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LA Times Business:
Material Grievances
As profits shrink and trends shift rapidly, L.A. textile and apparel firms are suing over what they say are knockoffs of their fabric designs.

By Evelyn Iritani, Times Staff Writer

No one knew the blue-and-lime-green floral print as well as Jae Nah.

His LA Printex Industries Inc. in Vernon crafted the design from artwork purchased in Italy, then rolled it out on fabric for wholesale.
Nah said the design — and others his firm crafted and copyrighted — began to show up on apparel at numerous places including Wal-Mart, Target and JCPenney and on fabric produced by CAFA Seoul Texprint Inc., one of the Southland's oldest fabric printing houses.

There was one major problem: None of the fabric came from Nah's stock.

"I give beautiful designs," Nah said. "But all the profits go to other people's pockets."

Nah filed copyright infringement suits against about 30 firms. He contends that the case of the ubiquitous floral print highlights the problem of intellectual property theft in California, home of the nation's largest apparel industry.

Shrinking profits have increased the pressure on some apparel and textile producers to take jobs that might skirt the law, said Michael Goldman, vice president of the Textile Assn. of Los Angeles, which represents about 600 manufacturers and sales representatives.

"People are hungrier," said Goldman, who owns a printing facility. "If there's money dangling in front of their face, they just take the shot and hope" that their lawyers can protect them.

Borrowed creativity has long been an accepted practice in the fashion world. If the bohemian look dominates the runways in Paris, then ruffled blouses and flouncy skirts are likely to be hanging in department stores the next season. If paisley grabs the headlines at New York fashion shows, then variations will probably show up in discount stores.

Between the creator and the store shelf, a piece of apparel might involve dozens of companies and countries. Designs and colors are tweaked, and the fabric or the style gains new life and marketability.

Rapidly changing fashion trends have heightened the temptation to steal the trendiest designs. It is not uncommon in today's competitive retail environment for store buyers to bring a hot product to their suppliers and ask for a cheap reproduction with little regard for the copyright and trademark issues, according to attorneys and industry experts.

The shift of textile and apparel manufacturing to China, the center of global piracy, has also made it easier for firms to duplicate the hottest patterns. Lax enforcement of intellectual property laws and a weak court system make it difficult to pursue legal action in that country.

Besides Nah, others in the fashion industry, including Los Angeles-based Samsung Caravel, one of the country's largest producers of textile designs, are also speaking up for their intellectual property in court.

"These manufacturers want to protect their competitive edge," said Crystal Zarpas, a Woodland Hills intellectual property attorney. "They want to make a statement to ABC Co. that if you knock them off, they're going to come after you."

Zarpas has initiated copyright cases on behalf of several local designers, including Judi Lambert, the originator of the popular Joystick label. Lambert is pursuing legal action against firms such as Forever 21 Inc., alleging that they sold blouses, skirts and other apparel that mimicked Joystick's distinctive embroidered designs.

Her fashions, which retail for as much as $175 for a long-sleeved T-shirt, are carried in stores including Neiman Marcus, Saks Fifth Avenue and Fred Segal.

Ilse Metchek, executive director of the California Fashion Assn., agrees that protection of intellectual property is crucial to local designers, who have become world-famous for their surf wear, jeans and other youth-oriented fashions. But she said some firms were abusing the copyright laws by claiming ownership of popular fabric designs that have existed for decades and then filing nuisance lawsuits in hopes of collecting big settlements.

The targets of the lawsuits are fabric and design companies, the converters that print designs on cloth and the manufacturers. But retailers are also vulnerable because they can be forced to pull disputed goods off their shelves and turn over any profits made from goods that violate a copyright.

Metchek said the latest round of lawsuits has put some small printers out of business and has been "extraordinarily costly" for retailers, which usually settle such cases out of court.

Larry Meyer, a senior vice president at Los Angeles-based Forever 21, said he couldn't comment on specific cases. But he said his company depended on its suppliers to ensure that no intellectual property laws have been violated in the production process.

"We basically expect them to abide by the laws," he said.

For his part, Nah says a flood of cheap copycats, mostly from Asia, has devastated his business, forcing him to slash production and lay off half of his staff of 70. During a recent visit to his plant, only one of his two high-tech printing machines was operating. He said his factory was operating at 33% of capacity.

A number of the companies sued by Nah, including Wal-Mart Stores Inc. and Target Corp., have settled the cases for undisclosed sums, Nah's attorneys said. Wal-Mart declined to comment, and Target did not return phone calls. Attorneys for several other retailers and printers said they could not discuss the cases because they were being litigated.

David Quinto, an attorney for CAFA Seoul Texprint, declined to comment on Nah's claims. In papers filed in U.S. District Court in Los Angeles, Austin Whang, general manager of CAFA Seoul Texprint, "categorically denies" that the firm copied any of LA Printex's designs. Instead, he accuses Nah's firm of illegitimately copyrighting patterns from CAFA's designs and popular magazines such as Vogue and Essence.

Nah denied the allegation.

Nah, who emigrated to the U.S. from South Korea in 1981, said he was forced to take drastic action to save his company, which he had furnished with nearly $1 million in high-tech laser engraving and printing equipment so that he could compete with low-cost competitors from India and China. He also hired 16 people to design and develop fabrics, at a cost of $25,000 to $30,000 for each new design.

After sales began to slide several years ago, an employee discovered apparel in two Southern California stores that was made from fabric nearly identical to LA Printex's designs, Nah said.

He dispatched employees to New York, Chicago, Florida and Texas. They visited some of the country's leading retailers and discovered several hundred pieces of apparel made with fabric whose designs Nah alleges were illegally copied from his.

Under U.S. law, the structure of a garment generally cannot be protected, but an original design or fabric pattern may be considered intellectual property that can be covered by copyright or trademark, Zarpas explained.

Filing for protection with the U.S. Patent and Trademark Office is time-consuming and costly. And protecting a claim is even more difficult because it requires constant policing of the marketplace.

In the past, many apparel and textile firms didn't bother to copyright their designs unless they were highly unusual, according to attorneys involved in the fashion industry.

Goldman, of the textile association, says printers now are much more careful to copyright their patterns and demand proof of design ownership from their customers, given the recent spate of lawsuits. And retailers are requiring suppliers to sign contracts that hold them responsible for any copyright issue that might arise.

"This really shook the industry," Goldman said of the LA Printex challenges.

Bruce Berton, a retail expert with Stonefield Josephson Inc., a consulting firm, said LA Printex was "taking advantage of a law that has been very loosely enforced" to extract lucrative settlements. But he said the firm's aggressive legal tactics had also resulted in important changes.

"Printex is doing things good for the industry. They're saying, 'You'd better respect trademarks, copyrights and intellectual property or it's going to cost you a pretty penny.' "



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