The legal Aspects of Borrowed Fashion—THE BUSINESS OF BORROWED FASHION.

Abstract

In the past, it has been a gesture to lend high-value fashion outfits to celebrities for public events, and it has become a large-scale business worth billions, known as ‘celebrity dressing’. This is backed up by complex private contract rules. The article examines the lawfulness of these fashion loan deals, where contract law, intellectual property rights, the right to use a person’s image and the rules governing the retention of another’s property converge. It highlights the differences between the approaches that the law takes to these agreements in India, the U.S. and the U.K. The article examines the effectiveness of the exclusivity clauses, credit rules and who pays if something is lost or damaged. It also examines the role of the use of celebrity image rights in such arrangements. The article reveals that the Indian legal system has loophole issues; it has no clear legislation on the right to use a person’s image and the lack of development of fashion copyright. It proposes amendments to legal thinking and/or legislation. Finally, the author notes that while the structure of the loans are widely found in business, they are not often explored in the law field, and invites legal thinkers to address the unique problems presented by these arrangements.

Keywords: Celebrity dressing, Fashion law agreements, Intellectual property rights, Bailment, Celebrity Endorsements

Introduction

Celeb-fashion collaborations can truly be a the star of the show, as illustrated by Audrey Hepburn’s appearance at the 1954 Academy Awards in a designer Givenchy gown. This look was not just eye-catching, but it also led to a major fashion trend due to the commercial implications. Now days, giving branded duds to stars has become a vital component of marketers’ strategies. It is all about sales and fashions.

Think about Kim Kardashian at the 2022 Met Gala. She wore a Jean Louis noted dress, which had been worn by Marilyn Monroe when she performed her song “Happy Birthday, Mr. President”. This outfit actually belonged to Believe It or Not in Ripley, and there were strict rules on how to use it, time limits and care to be taken to protect it. Kim Kardashian received a ton of love for her choice, but it also sparked some chatter around conserving historic fashion items and who has the proper to put on them. These outfits are not only concerned with beauty—there’s business and legal stuff involved as well!

Borrowed fashion is definitely not a red carpet trend but a legal concern as well. In such cases, numerous entities are involved, including fashion brands, stylists, celebrities, PR companies, museums, and insurance agencies. They have primarily contractual, intellectual property, rights of publicity and endorsement/transfers of temporary assets rights and liabilities. Though the economic influence of ‘star-styling’ has become more prominent, the legal aspects of ‘loaned fashion’ are underrepresented in academic research.

In this article the regulation of borrowed clothes is explored from a fashion law perspective. Explores legal aspects of celebrity fashion partnerships – including the concept of contract and property rights, obligations to lend out fashion, and emerging legal challenges from monetising images of celebrities and their fashion.

Background

A “dressing agreement” or “loan receipt,” as the business term is, is a legal document that would provide a fashion house or their representative access to a gown, pants, shoes, bag or jewelry, usually for a specific event, which the stylist or management can then use on behalf of the celebrity, but is promised to be returned. It’s a strategy that works both ways: the celebrity receives some couture he or she may not otherwise have access to, or something he or she wouldn’t have been able to afford, and the brand gets some aspirational publicity.

From a doctrinal point of view, the fashion loan arrangement is best classified as a bailment. These forms of transactions in India are provided for by the main law governing the transaction which is Chapter IX of the Indian Contract Act, 1872, according to which, Bailment is the delivery of goods from one person to another for such purpose and with an agreement that they will be returned or disposed of by the person to whom they are delivered as per the instructions of the person who delivers the goods once the purpose is achieved. There are three components required – delivery, a clear goal, and a return duty. Both are happy with the arrangement of fashion loans.

Under this agreement, it is typically the fashion house or its public relations representative who is the bailor and the stylist, the talent manager or the celebrity, in and of themselves, is the bailee. Under the provisions of Section 151 of the Contract Act, each bailee shall be held to the standard of care that a reasonably careful person would be expected to exercise in relation to his own commodities of the same kind, quality and value. The standard of care used to determine “ordinary prudence” is the operative standard of care standard for loss or damage during the term of the loan.

Intellectual property law is incorporated into fashion loan contracts in many ways other than bailment. Section 15 of the Copyright Act, 1957, which provides protection against copyright infringement of industrially applied designs, presents the question of whether the clothing itself is sufficiently distinct from the use of the design to warrant copyright protection. The registered marks and trade dress of the brand are covered by the Trade Marks Act, 1999.

The Indian fashion industry is supported by Bollywood and a growing luxury market, and generates substantial number of activities related to celebrity fashion. Unlike the U.S., where entertainment law firms have developed a template for loan receipts, and the U.K., where PR agencies regularly send out formal written loan confirmations, transactions of this kind are normally done orally or by a short digital letter in India. This informality is the chief source of the regulatory vulnerability referred to in this essay, and thus is not commercially insignificant.

Legal Analysis

The concept of bailments is adequate in theory but difficult to apply in practice.The bailment system is good in theory, but bad in practice.

Indian Contract Act, 1872, provides a nominally adequate framework in which to discuss the key incidents of a fashion loan: the bailor’s right to reclaim the goods under Section 153; the duty of care owed by the bailee under Section 151; and allocation of risk for loss, under Section 152. However, rather than being practical, the Act’s adequacy is theoretical. The Act does not have any specific provision for catering to the special needs or vulnerabilities of high value and time sensitive and media-proximate fashion loans as the Act has been enacted as a general commercial bailment law such as storage, carriage or pledge.

The first big hole is in the quantification of liability. Section 151 does not require anything greater than ordinary caution if a piece of Couture is lost or destroyed, but it doesn’t detail the calculation of the damages. The question isn’t academic, as a hand-embroidered lehenga Sabyasachi lent for the movie premiere could cost a few lakhs of rupees at retail, but the artistic and creditor value, which in terms of loss to the brand will be tied to its association with a high profile appearance, cannot be calculated using any conventional means. There is no contractual liquidated damages clause (which is standard in the USA loan receipts) so neither side has clear remedial direction and fashion courts have not dealt with it in the fashion context. Hadley v. Baxendale.

The second structural weakness is that most of the Indian fashion loan agreements are oral or informal. An oral bailment contract is considered to be valid under the Contract Act, but is very fragile as evidence. No signed confirmation of the return and no written loan receipt puts a stylist and the fashion house in a position where they are at odds with each other over a lack of credibility, which can be costly and cumbersome to resolve. In the United States, the validity of a written loan receipt has been litigated and proven successful in cases in which samples were withheld – fashion businesses have prevailed in civil conversion actions based on documentary evidence of the terms of a loan. Indian law does not have other kind of infrastructure of practice.

Thirdly, in the business context, the exclusivity obligations are not referred to in the Contract Act. There is no law that says that there is a right or wrong way for a fashion house to loan an entertainer a piece of clothing and to expect that she won’t be wearing a similar outfit at the same event. Without a written contract, the expectation of exclusivity cannot be legally enforced, and must be established by an express contract. The Indian fashion financing arrangement suffers from serious shortcomings compared with those in the United States or in the United Kingdom, because of the unenforceability of the exclusivity clauses which are among the most commercially significant provisions in dressing agreements.

The regulatory gap is exacerbated by the fashion loan agreements’ intellectual property components. Copyright in a design used in an article industrially (as defined under the Designs Act) subsides after 50 years or more (Section 15 of the Copyright Act, 1957, read with the Designs Act, 2000).

This can create a skewed incentive for Indian couturiers, since limited-edition clothes which are produced in small numbers can still violate copyright protection. The fashion house that lends a garment from a commercially produced collection might not have any basis for copyright control over how a garment’s design is reproduced, adapted or photographed, and this can affect loan agreements.

The Indian Legal Framework: Gaps, Growth, And Reform

The gap between formal and informal learning.

The most striking piece of the Indian fashion loan market is its informality which is found in almost all transactions. While PR firms in the UK routinely release written confirmations of loans, or entertainment law firms have standardized loan receipt forms in the US, Indian fashion-dressing arrangements rarely involve a written loan confirmation or even a formal digital communication, and can have significant legal consequences.

Indian Contract Act, 1872 does not require contracts to be in writing, except for certain types of contracts, such as those involving guarantees, real estate, etc. Therefore, an oral bailment agreement is valid.

Safeguarding Consumers and Counterfeit Clothing

The use of fake/ fake clothing in the outfits of celebrities in media/endorsement that is presented as a genuine couture has been a growing problem in the Indian setting. A framework for dealing with such misrepresentation is provided by the Trade Marks Act of 1999 and the Consumer Protection Act of 2019. The individual who presents counterfeit merchandise as genuine might be liable and so could be the celebrity whose association lends the false impression of endorsement. The import/export regulations under the Customs Act of 1962 also apply to the importation of fake clothing.

India’s Fashion Gift Taxation

Indian tax law will be applicable under the Income Tax Act, 1961 in case of a fashion loan being converted into a gift, a common scenario which occurs when the brand decides to retain a garment once it has been utilized during an event by the celebrity. Gifts received from anybody other than relatives exceeding Rs. The taxes are levied under Section 56(2)(x) as 50,000 within a fiscal year are treated as income from other sources. The revenue Tax Department has said that gifts made in the professional capacity to celebrities is a professional receipt and not a personal gift and is taxable in full. This perspective has been disputed in a few tribunals, for different reasons.

Conclusion

The fashion loan agreement is located at a fascinating juncture between contemporary business requirements and older concepts such as bailment, passing off, and unjust enrichment. It serves as a contract, a licence, a tax withholding and even a forum for intellectual property conflicts. Along with theological differences, there are differences in understanding the formalization of celebrity commerce, the commercialization of identity and the maintenance of artistic production between India, the US and the UK.

The fashion loan market in India is in a turning point. The Bollywood-couture nexus is growing explosively, Indian couture companies are aspiring to expand their reach across the globe, and India is becoming a global fashion diplomacy hub, making a more complex legal framework necessary than it is now. Finally, borrowing fashion is simply borrowing law, and the law in this aspect should be adapted to India’s cultural and economic context from the best comparative practices.

Now, until recently, fashion law has been considered a curiosity and not a discipline by the legal community, including practitioners, academics, and legislators. This article says that “borrowed clothing is at its core a legal means to get into the spotlight” on the red carpet. It deserves to be studied in the academies and now is the time to do so.

Referrence(S):

1 For a historical account of designer-celebrity relationships in post-war fashion, see Caroline Evans, Fashion at the Edge: Spectacle, Modernity and Deathliness (Yale University Press, 2003).

2 Indian Contract Act, 1872, Sections 148–181, governing the law of bailment in India.

3 Houghland v RR Low (Luxury Coaches) Ltd [1962] 1 QB 694 (Court of Appeal, England and Wales).

4 The Pioneer Container [1994] 2 AC 324 (Privy Council), establishing the principle of sub-bailment on terms.

5 Star Athletica LLC v. Varsity Brands, Inc., 580 U.S. 405 (2017), clarifying copyright protection for design elements of useful articles.

6 Christian Louboutin S.A. v. Yves Saint Laurent Am. Holding, Inc., 696 F.3d 206 (2d Cir. 2012), affirming trade dress protection for the red sole as a source identifier.

7 Irvine v. Talksport Ltd [2002] EWHC 367 (Ch), confirming passing off as a remedy for false celebrity endorsement in English law.

8 Titan Industries Ltd v. Ramkumar Jewellers, 2012 (50) PTC 486 (Del), recognising the celebrity’s right of publicity as a property right in Indian law.

9 Shivaji Rao Gaikwad v. Varsha Productions, 2015 SCC OnLine Mad 1151, extending right of publicity protection to celebrity persona.

10 Copyright Act, 1957, Section 57, preserving the author’s special right to claim authorship and protect integrity of the work.

11 California Civil Code Section 3344.1 (Celebrity Rights Act), providing post-mortem right of publicity for seventy years.

12 Income Tax Act, 1961, Section 56(2)(x), taxing gifts above Rs. 50,000 received from non-relatives as income from other sources.

13 For US loan receipt practice, see Susy Bielak, ‘The Business of Celebrity Dressing’ (2019) 22 UCLA Entertainment Law Review 45.

14 For a critique of fashion law’s doctrinal underdevelopment, see Scafidi, Susan, Who Owns Culture? Appropriation and Authenticity in American Law (Rutgers University Press, 2005).