Graphic design by Raihan Ahmed.
Raihan Ahmed has been an intern with Beantown Law Group, LLC, this spring (2024). He attends Revere High School in Revere, MA, and is in his senior year. He has experience working in the public sector alongside city officials, and plans to study public policy this fall at Stanford. He is the author of this blog discussing the trending legal issue in the world of upcycling and trademark law.
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Upcycling is the process by which an item is repurposed without the physical breakdown of the original product and then prepared for resale. Essentially, this is the process through which, for example, a used sports jersey is cut up and then resewn onto a fashion jacket with other recycled fabrics, and then sold. While upcycling and recycling are interchangeably used, the processes vary significantly, primarily because recycling involves the physical breakdown of the product to the extent that the original product is not recognizable in its new form. Often recycled material winds up as brand-new paper, plastics, or other materials. However, upcycled materials wind up with very recognizable materials in a brand-new form and are often in clothing or other accessories for sale. Due to the process of upcycling using recognizable materials that are apparent in the final design, certain intellectual property questions come to mind in the areas of trademark infringement. Is upcycling potentially an infringement on intellectual property holders?
The Trademark Act of 1946, or the Lanham Act, was established to protect and regulate trademarks and serves as protection for trademark owners. This protection ensures that owners can capitalize from their specific product or brand and are protected against others infringing and using their protected marks without permission. Simultaneously, it ensures that customers, who favor a specific brand, are not deceived by similar designs on a product and are getting what they paid for.
The protection for trademark owners extends further. Trademark owners, registered and unregistered, can seek legal action against infringers, including accidental mishaps, leading to confusion among consumers. Furthermore, “[i]t holds any person civilly liable who uses a registrant’s mark in commerce without the registrant’s consent in ‘any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.’” (Lepesant, 339). See also 15 U.S.C. § 1114(1)(a). This Act also allows owners to collect damages or lost profits from the infringers who intended to cause confusion among or deceive consumers.
There have been numerous court cases regarding trademark infringement resulting from upcycling. While many products are upcycled, this process is most prominent in the fashion industry. As this is becoming increasingly popular, legacy fashion houses are starting to crack down on these resellers. For example, in the past few years, fashion house Chanel brought forward a case against reseller Shiver + Duke claiming that its jewelry featuring Chanel's CC Monogram, a registered trademark, violated its intellectual property rights. The Complaint alleged five causes of action: (1) trademark infringement under 15 U.S.C. § 1114(1), (2) federal unfair competition under 15 U.S.C. § 1125(a), (3) federal trademark dilution under 15 U.S.C. § 1125(c), (4) trademark infringement and unfair competition under New York common law, and (5) trademark dilution under New York General Business law § 360-1. “[A]ll arising out of the Defendant’s offering for sale of jewelry that incorporate[d] used, repurposed buttons that bear Chanel’s federally registered CC Monogram trademark . . . .” Chanel, Inc. v. Shiver & Duke, LLC, Civil Action 1:21-cv-01277-MKV, 1 (S.D. N.Y. Nov 29, 2022). After extensive litigation, the District Court permanently enjoined Shiver + Duke from using the Chanel marks in any way for repurposing to create a different product, distribution, reselling, or referencing anything related to Chanel or its trademark, or that would lead the public to believe that the defendant was associated with Chanel. Id. at 6-8. Any subsequent breach of the order would result in fines or damages. Id. at 9.
Generally, some resold products that are not deemed to be repurposed and “materially different” may have a few protections allowing them to operate. The First Sale Doctrine, as referenced in Copyright law, also has a place in trademark law. The U.S. Supreme Court first applied the First Sale Doctrine to trademark law in Prestonettes, Inc. v. Coty.
Coty brought legal action against Prestonettes Inc., as the company resold trademarked perfumes and products in the United States that it legally bought from the French owner. The District Court of New York allowed Prestonettes to continue operations as it followed the decree established by the court which set differentiators to bring customer concerns to Prestonettes rather than Coty. However, the Circuit Court of Appeals reversed the decree, alleging that the volatile nature of the perfume may lead to product inconsistency that Coty would not be able to monitor, and enjoined Prestonettes. The Supreme Court reversed the Circuit Court of Appeals decree stating that: “If the defendant's rebottling the plaintiff's per-fume deteriorates it and the public is adequately informed who does the rebottling, the public, with or without the plaintiff's assistance, is likely to find it out. And so of the powder in its new form.” Prestonettes. Inc. v. Coty, 264 U.S. 359, 369 (1924). “The question therefore is not how far the court would go in aid of a plaintiff who showed ground for suspecting the defendant of making a dishonest use of his opportunities, but is whether the plaintiff has the naked right alleged to prohibit the defendant from making even a collateral reference to the plaintiff’s mark. We are of the opinion that the decree of the Circuit Court of Appeals must be revered and that the District Court must stand.” Id.
Prestonettes, Inc. has been a case mentioned in trademark litigation when the First Sale Doctrine is invoked. Generally speaking, under Prestonettes, Inc., a company is not prohibited from the use of a mark when it is a component being incorporated into another product and placed into the marketplace. If the reseller informed the public that a mark holder’s product is a part of the resold product, then the public is informed and can differentiate between them. The First Sale Doctrine limits the trademark owners’ ability to prohibit a resale. Further, it serves as a protection so long as the original purchase was legally made (i.e. they didn’t steal it) from the trademark holder. (Lepesant, 339-40).
This is how some retailers on Etsy, Depop, Amazon, and other platforms to continue to resell products with trademarks as long as they clearly identify that the product is not sold by the trademark holder and that if any the product has been altered, it is clearly stated.
However, much like any other legal principle, trademark owners frequently use "material difference exceptions" to crack down on resellers who may try to invoke the First Sale Doctrine. Essentially, this exception holds a reseller liable for trademark infringement if the resold product is materially different from the original product (Lepesant, 339-346). The idea behind this protection is simply to protect the goodwill of the brand, as in, if consumers expect a high standard of quality, their purchase shall correspond to that standard. Whereas, resellers may not be able to fulfill that level of standard and thus create confusion among consumers, ultimately, hurting the trademark owner. It is the sale of materially different products bearing the trademark of the original product that creates the risk of potential market place confusion and litigation, which was seen in the Chanel, Inc. lawsuit.
Upcycling does not receive the benefit of the First Sale Doctrine as it involves the breaking down of the original product and reconstructing a new product for resale. It is not a mere alteration or addition to a product. It is an entirely reconstructed product bearing protected marks that would be used as part of the resale. When those marks are broken down and then reincorporated into a new product, then resold, there is a material difference. Uses of the trademark in the new product is highly likely to lead to consumer confusion.
One very recent example is fashion designer Kristin Juszczyk’s up-cycled Nike football jerseys, which have been worn by Taylor Swift and Brittany Mahomes at NFL football games. This has led commentators to wrongfully associate the product with Nike, which has resulted in many trademark questions coming to the forefront as the upcycled clothing is materially different. While these jackets do not appear to have been available for sale, a consumer demand for these products has resulted in questions as to whether Ms. Juszczyk will strike a deal with the NFL and or Nike for these popular, upcycled outfits.
So, what’s the best way to protect yourself and your business from facing trademark infringement claims? The best practice for retailers is to ensure that the product does not bear a registered trademark. In the fashion industry, resellers may be lured into keeping registered trademarks on their products to provide a more luxe feeling, however, with the material difference exception, it becomes remarkably easy for trademark owners to pursue legal action. If a reseller's goal is to provide that high-end feel to customers, it is best to seek an authorization permit or license from the trademark owner of interest. In most cases, if the reseller is producing in-demand products, trademark owners may be inclined to seek a deal rather than pursue legal action. Until an exception is passed to protect upcycling, the prudent way to gain legal protection is through a licensing agreement, which will save you and your business a lot of legal hassle.
Works Cited
See “Lanham Act,” Cornell Law School: Legal Information Institute (Apr. 21, 2024, 4:17 PM), available at https://www.law.cornell.edu/wex/lanham_act
See Lepesant, Victoria, Redressing Sustainable Fashion Practices: Upcycling as a Defense to Trademark Infringement, 10 Tex. A&M L. Rev. 335 (2023), available at https://scholarship.law.tamu.edu/cgi/viewcontent.cgi?article=1269&context=lawreview