Van Cleef Wins Key Design Ruling

Susan Scafidi in WWD, September 17, 2012

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In a ruling that could have major implications for luxury-goods brands worldwide, French fine-jewelry house Van Cleef & Arpels on Monday claimed a landmark victory in a court case pitting it against one of its former designers.
 
The Court of Appeals in Paris ruled late Friday that designs made by an employee of a jewelry firm should be considered a simple contribution to collective works owned by the company, rather than the intellectual property of the individual designer.
 
The ruling came after the plaintiff, Thierry Berthelot, appealed a previous decision by the Paris prosecutor’s office, which ruled that he did not have enough evidence to prove that he owned the rights to the designs.
 
The Court of Appeals not only affirmed the concept of collective works but went one step further, sentencing Berthelot to damages of 10,000 euros, or $12,500 at current exchange, for withholding his drawings for the duration of the seven-year legal battle, saying this amounted to “malicious behavior.”
 
Berthelot’s lawyer said he now plans to appeal the Court of Appeals decision to France’s highest court.
 
Stanislas de Quercize, chief executive officer of Van Cleef & Arpels, said the company was comforted by the verdict.
 
“It has brought much-needed clarity for all of us in the luxury-goods industry in France. Certainty is always crucial for business, but in this case, the lack of clarity caused consternation for many years, in all artisanal and creative businesses in France. The judgment provides a positive message to all companies who create in France,” he stated.
 
Berthelot’s lawyers had argued in court that his creative process had been performed independently of any instructions or supervision from his employer. Berthelot, who kept more than 500 sketches made during his time at Van Cleef, said he was the designer of the brand’s Frivole collection, among others.
 
Susan Scafidi, professor of law at Fordham University School of Law in New York, said, “Fashion houses can breathe a sigh of relief….The [French] ruling says that the rights belong to the fashion house. It’s not so much a transfer of rights, but a clarification of what was a gray area.”
 
The French court ruling pertains solely to full-time employees of fashion houses, and it allows fashion firms to specifically state that they are the “director of the process, and the employee was hired as part of the team to create the design,” said Scafidi. The rationale is that since the fashion house directs and originates the process, it is therefore the first holder of the copyright.
 
As for implications on a grander scale, Scafidi said that celebrity designers, such as Tom Ford, who once worked at Gucci, or Karl Lagerfeld, if he ever left Chanel, can no longer claim — if they had ever wanted to — that designs they worked on belonged to them individually.
 
“You’ll see careful papering by fashion houses with respect to employment agreements signed by designers that they hire, and employee manuals will refer to participation in the creation of collective works in different ways, and how it is part of a team effort,” the law professor concluded.
 
Elisabeth Ponsolle des Portes, president of French luxury association Comité Colbert, said the ruling was welcome news for its 75 members, which range from fashion house Chanel to jeweler Cartier and perfumer Guerlain.
 
“This ruling truly recognizes the concept of collective works, which is clearly a very important element for the luxury sector as a whole, since many luxury houses have based their economic model on this notion of collective works — from the manager to the designer, the artisan, the prototype maker and so forth,” she said.
 
“What is also interesting is that the court has shown that effectively, the heritage of a company, which is going to determine the style of a brand, is important, and that preserving the archives that constitute this heritage is also something important,” Ponsolle des Portes added.
 
Vincent Fauchoux, the lawyer who represented Van Cleef in the case, called the decision unprecedented in its depth and clarity.
 
“It applies an existing provision in French intellectual property law, but this application is so precise and so realistic from an economic perspective that it provides a blueprint for all French creative industries, not just fashion or luxury,” said Fauchoux, who is a partner at Paris law firm Deprez Guignot & Associés.
 
He noted that Van Cleef had won a similar case against another one of its designers, Cécile Arnaud-Chevillard, in 2010, but said that ruling was far less explicit.
 
In particular, the court detailed the various elements that determine whether a work should be considered collective. This ranged from the house’s heritage to the amount of instructions given to employees and the role of internal committees and organizations in assigning tasks, said Fauchoux.
 
French law contrasts with the system in place in many other jurisdictions, where employees automatically relinquish their rights to their employer under the terms of their employment contract, a mechanism known as “work made for hire.”
 
In France, intellectual property rights on works created collectively belong, from their conception, to the person or employer who initiates the creation, supervises the creative process and then presents the creation to the public.
 
Fauchoux said the Van Cleef ruling put France on a more even footing with other countries.
 
“By affirming the notion of collective works in the luxury universe, it creates a bridge between French and other foreign laws, even if the basic notions remain very different, since collective works remain a French specificity. It shows that this French specificity can be very efficient and that French law can be very attractive and protective toward product creation,” he concluded.
 
But Emmanuel Gouesse, a partner at law firm Pech de Laclause, Bathmanabane & Associés, which represented Berthelot, said the former Van Cleef employee would now take the case to the Cour de Cassation, France’s highest court. Gouesse said two other related court cases had been resolved in his client’s favor.
 
A labor court ruled that the designer was unfairly dismissed by Van Cleef in October 2005, a decision upheld in May by the Paris Court of Appeals’ social division, which awarded Berthelot damages totaling 300,000 euros, or $385,000 at average exchange rates for the month in question.
 
Separately, a criminal court in January found him not guilty of charges of breach of trust brought by Van Cleef, Gouesse said.
 
“We are very surprised by this ruling, the grounds for which are partially in contradiction with the ruling handed down by the social division of the same court several months ago,” said the lawyer.