Upcycling in the fashion sector: what is the current position in relation to repurposing authentic items bearing third party trade marks?

19/01/2024

Given the crises of climate and cost of living that we are battling with today, consumers now more than ever are making more considered purchases and shopping more sustainably.

In a previous article, I wrote about brands encouraging prolonging the lifecycle of garments, whether that be upcycling, recycling or repairing goods such as clothes and accessories.

Upcycling is very popular in particular. It’s a sustainable initiative, prolonging the lifecycle of an existing item by transforming it into something more valuable. For example, cutting up existing clothes to make a new garment or transforming designer buttons into jewellery.

Transforming designer buttons into jewellery has been a big trend over the past few years by small businesses. But there are certain considerations where the new product does not originate from the brand owner of the initial product.

What are the issues for brand owners?

·       Diversion of sales – when customers buy a cheaper alternative such as an upcycled designer button converted into an earring, bracelet or necklace, the item is unlikely to attract the same price tag as buying from the designer brand itself.

·       Post sale confusion – although customers are aware that the upcycled jewellery isn’t a piece of jewellery originating from the designer brand, if the customer is wearing the jewellery once purchased and the piece of jewellery has been derived from an authentic item, to others, this may appear as an item originating from the designer brand itself.

·       No control over quality – if indeed this is confused as originating from the designer brand and the quality is poor, this can be harmful to the designer brand and damage its reputation.

·       Reputational damage - this can also work both ways; by the upcycler themselves but also by the designer brand itself as upcyclers are often fans or collectors of the products of the designer brand, so enforcing rights too harshly may damage customer relationships. Therefore, is education the solution rather than a cease and desist letter?

There is a balance to strike, however it is important for brand owners to protect and enforce their rights.

Existing case law

There is currently no specific case law on this issue in the UK – though there are some similarities to be drawn upon discussed later in this article.

There are two US cases in particular which have addressed the issue of upcycling buttons into jewellery which are Chanel, Inc v Shiver & Duke LLC 1:21-cv-01277 (SDNY) and Chanel, Inc v Villo & Co, et al, 1:23-cv-06781.

In the case of Shiver & Duke, following a cease and desist letter from Chanel, they made minor amendments to the packaging of their products, adding the word “reworked, reimagined” and “Shiver and Duke original designs” but still stating they were made from authentic Chanel buttons. They also added “SD SHIVER + DUKE” markings to the back of the buttons but these could not be seen when sold pre-sale or worn post-sale given it was on the back. This leads to issues as mentioned above of post sale confusion or suggesting a collaboration between these two brands when this is not the case.

In the case of Villo & Co, Chanel alleged trade mark infringement, dilution, counterfeiting, false association and false advertising. The upcycled pieces were advertised and sold as “authentic designer jewellery” though some jewellery was alleged to have been obtained from “unknown third parties, which include counterfeiters”. This is another issue for brands. Unless you know the original product to originate from the designer brand (for example, a button from your own personal collection), there is the risk of counterfeits. 

Both cases have since settled.

What is the current position in the UK?

Although there is no specific case law on upcycling per se, there is case law which addresses similar issues in the UK and the principles of exhaustion.

Nomination De Antonio E Paolo Gensini SNC v Bearley (JSC Jewellery) [2019] EWHC 599 IPEC (upheld on appeal [2020] EWCA 103) concerned whether a purchaser of a product (in this case a Nomination charm bracelet) sold under a trade mark is entitled to disassemble the product and sell component parts (with its own branding) under the trade mark. The following key issues were raised (para 26):

(1) Whether Nomination's consent to the marketing of its base bracelets constituted consent to the marketing of the base links individually, such that s.12(1) of the 1994 Act/art.7(1) of the Trade Mark Directive was engaged.

(2) If so, whether there existed legitimate reasons for Nomination to oppose further commercialisation of individual base links by JSC, pursuant to s.12(2)/art.7(2).

(3) Whether JSC had used the Nomination sign in relation to its own links.

(4) Whether JSC had represented to the public that its own links had been made by Nomination or were authorised by, or otherwise connected in the course of trade with Nomination.

(5) Whether Nomination had suffered damage as a consequence of JSC's misrepresentation.

The UK continues to apply the EEA-regional exhaustion regime following Brexit both for UK clones of EU registrations. That is:

·       Goods placed on the market in the EEA (or the UK) by the trade mark owner or with their consent = rights are exhausted in the UK.

·       Goods placed on the market outside the EEA by the trade mark owner or with their consent = rights are not exhausted in the UK.

The right to restrain such use is potentially limited by the Section 12 of the Trade Marks Act 1994 (emphasis added):

(1)A registered trade mark is not infringed by the use of the trade mark in relation to goods which have been put on the market in [the United Kingdom or] the European Economic Area under that trade mark by the proprietor or with his consent.

(2)Subsection (1) does not apply where—

(a) there exist legitimate reasons for the proprietor to oppose further dealings in the goods for the purpose of protecting the proprietor’s property (in particular, where the condition of the goods has been changed or impaired after they have been put on the market), and

(b)the opposition to those dealings interferes with the rights of any other person no more than is necessary to achieve that purpose.

It was considered that once Nomination sold a bracelet, its rights were exhausted and there was nothing to prevent the links of the bracelet from being dismantled. However, Nomination did succeed on the basis of the section 12(2) defence of preventing further dealings on the basis that its products were normally sold in “elegant” or “luxury” packaging, which increases its reputation (paras 56 and 64) so products sold cheaper packaging would likely damage its reputation.

This is arguably the case in relation to designer buttons converted into jewellery. An authentic button will have been attached to clothing. If clothing has been put onto the market by the trade mark owner or with their consent, their rights will have been exhausted and there is nothing to prevent a customer taking apart that product. But there appears to be legitimate reasons under Section 12(2) to prevent further dealings on the basis that the packaging of the repurposed jewellery is unlikely going to be the same standard as the designer brand itself.

With regard to issues 3 – 5 in the Nomination case, JSC were found to have used the Nomination sign in relation to its own links. JSC had represented to the public that its own links had been made by Nomination or were authorised by, or otherwise connected in the course of trade with Nomination and that Nomination had suffered damage as a result of the misrepresentation by JSC.

Use of an identical mark in relation to identical goods for which the earlier trade marks are registered engages Section 10(1) of the Trade Marks Act unless the third party has a statutory defence, which is unlikely in circumstances such as these. Even if the original product is a button and it is turned into jewellery, this would likely infringe the designer brand’s trade mark rights under Section 10(1) where these cover jewellery. Use of a designer brand’s trade mark in conjunction with the upcycler’s branding is likely to lead to blurring as to commercial origin and affect the essential function of the trade mark which is to guarantee the identity of origin of goods (as outlined in Arsenal v Reed).

The position may differ in situations where an individual upcycles jewellery for their personal use, as this is not technically use in the course of trade and therefore not trade mark infringement. However, there may still be issues of post sale confusion amongst consumers when wearing the jewellery.

Therefore, there appears to be scope within UK law to challenge upcycling where the end product is commercialised.

What’s next?

With the surge in sustainable fashion, there will inevitably be case law in the UK specifically on upcycling, as in the US, and I watch with interest on further developments on this topic.