JVC Articles

JVC’s 2023 Summer Compliance Briefing: Legal Updates and Key Takeaways on Copyright and Trademark Law

JVC's Legal Team
September 14, 2023

JVC’s Q3 2023 Quarterly Compliance Briefing Updates

Speakers:
Sara Yood, Esq., Deputy General Counsel, Jewelers Vigilance Committee (JVC)
Phillips Nazro, Executive Advisory & Attorney, Fixer Advisory Group

About Phillips:

Background: Serving as head of Legal and Client Services at Fixer Advisory Group, he’s dedicated over two decades to providing in-house legal counsel. With stints as the Senior Vice President at Marc Jacobs and Vice President at David Yurman, he has invaluable insights into the world of corporate law, both domestically and internationally.
Affiliations: Phillips’ association with the Jewelers Vigilance Committee (JVC) spans nearly a decade. Through this partnership, he’s gained immense knowledge from Sara, Tiffany, and the team.

JVC’s Recent Operational and Legal Highlights:

Team Expansion: We’re thrilled to introduce Catherine Walden, our new Vice President of Sponsorships and Partnerships. Catherine is spearheading our initiatives to ensure cohesive collaborations and relationships across the board.
Save the Date: JVC’s Annual Luncheon will be held on Friday, March 8th, 2024. This event, marking the onset of the 24 Karat Weekend in New York City, is not just our primary fundraiser but also a celebration of our ongoing commitment to legal compliance and ethics in the jewelry business world.
Green Guides Review: JVC actively participated in the Federal Trade Commission’s (FTC) Green Guides review. JVC’s Green Guides webpage is updated with relevant information regarding these revisions and can be viewed here. Our submission, a culmination of insights from over 60 consultations and backed by 16 industry organizations, emphasizes the significance of environmental marketing claims across sectors. Curious about our insights? Dive into our detailed brief available on the FTC comments website.
Looking Ahead: This year, our focus has been especially tuned to the discussions around ‘recycled terminology.’ We’ve been active participants, with our recent visit to a workshop in DC spearheaded by the FTC, ensuring we’re aligned with the broader industry conversation.

Insights from the Recycling Workshop:

A recent workshop hosted in DC provided a keen insight into recycling practices, primarily focusing on the plastics and paper industries. A significant challenge lies in the inconsistency across communities about what’s recyclable. An intriguing term “wish cycling” emerged, where consumers, out of hope or uncertainty, place items in recycling bins. Such nuances may not directly affect the jewelry industry, but understanding these complexities offers broader perspectives on sustainability.

A revelation from the workshop was the discussion on differentiating between ‘reusing’ and ‘recycling’. This distinction is pivotal for the jewelry sector, given that precious metals like gold or diamonds aren’t typically discarded. Our conversations with key figures from the FTC have left us hopeful for the FTC’s response to the initial round of comments by year’s end. Moreover, there’s an anticipation of additional hearings, possibly focusing on terms like ‘carbon offsetting’ and ‘sustainable’.

Upcoming Beneficial Ownership Reporting Requirement:

Starting January 1st, 2024, businesses will have to embrace a new protocol: beneficial ownership reporting. Designed to thwart financial malpractices like money laundering, this mandate emerges from the Corporate Transparency Act. It obligates entities with significant control over businesses to disclose specific identifying details.

Key Highlights:

A ‘beneficial owner’ is defined as someone with considerable control over the business or who holds at least 25% ownership.
This rule empowers the Financial Crimes Enforcement Network (FinCEN) to gather beneficial ownership data and share it with specified government bodies and financial institutions.
While the information isn’t public, its submission is mandatory for both domestic and registered foreign companies operating in the U.S.

Beneficial Ownership Reporting: A Deep Dive

Starting January 1st, businesses are set to face a new reporting requirement. Here’s what you need to know:

The What: Mandatory submission of detailed information regarding beneficial owners of companies.
The Details: This entails the company’s legal and trade name, its formation jurisdiction, and taxpayer identification number. For beneficial owners, the report should include legal names, birthdates, home addresses, and identification numbers (from driver’s licenses, passports, or other verified documents), along with the corresponding document copies.
The Why: This measure is set in place to combat illicit financial activities, such as using LLCs, shell companies for tax evasion, or money laundering in the U.S.
Exceptions: While publicly traded companies are exempt, many in the jewelry industry will likely have to comply with this regulation.
Where and When: The Financial Crimes Enforcement Network (FinCEN) will provide a standardized form for this, with all reporting to begin post-January 1st. More information can be found on FinCEN’s official website.

Updates on Russia Sanctions in the Jewelry Domain:

In March, following the G7 statement regarding diamonds, the State Department engaged in a crucial dialogue with various stakeholders in the jewelry industry. The focus was the ‘substantial transformation pathway’ of diamonds. Essentially, diamonds mined in Russia are later cut and polished elsewhere, thereby gaining a ‘legal’ status for import into G7 countries.

Post-meeting, the jewelry industry highlighted existing traceability limitations and alack of advanced technological solutions for diamond tracking.

Following these discussions and further consultations, there’s a growing consensus that, from January 1st, any imported diamonds above one carat will need verified proof that they weren’t mined in Russia. The exact methodologies and avenues for validation remain in development, but the jewelry industry and the State Department are in continuous talks to establish a cohesive and effective solution.

Insights from Phillips Nazro: Legal Protection for Jewelry Designs

Three Pillars of Jewelry Design Protection:

Copyrights: This helps protect the original design of a piece of jewelry.
Design Patents: Grants protection for the ornamental design of a functional item.
Trademark Protection: Undoubtedly the most challenging to achieve, primarily due to the ‘Acquired Distinctiveness’ criteria. This means that a jewelry design, when seen, should immediately evoke recognition of its brand, thanks to extensive marketing and branding. A classic example is the Renaissance cable bracelet, synonymous with David Yurman or the Love bracelet from Cartier.

Earning a trademark is no walk in the park. It necessitates a brand’s dedication to consistently marketing a product, achieving significant sales, and embedding the product in the consumers’ psyche over several years.

In conclusion, while intellectual property protection provides a necessary safeguard for jewelers, it requires time, effort, and a strategic approach.

Jewelry and Copyrights:

What Can Be Protected? – At the heart of copyright protection lies artistic expression. While copyrights extend to books, films, and art pieces, their application to jewelry is unique. Jewelry, in the eyes of the copyright office, is akin to a miniature sculpture or an individual artwork. This distinction offers jewelry an edge over the broader luxury fashion domain.
Understanding the Divide – In fashion, the basic design, like the cut of a dress or the shape of a shirt, doesn’t qualify for copyright protection due to its inherent utility. However, specific artistic patterns or prints on these items might. Similarly, in jewelry, while the fundamental design of a ring might be seen as utilitarian, intricate detailing or ornamentation could qualify as a protectable artistic expression.

Benefits and Mechanics of Copyright Protection:

Instant Protection – The magic of copyright in the U.S. is its instantaneous nature. Once an artwork, like jewelry, is made public, copyright protection kicks in immediately. However, formal registration becomes essential when you wish to enforce these rights against third parties.
Acting against Infringement – With the rampant imitation in the jewelry world, securing copyright protection for designs is invaluable. If a design has a registered copyright, legal action against copycats can be initiated without delay. In contrast, the absence of registration means waiting for the registration process, which can span several months.
Social Media and E-commerce Platforms – The digital age has shifted most infringement activities to online platforms. While platforms like Amazon or eBay offer mechanisms for brands to lodge complaints against imitations, they typically require tangible proof of intellectual property ownership. A mere statement on unregistered copyright rarely holds water. In contrast, showcasing a copyright certificate almost invariably results in the immediate removal of the copied product.
Cost-Efficiency of Copyrights – Copyright registration in the U.S. stands at $65, making it an affordable protection strategy. The process, straightforward in nature, can be handled in-house, eliminating the need for extensive legal assistance.

Challenges and Realities:

Despite these benefits, not all designs get registered. Often, brands neglect the registration process, making the whole exercise seem futile. However, given the advantages that a copyright registration offers, it’s a protective measure that shouldn’t be overlooked.

Copyright Evolution in the Jewelry Realm:

The Catalog Era – In the vibrant past of the jewelry industry, jewelers would routinely mail their seasonal catalogs to the copyright office. The effortless return was a stamp signifying the entire catalog had registered copyrights. Even though it brought some enforcement challenges, especially with catalogs containing multiple designs, it acted as a deterrent against small-time copycats. However, established brands could contest the intent behind such broad registration.
Bundling Designs into Collections – As individual designs’ copyright began to wane, jewelers adopted a strategic pivot. They started bundling similar designs, like a necklace, earrings, and bracelet set, into a singular image. Even if a ring, in its standalone capacity, didn’t qualify due to its inherent utility, the collective artwork did. This method, although effective against smaller infringers, was not foolproof against bigger brands who might question the specific elements protected.
Changing Tides at the Copyright Office – Eventually, the copyright office redefined collection registration. Instead of allowing a series of designs under one umbrella, they mandated that items should be literally sold together in a single package to qualify. This shift meant that many applications seeking registration for bundled items were met with rejection. Moreover, singular pieces, like rings or basic necklace chains, confronted registration obstacles due to their inherent utility.
Spotlight on Detail – Today’s climate requires a meticulous approach to copyright registration for jewelry. While some pieces still face challenges, pendants showcasing intricate designs are finding success. The focus has clearly shifted to the ornate details that set a design apart.

As we traverse this evolving landscape, the focus remains on identifying those unique elements in jewelry designs that can be shielded under the umbrella of copyright protection.

The Dynamics and Intricacies of Copyright Disputes

When it comes to jewelry designs, navigating the complex maze of copyright registrations and litigation is no small feat.

The Subtleties of Jewelry Copyright: Specific pieces, like ornate medallions and intricate pendants, stand a better chance for copyright registration, mirroring artwork in their uniqueness. Conversely, simple chains or rudimentary rings often face rejection. A critical implication to remember is once rejected by the copyright office, enforcing a copyright against potential infringers becomes next to impossible.
Copyright Lawsuits – What Do They Entail? If a brand or designer finds another entity copying their designs, the path often leads to litigation. Here’s a step-by-step overview:
1. Pre-requisites: A valid copyright registration is non-negotiable.
2. Expedited Registration: Recognizing the urgency, the copyright office offers a fast-track registration for impending litigations.
3. The Power of a Certificate: Owning a valid certificate from the US Copyright Office places the burden of proof on the alleged infringer. They must prove the lack of substantial similarity to the original design.
4. Determining Access: Proving that the infringer had access to the original design is pivotal. It could be as straightforward as both parties participating in the same trade show.
The Twists and Turns of Presumption: While a valid copyright registration ostensibly proves your design’s authenticity, it’s not impervious to challenges. An infringer can contest the validity based on several factors:
1. Design Originality: They can argue the design isn’t unique enough for copyright.
2. Technical Grounds: From details about the design’s creation, the creator, its history, to its assignment, any discrepancy can be grounds for challenge.
3. The Role of Attorneys: Given these complexities, it’s often prudent to have a legal expert oversee the registration process. A minor misstep can jeopardize the copyright validity.

In a litigious society, it’s crucial to be thoroughly informed and prepared. While navigating these complexities can be daunting, it underlines the importance of expert legal counsel in the realm of jewelry copyrights.

Exploring Design Patents in Jewelry

The jewelry sector doesn’t solely rely on copyright protections. Another instrumental protective measure is the design patent. Let’s delve deeper:

Advantages of Design Patents: Many jewelry brands have adeptly wielded design patents not just for protection but also enforcement against third-party infringements.
The Challenges: Cost and Timing
1. Cost: Design patents are pricier. While a copyright application costs $65, a design patent, from initiation to publishing, can burn a hole of $10,000 to $15,000. Even the initial filing fees are quite hefty, running into thousands.
2. Timing: A vital aspect is the one-year timeframe. In the US, after introducing a design to the public, there’s a one-year period to file the patent application. The definition of “introducing” is stringent; even a closed-door wholesale market could start the clock ticking.
Navigating Market Debuts and the “First to File” System: Using trade shows as an example, if you introduce a design in Vegas, the one-year countdown begins. But there’s a catch: the US, mirroring many other nations, operates on a “first to file” system. This means even if someone copied your idea at the show, they could potentially file it before you, leaving you in a precarious position. It’s essential to strategize before getting market feedback, given the hefty financial implications.
Provisional Applications: A Middle Ground: A provisional application offers a compromise. By spending a couple of thousand dollars, you can put a placeholder on your design, giving you breathing space to gauge market reception and decide if the design is worth the substantial patenting investment.
International Implications: Intellectual property rights vary by jurisdiction. Some significant markets, like Europe and the UK, mandate patent applications before any public unveiling. Hence, if international expansion or protection is in your radar, securing your design patent before its debut is crucial.
A Success Story: To bring things to life, consider the story of a recent client. Through careful maneuvering, they secured a patent for a unique chain design, proving that with the right strategy, even simple pieces can be shielded.

Navigating the world of design patents can be complex but given their potential power in safeguarding unique jewelry designs, it’s a journey worth taking.

Design Patents and Intellectual Property: Navigating the Intricacies in the Jewelry World

Jewelry creators often overlook the potential of design patents, especially in situations where copyright may not apply. Here’s why it’s crucial to familiarize yourself with this facet of intellectual property:

Consult with a Patent Counsel: Considering a design patent? Engage with a patent counsel. Many, well-versed with the jewelry industry, will often provide preliminary consultations, offering insights into the feasibility of a patent for your design.
Why Seek Patent Advice Early: An early conversation can save time, money, and prevent potential complications. Remember, if your standout designs can’t be protected via copyright, design patents may be the way forward.
Intellectual Property is a Two-Way Street: While protecting your designs is vital, ensuring you don’t infringe on others’ designs is equally crucial. Unintentional copying can lead to lawsuits and hefty fines.
The Thin Line between Inspiration and Infringement: Inspiration can be the fuel for creativity. However, it’s pivotal to differentiate between being inspired and directly copying. Myths abound about changing a few elements to sidestep infringement – but it’s rarely that simple. Instead, focus on creating something fresh. One approach is to glance at the inspiration, then design without it in sight. If you’re continually referencing the original, chances are your design is too close for comfort.
Be Aware and Save Money: Being cognizant of intellectual property rights not only safeguards your business legally but also financially. Infringement lawsuits can significantly dent your profits.
The Celebrity Endorsement Edge: One aspect that transcends industries is the appeal of celebrity endorsement. Jewelry designers, like many others, thrive on seeing a celebrity adorn their piece. Whether it’s gifted or bought, when a star flaunts your design at a grand event like the Oscars, it’s a massive win. However, with this comes the allure of using their photographs as promotional material, and that’s a slippery slope.

As a jeweler, grasping the complexities of design patents and intellectual property is more than just a legal necessity; it’s an integral part of establishing a sustainable, respected, and successful brand.

The Perils of Using Celebrity Images: What Every Jewelry Brand Should Know

The excitement of spotting a celebrity sporting your jewelry piece is undeniable. It’s tempting to instantly share such moments, but there are caveats every jewelry business needs to understand:

Celebrity Endorsement – It’s Not Always What It Seems: While a celebrity wearing your piece might seem like tacit endorsement, downloading and sharing that image can land you in hot water. Even if a stylist provides the piece, or a celebrity is genuinely a fan, this doesn’t grant the rights to use that image.
Beware of the Paparazzi: In the world of photography, paparazzi’s sustenance is selling their photos. When businesses use these images without permission, it’s typically these photographers – and not the celebrities – who pursue legal actions. Their livelihood hinges on these images.
The Role of Agents: Agents are intermediaries, bridging the gap between celebrities and the real world. Whether representing celebrities or photographers, agents seek opportunities to monetize these images. A brand’s unauthorized use can attract swift legal responses, especially since agents often pocket a share of any settlement.
Licensing – Not a One-Size-Fits-All Solution: While certain platforms sell image licenses, always scrutinize the permissions attached. Even with a license, the rights to use a celebrity’s likeness might not be included.
Celebrity Exclusivity Agreements: If a celebrity flaunts your jewelry, they might be violating an exclusive agreement with luxury brands like Bulgari or Cartier. These violations can lead to swift backlash from the aggrieved party, putting your brand in a difficult situation.
The New Crop of Social Media Enthusiasts: Younger social media handlers, though savvy, might lack an understanding of the intricate legal landscape. The allure of resharing celebrity endorsements might seem irresistible, but legal implications remain unchanged, regardless of the medium.

Navigating the world of celebrity endorsements can be complex, but a cautious approach ensures brands reap rewards without unwanted legal headaches. Always remember, in the exciting world of social media, it’s essential to prioritize awareness and understanding over immediacy.