How Fashion Brands Can Protect Their IP in the Recommerce Market

The fashion industry is responsible for around 10% of global greenhouse gas emissions, but consumers are increasingly prioritizing sustainability in their purchasing decisions.

This is particularly true for younger consumers, many of whom pay more for sustainable goods, which underscores that sustainable fashion and transparency about those efforts will continue to be important in the coming years.

Consumers aren’t the only ones asking for carbon-friendly production. Corporate boards are pushing environmental, social, and governance initiatives that factor green production into global processes. In this environment, there are ways that resellers and brands can mitigate intellectual property risks, including with the aid of counsel.

Recycled Fashion

This sustainability push has grown the resale or recommerce market, which reduces clothing waste and extends garment lifecycles, thereby contributing to the circular economy. The resale market is currently worth $36 billion, and resale clothing is expected to account for 27% of consumers’ wardrobes by 2023. Luxury brands, which generally have been skeptical of resale, have also geared up for recommerce.

Resale creates authentication challenges for both resellers and brands and their intellectual property counsel. While trademark owners typically cannot control the resale of their authentic and unaltered products, their failure to enforce against counterfeits could result in dilution or loss of trademark rights. Counterfeits also pose significant risks to resellers—including of infringement liability and even shareholder lawsuits.

Partnering with Resellers and Retailers

To meet consumer demand, some brands have established their own resale programs. For example, Patagonia, Eileen Fisher, lululemon, and Levi’s allow consumers to sell back, trade in, and/or purchase gently used clothes.

Partnering with recommerce retailers is another way for brands to boost sustainability metrics while mitigating infringement risk. For example, Gucci, Burberry, and Stella McCartney have been partnering with a popular reseller, The RealReal, for years.

Such partnerships allow brands to participate in the product authentication process, which helps to prevent brand dilution while still enjoying the benefits of participating in the circular economy. Of course, these partnerships also boost reseller legitimacy and reliability.

Using Blockchain to Combat Counterfeiting

Brands are also looking to blockchain and non-fungible tokens (NFTs) to battle counterfeits. A blockchain—a digital ledger that securely records and tracks information, and which cannot be modified—is a promising tool for battling counterfeits.

For example, NFTs—one-of-a-kind blockchain-based assets—can be tethered to physical products, such that they can be used to differentiate authentic products from counterfeits. A major player in this space is Arianee, which says it provides “NFT digital passports for luxury goods” that show digitized service history and repair information.

Luxury goods company LVMH’s Aura Blockchain Consortium similarly issues digital certificates of authenticity with products’ sourcing and sustainability information. Digital passports are often combined with attachable smart tags using radiofrequency identification (RFID), quick response (QR) codes, or near-field communication (NFC).

Digital passports may help to combat counterfeits in the resale market, which in turn may help to prevent brand dilution and increase consumer trust.

Negotiating Agreements and Registration

Intellectual property counsel can help brands navigate the recommerce landscape in several ways. They can negotiate protective contractual arrangements for brands that partner with third-party recommerce retailers. With their expertise, they may help establish guidelines governing proper use of brand owners’ intellectual property, as well as product authentication processes to ensure strong brand protection and to mitigate against activities that dilute or tarnish their intellectual property.

Counsel can negotiate licenses associated with blockchain authentication technology and brand passports. They’re able to conduct and coordinate global trademark clearance searches and filings for the programs’ names, taglines, and other branding associated with in-house recommerce programs.

Companies should also make use of counsel to develop comprehensive enforcement programs and strategies to address counterfeits and other infringement on recommerce sites. These strategies are typically composed of online and offline monitoring programs, evidence-preservation processes, and procedures for addressing counterfeits through informal and formal measures—such as through letter campaigns, negotiations with recommerce retailers, take-down requests, and litigation.

Finally, IP counsel can ensure comprehensive trademark registration and protection for current or legacy brands—including proprietary trademarks, logos, and trade dress—which will help to bolster brands’ partnership, licensing, and enforcement positions.

Consumers are increasingly looking for sustainable, eco-friendly products, and fashion brands are meeting the demand by entering into the recommerce market. By leveraging trusted IP counsel, brands can boost their sustainability metrics while maintaining brand integrity and combating counterfeits.

This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Colleen Ganin is counsel at Perkins Coie, and focuses her practice on trademark and copyright clearance, prosecution, licensing and enforcement, and counsels clients in a variety of industries, including fashion, finance, sports, entertainment, consumer products, and technology.

Mira Park is an associate at Perkins Coie. She counsels clients on brand protection and enforcement strategy. Her practice primarily focuses on U.S. and international trademark clearance, prosecution, and enforcement.

Grace Han Stanton is a member of the Perkins Coie’s Intellectual Property practice and former chair of the Trademark, Copyright, Internet & Advertising practice. She counsels clients from emerging companies to Fortune 500 and other public companies in a wide variety of industries.