26 legal eye
MAY 2014
www.ragtrader.com.au
PRESENTED BY
Help! Where do I start?
K&L Gates tackles your
questions around how to
launch a new label with
all the legal know-how.
its. It’s not only good business sense, but it will
also help you to continue to work together
during the good times and the bad. Different
structures will suit different businesses, and a
lawyer can help you establish a structure that
suits your business and protects you.
Dear K&L Gates Agony Aunt,
I’m working towards launching my own fashion label. I’ve been working closely with two other designers and we have created a range of samples that we
believe are really unique. We have a brand name,
a logo and have registered a domain name for our
website. Is there anything else we need before we begin manufacturing and promoting our products?
– RunwayDreamer
When you start out with manufacturers and
retailers, you will be expected to sign contracts
that cover not only your financial arrangements, but also your legal rights. You need to
understand the agreements and what protection
you have if anything goes wrong. A really common issue with retailers is, who owns products
that have been supplied, but not yet paid for or
sold. Some retailers allow you to retain ownership of the goods (which means that you have
the right to take them back if they break an
agreement, for example by not paying you for
goods). This isn’t always the case though.
We also strongly recommend that you are
proactive with these relationships. It’s worth
taking the time to talk to your retailers about
your goods, and to visit stores to check that your
products are being displayed and promoted as
you had agreed. Your retailers are an invaluable
source of information about colour, sizing, fit
and how customers are interacting with your
products, so make sure you ask them!
Dear RunwayDreamer,
First of all, congratulations! Creating unique
and distinctive products is the first hurdle for
any emerging fashion label. There are three
key areas that we recommend you consider
before launching your products in Australia
or overseas:
1. Business structure
Before selling your goods it’s crucial that you
choose a business structure that fits your business. Remember, starting a business can be
risky – it’s prudent to have a structure in place
that protects you if anything goes wrong.
Many designers start out as sole traders, without understanding that this structure is the
highest risk to them personally, and that it
may be easier to seek investment and minimise costs via structures such as a company or
trust. You mentioned that you have two business partners. Before you start entering agreements with distributors, make sure you have
agreed (in writing) on each person’s ownership of the brand, and how you will split prof-
2. Protect your business
3. Protect your label and designs
You mentioned that you have a name and logo
already. We recommend that you register these
as trade marks. Registering a trade mark is a
small investment and is quite a simple process
that an intellectual property lawyer or trade
mark attorney can help you with. Remember
that, the more distinctive your branding, the
easier it will be to protect, so steer away from
names or logos that are too similar to other
brands or that are very obviously related to
your products. It’s also important to remember
that, registering a domain name or a business
name doesn’t give you any proprietary rights.
Only a registered trade mark will give you an
easily enforceable property right, which will
become an important business asset quickly
over time and through use. If your business
becomes so successful that you begin to export
or manufacture overseas, you should register
the trade mark in those countries as well.
You should also consider protecting your designs. It’s hard enough funding the manufacture
of your products and business operations, you
don’t want to expend resources on chasing imitation brands and copycat designs. Australia has a
system of registered design protection which covers the shape, configuration and ornamentation
of designs (which can include clothing and jewellery). An intellectual property lawyer can help
you determine if your designs can be protected
as registered designs. You should also be able
to protect your graphic designs and fabric print
with copyright, which does not need to be registered. You might need advice to make sure you
own all the copyright in your designs if you are
using any contractors or freelance designers.
Don’t forget to seek advice when you’re not
sure. The savviest designers are those who surround themselves with people that they trust
to assist them with business strategy and help
them to make tough decisions. This includes
proper financial advice (not simply bookkeeping) so that you know your financial position,
and are not spending your precious start-up
funds unnecessarily. Good luck! ■
Authors: Jacqui Pitt, Caroline Cossio, Lisa Egan –
K&L Gates. For legal advice about protecting your brand
or starting your business, please contact Lisa Egan,
Partner, K&L Gates or Caroline Cossio, Senior Associate,
K&L Gates – 03 9205 2000; lisa.egan@klgates.com,
caroline.cossio@klgates.com