Dozens of fashion businesses and individual artists have sued the Chinese fast-fashion behemoth Shein for trademark infringement and other alleged offenses, but the litigation, cease-and-desist orders and settlements have done little to compel Shein to change its practices.
But some legal minds believe a lawsuit filed in a California U.S. District Court by the cannabis and apparel retailer Cookies SF last week may change all that for two reasons, not the least of which is that attorneys for the nationwide chain insist their client has the resources necessary to fight Shein all the way to the end of a trial.
Cookies SF refuses to settle for any amount of compensation, according to Jeff Gluck, an attorney representing the brand, who said the company is bent on putting Shein in front of a jury.
Then there’s the matter of the violation in this incident, which is so apparent to the naked eye that Cookies is suing for counterfeiting, not just trademark infringement, which could result in triple the damages. Shein has never been successfully sued for counterfeiting and some believe if that were to change, so might the company’s practices of using artificial intelligence to steal intellectual property for its own profits.
At issue is apparel, namely shirts made by Shein that sport the word ‘Cookies’ across the top in virtually identical fashion to those made and sold by the San Francisco-based chain with 38 shops nationwide.
Cookies SF was the 2011 creation of Gilbert Milam, the Bay Area recording artist better known as Berner, and ever since the the hip-hop hopeful sported Cookies swag in his 2013 ‘Yoko’ music video featuring Chris Brown and Wiz Khalifa, the brand has burgeoned into underground flashpoint for the fashion, music, sports and cannabis scenes. All of those influences spilled out into an apparel line that launched in 2015.
“On the facts, I like the Cookies case,” Douglas Hand, partner at Hand Baldachin & Associates and an adjunct professor of fashion law at New York University, told the Sourcing Journal Thursday. “This is different because it’s a well-funded organization that really isn’t in the fashion industry. They sell weed, so their perspective on it is different and their lawyer is committed to taking it to trial.”
Not to be discounted is the positive publicity Cookies SF would generate for going to the mat with Shein.
Asked whether this lawsuit was more about protecting the common good than pocketing a large payout, Gluck was transparent in saying a “favorable verdict will help towards deterring the alleged conduct.”
“Protecting the IP rights of independent artists and designers is paramount, especially when a company like Shein has allegedly been sued over 50 times for trademark infringement or copyright infringement, just in the past two years,” the attorney, who is also representing artist Jen Stark in an infringement suit against Shein, told Sourcing Journal. “If these cases continue to settle out of court, the alleged conduct will just continue unabated. Accountability is long overdue.”
Hand said it is imperative for plaintiffs to stop settling with Shein if they actually want anything to change.
“If people keep settling, the courts won’t have the opportunity to provide a judgment, which has a punitive effect, a disincentivizing effect,” Hand said. “Right now, all Shein has to do is achieve settlements… They’ve clearly done the math and no matter how many cease and desist orders they get, the number is still positively in their favor. Given the cycle of fashion; the in and out of trends, by the time a cease and desist arrives, an item has had its life.”
To win an infringement case, a plaintiff need only prove that the defendant was infringing with a product that was confusingly similar, but the burden of proof in counterfeiting is an “absolutely indistinguishable mark,” according to Susan Scafidi, founder and director of the Fashion Law Institute at Fordham Law School in New York City.
A Shein spokesperson told Sourcing Journal it “takes all claims of infringement seriously.”
The Christian Siriano collaborator requires that all suppliers “comply with company policy and certify their products do not infringe third-party IP,” the rep added. “We continue to invest in and improve our product review process.”
Scafidi, however, said Shein generates its knockoff garments with the help of artificial intelligence, suggesting technology might bear the blame for some of its trademark-infringing transgressions.
“Shein is a next-generation fast fashion company… it doesn’t simply rely on human designers. It’s watching runway shows and uses an algorithm to determine what is popular in fashion and the algorithm may not be able detect something on the design of the shirt that might be trademarked. It’s entirely possible they didn’t have the systems in place to double-check what its algorithms were copying,” she said. “Of course, ‘the algorithm did it’ is not necessarily an excuse. Shein creates merchandise on gathered data. All the artists screaming and screaming are right to, but in a sense, they were copied blindly by an algorithm.”
Scafidi said the key to ultimately getting Shein and those like it to change behavior, is not just more lawsuits and but also more claims like Cookies’ that charge counterfeiting.
“What would really change the game is if there were more IP protection,” she said. “Most of fashion is legally copyable—the IP protection is limited to start with… so a greater volume of lawsuits would change the game. That’s the reason [the Cookies] case has everyone excited.”
Trademark trouble for Cookies?
As potentially game-changing as a Cookies lawsuit could be, Scafidi says there may be a serious flaw in its case for counterfeiting, namely the status of Cookies’ U.S. trademark.
Scafidi said that when she first read about the Cookies suit she decided to see if the company secured a registered U.S. trademark.
“Cookies does not have a U.S. registered trademark yet,” she said. “In order to register a trademark, the process is you file your application, then a trademark examiner reviews it and if you can clear it there is a 90 day window for opposition where anyone can claim against in. Last week I saw there was a third party that asked for an extension.”
Scafidi said that third party was another cannabis retailer called AK Futures, which wound up opposing Cookies’ registration because it uses a number of ‘marks’ under the name ‘Cake’.
“This is not just a fashion fight, it’s a weed war,” Scafidi said.
Gluck, who said he only represents the apparel side of the Cookies brand, and not the cannabis side, disputed that there were any lingering questions regarding the Cookies apparel trademark.
“The opposition was not filed prior to this litigation,” Gluck said in an email. “The only one we are aware of was filed just a couple days ago by some other dispensary. We don’t view that as having any impact on the Shein litigation, and it distracts from the very salient issues at stake here for independent artists and designers.”
According to Scafidi’s reading, “The trademark—which is the one in class 25, the class for clothing (including sweatshirts)—is described as follows: The pending trademark application has been examined by the Office and was published for opposition, at which time one or more oppositions was filed but they have not yet been decided.”
Scafidi said she supports the cause behind the Cookies suit, but is concerned Shein attorneys would exploit the trademark question as a means to defeat the counterfeiting claim entirely.
Brian Beck, a Chicago-based attorney at the law firm of Zuber Lawler, who specializes in trademark and copyright law, especially in the cannabis industry, found some “problems” after reviewing the court and trademark documents.
Beck found that the number for the trademark entered on the court documents was for an international trademark registered to Cookies in Indonesia and affirmed that the U.S. trademark is still pending.
Beck said that according to tracking on the U.S. Patent and Trademark Office, the trademark was published in the Gazette, the office’s official journal, on Aug. 30, after which time it had to remain for 30 days without anyone claiming opposition. But then AK Futures, which has a long history of making copyright complaints, asked for an extension to 90 days and later filed an opposition notice on Nov. 14.
It’s possible Cookies will win the challenge to the mark, but only at that point will it own an actual trademark.
“It strikes me as sloppy that the complaint lists an international registration number when there is no U.S. trademark registration for it,” Beck said. “There cannot be counterfeit of a mark unless the mark has been registered. Once Cookies has U.S. registration, only then would the counterfeiting of a mark be considered counterfeiting… It can be counterfeiting going forward, but not backwards.”