Karen Millen lost her court battle to challenge the agreement reached after the sale of her business to Baugur for £95m in 2004 which stated that she could not use her name in business in the future. Even her offer of using her name in a different sector was rejected by the court as it felt there would be too much confusion between the current fashion brand and whatever new business Ms Millen set up.
This case follows a long line of identical cases where the designer has been unable to overturn a clause in a sale agreement stating they cannot use their name in business in the future. This includes Elizabeth Emannuel (the wedding dress designer for Princess Diana), Jil Sander, Thierry Mugler, Joseph Abboud and many others.
So, why is this the case? Basically, it is because the designers’ names have become linked to the goodwill of the business. For example, when you mention Jimmy Choo or Christian Louboutin do you think of the individual or their luxury footwear? When it then comes to selling the business the buyer wants to ensure that it is getting all of the goodwill (and any intellectual property) in the business and will normally require the designer to agree not to use his/her name in the future. In Karen Millen's case she sold her business for £95m - is that enough to agree not to use your name again?
Remember when agreeing such a clause it does not mean that you cannot work again or that you cannot design again. It just means you cannot do either under your own name. You can therefore become a Creative or Design Director at an established brand or set up a new company under a different name like Roland Mouret when he used 'RM by Roland Mouret' after he sold his business.
What advice is there for fashion designers?
When starting out most fashion designers either go in-house with an established brand or set up on their own. In the former case, it is important not to let your name be used as a trade mark for your designs by your employer as it is likely they will own the rights to your name. Instead see what Tom Ford or Sarah Burton have done.
Tom Ford was creative director at Gucci but never let his name be used for any of his designs. This left the door open for him to leave Gucci and set up the Tom Ford empire using his own name. Sarah Burton of Alexander McQueen - best known for designing the Duchess of Cambridge's wedding dress - also has not allowed her name to be used while at McQueen and will have the same flexibility as Tom Ford whenever she leaves.
When setting up on your own, the designer has two choices about the name of the business. Either pick a unique name or use your own name. Obviously, when choosing a unique name that is all you lose when selling the business. If the designer decides to use his/her own name then we suggest that they register it as a trade mark but with themselves as the owner not their company. The reason for this is that when a buyer comes along they will notice that the trade mark is not part of the assets of the company and will ask for it to be transferred. It is at this time that the designer has the opportunity to consider 'is the amount being offered enough not to be able to use my name again in business?'.
Of course, depending upon the amount of the investment and the investor it is possible for the designer to negotiate when he/she might be able to use his/her name in the future e.g. in a different sector or maybe as a similar brand e.g. RM by Roland Mouret.
However difficult this issue may seem at the time it comes down to the question of how much is it worth never to be able to use your own name again in business?
GARY ASSIM heads up Shoosmith’s national Retail and Intellectual Property & Creative Industry Groups in which he has built up strong reputations on both a national and international basis. He specializes in resolving disputes especially those to do with anti-counterfeiting, with particular emphasis on parallel importing. Contact him at firstname.lastname@example.org.