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The law of luxury brands

The law of luxury brands

Kat C-W

09/03/2020

Something I have been trying to do more of lately is align the type of law I want to do with the kinds of things that interest me in life. One of these is luxury fashion. I love reading stories about designers and how they are inspired to make beautiful clothes, runway shows and retail stores.

In 2018 it was estimated that the fashion industry is worth £32 billion to the British economy, as well as being a major employer. Luxury brands can be found as clients of many major law firms, as well as in more private-client-focused outfits. The lawyers working with these brands may encounter a whole range of issues. 

Intellectual property

One of the most prevalent issues is without a doubt intellectual property (IP). Many of these luxury brands are known by their prints, logos and distinctive designs. The distinctive Alexander McQueen oversized trainers are one of the most popular copied items recently and are being sold all over social media. Fake handbags are also readily available on resale websites like eBay and in markets around the world. For companies whose image is one of the most valuable assets, IP rights are important to protect. IP rights can be held in prints, logos, innovative features such as zips or fastenings, or the shape of the goods themselves. 

Employment

Employment issues are present in any business, but protecting IP intertwines with employment, especially in this sector. Fashion houses may wish to use non-disclosure agreements to protect collections.

Law firms will also deal with employment and remuneration of senior personnel in companies. Something that was especially prevalent in more recent years was the fashion industry’s use of unpaid interns, which is now mostly combatted with tighter labour laws and apprenticeship schemes.

Restrictive covenants are also features of employment contracts that might be more unique to this industry. One such example involved a model’s employment contract which stated that she could not add more than two centimetres to her waist. 

Ethical

Ethical advice that lawyers provide in this area could be on a wide range of topics, as these brands are often in the spotlight. Reputation management, CSR policies, modern slavery policies and environmental policies are all things on which a luxury brand might seek advice. A brand having sweatshops, using child labour, using fur in its collections or being a major polluter are all reputational concerns that luxury brands deal with. Social media also makes it easier for consumers to call out brands for unethical behaviour and share it with other consumers, snowballing the effect of reputational harm. 

Litigation and disputes

Like any major brand, litigation and disputes will be a good chunk of the work in this area. Protecting IP rights will often involve challenging people’s uses and potential infringements. A recent story that details this in a somewhat humorous way is the controversy around Hugo Boss, which was brought to light by comedian Joe Lycett; I would strongly recommend reading some stories about it!  

Licensing, franchise agreements and distribution agreements 

Other issues that lawyers working in the fashion industry may encounter include licensing and creating franchise agreements, distribution agreements and other commercial business needs that are essential for a luxury fashion brand to run effectively. 

Brands are often owned by large groups, such as Kering or Louis Vuitton Moet Hennessy (LVMH), so buying and selling companies within these groups is important, while also maintaining the brand image that is integral to the business when being bought or sold. A high-profile deal that LVMH recently announced was the acquisition of Tiffany & Co for $16.2 billion, which was considered to be the priciest deal in this sector. 

Tax, real estate and corporate law

Usual business legal issues also arise in the fashion industry, such as tax, real estate and corporate law. Real estate can be an interesting area to read about in this sector, as the premises where these brands often have stores or headquarters are located in premium areas, and the cost and complications of real estate reflect this. Some fashion designers or models might be self-employed so may wish to seek legal advice on the issues around this.