Levi's takes on Japanese Denim Resellers and Manufacturers

[poly800rock]

just got this from the other sf

http://www.nytimes.com/2007/01/29/business/29jeans.html?hp&ex=1170046800&en=a8ad6331c429d5ea&ei=5094&partner=homepage

January 29, 2007

Levi’s Turns to Suing Its Rivals

By MICHAEL BARBARO and JULIE CRESWELL

United States Patent and Trademark No. 1,139,254 is not much to look at: a pentagon surrounding a childlike drawing of a seagull in flight.

But the design for a Levi’s pocket, first used 133 years ago, has become the biggest legal battleground in American fashion.

Levi Strauss claims that legions of competitors have stolen its signature denim stitches — two intersecting arcs and a cloth label — for their own pockets, slapping them on the seats of high-priced, hip-hugging jeans that have soared in popularity.

So Levi’s is becoming a leader in a new arena: lawsuits. The company, once the undisputed king of denim and now a case study in missed opportunities, has emerged as the most litigious in the apparel industry when it comes to trademark infringement lawsuits, firing off nearly 100 against its competitors since 2001. That’s far more than General Motors, Walt Disney or Nike, according to an analysis by research firm Thomson West.

The legal scuffles offer a rare glimpse into the sharp-elbowed world of fashion, where the line between inspiration and imitation is razor thin. After all, clothing makers’ trade secrets are hung on store racks for all to see, and designs can be quickly copied with small changes to exploit a hot trend.

The lawsuits, which Levi’s says it is compelled to file to safeguard the defining features on its jeans, are not about the money — one settled for just $5,000 in damages. Instead, the company says, they are about removing copycats from stores. Nearly all the cases have settled out of court, with Levi’s smaller rivals agreeing to stop making the offending pants and to destroy unsold pairs.

But those competitors say the lawsuits are the last resort of a poor loser, a company that has lost billions in sales, laid off thousands of workers and flirted with bankruptcy as the denim industry exploded.

“They missed the boat,” said Tonny Sorensen, chief executive of Von Dutch Originals, a six-year-old denim and clothing manufacturer sued by Levi’s six months ago for allegedly borrowing the company’s double arcs for a back-pocket design. “Now they want to make a lot of noise and scare people away.”

Mr. Sorensen said his pocket design “did not look like Levi’s at all” because of subtle differences like placing the arcs “one inch to the left” and stitching a line to resemble “a pirate’s hook.”

Nevertheless, Von Dutch agreed to remove the jeans from dozens of boutiques and destroy hundreds of unsold pairs. “It was one style and it was not that successful anyway, so we made the decision not to fight it,” Mr. Sorensen said.

In the majority of cases, Levi’s accuses competitors of copying its design of two arcs that meet in the center of the pocket or its famous Levi’s tab, a folded piece of cloth sewn into the vertical seam of the garment.

Robert Hanson, Levi’s president for North America, said the company manufactured “a product that a lot of people are copying and copying with a lot of success.”

Instead of relying on Levi’s designs for what he called a “running start,” competitors should “look for other devices that don’t come remotely close to the Levi’s trademarks,” Mr. Hanson said. “Be more innovative.”

But the privately held Levi’s, whose founder sewed together the first pair of jeans in 1873, has been unable to exploit the latest $200-a-pair denim craze — and now claims scores of smaller competitors are riding high because of what it created. When consumers’ tastes shifted toward designer jeans that were bejeweled, torn and frayed, Levi’s was still selling basic $30 pairs at K-Mart.

In this dispute, back-pocket stitching has become the fashion equivalent of ink blots, with plaintiffs and defendants seeing in the new designs what they want, or need, to see. So far, Levi’s view is prevailing.

The company’s team of denim detectives — there are 40 across the world, scouring boutiques and department stores — has spotted what they considered offending stitches on jeans from the biggest names in the clothing business: Guess, Zegna, Esprit, Lucky Brand and Zumiez, to name a few.

Even companies that have painstakingly worked to avoid infringing on Levi’s trademarks have found themselves in the company’s crosshairs. At Rock & Republic, one of the country’s fastest-growing jeans makers, designers intentionally placed a cloth label on the right hand side of a back pocket, not the left, which would violate a Levi’s trademark.

Levi’s sued anyway, arguing its trademarks forbid placing such a label on a vertical seam of a back-pocket. During a tense, five-hour settlement discussion in San Francisco several weeks ago, the chief executive of Rock and Republic, Michael Ball, upbraided Levi’s lawyers for their aggressive tactics.

“I take it personally that you try to dictate how I design my jeans,” he recalled saying. Still, Mr. Ball said he agreed to stop placing the label on the vertical seam of a right-hand pocket for two years to avoid a drawn-out legal battle.

In an interview, Mr. Ball said his back-pocket stitching “was not remotely close to Levi’s” and that he agreed to a settlement, in part, because “I will get bored with that design soon anyway.”

Executives at Levi’s concede they missed important fashion trends as the denim industry ballooned over the last several years, but they deny the lawsuits are connected to any downturn in their business.

Instead, they say they are simply trying to preserve their intellectual property. Like pharmaceutical companies that sue generic drug makers over their patents or technology companies that duke it out over who owns the right to microchip designs, Levi’s says it is trying to protect its most valuable asset, its trademarks.

Clothing companies have battled counterfeiters and each other for decades over design trademarks. Lacoste has defended its alligator, Polo Ralph Lauren fights for its polo player and Nike fiercely protects its famous swoosh.

In that respect, Levi’s is no different. As far back as the 1970s, it sued the firm that made Wrangler jeans over the use of identifying tabs on clothing. “We protected our trademarks when business has been terrific and when it’s been difficult,” said Mr. Hanson.

Yet difficult only begins to describe Levi’s business today, after it failed to exploit the designer denim boom in what is widely regarded as one of the biggest debacles in the American clothing business. Levi’s sales have plummeted more than 40 percent since 1996 to $4.1 billion, forcing it to close dozens of factories and lay off nearly half of its workforce, or 7,600 employees, in the last five years.

The clothing company faced two major problems over the last decade. Its image and brand — button fly, rugged, and all-around bad-boy cool — was largely built for men, its jeans cut boxy and loose- fitting. At the same time, the company, which once distributed its jeans largely through department stores catering to the rich, had shifted into lower-priced retailers like J.C. Penney, Sears and Wal-Mart.

In the mid-1990s, though, the denim industry underwent a seismic shift as small upstarts began designing tight-fitting, feature-flattering women’s jeans and distributing them through luxury boutiques and department stores.

Women suddenly began snapping up jeans from manufacturers like 7 for All Mankind and True Religion that cost more than six times what Levi’s charged. Levi’s did not produce a premium denim line, Capital E, until just last year.

“The emergence of all this denim sold at astronomical prices simply passed them by,” said David Wolfe, creative director of the Doneger Group, a fashion consulting firm in Manhattan. “They should have jumped on the bandwagon but they did not even seem to see the bandwagon rolling, which amazed everyone in the fashion industry.”

The denim manufacturers who recognized the trend openly concede that Levi’s has served as an inspiration, if not template, for their products.

“Everyone is borrowing from them, it’s inevitable,” said Michael Silver, the founder of Silver Jeans, who has had several legal run-ins with Levi’s. “They should be happy that people are copying them,” he said.

But Levi’s is not flattered. “The value of the brand will become diluted if the marketplace becomes crowded with products with similar tabs or stitching to ours,” said Thomas M. Onda, a global intellectual property lawyer for Levi’s.

So employees at Levi’s keep walking into stores and scanning the racks for rivals who dare to stray to close its trademarks, as Steven Shaul, the founder and chief executive of Jelessy Jeans, learned when he slapped several intersecting arcs on a back pocket.

At the time, Mr. Shaul, who loves Levi’s and wears its jeans all the time, was confident his design bore no resemblance to the Levi’s trademark. “It was not even close,” said Mr. Shaul, whose jeans sell for between $200 and $400 a pair.

“It was an original design,” he said. “Why would I use Levi’s stitching? If my jeans sell for $200, I would not knock off $40 jeans from Levi’s.”

Nevertheless, Levi’s sued in 2005. “The first night after I was sued by them I couldn’t sleep,” he said. “The second night, no sleep again. Then I started talking to people in the industry and I realized, hey, everyone’s been sued by Levi.”

Relieved, he quickly settled the case, agreeing not to sell jeans with the offending stitches. “I did not even hire a lawyer,” he said.

[wild style]

If my jeans sell for $200, I would not knock off $40 jeans from Levi’s.

10characterz

[Chicken]

just got this from the other sf

http://www.nytimes.com/2007/01/29/business/29jeans.html?hp&ex=1170046800&en=a8ad6331c429d5ea&ei=5094&partner=homepage

interesting article. but it really makes levi´s sound like a loser, i do feel bad for them.

thanks for posting it, mr. postwhore.

[n0torious]

The comment about Levi's not producing a premium line until last year is not true. The result of more poor NY Times research. They've been doing LVC for a while now, and i bought my first couple pairs of Levi's Premium in 2002.

[tweeds]

and "awhile" means since 1996 at least (if my memory holds?)

[Charlie Delta]

“The value of the brand will become diluted if the marketplace becomes crowded with products with similar tabs or stitching to ours,” said Thomas M. Onda, a global intellectual property lawyer for Levi’s.

On the one hand he's right, on the other there's the fact that "the value of the brand" isn't so high at this moment anyway, and especially for the people who actually buy/bought the infringing jeans.

Hope that made sense....

[horriblyjollyjinx]

“The value of the brand will become diluted if the marketplace becomes crowded with products with similar tabs or stitching to ours,†said Thomas M. Onda, a global intellectual property lawyer for Levi’s.

On the one hand he's right, on the other there's the fact that "the value of the brand" isn't so high at this moment anyway, and especially for the people who actually buy/bought the infringing jeans.

Hope that made sense....

The key here is "similar", notice that he didn't say "same." So Levi's came up with something that looks like a gull on their backpocket, does that mean that they should forever have the right to keep others from doing something that looks SIMILAR?

They were the first(?) with that arcuate, does that mean that they are entitled $999999999999999 each year, for eternity, for their great discovery?

He says that the value of the arcuate diminishes if others can use it, how so? It could also rise in value. They could do something else than sue, like present their jeans like "the original blabla" and actually make a quality product.

You can't patent the most important things in a pair of jeans, the design, fabric and cut, but for some reason you can trademark something like an arcuate.

[poly800rock]

because the trademark is so old is the reason levi's can still hold it.....otherwise it would have been public domain by now...it's a loophole in orginal american laws i believe

[Paul T]

The key here is "similar", notice that he didn't say "same." So Levi's came up with something that looks like a gull on their backpocket, does that mean that they should forever have the right to keep others from doing something that looks SIMILAR?

They were the first(?) with that arcuate, does that mean that they are entitled $999999999999999 each year, for eternity, for their great discovery?

.

THe irony is they quite possibly didn't invent the arcuate. There are others, pre-1900, and no one knows who came first.

All that said, it is a trademark, just like the Merc steering wheel badge. If someone used a steering wheel with the spokes rearranged, Mercedes would still sue their ass...

The fact that the New York Times didn't even know that Levi's had a premium line pre Capital E is a good sign of the problems they face, though.

[blm14]

The fact that the New York Times didn't even know that Levi's had a premium line pre Capital E is a good sign of the problems they face, though.

You know I thought the same thing! What about levi's premium, levi's red, and the LVC stuff. LVC started back in like 1996 didnt it?

[sneakeraddict]

no one fashionable wears levis. (LVC aside)

that is one of the problems levis face.

[Guest jeffvyain]

give it 10 years and we'll me legally making levi's repros again, because a business can't hold a trademark when they're not in business anymore. the dipshits at that company won't last much longer.

on a side note, i didn't realize that levi's had sued THAT many companies. it makes me feel slightly better knowing that we're not alone. but it still heats my blood that no one has actually taken them on in court yet. I don't think they would win.

[LA Guy]

You can't patent the most important things in a pair of jeans, the design, fabric and cut, but for some reason you can trademark something like an arcuate.

Levis stupid moves aside, branding is very important. Yes, design, fabric, cut, blah, blah, blah, and I know that you would choose a pair of PBJs or SDAs over a pair of Levis any day. But let's take a reverse example. What if there were a great pair of jeans - terrific fit, remarkable denim, flawless construction and trims - but they were made by, say, True Religion or Seven. Now, consider that there is no external branding except for a simple leather patch that has "True Religion" Embossed on it, or the Seven squiggle. Would you buy these jeans? And if you did, would you take off the (very subtle) back patch (the seven squiggle could actually look quite nice.) I would wager that 80-90% of the board would either not buy the jeans, or remove the branding even if they did.

Oh, and iirc, trademarks do not expire, as long as they are protected, unlike patents and even copyrights.

[artificialsky]

The value of the brand will become diluted if the marketplace becomes crowded with products with similar tabs or stitching to ours

hah, this guy has no clue? WHAT value?

i like how all the guys they interviewed that got sued by levis pretty much agreed to do everything levis asked them to do, but they still think levis is a joke.

a sad state of affairs at levis. i guess this is what happens when you have huge privately-owned businesses though.

[LA Guy]

a sad state of affairs at levis. i guess this is what happens when you have huge privately-owned businesses though.

Agreed about the sad state, but the company is publicly traded (on the NYSE.) AFAIK, there is not a majority stockholder who essentially runs the show...

[schmallo15]

Agreed about the sad state, but the company is publicly traded (on the NYSE.) AFAIK, there is not a majority stockholder who essentially runs the show...

i believe levis is private in the US:

http://www.levistrauss.com/Financials/

Levi Strauss & Co. is a privately held company, owned by the descendants of the family of Levi Strauss. Shares of the company's stock are not publicly traded. Levi Strauss & Co. has publicly traded bonds, and shares of the company's affiliate, Levi Strauss Japan K.K., are publicly traded in Japan.

[LA Guy]

i believe levis is private in the US:

http://www.levistrauss.com/Financials/

Levi Strauss & Co. is a privately held company, owned by the descendants of the family of Levi Strauss. Shares of the company's stock are not publicly traded. Levi Strauss & Co. has publicly traded bonds, and shares of the company's affiliate, Levi Strauss Japan K.K., are publicly traded in Japan.

Hmmm... seems like you are right. My bad. Mea culpa.

[n0torious]

I know this has already been said, but I hope Levi's uses this opportunity to try to win back the core denim fans they've lost as the company has changed directions over the years. They're one of the few manufacturers with the market power to produce reasonably priced selvage.

[mizanation]

the NYT article mentions that levi's employs 40 "denim detectives" that search the world for copyright infringements. they are kinda like evil denim ninja spy operatives that covertly visit denim stores and report back to the mother brain.

who are these 40 agents? obviously some of them read what we post, and i would suspect some of them have secretly visited BiG and Self Edge, acting like normal customers but covertly performing reconnaissance missions for the big company.

how are these 40 agents selected? trained? do they like what they do? or do they have to resort to drugs and alcohol to live with themselves?

[brozek]

I might as well come clean.

From WAYWT:

-black

-black

-black

[n0torious]

Quick, kill the interloper!

[synthi]

I know this has already been said, but I hope Levi's uses this opportunity to try to win back the core denim fans they've lost as the company has changed directions over the years. They're one of the few manufacturers with the market power to produce reasonably priced selvage.

This too has already been said - it would be a bit like Ford trying to make a supercar - they tried recently with the new Ford GT which was on sale for £150,000 by invitation from Ford USA only but they cut huge corners in manufacture for the most part due to finacial problems and then they decided to use the exact same engine they put into a common pick up truck - way to go . . . And now a lot of people who bought one are selling.

The exact same thing would happen with Levi's now. If big multi's could do minutiae, cottage industries / boutique labels wouldn't exist. And the other thing is you're using 'selvedge' too loosely, here in the UK you can walk into a common high street store called Topman and buy a pair of selvedge seam jeans for £35.00 (rrp, not reduced) but that isn't gonna stop me from procuring Japanese jeans.

[n0torious]

This too has already been said - it would be a bit like Ford trying to make a supercar - they tried recently with the new Ford GT which was on sale for £150,000 by invitation from Ford USA only but they cut huge corners in manufacture for the most part due to finacial problems and then they decided to use the exact same engine they put into a common pick up truck - way to go . . . And now a lot of people who bought one are selling.

The exact same thing would happen with Levi's now. If big multi's could do minutiae, cottage industries / boutique labels wouldn't exist. And the other thing is you're using 'selvedge' too loosely, here in the UK you can walk into a common high street store called Topman and buy a pair of selvedge seam jeans for £35.00 (rrp, not reduced) but that isn't gonna stop me from procuring Japanese jeans.

You make a couple good points. I'll admit that the use of 'selvedge' is too broad. And it is useful to note that big companies often have a hard time being nimble enough to react to market forces with any kind of efficacy. But the comparison of Levi's to Ford is unfair. First, Ford as a company, top to bottom, is mucho fuxxed. And secondly, talking about manufacturing high end jeans vs. a high end automobile is not a good comparison. Levi's could still cultivate a boutique brand at a higher price point than their average product but still below a lot of the labels that they feel are borrowing their processes. The amount of risk involved when handling thousands of dollars in machine parts per product and then a few dollars of fabric per product...it's just not relative.

[homi29]

Levis stupid moves aside, branding is very important. Yes, design, fabric, cut, blah, blah, blah, and I know that you would choose a pair of PBJs or SDAs over a pair of Levis any day. But let's take a reverse example. What if there were a great pair of jeans - terrific fit, remarkable denim, flawless construction and trims - but they were made by, say, True Religion or Seven. Now, consider that there is no external branding except for a simple leather patch that has "True Religion" Embossed on it, or the Seven squiggle. Would you buy these jeans? And if you did, would you take off the (very subtle) back patch (the seven squiggle could actually look quite nice.) I would wager that 80-90% of the board would either not buy the jeans, or remove the branding even if they did.

Oh, and iirc, trademarks do not expire, as long as they are protected, unlike patents and even copyrights.

i see where ur coming from, people here like to state that quality trumps all else, whereas quality is often entirely intertwined and associated with a brand

Obviously though if seven started to make better jeans, their brand image would shift as well, eventually finding their way into SFers hands who lke sevens "new direction"

[artificialsky]

how are these 40 agents selected? trained? do they like what they do? or do they have to resort to drugs and alcohol to live with themselves?

THEY'RE ROBOTS

[drofhiphopology]

I was able to put my tab back on, albeit in a different position. Take that Levi's, plus it's not sewn in between two pieces of denim.

[xcoldricex]

um ok..................

[ericdw]

what, did the tab come in the box with the jeans or something?

[n0torious]

um ok..................

co-sign. 2 3 4 5 6

[artificialsky]

I was able to put my tab back on, albeit in a different position.

KILL YOURSELF.