By and large, there are limited legal protections for fashion designers despite the size of the industry and their contributions to it. Technology makes copying fashion designs or some variation of fashion designs sadly very efficient. There are basically three approaches based on intellectual property that can be applied to fashion designs:
• Trademark law can be used to protect brands and logos as well as key visual characteristics of the design.
• Fashion designs themselves are not protected by copyright, but certain aspects can be protected.
• Utility and design patents can protect the look of a design provided it is deemed “novel.”
A large percentage of fashion designers works to ensure their designs have solid legal protection from counterfeiters and the like. These protections can easily become critical to the financial success of fashion designers and are essential components of their ability to generate personal wealth. Consequently, there are steps that can be taken help protect these “assets” and mitigate current and future taxes tied to these “assets.”
Insuring for the costs of lawsuits against counterfeiters and copycats is becoming a trend among some very prominent fashion designers. According to Rick Flynn, managing partner of FFO Business Management & Family Office and author of The High-Functioning Single-Family Office, “Under the right circumstances, captive insurance companies can be very effective in dealing with legal costs and other risks tied to intellectual property. They can be a very useful tool for entrepreneurial fashion designers.”
At the same time, there are ways to tax efficiently deal with the value of the intellectual property. According to Frank Seneco, president of the advanced planning boutique Seneco & Associates and author of Maximizing Personal Wealth: An Advanced Planning Primer for Successful Business Owners, “With time and proper planning, intellectual property, such as design patents, can be transferred to other parties such as loved ones or even sold without incurring tax on the transfer.”
When fashion designers proactively and perspicaciously deal with the intellectual property they create, the result can easily be significantly more personal wealth for them and/or their loved ones.