David slays Goliath, David dies too
Alternative title: Contracts aren’t an insurance policy pt.2
Somewhat depressing but it must be said (again): don’t stake the health and viability of your business on a contract. Today’s case history makes the point that even if you have a great contract and even prevail to win an ensuing lawsuit over breach of contract, you can still lose.
In this case, it wasn’t a contractor copying a designer client (it almost never is) it was a designer who copied their contractor. Specifically, it was the venerable house of Chanel who copied a design submitted under spec by World Tricot, their knitting contractor; the latter sought redress in the French courts. It went like so:
[Colle (the principal of World Tricot)] filed suit against Chanel for alleged counterfeit after she spotted in a shop window a Chanel vest with a crochet design that she claimed was hers. The simple cable design with black edging had been previously submitted to Chanel’s studio and rejected, Colle claims.
An earlier ruling in 2009 held Chanel was guilty of breaking the contract (but not of counterfeiting goods) and was ordered to pay €400,000. Colle successfully appealed and was awarded an additional €200,000 last week.
The case has been trumpeted far and wide as a victory for artisans and designers but it falls far short once one realizes that Colle went bankrupt over it. Perhaps the greatest tragedy of all is that Colle used the enterprise to employ disadvantaged workers from an economically depressed area so they lost too.
So what is the solution for problems like this? I’m not certain there is an easy answer because even if you win, you still lose. The only lessons to take from this case is that if you provide services or products, don’t put all of your eggs in one basket. Chanel was Colle’s main customer; after she complained to Chanel of the design theft, they cut their orders to the knit firm and it eventually folded.
Having a contract is no protection even if you have the means to pursue and prove your case. Structure your enterprise so you can survive the crisis of losing your best customer.