What Can I Do With That Fabric Thing?

BoingBoing started off with this criticism of a online fabric seller that posted a notice that read, “*Please note: This fabric can be purchased for personal sewing projects only. This print cannot be used for items made for resale.” Siva weighed in, in support. The fabric seller retreated, but not before pro-fabric seller posts appeared elsewhere.

It’s deja vu all over again: Misinformation begets overreaction and more misinformation. A quick primer for the non-lawyer follows the break:

First: Suppose that the fabric didn’t have a copyrighted (or trademarked) design. It was just blank fabric, for sale in a fabric store. The store posts a “no resale” sign. You buy the fabric; you sell the clothes you make with the fabric. Can the store sue you? No. That much should be clear. If you sell things, you can’t enforce labels that purport to limit what people do with them. Lawyers know this as the rule against equitable servitudes in chattels. A very small number of old cases suggest that the rule is flexible, but modern conventional wisdom says that it’s not.

Second: Now change the facts; put a copyrighted design on the fabric. There is a “no resale” sign next to the *copyrighted* fabric. You buy the fabric; you sell the clothes you make. Can the store now sue you? Does putting a copyrighted design on the fabric change anything? No. The first sale doctrine (Section 109) of copyright law kicks in, and an old Supreme Court case will back it up.

Suppose, when you bought the fabric, you signed a document (or otherwise “assented,” in the law of contracts) that specified, in so many words, that you would not resell the fabric or resulting clothes. Then you went ahead and resold the clothes anyway. Can the store sue you? Maybe — some courts, maybe even a majority of courts, would conclude that the contract is enforceable as a contract; some courts would conclude that the contract cannot be enforced because it is inconsistent with a fundamental policy of federal law, expressed in the first sale doctrine. Enforcement of the contract would be preempted.

Along the way, a lawyer should point out that a license and a contract are different legal things. A contract usually requires assent by two parties. A license is a term that comes from property law and refers to the owner of a property right giving permission to someone else to use that property. The two terms are frequently combined (as in the phrase “license agreement”), but it’s helpful to be aware of the fact that they have different meanings.

Third: Change the facts one last time: suppose the design on the fabric is trademarked, rather than copyrighted. Does the change to trademark law magically change the answer? No again. If you buy a trademarked thing, such as a swatch of fabric, you can resell the trademarked thing, as well as things made from the trademarked thing. There is a condition here: You can’t resell the trademarked thing in a way that is likely to cause confusion in some relevant population of consumers. Confusion, however, depends on what consumers think, not on what the producer of the original thing thinks. In the case of trademarked fabric, people who make clothes from the fabric can’t sell the clothes in a way that leads buyers to think that they’re buying fabric (or clothes) from the fabric maker. They also can’t sell the clothes in a way that leads buyers to think that the fabric came from maker X when in truth it came from maker Y. Those aren’t the only sources of possible confusion, but they are probably the most important ones.

Last: Walking patiently through the legal jargon isn’t the end of the matter. What’s important to know is that the legal details reflect some broad and important compromises as matters of public policy.

People who create things, including things that embody copyrights and trademarks, expect and are entitled to fair returns when they sell what they create. Lots of people and companies wouldn’t go to the trouble of creating new fabric designs if they thought that they would end up having to compete with design pirates. That’s perfectly fair. So it’s clearly wrong, and illegal, to make unauthorized copies of copyrighted things — even unauthorized copies that aren’t perfectly identical.

People who buy things, including things that embody copyrights and trademarks, expect and are entitled to use those things, especially (but not only) for the purposes that the things were designed for. Why buy fabric unless you are going to make clothes — or curtains — or slipcovers, etc.? And if I make clothes for my kids, and the kids outgrow the clothes, I’m going to try to sell the clothes — at a tag sale, or via the kids’ stuff resale shop, or somewhere. And that’s perfectly fair, too. Allowing fabric designers to put “no resale” notices on their fabric isn’t the IP apocalypse, but imagine a world in which all makers of things — copyrighted or trademarked or patented or none of these — could unilaterally tell buyers what they can and cannot do with them. (Actually, don’t imagine it; in some parts of the economy that are more troubled than fashion design, we have that world.)

The reason that the “no reselling permitted” restriction isn’t enforceable is that it doesn’t advance the ball on behalf of the creators (because it isn’t directly related to the core “no piracy” point of infringement law), but it obviously limits the otherwise fair interests of buyers. In theory, fabric buyers could look at “restricted” fabric, and reject it in favor of “unrestricted” fabric, but what happens when all fabric makers impose resale restrictions on their fabric? Buyer choice would disappear. And even if “the market” would produce competition between “restricted” and “unrestricted” fabric, do we want people choosing fabric based on what IP rights accompany it (as opposed to, say, the quality of the design or the cloth?). But I’m getting ahead of myself, and I’m heading into contested policy waters. Some people would be perfectly happy with that result. I’m not one of them, but reasonable people disagree. Still, that would be a different world than the one we have now.

I know that some people look at computer programs and software licenses, which have all sorts of “no using it this way” and “no reselling the program” restrictions that some courts have enforced. To which I say: fabric, like other things, isn’t software, and I think that’s a safe conclusion both with respect to physics and with respect to public policy. (I happen to be pretty skeptical of those restrictions even for computer programs, but this isn’t the time or the place for that discussion.) And copyright mavens will wonder about whether making clothes out of copyrighted fabric is preparing a “derivative work,” to which the first sale doctrine doesn’t apply. To them I say: Judge Easterbrook was, on this question, correct.