Brazil’s Best Counsel 2022 - Chapter Opening: Fashion Law

Posted Monday, December 13th 2021
Brazil’s Best Counsel 2022 - Chapter Opening: Fashion Law

The fashion industry in Brazil and the legal implications of the pandemic

Fashion law is an interdisciplinary and transversal practice area and a very robust sector of the world economy, interacting with many different areas, such as intellectual property (IP), consumer, labor, contractual, tax, corporate, advertising and even environmental law. In Brazil, fashion law is of major importance as the sector generates around 1.5 million jobs – especially considering Brazil’s textile economy is the fifth-largest in the world. The industry recorded a turnover of R$186 billion1in 2019, establishing itself as a promising segment for new technologies and sustainable developments.

Brazil has a unique fashion market, full of purpose and the “iconization” of brands. As such, trademarks are still the center of market interest and are a form of communication, free speech, innovation and status. Brazil is a country of near continental dimension, allowing for great cultural and folkloric diversity in its brands.

During the pandemic, clothing manufacturing suffered a 90% reduction, according to data from April 20202, being a sector severely impacted by lockdown. Besides the impact on manufacturing and supply chains, franchises, shops and even relations with influencers experienced a low point during 2020. On the other hand, the pandemic increased online sales through various channels, including WhatsApp; sports clothing, loungewear and comfortable clothes were the most sought-after and bought products during the period.

In terms of business, big acquisitions and new groups have been a trend in Brazil. Arezzo & Co., originally owner of its own shoes’ brands (Arezzo, Schutz, Alexandre Birman, Fiever and ALME), has been acquiring several new brands for the past years, such as MyShoes, Reserva and VANS Brasil, becoming a large player in the footwear market.

Fashion influencers have become even more prominent in the field. Brands created by these fashion figures have become game-changers in the Brazilian industry. Fashion influencer Nati Vozza, for example, sold her brand BYNV for R$210 million ($42 million) due to the force of her name and followers (1.2 million), as well as its annual revenue of R$158 million in 2020. Her image was the main marketing for BYNV for several years, which boosted the growth and endorsement of other fashion influencers.

Brazil is a country of near continental dimension, allowing for great cultural and folkloric diversity in its brands

Moreover, contracts with influencers and celebrities have followed some global trends. Actress Marina Ruy Barbosa became creative director of ZZ Mall, the online marketplace of Arezzo & Co., and world music phenomenon Anitta joined the counsel of Nubank, Brazil’s biggest fintech.

Brazilian fashion companies are looking to the international market and following the trends, becoming a relevant market. The well-known sport and lifestyle brand Track & Field opened a café in its flagship base in São Paulo. The café is focused on healthy food, which represents the lifestyle proposed by Track & Field. This kind of brand extension strategy shows that brands are diversifying, looking to activities that relate to what they represent, not only by what they sell. Also, adding new experiences to basic retail creates an ecosystem around the brand. This movement has been seen at Selfridges in London, for example, which has been, over the past few years, adding new experiences to the store, with a cinema and a wedding venue.

All these changes in the market are reflected in the legal environment of fashion law. Towards the end of 2020, a new Data Protection Law (Number 13.709/18) was enacted in Brazil. The law became instantly relevant and of utmost importance with the shift to the online market during the pandemic. Fashion companies have been adapting their internal and external data policies to the new requirements, as happened in Europe with the GDPR phenomenon. The new Brazilian law has had quite an impact on fashion companies’ e-commerce and online marketing strategies, which have undergone effective changes since then. With the new law, all companies, including fashion companies, must provide a clear, transparent, and objective privacy policy, to protect consumers and data owners. Moreover, consumer data cannot be used for different purposes than what is authorised by users via a clear consent management, with opt-in and opt-out options for marketing and emails, for example (Articles 7 and 11, LGPD, Data Protection Law).

During the pandemic, clothing manufacturing suffered a 90% reduction, according to data from April 2020[3], a sector severely impacted by lockdown

Fashion law in Brazil depends a lot on IP legislation. The Industrial Property Law (Law 9.279/96) and the Copyright Law (9.610/98) can protect the fashion market’s intangible investments. Both are compliant with the minimum standards of TRIPs (the agreement on Trade-Related aspects of Intellectual Property rights), creating a minimum and reasonable protection for facing counterfeiting and piracy.

New precedents on fashion law have been setting the parameters of the copyright protection for clothing designs, which, most of the time, are not copyright-protected. On 2 June 2021, the Appeals Court of São Paulo, case number 1066278-93.2019.8.26.0100, with a decision issued by Justice Azuma Nishi, maintained the decision of the lower court that confirmed acts of unfair competition and infringement of the famous clothing designs of the brand Lolitta, which brought the lawsuit. Such designs have been the essence of the mark since its creation, with a specific material and style that are instantly recognised by consumers. Both decisions were based on comparative evidence of the designs, which were found to be identical or 90% similar. Considering the comparison between the designs of the plaintiff and the defendant, the judge in the appeal decision stated his belief that it was not simply a coincidence. Although it is another great case for fashion houses, possible infringement and copy of fashion items depend heavily on structured and comparative evidence of the claims.

Also, in the field of IP, from October 2021, applicants will be able to file position marks, as a new Brazilian PTO (Patent & Trademark Office)’s normative act entered into force in September 2021. So far, Brazil will allow the filing of position marks as 3D marks until a suitable form for position marks is made available by the Office. The definition of a position mark in Brazil is a distinctive sign that has a unique and specific position in a device. Such a sign should be separated from the technical or functional side. This new legislation will be useful to fashion brands that have specific details that are recognizable by consumers as a distinctive part of the brand.

Brazil is a hub for fashion creators, and Brazilian businesses and consumers are engaged with trends and the global market. Legal and business changes reflect the relevance consumers are demanding of the market to stay up to date with international market standards, helping create an environment suitable for investments by foreign and local designers.

 

About the Authors:

Flávia Mansur Murad is the founding partner of Mansur Murad Advogados with a PhD in Intellectual Property Law from Lorraine University (France) and a Master’s in International Business Law from René Descartes University (France). She is professor of postgraduate programs and courses at Brazilian associations. Flavia serves as a committee member at INTA and vice-chair of the ABPI arbitration committee. She is also the coordinator of the book Artificial Intelligence and Intellectual Property.

E-mail: fmm@muradpma.com
Phone: + 55 11 3884 9791

 

Isadora Schumacher Jeong is the Head of International Practice at Mansur Murad Advogados. She has a master’s degree from Queen Mary University, focusing on Intellectual Property and Fashion Law. Currently, she is based in London, leading the firm’s new international hub and English Desk. Isadora serves as acommittee member at CITMA and INTA and was a speaker at the 2021 World IP Forum.

E-mail: iss@muradpma.com
Phone: + 55 11 3884 9791