In the fashion and apparel industry, ‘upcycling’ denotes the process by which garments, accessories, bags and fabrics already put on the market are re-furbished, modified, or deconstructed and re-used to create qualitatively new products. For example, fabric from t-shirts or other garments can be converted into tote bags or new garments, and buttons originally attached to clothes or bags can be converted into earrings, pendants and other accessories. 

The surge in popularity of upcycling has various causes. For cost sensitive consumers, it can provide access to unique branded products at a fraction of the cost of the original components. Consumers with environmental and sustainability concerns also appreciate that upcycling makes creative use of existing items, giving them new life instead of resigning them to landfill, and reducing the environmental impact caused by the manufacture of new products. 

However, upcycling also gives rise to trade mark issues for brands whose products have been upcycled and put back on the market by unaffiliated third parties. These issues centre on the principle of exhaustion of trade mark rights. 

Exhaustion of trade mark rights

In the UK and EU, similar to many territories around the world, trade mark owners have the right to control the nature and quality of goods bearing their trade marks and therefore may control the first sale of such products. However, once this first sale occurs with the trade mark owner’s consent, the owner generally cannot use their trade mark rights to prevent or control the product's later resale. This is known as principle of ‘exhaustion’ (and in the US, ‘the first sale doctrine’). 

However, in both the EU and the UK (and again with similar rules elsewhere), the trade mark owner’s rights are not exhausted where there exist legitimate reasons for the trade mark owner to oppose further dealings in the goods, especially where the condition of the goods is changed or impaired after they have been put on the market. In the case of upcycling, this exception to the rule can apply and provide the trade mark owner with a means to prevent the resale.

When does upcycling result in trade mark infringement? 

The answer to this question depends on the circumstances of precisely how the goods have been upcycled, as well as how they are marketed towards purchasers. In some cases, trade mark infringement can be established. 

A January 2024 decision from a US federal court regarding a famous watch brand provides some guidance. In the case, the defendant advertised and sold modified watches that included both genuine and non-genuine parts, including some with added diamonds, bracelets, and straps. These watches bore the brand owner’s marks and the defendant promoted them to customers using the term "genuine." The brand owner sued the defendant for trade mark infringement. Finding for the brand owner, the court acknowledged that it is not unlawful to refurbish and resell goods bearing another's trade mark, provided that the seller adequately discloses that the goods are not the same as those originally put on the market by the trade mark owner. However, the defendant’s changes to the products resulted in watches that were materially different from the brand owner’s original watches. There was therefore a clear likelihood of confusion because: (i) some customers stated that they did in fact believe the products were fully genuine; (ii) the defendant received complaints from customers that the goods were not composed of exclusively genuine parts; and (iii) the defendant’s disclosures (that the goods were not in their original condition and did not contain exclusively genuine parts) were insufficient, including the fact that many potential customers might not have been able to see them.

In another case in early 2024, the Swiss Supreme Court handed down a decision in another case involving a famous watch brand and a defendant whose business involved to-order customization that brand’s watches. In particular, the defendant, in carrying out its work, removed and then reapplied the brand owner’s marks on the dials alongside the atelier’s own mark. In the decision, the Swiss Court distinguished between private and commercial use of the marks. They found that only the resale of customized watches to the public on a larger scale would amount to trade mark infringement, however providing customization services to private individuals who brought their privately-owned watches to the atelier and requested specific customizations was permissible.

Practical takeaways for brand owners

As case law on upcycling is still emerging with only a few decisions having been issued, there are no well-established principles. Whether there exist legitimate reasons for the trade mark owner to oppose further dealings in their products, or whether the owner’s rights will be considered exhausted, will be assessed on a case-by-case basis. 

However, for brand owners whose original products have been or could be upcycled and sold by third parties, some measures can be adopted. For example, consider expanding the sales channels covered by your monitoring, to ensure that potentially objectionable upcycled products are rapidly brought to your attention. Contractual obligations could be imposed on your purchasers and distributors to help control how original products are modified and resold, but legal advice should be sought on these to ensure compliance with consumer and competition law. Finally, product tracking techniques (such as inscribed codes to identify a product and its intended sales channels) can yield helpful evidence in the event of a dispute. 

This is a complex area where there are many potential causes of action available, based on both registered and unregistered trade mark rights. Similarly, there are a myriad of potential defences, including competition defences, which could be employed by defendants. Cases are always highly fact specific, and we recommend seeking advice prior to taking any action.