Thursday, 21 May 2009

From Zero to Hero: but who really wins?

Just over a month ago, Fashionista brought you the news that Woody Allen was suing American Apparel for $10million for the unauthorised use of Woody Allen's image in an advertising campaign. Mr Allen claimed enormous damages. American Apparel refused to pay up.

A month later, and on the morning of the trial, news broke that settlement had been reached just as the parties were due to appear in court. It's the sort of high octane tension that Fashionista would expect from a good Hollywood drama! At the last minute, American Apparel decided to cut their losses and agreed to pay out $5million.

Were American Apparel afraid of a jury siding with Mr Allen and awarding the damages he sought? Fashionista's questions have been answered by the statement on American Apparel's website which comes from the company's CEO and President, Dov Charney. So, the settlement was at the insistence (and expense) of the insurance company - and not (apparently) an overt admission of liability, which Dov Charney is keen to clarify: "for the record, I personally think we had a really good case..."

Fashionista was even more surprised that a confidentiality agreement was not agreed as part of the settlement. After all, a u-turn resulting in a settlement payout of $5million certainly sounds like an admission of liability, so why take litigation so far?

And why not keep the settlement details private? Well, if you can't win litigation, at least try to win new business from it. Consumers will have already made up their own minds whose side they were on. There are those who will have sided with Mr Allen. But there are also those who will have sided with American Apparel, and those who will feel inclined to do so after hearing about the settlement. Those in the "Americal Apparel Camp" who feel the company was "robbed" (relatively speaking) may show their solidarity by making online orders or store visits which would not otherwise have been made.

As for those who had not previously heard of American Apparel before this case became news, Fashionista suspects that most will at least have visited American Apparel's website in the last month, if not a store. And so, Fashionista expects the business may actually do rather well in the long term as a result. With the right spin, a loss at court does not have to mean a loss of business.