Stitching Together Sustainability: Navigating Trademark Law in Upcycled Fashion

by Camille Chandler, Associate Member, University of Cincinnati Law Review Vol. 92

I. Introduction

Whether it is admitted, or not, everyone has experienced a variation of this cycle: buy a piece of clothing, wear it once, and then get rid of it. In fact, it is approximated that the average American consumer discards 81.5 pounds of clothes every year.¹ And although this has always been an issue, growing concern over the environment has brought more attention to the wasteful nature of the clothing industry. With warnings about climate change around every corner, lowering one’s carbon footprint has become a priority for many; the fashion industry specifically, has felt pressure to become more sustainable.² An older concept that gained recent popularity is upcycling. To prevent the inevitable landfill fate of most clothing, upcycling breathes new life into old pieces.³ Upcyclers take small pieces from used items such as buttons, zippers, or fabric, and rework them into new items.⁴ This could be crafting an old pair of jeans into a purse, or even reworking vintage designer pieces into new and improved items. While upcycling may prevent the expansion of landfills, the practice also presents legal concerns for the luxury brands whose trademarked logos are being incorporated into these upcycled goods.⁵

This article will consider the benefits of upcycling and resale, while also discussing the success of trademark infringement claims brought against resellers by big-name brands. Part II will provide background on the luxury resale industry, specifically its rise in popularity due to its sustainability. Part II will also look at the Lanham Act and the standard for trademark infringement. Part III discusses recent lawsuits filed by Chanel and Louis Vuitton. Finally, Part IV discusses the impact these recent cases could have on upcyclers and the resale industry as a whole.

II. Background

Although upcycling has gained recent popularity, the term has circulated the fashion industry for some time.⁶ Unlike recycling which was thought to diminish the value of used products, upcycling was meant to add new value to old or used items.⁷ Rather than processing the raw clothing material, upcycling takes pieces of the clothes to craft an entirely new design.⁸ A recent upcycling trend, similar to that discussed in the Louis Vuitton case, has been to take old pendants from luxury necklaces and rework them into new jewelry pieces.⁹ These necklaces have become popular because they feature luxury logos including Prada, Dior, and Louis Vuitton.

For many upcycled items trademark infringement is not an issue since many individuals solely create the pieces for themselves. If they do sell the pieces the brand’s logo may not be incorporated; thus, there is no likelihood of consumer confusion. However, trademark issues do arise when individuals sell upcycled items, incorporating a brand’s logo to benefit from the reputation and goodwill of that brand in an effort to increase sales.¹⁰ It can be as simple as adding a Chanel branded button to an original design. It is the inclusion of Chanel’s logo that adds a level of luxury and value that the piece might not have had without it; essentially allowing the individual to benefit from the reputation of luxury that Chanel has already established.¹¹

In addition to upcycling, luxury resale websites have grown in popularity.¹² In an effort to promote sustainability, resale websites sell designer goods to decrease firsthand consumption in the fashion industry.¹³ However, rather than materially changing the product, like with upcycling, resellers typically sell the goods how they bought them. Websites like The Real Real resell luxury goods while heavily emphasizing the good’s authenticity and value.¹⁴ Reselling items still poses a risk of customer confusion if the resale website includes information that could mislead customers. This can occur if a resale company falsely advertises that a designer brand authenticated the website’s goods. Based on this information customers could conclude that the brand is associated with the resale website, influencing them to make the purchase. The resale website is then benefiting from the brand’s reputation and goodwill, in addition to that brand’s loyal customer base. Trademark law was created to protect businesses who have gone to extensive measures to build a reputable brand.

Trademark rights are associated with the original good and serve as a connection between the designer and its goods.¹⁵ Trademarks can help a business build its reputation for quality goods by correlating the company’s logo with its specific products.¹⁶ This allows customers to trust that they are getting a product from the company whose logo is on the product.

In 1946, Congress passed the Lanham Act to create a national trademark registration system.¹⁷ The Lanham Act restricts the use of similar marks if use of the mark would likely cause consumer confusion.¹⁸ The factors used to determine the likelihood of customer confusion vary based on the court.¹⁹ However, courts have considered the degree of similarity between the products, whether deception was intended by the defendant, and how recognizable the plaintiff’s trademark is to the marketplace.²⁰ The focus on consumer confusion rests on whether the public is likely to believe a brand is associated with an infringer’s good.²¹ The Lanham Act applies to both pre-sale and post-sale confusion. Pre-sale confusion refers to possible confusion during the actual sale, whereas post-sale confusion refers to the confusion of those who see the good in public who may believe the good is authentic.²²

Companies are also concerned with the dilution of its brand. This occurs when the unauthorized use of a widely recognized trademark weakens consumers’ connection between the brand and its goods.²³ For the luxury fashion industry, dilution can be thought of in terms of accessibility. Brands like Dior and Chanel have images associated with wealth and exclusivity; when its logos become associated with the average person the appeal of its products could be affected.²⁴ Luxury fashion companies spend years curating a reputation and a level of notoriety that customers buy into. The reputation explains why companies like Hermes do not let just anyone walk around with a Birkin bag. Trademark law ensures that a brands’ efforts to maintain a reputation of luxury goods is not used to the advantage of others and that goods with that logo are authentic.²⁵

Trademark owners are not the only ones with rights; resellers are also protected, under the first sale doctrine.²⁶ The first sale doctrine allows an individual to resell an item without the consent of the trademark owner.²⁷ Under this doctrine resellers are not to mislead customers into thinking that the trademark owner is associated with the sale or has authenticated the product.²⁸

Still, the first sale doctrine has a few exceptions, one being the material difference exception.²⁹ This exception restricts the resale of a good if the owner has materially changed the product so much so that it is no longer genuine.³⁰ This purpose of this exception is to prevent the association of a brand to a product no longer meeting its specifications.³¹ Luxury brands have extensive quality assurance measures, making it unfair for a reseller to pass off an item that is no longer of that quality. Continuing with the Chanel button example, adding the button to a non-Chanel sweater could mislead a consumer into thinking the sweater was originally made by Chanel. If the sweater was poor quality the consumer could lose trust in Chanel’s quality, therefore negatively impacting the brand’s image.

III. Discussion

Several luxury fashion companies made headlines recently after filing lawsuits alleging that resale websites and upcyclers had committed trademark infringement.³² Chanel won its case against resale website What Goes Around Comes Around, while Louis Vuitton settled a case with a smaller upcycle company named Sandra Ling Designs.³³ Both companies are still pursuing similar claims against other websites who have allegedly also confused its customer base.³⁴ This section will discuss these lawsuits among others and examine the various factors used by courts to decide what constitutes customer confusion.

Chanel filed its lawsuit against What Goes Around Comes Around in 2018 claiming that the luxury resale company was trying to deceive Chanel’s customers into thinking the brand had in some way authenticated the used goods featured on the website, when they were actually counterfeit.³⁵ Chanel claims that What Goes Around Comes Around allegedly sold unauthenticated goods while portraying the items as authenticated Chanel purses.³⁶ The jury unanimously voted in favor of Chanel on all four counts: trademark infringement, false association, unfair competition claims, and false advertising.³⁷ What Goes Around Comes Around still denies ever selling counterfeit items on its website, stating the website has never sold a non-genuine item.³⁸

In 2021, Louis Vuitton brought a trademark infringement claim against Sandra Ling Designs, a small upcycling business.³⁹ Sandra Ling, the company’s owner, takes components of old Louis Vuitton items and incorporates the logo into her own new creation.⁴⁰ Louis Vuitton claimed that the unauthorized use of its trademark by Sandra Ling Designs could lead customers to believe that Louis Vuitton had in some way approved these goods, causing both point-of-sale and post-sale confusion.⁴¹ Louis Vuitton further argued that Sandra Ling was including the company’s signature “LV” to benefit from Louis Vuitton’s established reputation and customer base.⁴² Since Sandra Ling deconstructed the Louis Vuitton products and added them to her own creations, Louis Vuitton argued that her actions fell within the material difference exception.⁴³ Sandra was specifically repurposing Louis Vuitton branded leather from used Louis Vuitton purses and incorporating the logo into keychains and bracelets.⁴⁴ Sandra Ling’s items were no longer remotely close to the original Louis Vuitton good the logo came from.

Sandra Ling denied the claims brought against her and argued that her customers would not believe the goods are connected to Louis Vuitton because they are upcycled goods made by an independent business.⁴⁵ Although Ling continued to deny the claims against her business, the case ultimately settled. Sandra Ling agreed to pay Louis Vuitton $603,000 and was enjoined from selling goods that included the Louis Vuitton trademark.⁴⁶

Since the Louis Vuitton case ended in a settlement and Chanel’s case was decided by a jury, there were no court opinions issued in these cases. However, many of the Circuits have developed multifactor tests for analyzing general trademark infringement cases, which also apply to cases involving uncycling. In Polaroid Corp. v. Polarad Electronics Corp., the Second Circuit analyzed “the strength of the mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, the reciprocal of defendant’s product and the sophistication of the buyers” when determining whether trademark infringement had taken place.⁴⁷

Some of these factors are clearer than others when analyzing trademark cases. The “likelihood that the prior owner will bridge the gap” refers to how likely the product line will be expanded. A likelihood of expansion is viewed as a higher chance for consumer confusion. The court stated that the existence of a “probability of [consumer] confusion, not a mere possibility” is determinative.⁴⁸ But the factors in Polaroid are not exhaustive, especially in more complicated cases where additional variables need to be considered.⁴⁹ Courts have also emphasized the importance of full disclosure in trademark infringement cases and have required defendants to adequately show that the good has been restored or altered.⁵⁰

The Supreme Court has also weighed in on trademark infringement cases and looked at alternative factors to the ones used by the Second Circuit. The Supreme Court has differentiated cases that involve modified genuine products, like those used by Sandra Ling.⁵¹ In these types of cases, whether the defendant “adequately disclosed the origins of the product” is dispositive.⁵² The clearer the disclosure, the less liability the reseller is likely to face.

IV. Conclusion

The recent cases have left many upcyclers and secondhand retailers questioning their futures, as many cannot afford to keep fighting expensive legal battles against large corporations.⁵³ But shutting down their businesses is not the only option moving forward. An increase in authentication processes and the inclusion of explicit disclosures distancing it from the trademark owner could be one option worth pursuing.

Other solutions have also been proposed, like the push for collaborations between small scale upcyclers and luxury fashion brands.⁵⁴ With the fashion industry under significant scrutiny as is, collaborating with upcyclers presents a solution for both sides of the equation.⁵⁵ Several brands have already started on this idea. An interesting collaboration occurred between The North Face, an outdoor clothing company, and RÆBURN, a sustainable design company.⁵⁶ The two companies turned old tents into a line of accessories to decrease wasted materials.⁵⁷ The clothing brands Miu Miu and Levi’s have also paired up to produce a collection of upcycled denim pieces. Under the collaboration, Miu Miu will be adding its own designs to vintage Levi’s denim.⁵⁸

Another proposition is adding an exception under existing trademark law to allow upcyclers to use a brand’s trademark in certain circumstances.⁵⁹ An article suggesting this solution argues that the exception would require the upcycler to follow specific criteria including the issuance of a statement explaining that the product is an authenticated preowned genuine item, that the upcycler has no connection with the trademark owner, and that the product was not made or sold by the trademark owner.⁶⁰ These requirements aim to protect the trademark owner while also allowing the continuance of a sustainable practice.⁶¹ The key seems to be full disclosure on the part of the upcycler to prevent consumer confusion.⁶²

With all these ideas circulating, one thing is clear: the clothing industry’s production of waste is unacceptable with the current level of climate change. It would not be the worst thing in the world for fashion companies to occasionally sacrifice profits if it meant the sustainable production of its goods. Upcycling presents a unique opportunity incorporating artistic collaboration, business, and sustainability. It is one thing to protect one’s well-established brand, but something entirely different to gatekeep sustainable fashion from those seeking sustainable solutions.

Cover Photo by Fujiphilm on Unsplash

Camille Chandler

Before starting law school, Camille Chandler received a degree in Political Science and International Affairs with a minor in Psychology from Western Kentucky University. She is primarily interested in pursuing transactional work but is always open to expanding her knowledge in other areas of the law as well. She is currently serving as the Executive Blog Editor of the Law Review.

References

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I. Introduction

II. Background

III. Discussion

IV. Conclusion

Author

References

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