii]

Hence, the Act, if passed, would require management companies to:

• Establish a fiduciary duty to act in the best interests of talent
• Pay workers within 45 days of completing a job
• Provide workers with copies of contracts and agreements
• Notify former workers if the management collects royalties on their behalf
• Register and deposit a $50,000 surety bond with the NYS Department of State
• Conduct a reasonable inquiry into health and safety on set, implementing a zero-tolerance policy for abuse
• Stop bad practices such as:
  • Requiring power of attorney as a prerequisite for entering into a contract
  • Charging models interest on payment of earnings
  • Collecting signing fees or deposits from models
  • Charging more than the daily fair market rate for accommodation
  • Deducting any fee or expense other than the agreed-upon commission
  • Renewing the contract without the worker’s affirmative consent
  • Imposing a commission fee greater than twenty percent of the worker’s compensation
  • Taking retaliatory action against the worker for using the bill to file a complaint
  • Engaging in discrimination or harassment against talent based on legally permissible categories.[xviii]

Conclusion

Fashion, with its boundless influence socially and environmentally, positions New York as a potential model for fashion legislation. The New York Fashion Act and Fashion Workers Act, if passed, could reshape the global fashion industry. While the legislative process may be time-consuming, their enactment might inspire other jurisdictions to adopt comprehensive laws promoting a sustainable, ethical, and socially responsible fashion ecosystem.

References:

[i] Model Alliance, Fact Sheet: Fashion Workers Act, https://static1.squarespace.com/static/5f539f9f0055833393928efb/t/64494524ff4b5e50af6b4c82/1682523428828/FWA+2023+Fact+Sheet.pdf (last visited Jan. 24, 2024).

[ii] Id.

[iii] See 2021 NY Senate-Assembly Bill S7428, A8352.

[iv] The Fashion Act, Fact Sheet: The Fashion Sustainability

and Social Accountability Act, https://static1.squarespace.com/static/61dd9f6e0419d83f2fb548fb/t/653c139f7f3ad141be01d5f2/1698435999992/Fact+Sheet.pdf (last visited Jan. 24, 2024).

[v] Id.

[vi] Id.

[vii] Id.

[viii] Id.

[ix] Id.

[x] Amber Later, Everything you need to know about the New York Fashion Workers Act, THE PERFECT MAGAZINE (Apr. 4, 2023), https://www.theperfectmagazine.com/news/everything-you-need-to-know-about-the-new-york-fashion-workers-act.

[xi]See 2023 NY Senate-Assembly Bill S2477/A5631.

[xii] Sarah Kent, Is This the Year New York Regulates Fashion?, BUSINESS OF FASHION (Jan. 9, 2024), https://www.businessoffashion.com/articles/sustainability/bills-to-regulate-the-fashion-industry-introduced-into-the-state-legislature/.

[xiii] Kai Braden, It’s Not Just Actors and Writers—Models Need Labor Protections, Too, THE DAILY BEAST (Sept. 4, 2023), https://www.thedailybeast.com/its-not-just-actors-and-writersmodels-need-labor-protections-too.

[xiv] Model Alliance, supra note 1.

[xv] Later, supra note 15.

[xvi] Id.

[xvii] Model Alliance, supra note 1.

[xviii] Model Alliance, supra note 1; Later, supra note 15.

The post New York, It’s Time to Act: The New York Fashion Act and Fashion Workers Act appeared first on Fashion Law Journal.