I. What is the "upcycling" trend?

In today's modern world, because of increasing environmental problems and the climate crisis, environmental awareness is becoming increasingly widespread on a global scale, both individually and socially. The momentum of environmental awareness has not only led to changes in behavior on an individual level, but also pushed commercial corporations and businesses to carry out their activities with an environmental awareness index. This shows that the issue transcends sectors. In fact, since the environmental awareness and sensitivity has spread in almost every aspect of the economy, the concept of "upcycling" has entered into our lives. Upcycling essentially means the reuse of old and/or obsolete objects by transforming them into a product that will have a new value in a completely different way than the original. Upcycling is an environmentally sensitive recycling method that has applicability in many branches of the industry. By purchasing upcycled products, consumers have the opportunity to purchase luxury branded products, while engaging in environmentally beneficial behavior. In fact, sometimes upcycled new products are more in demand than the original ones.

One of the most common examples of upcycling is the fashion industry. The fashion industry offers a favorable practical and technical infrastructure for upcycling. Indeed, the fashion industry is a convenient platform for upcycling, as an outdated and unusable blouse can easily be transformed into a handy cloth bag. Likewise, this favorable platform also explains the acceleration of upcycling activities in the fashion sector.

II. Potential legal issues arising from upcycled branded products

Upcycling activities, which have become increasingly widespread in the fashion industry, constitute positive sectoral progress indicating that environmental and climate awareness is also increasing at the same rate. Therefore, upcycling activities may occasionally lead to violations of intellectual and industrial property rights (IPRs). When the upcycled product keeps the original trademark, consumers may think that the original proprietor owns the upcycled product. Besides, if there is a particularly well-known trademark included in the upcycled product, this may turn into taking unfair advantage for the traders engaged in the upcycling activity. Absolute authorization of the use of upcycled products in the market may cause the trademark owners to lose reputation and control over their trademarks.

Likewise, the fashion industry is one of the industries where trademark rights are essential especially in the luxury clothing and accessories industry. The underlying reason for the current trend toward upcycling activities in the fashion sector may stem from the prestige, brand value or recognition of the upcycled brands, as well as the durability or quality of the material of the old or obsolete product. Thus, the relationship between possible trademark infringements and the upcycling trend, which is common especially in the luxury clothing and accessories industry, should also be examined. In fact, by retaining the trademark on an old or obsolete clothing or accessory, it may be possible to transform it into an alternative product. Such upcycling transactions may cause trademark infringement disputes, especially if the trademark becomes the main focus of the upcycled product. On the other hand, the "principle of exhaustion of rights" can be asserted against these claims.

Naturally, anyone who buys an original product on the market is free to use it as they wish and then resell it. As a rule, the original trademark owner does not have the right to prevent these activities. However, the "principle of exhaustion of rights" has some restrictions in various jurisdictions, including Türkiye. A trademark owner's legitimate reason is a way to oppose further commercialization of its trademarks that are already on the market. It is debated whether an upcycled and trademarked product that is altered and transformed into a different form falls within this scope. Unfortunately, today, the boundary between trademark infringement and upcycling activities that are considered legitimate is not clear. At this point, it is necessary to discuss what kind of upcycling activities may constitute trademark infringement, the relationship between this and the "principle of exhaustion of rights" and what kind of criteria should be sought in this regard.

III. Decisions by US jurisdictions on whether upcycled branded products constitute trademark infringement

It is necessary to determine the fine line between the compatibility of upcycling activities with industrial property law, which are common in the fashion industry, and the infringement of trademark rights. At this point, concrete disputes examined by global judicial authorities, particularly in the US, are important. As there are no direct and detailed decisions yet by Turkish courts on upcycling and possible constitution of trademark infringement, it will be useful to examine the issue in light of foreign court decisions. While examining these decisions, it is discussed which types of upcycling activities may constitute trademark infringement and under what conditions. In a dispute before the US District Court of the Central District of California, the defendant engaged in the upcycling of swimming trunks by a luxury brand into a hat. It was discussed whether this constitutes trademark infringement. The court ruled that the defendants' production of hats that retain the trademark of the plaintiff constitutes trademark infringement. The products that were offered for resale were significantly different from the plaintiff's original swimming trunks, and, therefore, they fell outside the principle of exhaustion of rights.

Another upcycling activity related to the luxury fashion industry has been the subject of a trademark infringement dispute before the US District Court for the Northern District of Texas. In this dispute, the defendant's upcycled products were imported from old and original watches produced by the plaintiff, a luxury watch manufacturer. The defendant integrated parts produced by third parties into these upcycled watches and carried out sales activities claiming that the products were "original." The court ruled that these products were counterfeit. In this respect, the court prohibited the defendant from producing the upcycled watches and from marketing these products as "original." Although the court found that the watches produced by the defendant through upcycling were counterfeit products, the court rejected the claimant's claim for payment of the defendant's profits from these products, having been aware of the defendant's activities for more than 10 years.

However, in a dispute before the US District Court for the Southern District of New York concerning the manufacture and marketing of new watches by upcycling old products of another luxury watch manufacturer, the court ruled that there was no infringement of the trademark right. The dispute is related to the production and sale of watches by the defendant as a result of the upcycling activities of watches produced between 1894 and 1950 by the plaintiff, a luxury watch company. Although the plaintiff's trademark is still legibly preserved in these upcycled watches, the defendant has clearly stated that the commercial source of the product is the defendant itself, both directly on the products in question and on the website and advertising materials through which the defendant carried out the marketing and sales. In this respect, the court rejected the plaintiff's claims, stating that reasonably prudent consumers would not have any doubt that the commercial source of the upcycled products was the defendant and, therefore, there would be no likelihood of confusion on the part of the relevant consumer.

Although in the above-mentioned dispute it was ruled that the nuances added to the upcycled products by the defendant indicate that the defendant is the commercial source of the products, and this prevented a possible trademark infringement by eliminating the likelihood of confusion, in a case filed by a luxury watch company, the US District Court for the Central District of California ruled differently. In that case, the defendant converted watches manufactured by a luxury watch company into new watches by upcycling. The defendant company especially changed the dials of the old watches and removed the plaintiff's trademark. However, following the dial replacement and a fresh coat of paint, the defendant placed the plaintiff's trademark back on the dial. The court permanently prohibited the defendant from producing these upcycled products, even though the defendant had placed on a number of its products a representation that it was the commercial source of these watches.

IV. Conclusion

In the above-mentioned cases on upcycled products given by various courts in the US, the courts evaluated the merits of the case by considering multiple criteria and decided on whether the products subject to the lawsuit caused trademark infringement. Primary criteria addressed in the relevant cases include the type of the upcycled original and new products, whether the upcycled products are subject to commercial activity to a significant extent, how the trademark of the original product is used, how the commercial source of the upcycled new product is specified, and whether the upcycled new products would lead to likelihood of confusion. The courts have considered these criteria on a case-by-case basis, with a cumulative approach, together with the facts and circumstances of the case, and have decided whether the upcycled new products constitute trademark infringement.

It is of utmost importance to promote the concept of upcycling in order to mitigate the side effects of the climate crisis and the consumer society. For this reason, it should be accepted that upcycling activities carried out in accordance with certain criteria and within the framework of justified use do not constitute infringement, but it is not always necessary to use the original trademark or other IPRs in an upcycled product. For instance, when transforming a blouse with the logo of a luxury clothing brand into a tote bag, the upcycling can be completed without using the trademark. In cases where the branded parts of the product cannot be separated from the item during the upcycling activity, labeling and explanations indicating the true origin of the upcycled products may reduce the risk of likelihood of confusion for consumers. Otherwise, the owner of the upcycled product may be perceived as having a connection, sponsorship or cooperation relationship with the original brand owner, which is not the case. The unlimited authorization of upcycling may create a new market for upcycled products to the detriment of trademark rights. With an increasing number of disputes on this issue, it is expected that the courts will more clearly specify the boundaries of the intricate relationship between upcycling activities and the trademark rights and the principle of exhaustion of rights.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.