Fashion Counsel with Anthony V. Lupo

Arent Fox's fashion law blog offers news, analysis, and insights for the industry from fashion attorney Anthony Lupo.

Fashion Counsel with Anthony V. Lupo
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Sears Sued by Clothing Company for Cancelling Orders in Violation of Contract

On March 18, retailer Sears Holdings Corp. was hit with a $5.5 million lawsuit in Illinois’ Cook County Circuit Court by clothing company Sprockets Clothing Inc. (which is now known as SCI Apparel Inc.). Sprockets alleges that Sears breached an exclusive vendor contract entered into in 2010 by cancelling nearly $4 million of orders after Sprockets already manufactured and shipped the orders.

Sprockets claims that Sears had no contractual justification for its actions and Sears’ cancellation was not “commercially reasonable practice” because the clothing that Sprockets produced was of a quality consistent with the requirements of the contract and there was no cancellation clause in the contract. Additionally, Sprockets alleges that Sears violated the contract by withholding $750,000 of Sprocket’s contributions to a joint project between the parties to launch a “store within a store” retailing concept, even though Sears never developed the concept.
 

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Advertising, Data Collection & Privacy
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Costco Looks to Knock Out FACTA Receipt Class Action

What’s the News?

Costco Wholesale Corporation recently moved to dismiss a class action lawsuit alleging that the discount retailer printed more than the last five digits of a customer’s credit card number on her receipt, in violation of the Fair and Accurate Credit Transactions Act (FACTA). Costco argued in its motion that the document upon which the credit card number was printed – a longer document provided to the plaintiff by a customer service supervisor – was not actually a “point-of-sale” receipt within the meaning of FACTA, taking it outside the scope of the law. This case presents an interesting issue for companies as they seek to avoid costly and time-consuming litigation under FACTA.
 

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Real Estate & Leasing
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Catch a Conversation with Anthony Lupo and Camuto Group SVP Jessica Cardon

On March 15, Arent Fox Fashion Law practice leader Anthony Lupo will give the keynote interview with Jessica Elliott Cardon, Senior Vice-President and General Counsel of Camuto Group during Bisnow's 6th Annual Retail Summit “Trends in Urban Acquisitions, Development, and Leasing” in New York City.

Mr. Lupo and Ms. Cardon will discuss fashion industry trends including omnichannel services and licensing partnerships, as well as what's on the horizon for the Camuto Group.

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Communications, Technology & Mobile, E-Commerce, Online Distribution & Fulfillment
Amazon Fights Injunction in FTC Action Over In-App Billing Practices

Practical Guidance

  • In-app purchasing remains a priority for regulators.  
  • Companies with mobile apps should incorporate password protection and informative prompts to obtain informed consent from account owners for in-app purchases.

What the News?

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International Corporate, Importation & Immigration
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Importer Information: ACE Transition Delayed; Updated Timeline

This alert brings you recent developments affecting importers at US Customs and Border Protection (CBP). The developments affect how importer information is filed with CBP.
 
You will be impacted if you electronically submit entry or entry summary data to CBP. Groups most likely to be impacted include importers, brokers, self-filers, or software providers.
 
Importers will want to work with their customs brokers to ensure that procedures are in place for proper electronic filing of import/entry information. The revised timelines allow for more time for the mandatory transition to the new ACE system (from the older ACS system).
 
Responding to industry concern, on February 8, 2016, CBP announced an “Updated ACE Transition Guidance” which may be found on CBP’s website by clicking here.
 

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E-Commerce, Online Distribution & Fulfillment
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CFPB: Get Proper Consent for Recurring Debit Transactions, or Else!

As 2016 gets underway, companies should be mindful that regulators are paying close attention to automatic recurring debit transactions. If reviewing your recurring debit transaction consent procedures was not already one of your New Year’s resolutions, it may be worth making it a late addition.

What’s New?

The Consumer Financial Protection Bureau (CFPB) signaled in a compliance bulletin late last year that it is scrutinizing automatic recurring debit transactions to ensure that companies are obtaining proper consent from consumers. Such transactions are regulated by the Electronic Fund Transfer Act (EFTA) and its implementing regulation, Regulation E.

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Intellectual Property, Trademark
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Arent Fox Wins Lawsuit Protecting Diesel From Websites Selling Counterfeit Products

Washington, DC — Earlier this month, Arent Fox LLP secured a victory for Diesel S.p.A. after a federal court granted default judgement in a lawsuit the Italian clothing company filed against nine John Doe defendants operating 83 cybersquatting websites that sold counterfeit products appearing to carry the internationally recognized label. In granting the default judgment, the US District Court for the Southern District of New York awarded $2 million in damages and ruled that by using Diesel’s trademark in the domain name, the websites created the false impression they were authorized to sell genuine Diesel goods.
 

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Deal or No Deal? Class Action Alleges Macy’s Offered Misleading Sale Prices

What’s the News?

Macy’s, Inc. and subsidiary Bloomingdale’s, Inc. were recently served with a class action complaint alleging that the retail chains misled consumers with a “phantom pricing scheme” that inflated the savings available on items marked for sale. According to the complaint, the stores listed artificially high “regular” prices on “sale” items, increasing, by comparison, the savings that consumers believed they were receiving. This is the latest of several recent class action lawsuits attacking retail pricing strategies, and it serves as a reminder to retailers nationwide to be careful when using price comparisons.

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Advertising, Data Collection & Privacy
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Is It or Isn’t It? FTC Issues Guidance to Companies on Native Advertising

The Federal Trade Commission recently issued its long-anticipated guidance on native advertising. While the policy statement and its related guidance are new, the FTC emphasized that it has been regulating native advertising under Section 5 of the FTC Act since 1967 and that this policy document and guidance is a summary of the principles that it has developed over the years. While the FTC has been regulating native advertisements for decades, the issuance of this guidance indicates that the FTC will be making regulation of native advertising a priority in 2016.
 
Native advertising – as defined by the FTC – is advertising that matches the design, style, and behavior of the digital media in which it is disseminated. The main problem with respect to native advertising arises when the content is formatted in a way that suggests or implies it is not an advertisement.

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Communications, Technology & Mobile, E-Commerce, Online Distribution & Fulfillment
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Better Off Without It: FTC Telemarketing Sales Rule Amended to Ban Abusive Payment Methods

The Federal Trade Commission (FTC) amended its Telemarketing Sales Rule at the end of 2015 to ban certain forms of abusive payment methods. The amended rule now bans four previously allowed methods of payment that the FTC determined were commonly used in abusive telemarketing operations.  The banned forms of payment include: remotely created checks, remotely created payment orders, cash-to-cash money transfers, and cash reload mechanisms. The amendments also require that a description of the goods or services purchased must be included in the verification recording of a consumer’s agreement to purchase them.

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Arent Fox LLP, founded in 1942, is internationally recognized in core practice areas where business and government intersect. With more than 350 lawyers, the firm provides strategic legal counsel and multidisciplinary solutions to clients that range from Fortune 500 corporations to trade associations. The firm has offices in Los Angeles, New York, San Francisco, and Washington, DC.