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Los Angeles clothing sellers accused of trademark infringement

In clothing retail, when large companies like Forever 21 order a product, it's possible for the retailer to cancel the order if the product isn't selling well. In other words, some clothing is produced, but it will no longer go to its originally intended destination. Discount stores can purchase the clothing and sell it; that is, if certain steps are taken to remove the clothing labels and prevent trademark infringement.

Forever 21 is suing a number of Los Angeles businesses for trademark infringement, unfair competition, trademark dilution and false designation of origin. The retailer wants at least $3 million in compensation for what it claims was a failure to get permission to sell the marked-down items.

Named as defendants in the lawsuit are David's Place Off Price Clothing Co., Y.M.I. Jeanswear, Damo Textile, Seven Lions (all of which are based in Los Angeles) and Gabriel Brothers, a company in West Virginia.

Forever 21 claims that David's Place sold clothing items to Hi Fashion Inc., which then resold the clothing to customers. The Forever 21 tags and labels had been marked out or cut off of the merchandise, but that apparently isn't the problem.

The lawsuit was filed back in February 2010, but the case is still pending.

Forever 21's attorney (not affiliated with our firm) claimed that discount clothing vendors "can easily resell their items if they obtain authorization through very vendor-friendly terms and conditions. That is the problem with the defendants. They obtained no such authorizations."

For their part, the defendants say that because Forever 21 never paid for the clothing, and because the identifying labels were marked out, the retail giant has no right to the merchandise.

Clearly, trademark infringement cases can be dicey without the proper legal strategy. Small business owners faced with this kind of litigation would do well to consult with a business law attorney.

Source: Apparel News, "Forever 21 Sues Discount Stores for Trademark Infringement," Deborah Belgum, May 9, 2013

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