Generative AI in fashion design complicates trademark ownership

Emerging technologies are weaving their way through the fashion industry. Whether it's offering unique fashion pieces through non-fungible tokens like Dolce & Gabbana's Collezione Genesi NFT or Metaverse Fashion Week 2023, fashion creatives are seizing the opportunity to engage with cutting-edge technologies.

Generative AI is expected to add $275 billion to the operating profits of the apparel, fashion and luxury sectors in the coming years. Technology in the fashion space can be used to improve sustainability and creativity, adapt products to consumer preferences, predict trends and minimize barriers to entry in the fashion industry.

Recent lawsuits against generative AI companies have largely involved copyright issues. The flurry of cases is likely to be contested by trademark owners whose concerns could be at the forefront.

Legal landscape

Generative AI in fashion design poses new and significant problems for trademark owners. For example, an artificial intelligence tool called New Black helps fashion designers create brands, slogans, bags and among other things. If tools like this can generate, in seconds, a design that resembles an existing trademark, how does the trademark owner seek redress?

In Getty Images (USA) vs. Stability AIPlaintiff Getty Images asserts trademark claims against Stability AI, alleging that the output generated by Stability AI's Stable Diffusion model contains “a modified version of a Getty Images watermark, which creates confusion about the source of the images and implies falsely an association with Getty Images.”

To be liable for infringement, the defendant must use the infringing trademark “in connection with the sale, offer for sale, distribution or advertisement of any good or service,” known as commercial use. The commercial use must be “likely to cause confusion, or to mislead or mislead” consumers as to the source of the infringing mark.

Does the production of a generative AI model constitute commercial use? And is the output of a generative AI model likely to cause consumer confusion as to origin?

Modeling the Future

The answers to questions about the use of generative AI in the fashion industry largely depend on how the courts interpret trademark infringement as applied to these new technologies.

A fashion designer who uses generative AI to produce and market products that infringe existing trademarks could be held liable under a theory of direct infringement. The trademark owner would have to show ownership of a valid trademark and a likelihood of confusion arising from the defendant's alleged infringing use.

Under existing law, a generative AI company can avoid liability under a theory of direct infringement simply by generating the potentially infringing output. This is because the trademark owner may not be able to show the commercial use requirement over the generative AI company.

In this scenario, the generative AI company provides a platform that uses a third party to create and use an infringing mark, but does not use the infringing mark. A generative AI company could be held liable under an indirect theory of trademark infringement.

To establish contributory liability, a plaintiff must demonstrate to the defendant or “intentionally induce[d] another to infringe” your mark or “continue”.[d] to supply your product to those you know or have[d] reason to know [was] incur trademark infringement”.

When the defendant provides a service rather than a product, the plaintiff must also show that the defendant had “[d]direct control and monitoring of the instrumentality used by a third party to infringe”.

Plaintiffs may argue that the generative AI company has direct control over the tool used by the designer to create the infringing design and/or mark and is therefore liable for the resulting direct trademark infringement. However, plaintiffs may face a hurdle in showing the requisite knowledge on the part of the generative AI company that the tool is being used to infringe another's trademark.

Many generative AI companies have affirmatively implemented safeguards to address issues related to intellectual property infringement. For example, when we asked to create a trademark for a shoe company similar to Nike's “Swoosh” logo, ChatGPT responded:

“I can provide guidance on creating a unique and original trademark, but I cannot create one that is intentionally similar to an existing trademark such as the Nike Swoosh logo. It is critical to respect intellectual property rights and avoid infringing on existing trademarks. Creating a trademark that closely resembles another company's trademark can lead to legal problems.”

Because liability for direct infringement may be inapplicable to a generative AI company and liability for indirect infringement may be difficult to prove, courts and legislators will need to adapt existing legal frameworks to address the unique challenges posed by AI technology. i.a.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.