I'm sorry - but this statement is wrong.
Yes - fabric print designs are covered by copyright. But that doesn't mean that you are breaking copyright by buying it, cutting it up into a dress and selling it. A newspaper is covered by copyright. If I cut it into paper dolls and resell them it doesn't make it a breach of copyright !
If you want an example where it has gone to trial, just look at
'Precious Moments, Inc .v. La Infantil, Inc' where the judge stated that
"items manufactured with lawfully acquired, authentic fabric with copyrighted design were not infringing derivative works"
Remember - you can still have trademark issues (or possibly even patent issues if the fabric is uber-special!) but there is no reason to expect copyright issues.
That is about trademark and endorsement issues rather than breach of copyright. They are *very* separate issues. It is a huge mistake to conflate the them.
That is a contract issue - if person 'A' buys the fabric and promises to only use it for home use then person 'A' is in breach of contract if they use it commercially.
But if person 'A' sells it to person 'B', and person 'B' creates dresses .. then person 'B'
may have no obligation to honour the contract that person 'A' agreed to. It does mean, however, that the manufacturer may be able to sue 'Person A'.
Not only that - but simply printing such a statement on a web site or on a copyrighted article is not enforceable without consent before the purchase. That is why 'shrink wrapped' licenses have to be careful in their implementation.
I believe you are wrong on your understanding of copyright. To quote the decision in
"Quality King Distributors, Inc. v. Lanza Research Int":
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To answer the original question for the purpose of story research:
The characters in the story could get in trouble for 'passing off' or 'trademark' issues if the pattern is distinct to a product brand. For example, if there is a supply of cloth used to make Louis Vuitton products then even if I obtained it legally I would get into trouble if I sold handbags that clearly show the markings. But that wouldn't be about breach of copyright on the fabric - it would be about deceiving consumers or diluting the brand for genuine Louis Vuitton handbags.
Mac