Redefining design in the digital age: How Canadian fashion houses can engage with AI

How are fashion houses currently utilizing GenAI? 

There is no doubt Generative AI (GenAI) has dramatically impacted the way we use technology. The fashion industry has dabbled in AI, from nonfungible tokens (NFTs) to the metaverse. However, GenAI’s capabilities go beyond these innovations, as its usage is pushing the fashion market beyond what it used to be: it’s revolutionizing production and operations, marketing efforts, hyper-personalizing customer service, and changing the creative design process itself. In fact, a McKinsey analysis estimates that GenAI will contribute between $150 billion to $275 billion to the apparel, fashion, and luxury sectors’ operating profits. With this potential, fashion firms are exploring how GenAI can drive their growth, while also addressing the legal and ethical considerations it raises. 

Production, operations, and management 

GenAI is increasing supply chain and operational efficiency by streamlining the process of getting a product from the warehouse to the consumer’s front door. Brands can cut labour costs and prioritize efficiency through integration of AI-powered robotics into warehouses, automating tasks such as inventory management, processing returns, and negotiating with suppliers using market research data.  

For bricks-and-mortar stores, GenAI can enhance employee training by generating tailored content based on real-time consumer feedback. Stores are becoming more equipped with ways to better engage customers to retain clientele, all using AI-powered results.  

Marketing 

Fashion firms can use GenAI to brainstorm marketing strategies - and do so quickly. Hyper-personalization is making waves as a dominant form of marketing, through the collection and analysis of consumer data, allowing GenAI to predict and influence consumer behaviour. For example, algorithms analyse patterns in online searches and conversations, allowing consumers to see ads for products they have recently browsed, or items discussed in conversations with friends online or near their digital devices. This instantaneous precision of marketing allows brands to strengthen their connection with consumers like never before. 

Customer service 

The use of GenAI in customer service tools is redefining how fashion companies interact with consumers. For instance, AI-powered chatbots on company websites use language processing to answer questions instantly, resolve issues on the spot, and offer tailored product recommendations. In turn, these tools enhance the online shopping experience and build customer loyalty. 

Other innovations include virtual “try-ons,” where consumers can preview clothing or accessories using a virtual platform before purchasing the item, without having to ever step into a store.  

The design process 

One of the most exciting applications of GenAI is in the creative process itself. Designers can upload basic sketches and ideas into GenAI platforms to generate high-fidelity designs, including 3D renderings of garments and accessories. This dramatically accelerates the design process, allowing designers to play around with a large array of designs compiled with only a few inputs. This can be particularly useful in situations where founding designers of global fashion companies pass away. Firms can use GenAI to maintain the DNA and core image of a brand by assessing past collections to retain a similar “flavour” in future designs. 

Moreover, data-driven analyses of market trends and consumer preferences allow firms to predict future trends and release collections as such.  

The attractiveness of GenAI is therefore clear.  

The legal risks of embracing GenAI in fashion 

As GenAI transforms the fashion industry through efficiency and innovation, fashion houses may rush to embrace its benefits. That can expose them to significant legal and ethical risks. These risks, in particular intellectual property (IP) and data privacy risks, can result in lawsuits, damage to a company’s reputation, or regulatory penalties.  

GenAI is still an emerging technology, which means its uses are still exploratory, and its legal framework remains a work in progress. Various jurisdictions, including the U.S., Brazil, and the European Union (EU) are beginning to address these challenges. Fashion brands must ensure they anticipate and mitigate potential repercussions as they continue to use AI to remain relevant in a highly competitive landscape.  

IP risks 

Coco Chanel once remarked, “If you want to be original, be ready to be copied.” The fashion industry reimagines and recycles older trends. GenAI challenges copyright law and counterfeiting because it blurs the lines between imitation, infringement, and originality. 

A primary risk is that GenAI-generated designs may inadvertently mimic protected designs, because developers train AI models on large datasets that often include copyrighted images or designs - sometimes without the creators’ consent. By replicating these designs, firms risk infringing and litigation. As there is already a tremendous amount of infringement lawsuits between fashion companies occurring, this could burden the legal system. 

Adding to the complexity, the U.S. Copyright Office and American courts have ruled that content generated solely by AI lacks protection because AI is not a “human U.S. copyright law currently does not clearly protect fashion designs created with AI, and lawmakers have not defined how much human involvement is needed to qualify for copyright. Because the law may treat AI-generated design outputs as public domain due to the lack of human authorship, fashion companies that rely heavily on AI during the design process face growing uncertainty. While copyright law limits protection for clothing design to the garment’s non-functional elements, it may protect purely creative aspects such as patterns – but only if human involvement in the creative process is substantial and demonstrable.  

To mitigate these risks, firms must conduct due diligence and remain cautious when using GenAI in the creative process. This includes ensuring datasets used to train AI models (inputs) are free of copyrighted content and clearly documenting human contributions to AI-assisted designs.  

This demonstrates the urgency for legislative frameworks to specifically address AI-generated creations to reduce ambiguity across jurisdictions.  

Privacy risks 

GenAI relies on the collection of vast amounts of data to deliver its services in the fashion industry. While data-driven services provide efficiency, it also exposes fashion firms to significant privacy concerns. 

Most consumers do not realize how much personal information fashion firms collect and use. From biometric data to purchase history, the sheer volume of sensitive information fueling GenAI raises serious questions about data security. Moreover, when AI models train on biased or incomplete data, they can produce discriminatory results, potentially triggering public backlash and exposing firms to legal liability. 

We are slowly seeing privacy regulations come into place when using GenAI. In the EU and UK, the General Data Protection Regulation (GDPR) imposes strict requirements on data collectors, mandating transparency and consent mechanisms. The EU AI Act addresses the obligations of high-risk AI systems, which could potentially include GenAI uses in fashion (virtual try-ons, designs, etc.). Under this framework, firms must clearly disclose AI-generated content, safeguard personal data, and implement measures in case of breaches. For instance, firms offering virtual fitting rooms powered by GenAI must ensure they anonymize and securely store biometric data, and that consumers understand how the firm uses their data. As transparency requirements expand, firms must integrate disclosures into marketing and customer service strategies to ensure compliance and safety.  

How can Canadian fashion houses navigate using GenAI? 

Fashion law in Canada is growing. Canada has several prominent fashion companies already – Aritzia, Canada Goose, and Lululemon, with even more on the rise. This raises the question: how can Canadian fashion companies, including the big names, harness AI to be competitive on the global stage? Because AI transcends borders, the approach requires compliance on existing Canadian laws while accounting for international standards.  

From an IP standpoint, current Canadian legislation offers limited protection for designs. Similar to other jurisdictions such as the U.S. and the EU, designs generated solely by GenAI may lack copyright protection. Therefore, it is pivotal to ensure human input is integral to the creative process and monitor any changes in AI-related authorship globally.  

Beyond IP compliance, Canadian fashion companies must integrate ethical AI practices into their operations not only to remain competitive, but also to remain trustworthy and retain clientele. Canada’s proposed Artificial Intelligence and Data Act (AIDA), part of Bill C-27, aimed to regulate high-impact AI systems and establish accountability for its use. While Bill C-27 did not become law, Canadian fashion firms should prepare for the new government’s next attempt at AI regulation and consider compliance with other more developed privacy laws across the world, such as the EU GDPR.  

Canadian fashion houses face challenges when in navigating GenAI use due to Canada’s undefined legal framework. While other jurisdictions also lack fully established regulations, they represent markets that are crucial for expansion, as the U.S. and the EU are home to some of the most historic fashion houses that Canadian firms hope to compete with. Canadian fashion companies must accordingly navigate a range of undefined legal frameworks to stay competitive in the global market.  

The opinion is the author's, and does not necessarily reflect CIPPIC's policy position