Denim Wars: All for 63 pairs?

COMMENT

Sixty-three pairs of jeans were the subject of the latest decision on copyright infringement from the New Zealand High Court.  G-Star Raw C.V. v Jeanswest Corporation (New Zealand) Ltd is interesting from a number of perspectives, not in the least for the meagre amount of damages awarded to G-Star Raw, a mere $325. The decision demonstrates the importance that fashion houses place on goodwill and reputation in a market that is hugely competitive due to high street brands "knocking off" high end designers' creations. 

The case also demonstrates how an Australian company with relatively good internal Australian law processes for preventing copyright infringement was caught out by differences in copyright law across the Tasman in New Zealand. 

High Court decision
G-Star Raw (G-Star) is a Dutch clothing brand specialising in jeans.  It created the "5620 Elwood" jeans in 1996.  The Elwood design has become G-Star's signature piece with more than 10 million pairs sold worldwide. 

G-Star claimed that Jeanswest Corporation (New Zealand) Ltd (Jeanswest) had infringed its copyright in the original drawings for the Elwood design by manufacturing and retailing a style of jeans named "Dean Biker Slim Straight" (Dean Biker Jeans).  On the facts Justice Paul Heath found Jeanswest had copied a substantial part of the Elwood design when designing and producing the Dean Biker Jeans, commenting that there were "telling similarities" between the two designs. 

As only 63 pairs of the Dean Biker Jeans were sold in New Zealand, G-Star was awarded damages of $325.  Justice Heath also awarded costs to G-Star, with a slight uplift due to Jeanswest's conduct during the proceedings. 

Comment
On the facts, the outcome of the case was a win for G-Star.  However, the costs and damages awarded are unlikely to cover the actual costs of pursuing what Jeanswest called "frivolous litigation".  So why did G-Star bother? 

G-Star has a reputation for aggressively protecting its copyright, and has previously brought cases against other fashion houses, including Tommy Hilfiger, Ralph Lauren and Benetton. Justice Heath commented in the case that he "could not understand why Jeanswest Australia would take the risk of infringement proceedings being issued by an enterprise that was well known for protecting its intellectual property rights". With such an aggressive approach, G-Star consistently warns its competitors that they should think twice about using G-Star's styles as a starting point for their own designs. This type of uncompromising stance on copyright helps ensure that G-Star maintains its market positioning as a "denim pioneer" and keeps others out of the same sphere.   

By ignoring G-Star's track record, Jeanswest was forced to spend a large amount of money defending a claim over 63 pairs of jeans. Worse still for Jeanswest is that the issue could have been avoided if its internal processes had been more robust. 

Jeanswest had a legal education programme in place for its design and production team. The company's solicitor attended an annual meeting with relevant staff to discuss legal issues and processes, with the aim of alerting staff to what was and was not acceptable to use when designing a new product. The material presented by the company's internal solicitor appeared to only cover Australian law, even though all Jeanswest products are sold in New Zealand and there are some material differences in the copyright laws of the two countries. 

To decrease the risk of copyright infringement proceedings, Jeanswest could have taken a number of relatively simple steps:

• increased the frequency of the meetings between the design and production team and the company's solicitor; 
• ensured that the training provided by the company's solicitor emphasised the need to produce a product that was compliant with copyright laws in all relevant jurisdictions;
• developed straightforward and practically focused legal guidelines for the design process that reflected the different copyright standards in Australia, New Zealand and any other countries where Jeanswest retails its garments; and
• introduced a requirement for sign off against those guidelines for all designs prior to the sample orders being despatched.

Such measures are relatively simple to establish and are cost-effective when compared to the alternative. Designing garments inspired by existing trends is expected, but by better educating its staff on New Zealand copyright law and putting appropriate controls in place, Jeanswest should have been able to avoid stitching itself up.

Earl Gray is a partner at Simpson Grierson and heads the firm's intellectual property team.