This article was co-written by Michael Isselin, an associate in the Regulatory practice at Venable.
Where once many criticized the fashion industry for being slow to evolve, it may now be one of the most tech-savvy industries. Heavy hitters and local brands alike are using emerging technology to better understand consumers, create products that are more customized for individual consumers, and develop new and personalized ways to bring the shopping experience to consumers.
To say that technology is currently disrupting the fashion industry is a bit misleading—brands have adopted the latest available technology for decades. Take, for example, the invention of the sewing machine and the silk-screen printer, or even e-commerce and how it revolutionized the way we shop in the early 2000s. Current technology goes beyond bringing the shopping experience to the consumer’s home (or phone), from developing “smart” clothing to body scanning for measurements. Such technological innovations that are disrupting the fashion industry are raising a variety of interesting legal issues, especially related to privacy and data security, intellectual property rights, advertising and marketing, and consumer safety. In this article we discuss recent examples of technology disrupting fashion and some of the legal implications arising from the use of such technology.
AR and VR Are Changing the Game
Perhaps the most innovative technologies available to fashion brands are augmented reality (AR) and virtual reality (VR). An increasing number of fashion brands are using AR and VR during their fashion show presentations to bring the product closer to the consumer—both in the audience and at home. For instance, Topshop brought its 2014 London Fashion Week show to individuals watching the show through VR headsets at its London store. Similarly, Tommy Hilfiger allowed customers in certain stores to experience its New York Fashion Week show through VR headsets. For those lucky enough to get their hands on a VR headset, Paris fashion brand Balenciaga produced a 360-degree live stream of its fall collection during Paris Fashion Week in 2016.
Using AR and VR to give consumers access to what happens “inside the tents” during fashion shows continues to be a growing trend, but such use may create additional legal considerations that do not exist where filming is limited to traditional video streaming. Before live streaming a fashion event through AR and VR, it is important to understand who and what will be captured on video and transmitted through the stream, including whether audience members or attendees will be shown and whether it is necessary to have these individuals sign a release. Cameras used for AR and VR streaming may allow the viewer to choose how close to get to an object captured in the stream, including actual (and virtual) persons.
Although a traditional fashion show might not require audience members to sign a release, shows streamed through AR or VR might require notice to audience members or a signed release before entering. Brands might intend the 3-D stream to allow viewers to see details about the clothing, but it may be possible to view details about audience members—from facial expressions to conversations seen on their smartphones. The front row might want others to see their exclusive status, but probably not the contents of their handbags.
Brands are also incorporating AR and VR in their designs. For its spring/summer collection, Japanese brand Anrealage hosted an AR fashion show during Paris Fashion Week in 2016. At Anrealage’s “Silent Augmented Reality Show,” members of the audience with the Anrealage mobile application could scan the models on their smartphone to reveal hidden messages and designs on the clothing. These new design elements raise interesting intellectual property issues, such as copyright ownership for the designs. For example, can the designer claim copyright ownership of the design elements that can be seen only through the use of AR technology, or does ownership extend only to the design on the actual clothing and viewable without a headset? Will this distinction matter if (or when) more consumers own headsets?
The benefits of AR and VR go beyond fashion shows and can help solve the problem everyone has when shopping at home: trying on the product. In late 2016, makeup retailer Sephora launched an AR application that allows consumers to “try on” makeup while sitting in front of their computer screen. A number of brands and AR/VR companies are creating applications and other online services to allow consumers to “try on” product at home or “customize” it before making an online purchase, such as a mobile application that scans the user’s body for the right measurements to generate a “custom” fit.
Body scanners and other at-home “try on” methods might be consumer-friendly, but they can collect, store, and transmit a great deal of information about the user and the user’s surroundings. To obtain measurements, consumers might be disrobing, and the technology can capture intimate images not only of the individual, but also of the individual’s home. This information might be viewable by company employees and transmitted through a web of hosts.
By allowing this technology to view some of the most intimate parts of an individual, companies must minimize the amount of data that is collected and have in place data security measures to protect this information. Regulators recognize that this type of technology can collect a substantial amount of information, sometimes without the consumer being aware of what is collected, and how companies need to consider privacy concerns. The Federal Trade Commission released a 2015 report to address privacy concerns with the “internet of things,” including wearable technology. The report discusses designing security into the physical objects, minimizing data collection, and how to notify a consumer of data collection and obtain consent through certain devices.
An Evolving Shopping Experience
While AR and VR help enhance a consumer’s at-home shopping experience, brands are adopting a range of technologies to disrupt the e-commerce experience. The rise of influencer marketing has increased “social shopping,” or shopping through social media sites. One popular social shopping platform is LiketoKnow.it, where influencers and bloggers can engage with their followers while promoting products. The individual links their “outfit” post from their social media account to LiketoKnow.It, tags it with the products featured in the image, and includes a link to purchase the item from the retailer. If a registered user “likes” the post, they receive an email with links to sites where they can purchase pieces from the outfit, or the user can take a screenshot of the image and use the LiketoKnow.It application to shop for featured products.
As brands continue to focus heavily on influencers and bloggers to market their products and engage with consumers, this model provides another way consumers can skip the store experience and rely on their favorite “Instagrammer” to do the shopping for them without ever leaving the couch. By using influencers not only to advertise a product but to direct the consumer to purchase the product in only a few taps, both brands and influencers must comply with the FTC’s Endorsement Guides. The connection between the influencer and the advertiser must be disclosed, and the FTC continues to provide insight as to what is (e.g., “#ad” and “#sponsored”) and is not (e.g., “#spon” and “#partner”) sufficient disclosure.
Social shopping platforms create a unique issue for influencers because the individual may not always have partnerships or “material connections” with the brands they are wearing. If the influencer posts an outfit without monetary or non-monetary payment by the brand, but receives a percentage of revenue through the social shopping platform for merchandise purchased through the post, what should be disclosed and where? How can influencers make disclosures if social shopping platforms aggregate posts and drop captions? After the FTC’s action against Lord & Taylor for its influencer campaign back in 2015, and following the FTC’s recent “sweep” of warning letters to influencers, the Commission is clearly shining a light on the use of influencers and proper disclosures, so the motto holds true: disclose and disclose often (or anywhere you can).
Wearable Technology Beyond the Wrist
For some time, the phrase “wearable technology” was synonymous with smart watches and designer-branded accessories for fitness and activity trackers, but fashion companies have started embracing technology as a component of their products. One example is the “data dress,” which is a dress that is customized based on personal information gathered about the customer. By using a mobile application, information such as the local weather and daily activities is collected and used to design a dress meant to fit the individual’s lifestyle. However, as discussed above with AR and VR technologies, this collection and transfer of data, including the individual’s location information, must be secure and subject to well-developed privacy policies, processes, and data security measures.
While the “data dress” uses technology to build a custom product, companies are building technology directly into the product e. Brands are replacing classics like cashmere and wool with “smart fabrics,” where the technology is woven into the product. For example, Ralph Lauren released the “POLOTECH” shirt, which gathers biometric data during the individual’s workout through fibers sewn into the shirt. The technology is linked to a mobile application that can alter the workout in real time based on the data.
Perhaps the most novel use of incorporating technology into fashion, these “smart fabrics” and e-textiles trigger a web of legal regulations. On the one hand, products that collect and share an individual’s personal health information might fall under the Health Insurance Portability and Accountability Act (HIPAA). For instance, a garment intended for wear during a workout can collect heart rate or blood pressure information and transmit it to a mobile application or other database to analyze the information for the consumer. If HIPAA applies, companies must comply with certain standards, including safeguarding the personal health information collected by the garment. “Smart fabrics” might also fall within the jurisdiction of the Food and Drug Administration (FDA), though the agency’s authority in this area is yet to be determined. Brands that develop clothing with health and fitness functions built directly into the garment—such as a sweatshirt version of an activity tracker—should review FDA regulations and consult their legal teams to determine what FDA and/or HIPAA requirements may apply.
Whether or not a product made with “smart fabric” is collecting personal or health information, one thing is certain—the product must be safe to wear. “Smart fabrics” might incorporate technology similar to that of their smartphone and wearable technology counterparts, but careful testing is crucial, because these fibers are built directly into the clothing worn against consumers’ skin. Under the Consumer Products Safety Act, which regulates consumer products such as textiles, certain testing, documentation, and labeling standards will apply based on the type of consumer good. Of course, the recent rise of “smart fabrics” makes it unclear how such textiles fall within the Act’s language, but brands must test and evaluate the products and communicate to consumers any hazards or restrictions, including how the product should be worn, washed, and discarded.
Technology’s disruption of the fashion industry will continue to impact designers and consumers, but it also creates a new set of legal issues to consider. Brands and their lawyers should understand the overall technology, how it will be used, and the information it will collect. Fashion designers will increasingly look to technology companies for partnerships and co-ventures because brands do not typically have the expertise to create such technology. The agreements that accompany such partnerships will likely be lengthy and complex, and involve a number of important obligations for both parties that include, but are not limited to, safety testing, intellectual property clearance, privacy protection, and data security. Lawyers handling these deals and advising on such products must be as versatile as the clothing and as innovative and forward-thinking as those who create it.
Based in Washington, D.C., Venable LLP is a law firm with more than 600 lawyers in nine U.S. offices.Favorite