Fashion piracy causing concern in Hong Kong

France News.Net
Friday 3rd July, 2009

Hong Kong fashion designer Jing Wong has encountered fashion piracy first-hand.

"We were trying to look for places in Hong Kong to do the manufacturing for some crochet accessories for a huge order we got from [international retail firm] Urban Outfitters," Mr Wong said. "We went to a place but couldn't make a deal. A few weeks later we went past that shop again, and the whole window display was filled with our designs."

Copyright infringement is always a risk for designers like Mr Wong. The good news for Hong Kong designers, most of whom run small and medium-sized enterprises, however, is that the city is not considered the piracy centre it might once have been.

"In reality, Hong Kong is not a huge centre [for piracy] anymore," said Steve Vickers, President and CEO of FTI-International Risk, a leading Asian risk mitigation consulting and investigative organisation. Mr Vickers, who served in the Hong Kong Police Force, said "licensing activity here is fairly limited; there's not much manufacturing, and there's a strong legal framework. This all makes Hong Kong one of the better places. But it has been affected."

While Hong Kong may be one of the best places for a designer, Mr Vickers added, "Once your goods hit the street, the reverse engineering doesn't take five minutes. We advise people to use the protection that is available."

Daydream Nation's vintage-inspired clothing
Mr Vickers advises all designers to improve their data security, given that gigabytes of storage are now available on USB drives the size of a car key.

"A lot happens at the design stage, and losing control of that early can put a competitor ahead of you," he said. "We advise clients to protect their data and segment things, so that no one can send out the whole design in five minutes. We also provide data audits and have their people sign confidentiality agreements and non-competition agreements, which are enforceable here in Hong Kong."

Mr Vickers also urges designers and fashion houses to do what may seem like common sense, but for many organisations remains an oversight. "Many of the problems stem from sloppy legal departments. You've got to know the history of your suppliers and who they're going to license. Designers need to know their history. Many of the rip-off artists, many of the threats, are the people that are closest to them. It's the people that do the packaging for them or run three shifts instead of two. They need to do proper due diligence, have the right of audit, be able to turn up at the factory and see the books."

Designers and fashion houses need to "spend money on the front end" by implementing strong legal and data protections, Mr Vickers said. But even that "won't eliminate all the problems, because all industry segments are prone."

Part of the problem facing smaller design firms is that they often cannot afford to spend the money upfront, according to Mr Wong, who founded DayDream Nation with his sister Kay. While the company is doing well, "we're still a small brand," said Mr Wong.

"It's hard for younger designers," he said. "Clothes are more or less the same, and it's really hard. Things are very seasonal and people, if they use the same fabric or alter it just a little bit, it's a grey area. The big brands are not affected as much. It's the young brands, the independent designers."

Mr Wong added that part of the problem for younger designers is they are under-funded and "always get too focused on the design. "We can't afford the time and effort you have to put into it. There's so much to do in a season, with the design, production, dealing with the clients, that we can't think about it. It comes later and sometimes we don't have the budget."

It's a familiar argument. Despite a significant investment in the fashion industry, little use is made of relevant national and regional design law to register and protect designs. In some countries, fashion designs may be adequately protected by copyright law as works of applied art. A frequently cited explanation for not registering fashion designs, however, is that the short product life cycle – often no more than one six-to-12-month season – does not justify the considerable time and financial cost involved.

Some countries and regions, such as the United Kingdom and the European Union, offer an unregistered form of protection for industrial designs for a relatively short period of time. Unregistered design protection, wherever available, is extremely useful for fashion designers or businesses with limited budgets, and for those who wish to test-market new designs before deciding which to register.

For fashion items with a long life span, filing an application for a registered industrial design may be the best way to prevent others from using the design. It is possible to request at the time of filing – not after – that the publication of the application be deferred for up to 30 months. This is a particularly useful feature, offered under the Hague System, the EU community mark and many national systems, for those who may want to keep their design secret until it comes to market.

Still, "in spite of the fact that unauthorised copying of designs is the norm," Mr Vickers says the fashion industry continues to thrive. He attributes it to the so-called "low-IP equilibrium," in which clothing designs enjoy almost no copy protection and designers frequently turn large profits by copying each other's work. In spite of the lack of IP protection for clothing designs – or rather, because of the lack
of it – the fashion industry remains vibrant and profitable.

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