YVES SAINT LAURENT TAKES A HIT

Ashley PendletonBest Practices

When dealing with creative talent, it is imperative that a company pays close attention to their employment and intellectual property agreements to be sure that the company’s operations are not disrupted if and when the talent departs. Recent litigation between Yves Saint Laurent (YSL) (and its parent entity) and YSL’s former creative director, Hedi Slimane, provide a case study in what can go wrong when issues concerning works-made-for-hire and restrictive covenants are not fully fleshed out and considered at the outset.

BACKGROUND

Hedi Slimane, French photographer and designer, became the creative director for YSL in 2012. After re-vamping the brand, Slimane departed his position in April 2016. Immediately, YSL scrubbed its websites of pictures thought to have been shot by Slimane during his tenure. By June 2016, Slimane filed lawsuits against YSL pertaining to his employment contract, specifically the non-compete provisions and compensation during his last year as creative director. Later, Slimane filed another lawsuit regarding YSL’s continued use of photographs and videos created for campaigns while Slimane was creative director.

The Non-Compete

In the 2016 litigation involving the non-compete provisions of Slimane’s YSL contract, Slimane filed suit against YSL to specifically enforce the restrictive covenant. The provisions stated that in consideration for 10 million euros, Slimane would not work for a competitor for a specified period of time after departing YSL. YSL purported to waive these provisions after Slimane’s departure. YSL claimed that by permitting Slimane to work with a competitor, it did not have to compensate him in connection with the non-compete provision. Slimane brought suit to obtain a court order that YSL’s attempted cancellation of the restrictive covenant was invalid and that he was entitled to have the clause remain in full effect and be compensated accordingly. In June 2016, a French labor court sided with Slimane and ordered YSL to pay Slimane 10 million euros.

Compensation & Equity

Slimane also claimed that YSL did not compensate him properly for his last year of employment as creative director. According to his contract, Slimane was guaranteed at least 10 million euros per year, mostly through YSL’s agreement that it would buy his minority ownership shares in the company at a higher price. A French commercial court found that Slimane was paid no more than 667,000 euros for his final year of employment and awarded Slimane an additional 9.3 million euros. 

Not a Work-Made-For-Hire

A photographer by profession and separate from being a designer, Slimane shot numerous photographs and videos to be used in advertising campaigns for YSL while employed as creative director. Photographers are typically deemed authors of the photographs and videos they create. Therefore, ownership of the copyright in the images usually belong to the photographer.  However, photographers often provide services for companies either as employees or as independent contractors. In such situations, the company, in this case a fashion house, will obtain the artist’s agreement that the company owns the copyright in works made int eh scope of employment as “works made for hire.” Under such an agreement, the employer is considered the author of the works. Alternatively, or additionally, the company will enter into a contract with the photographer to assign all copyrights in work produced for the company during the term of employment. 

Based on Slimane’s inclusion in several design patents, the designs created by Slimane during his tenure at YSL were attributable to the company pursuant to a “work-for-hire” agreement or an assignment. However, ambiguity existed as to whether the arrangement also applied to the copyrights in the photographs and videos Slimane created.

In 2017, the First Instance Court of Paris ruled in favor of YSL concerning its use of the disputed photographs and videos, noting that Slimane had previously been paid nearly $8 million euros for the material.

On appeal, Slimane prevailed, with the court finding that the rights in the images themselves remained with Slimane. Pursuant to the parties’ agreement, YSL had the right to use the material created by Slimane for two years after his departure, but compensation was required for any subsequent use. Finding that there were more than 100 instances where YSL should have paid Slimane one-year license extensions for continued use of the material, the appellate court overturned the lower court’s verdict and awarded Slimane 618,000 euros (or 6,000 euros per extension) in damages, plus 80,000 euros in attorney’s fees.

The Lesson

Employers should pay careful attention to the contracts the enter into with their creative talent. As reflected in the YSL-Slimane litigation, YSL had properly established rights in certain intellectual property Slimane created for YSL, such as patentable product designs. The rights in other creative works, however, were not clearly addressed in the parties’ agreements. Employers should be careful to negotiate with talent at the outset to ensure that they do not end up having to pay either damages or expensive license fees to their former employees.            

Further, employers and employees alike should be careful how non-compete provisions are drafted. It is certainly rare that an employee enforces a non-compete clause with a former employer. In some circumstances and in some jurisdictions, however a court may interpret and enforce a non-compete in a manner that the employer regrets. By having the court enforce the non-compete clause, Slimane willingly put prospective creative design positions on hold for a specified temporarily in order to receive 10 million euros. 

With compensation packages reaching greater heights, the stakes are higher than ever, both artists and employers alike must ensure they understand the interplay of employment and copyright law and carefully consider the terms of the agreements they reach. 

Ashley Pendleton

Ashley Pendleton

Joining Ziliak Law as an associate in the summer of 2020, Ashley also brought significant insight and experience in the area of Intellectual Property. Read more
Ashley Pendleton

Latest posts by Ashley Pendleton (see all)