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War of the…Trade Secrets?

By Ariana Lo Giudice [March 26th, 2013] 

Burches

The four-month legal saga between fashion mogul Tory Burch and her ex-husband Christopher Burch ended in early January with settlement talks. Although we will not get a chance to see this fashion-inspired “war of the roses” play out in court, there is certainly a legal lesson or two to be learned from this battle of the brands.

Women’s Wear Daily (WWD) followed the Burch Battle quite closely, beginning in early October 2012 when Christopher filed suit against his ex-wife for breach of contract and tortious interference. However, WWD hinted back in February 2012 that Tory Burch was contemplating a lawsuit against her ex-husband for either “…trade dress infringement or usurpation of corporate opportunity” over the opening launch of Chris’ new retail store, C. Wonder. WWD “Christopher Burch Files Suit Against Tory Burch,” 10/03/2012. Even though Tory did not wind up filing suit, it certainly seems like she was concerned with trade dress infringement.

Interestingly, Tory’s counterclaim does not directly mention “trade dress” as an outlined cause of action, whereas “misappropriation of trade secrets” forms the basis of her suit against Chris Burch and his new retail stores, C. Wonder. Tory claims that Chris, being a member of the board of directors for Tory Burch LLC, was privy to information concerning “…highly confidential data compilations, business methods, techniques and processes” that are economically valuable because they are not known to the general public—essentially, trade secrets. (Tory Burch Counterclaim, 46-47).

According to Tory, the C. Wonder brand was developed and selected based on the confidential information that Chris learned in the course of his duties as a Board member. However, it would seem that any products sold in C. Wonder or the “look and feel” of the store, such as its décor and product packaging, could have easily been copied from simply looking at the Tory Burch stores and did not require Chris being privy to the trade secrets that Tory Burch and her company own.

The counterclaim discussed the “look and feel” of the C. Wonder stores and how they closely resemble that of the Tory Burch stores, including testimonies from bloggers, customers, and the media commenting that both stores seemed to be “connected” and how many are “confused” as to whether the two stores are associated with each other. But why is it that Tory did not directly assert a trade dress infringement claim?

To assert a trade dress claim, Tory Burch would have had to establish her trade dress rights—since trade dress rights are not registered, such rights are not presumed and it is up to the party alleging infringement to establish that there in fact exists trade dress rights. If Tory was unable to produce enough evidence to support trade dress rights, then her trade dress arguments would not only fail against Chris, but would open her brand to possible worldwide dilution and tarnishment. It may be that she did not want to take the chance that the court could deny her all trade dress rights, which would certainly harm her brand.

Tory does assert an unfair competition claim at common law, but such claim does not necessarily translate to a trade dress infringement claim. In fact, Tory indicates in the unfair competition claim that Chris’ misappropriation of her company’s trade secrets is what led to the public being confused and the possible dilution of her Brand. Even under the “indirect” trade dress claim, misappropriation of trade secrets plays a prominent role.

If the Burch Battle has taught us anything, it may be that lawyers have added another weapon to their arsenal when fighting trade dress infringement—the weapon of trade secret misappropriation. It will be interesting to see in the future if trade secret misappropriation claims start playing a larger role in fashion suits and trade dress claims in general. The Battle of the Burch Brands may be over, but the war against trade dress infringement and trade secret misappropriation certainly is not.

 

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