In a stunning turn of events that has stirred the bridal fashion world, designer Hayley Paige Gutman and industry giant JLM Couture, Inc. finally laid down their legal arms. The long-standing trademark dispute that kept the bridal industry on tenterhooks for years reached its conclusion with a settlement agreement signed on May 15, 2024. This resolution marked the end of a tumultuous chapter in the career of one of bridal fashion's brightest stars and signals a potential shift in how the industry approaches designer-company relationships.
The origins of this very iconic fashion legal battle can be traced back to the meteoric rise of Hayley Paige as a bridal designer. Known for her fresh, youthful designs that resonated with millennial brides, Paige quickly became a household name in the wedding industry. Her partnership with JLM Couture, a powerhouse in bridal fashion, seemed like a match made in heaven. However, as is often the case in the fast-paced world of fashion, the fairy tale began to unravel.
The crux of the dispute centered around the use of the "Hayley Paige" name and brand. Like many young designers, Paige had signed a contract with JLM Couture early in her career, likely without fully understanding the long-term implications of such an agreement. As her star rose and her personal brand grew, tensions began to simmer between the designer and the company over the ownership and control of her eponymous brand.
The conflict escalated dramatically when Paige announced her intention to step away from her role at JLM Couture, citing creative differences and concerns over the terms of her contract.
The employment agreement between Hayley Paige Gutman and JLM Couture in 2011 included the contentious non-compete clause that specifically prohibited Gutman from engaging in any bridal-design related business or activity that could be perceived as competition with JLM during the course of her employment and for five years after its termination. Other terms of the agreement restricted Hayley from using her own name, as well as locked her out of all her social media accounts which were engaged in the promotion of the eponymous brand.
In our previous blog, we unraveled every layer of this feud, and to best understand all the explorative nuances of the case head over to our linked above blog for reading all about the unanswered questions raised, which are answered in this blog.
Social Media Ownership: A Game-Changer for Designers
A mixed ruling by a New York federal judge on May 8, 2024 finally resolved the unanswered question of social media ownership, setting a precedent for the industry. The entirety of the dispute was based on the contesting claims over the “ownership rights” of the disputed social media accounts and the injunctive relief sought by JLM against Gutman.
JLM’s efforts were directed by the motive of securing sole control over the accounts, for which JLM needed to demonstrate “conversion or trespass to chattels” as per the mandatory injunction standard. And in order to establish a claim of conversion under the New York Law, there are three elements which must be proven:
The property in question is of specific nature and is an identifiable item.
The plaintiff had ownership, possession or control over the property so claimed before its conversion.
The defendant in-fact exercised unauthorized dominion over the property rightfully owned by the plaintiff, thereby infringing upon the plaintiff’s rights.
In the cases of Brown v Twitter (2021) and Salonclick LLC v Superego Management. LLC (2017), courts had cemented their position by decreeing that social media accounts could be treated as objects of conversion and claims for trespass to chattels. Subsequently, the Second Circuit following this precedent, also emphasized that JLM’s request for injunctive relief hinged upon its ability to prove ownership of accounts, either at the time of their creation or through a valid transfer of ownership.
The court held that “The analysis of social-media account ownership begins where other property ownership analyses usually begin - by determining the account’s original owner. The next step is to determine whether ownership ever transferred to another party. If a claimant is not the original owner and cannot locate their claim in a chain of valid transfers, they do not own the account.”
And as per the facts of the case the Court further observed that Gutman created the accounts using her personal information for personal purposes, making her the original owner, regardless of how the accounts were subsequently used. The presented evidence further strengthened her position as they showed that Gutman’s access to the accounts was not tied to her role as a JLM employee.
Answering another crucial question, the Court ruled in Gutman’s favor, rejecting JLM’s argument of social media accounts falling under “work-for-hire” provisions. Her claim was bolstered, as Instagram’s terms of service were presented, which prohibit the transfer or sale of accounts rendering JLM’s contention untenable. Accordingly, the Court held that the control over the disputed accounts be handed over to Ms. Gutman via an order dated 05.08.2024.
However, the order was not a complete win, as the Court sided with JLM on the matter of non-compete stating that JLM had clearly depicted that it had a “legitimate interest warranting enforcement of a restrictive covenant”. The court also opined that while the five year restraint was a significant amount of time, and was usually held to be unreasonable by courts in New York, it was not so in the present case, since JLM’s business model not only invested in building eponymous brands of upcoming designers but also in building up their “personas” which were intimately attached to the brand. Accordingly, five-years was a reasonable time for JLM to re-think its strategy in order to detach itself from the persona of Hayley Paige the designer.
What the Settlement Means for the Bridal Industry
Hayley Paige Gutman and JLM Couture, Inc. shocked the fashion world on May 15, 2024, when they announced their settlement agreement. As per the terms of the agreement, Hayley Paige Gutman will pay JLM Couture $263,000 as part of the settlement agreement. This payment will allow her to compete with JLM again, including using the Hayley Paige name and related social media handles for bridal designs. The settlement frees Gutman from all obligations and restrictions to JLM. It also grants her exclusive ownership of the Hayley Paige-related intellectual property portfolio that JLM previously held. This portfolio includes numerous trademark rights and registrations, as well as copyright-protected assets such as Hayley Paige brand look books.
Gutman will now own and control the various Hayley Paige social media accounts, which played a significant role in the conflict between the parties. This settlement follows a mixed ruling issued by a New York federal judge in the lawsuit. JLM initially filed this lawsuit in a New York federal court in December 2020.
The agreement marks a significant shift in the relationship between Gutman and JLM, giving Gutman back control of her brand and allowing her to resume her career as a bridalwear designer in the bridal industry under her own name. It resolves the long-standing dispute over intellectual property rights and social media control that had been at the center of the legal battle.
The parties issued a rare joint press release, indicating they had found common ground. This united front aimed to rebuild trust with consumers and retailers caught in the crossfire. The timing coincided with a post-pandemic wedding boom, providing motivation for both parties to resolve their differences and capitalize on increased business opportunities.
While the specific terms of the settlement remain confidential, as is often the case in such high-profile disputes, the very existence of an agreement suggests that both parties found enough common ground to avoid a protracted court battle.
Lessons Learned: Protecting Your Creative Rights
Whilst this settlement did bring to an end a long drawn legal battle, it was nonetheless a bittersweet victory for the designer. While it allowed her to move forward with her career and rightfully regain control over her personal brand, it also serves as a stark reminder of the challenges young designers come across in the cut-throat industry.
It brings forth to us critical questions of law, which hold the potential of significantly impacting the bridal industry, further reshaping expectations for future collaborations and partnerships.
Being a young designer, still charting her route of defining her creativity, Hayley Paige transcended her roles as a designer to become a brand in her own right, leveraging her robust social media presence to cultivate a devoted following among the millennial brides. This very unquiet connection with her audience also led to creation of an unfortunate divide within the bridal community during the legal dispute, quite naturally leaving both brides and bridal shops uncertain about whether to support the designer or the company that produced her gowns.
For a giant like JLM Couture, the challenge lies in sustaining the Hayley Paige brand’s value without its namesake designer. A challenge reminiscent of what Christian Dior faced after John Galliano’s departure or Chloe after Phoebe Philo’s exit, JLM too stands at the juncture where their success hinges upon preserving the aesthetic that made the brand popular while strategically evolving to meet the changing consumer expectations.
However, with proper counsel and strategy, not everyone ought to lose the rights to their own name as can be read in our blog “Fashion Trademark Disputes: When Your Name Isn’t Yours”.
Beyond the perceivable implications for the bridal industry, this case also plays a key role in setting the premise for the fashion world, particularly regarding intellectual property and designer collaborations. Presenting to us the need. For clear and equitable IP agreements, as trademarks involving a designer's name remain a contentious issue. The fashion industry taking forth the glamour must also adopt the ethical practice of finding a balance between protecting a company's investment in a brand and recognizing the designer's creative rights. Learning from the red flags we saw in the entire trajectory of the employment agreement, this case could also encourage a shift toward more short-term, project-based collaborations rather than long-term exclusive contracts, allowing designers to maintain independence while partnering with larger companies on specific collections.
Legally, the case brings forth to us the importance of fair contracts, particularly in addressing social media ownership, personal brand development distinct from brand promotions, and designer exit strategies. The role of social media has captured the center-stage more firmly than ever before, it has now become a critical asset in brand value, slyly creeping its way into IP disputes. This settlement has the potential of setting a precedent for how social media accounts are handled in designer- company agreements, emphasizing the need to recognize these platforms as vital digital assets.
Such an interesting turn of events!