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Zara Lawsuit Illustrates Why Digital Product Labels Matter

Spanish fast fashion giant Zara filed a lawsuit last week accusing Shopify seller Thiliko of removing the tags from Zara clothing, replacing them with its own labels and re-selling the goods under its own brand name, sometimes for three, four and even seven times the Inditex-owned nameplate’s retail price. Court exhibits show a model sporting a pair of pants valued at $59 on Zara, next to a Thiliko version with the same photo priced at $258; a lingerie-style dress at $49 at Zara and $328 on Thiliko. The copyright infringement lawsuit alleges more than 30 more occurrences.

As Zara attorneys point out in the suit, such alleged actions are not only baldly illegal trade practices, but they also fail to attach labels detailing garment care, fiber content and country of origin, in violation of federal law 15 U.S.C. § 70c and 16 U.S.C. § 423.6.

All of this goes on in a world where digital displaces print on a daily basis, and technology is available to make those annoying labels on clothing a thing of the past by simply printing a QR code on every garment, which when scanned could tell the whole life story of that garment, cradle to landfill, and perhaps recycled and reborn a few times in between.

So why wait one itchy minute longer?

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“The mechanics of labeling are outdated. We’re relying on concepts and technology that were cutting edge during the Eisenhower administration,” said Steve Lamar, president and CEO of the American Apparel and Footwear Association, which is spearheading an effort to have physical label tags replaced with digital ones. “If you have labels structured differently with QR codes, that then means those individual garments will be better citizens in the circular economy.”

Lamar said the label tags on the world’s clothing right now, sewn together, would stretch 5.7 million miles, or 12 trips to the moon and back.

Chelsea Murtha, sustainability director for AAFA, whose members include Levi Strauss, Patagonia and Target, said the environmental benefits of going tagless would extend beyond simply reducing the amount of label tape the industry currently produces.

“Consumers are demanding more information than ever on how and where a piece of clothing is made,” she said. “In addition to required care and whatnot, it’s about being able to put all that on a website and give consumers the information they want. It enables them to make decisions. Customers say they want to buy more sustainable, but they don’t know how [to]. This also means brands can put information behind the label that enables recycling.”

Tagless garments are nothing new. Twenty years ago, Hanes introduced its line of tagless T-shirts and later tagless underwear, pitched by none other than Michael Jordan in an ad campaign pointed at eliminating the irritation and discomfort caused by these once-necessary nuisances.

Other companies have followed that lead, but the durability of printed materials through wear and tear and wash cycles is one of the chief objections to making the switch to digital tags entirely.

“It would wash off, and that’s where the whole life of the garment come in,” said Mike Colarossi, vice president of innovation and product line management with Avery Dennison, a well-known print label manufacturer. “[Printed] tags today can certainly survive that, but as direct printed—as many of us have experienced with T-shirts where after a few washes you get cracks, you get fading—that could be a challenge if the regulation [that the tag last the lifetime of the garment] doesn’t change… There’s going to have to be some innovations in digital technology to make sure that exists.”

Even Lamar concedes the point that if there is a mistake on a label, producers can just print more labels, but if a mistake is printed directly on the garment, there goes the whole batch.

But aside from technological and typographical concerns, a larger objection to the switch to all digital is a question about accessibility to the information for all.

Avery Dennison’s Michael Colarossi

“If you were to simply have a QR code, does everyone have access to an intelligent device that can access that info?” Colarossi said.

To that point, the AAFA’s Lamar counters that even the printed label discriminates against some.

“People ask, ‘what happens if I don’t have an iPhone?’ And I say, ‘well, what happens if I don’t have an eye?’” Lamar said. “Right now it’s reliant on visual observations, and an iPhone would circumvent that. We have the technology to read it out loud to you, tell you in a specific language.”

Lamar points to the long lists of labels needed when printing in multiple languages as further urgency to go all digital.

“It becomes trying to satisfy different markets; we’ve never harmonized labels,” he said. “What if you’re Vietnamese living where I am now, you don’t really speak English, but there’s no requirement in the U.S. to have it in Vietnamese. [With digital], if you’re not speaking English as a first language—or if you’re a traveler—you can still understand.”

It might seem that the label-making industry might fight tooth-and-nail to prevent such a change from taking hold. It is their bread and butter, after all. But according to both Lamar and Colarossi, that isn’t the case.

AAFA’s Steve Lamar

“[Big Label is] part of the solution,” Lamar said. “Everyone is moving in this direction and people can’t move fast enough… Labels are going the way of the dinosaur, so they’re all about providing labeling solutions, helping clients inform customers in order to be around for the long haul. That’s where you see Big Label—they want to be part of the sustainability solution.”

Colarossi said he couldn’t divulge, nor would it be easy to unpack even if he could, what percentage of his company’s revenue is associated with labeling for apparel, but he agreed the industry is moving in a more digital direction, but perhaps not as quickly as AAFA would like.

“Avery Dennison believes that there will be an intersection between the physical and digital worlds in which labeling will play a really important part,” Colarossi said. “We believe, ultimately, every piece of apparel, and every piece of consumer good will have a digital ID assigned to it. So I think the AAFA’s push for more digital labeling is consistent with that. Will it mean that labels will be replaced by something purely digital? I don’t think we would subscribe to that. The label still plays an important part in relaying communication. That will still evolve.”

Also unclear is whether the change in federal regulations for labeling can be executed unilaterally by the Federal Trade Commission (FTC) or whether it would require an act of Congress.

Lamar is of the opinion that the FTC does have the authority, but perhaps not the urgency, and as for the legislative branch, he finds the “muscle memory” of maintaining the status quo to be the “most powerful lobbyist in Washington.”

“To be clear, nothing is stopping anyone from putting a QR code on now, but [with the printed tags still required], that’s not 12 round trips to the moon, that’s 14,” he said. “We’re looking for something ‘instead of’ instead of ‘including.’ We think the FTC has the ability to do ‘instead of’ rule-making… Even so, I don’t think they have the will to do that yet.”

AAFA’s Chelsea Murtha

With that in mind, the AAFA has taken to lobbying on Capitol Hill.

“The FTC is a notoriously slow agency, so we’ve gone to the Hill , we’ve gone to the White House, Commerce and other government agencies and they’ve expressed a lot of interest,” Lamar said. “A lot of agencies, like Customs, think it would be much easier to enforce things if everything was scannable. It would make recalls so much easier and more effective.”

Colarossi says the ‘how’ of the implementation is as important as the ‘when’ and the ‘why.’

“I think the industry is moving in that direction, but what’s yet to be clear is what use case is going to drive the momentum,” he said, noting several pilot projects currently underway. “When I think about digital solutions, I don’t believe the industry is coalesced around what is the use case.”

Sourcing Journal reached out to the FTC for comment and was told the agency typically does not “speculate or comment on industry proposals.”

Colarossi expects that even if the FTC did decide it had the authority to rule, it won’t without broader support.

“I think there will be a legislative push; I don’t get the sense that the FTC has been overly willing to push this on its own,” he said. “I also think it’s going to take the industry and some other groups out there to figure out what makes the most sense.”

Regardless of what happens in Washington, D.C., the European Union is light yeara ahead on the issue, soon to enforce a ‘Product Passport’ beginning in 2025. This passport would track the contents and origin of all consumer products through a QR or bar code.

At its launch, however, the digital passports will still include print labels, which sort of defeats the purpose, according to Lamar.

“The EU is very far ahead on digital product passport, which isn’t apparel-specific, but the problem is, it’s ‘in addition to’ and not ‘instead of,’” he said. “A lot of people look to the U.S. to lead, but the U.S. is not the leader on labeling.”

Colarossi said his company, and the industry, for the most part, is preparing for a future in the U.S. with something similar to the EU model.

“What we see at this intersection of physical and digital is a significant opportunity to provide a much bigger solution, whether providing transparency information in a digital way or recycling of garments… we have to look at it as more of an opportunity than a threat,” he said.

Murtha points out the sustainability benefits to adopting digital-only far outweigh freedom from the irritation that tags often inflict on a garment’s wearer. She, and Lamar, contend that many consumers cut their tags off, thus ending any possibility of tracking the corresponding products through the life cycle.

“That’s where people are looking now, takeback programs. But they don’t know exactly what it is. If it’s 5, 8, 10 years old, they don’t necessarily have accessible information to advertise exactly what it is to the consumer,” she said. “[Digital tags] enable the re-use and extends the life cycle of the product.

Lamar contends that regardless of the technological and bureaucratic speed bumps ahead, the industry and government agencies are better off just powering through and enacting the change because change is coming anyway.

“I keep telling people, 30 years from now, we’ll point to the QR codes and say, ‘wow, remember when that happened.’ The only question is, did that happen 29 years ago or two years ago, because 30 years from now we will definitely be reliant on this technology.”