As William Shakespeare put it, “That which we call a rose by any other name would smell as sweet.” He was not, however, referring to a name that also happens to be your trade name, in which case Juliet’s renowned question would yield an entirely different answer. When your name is not only your personal moniker but also that of your brand, comprising trademarks, goodwill and reputation, it is no longer an inconsequential appellation but a valuable asset. And yet names seem to be rather difficult to retain in the label-centric world of fashion, where an increasing number of founders of namesake labels have lost the right to trade under their own name.
Helmut Lang cut ties with the “Helmut Lang” label back in 2006. Roland Mouret, the creator of the iconic “Galaxy” dress, lost the right to use his own name when he suddenly departed Roland Mouret Designs. He had to adopt the rather cumbersome brand name, “RM by the designer Roland Mouret” until 2010 when he re-acquired the “Roland Mouret” trademark and was, once again, able to trade under his own name. This issue is by no means confined to the fashion industry. Jo Malone is no longer behind the fragrance empire that bears her name; she had to endure exile from the industry for several years until she was able to launch her new line, “Jo Loves”, in 2011.
In these instances, the individuals’ inability to trade under their names was due to factors ranging from creative differences with business partners to restrictive terms imposed by lucrative buy outs. Karen Millen – who established her namesake label in 1981 with her former husband Kevin Stanford – is the most recent addition to the fray. In 2004, they sold their majority stake in Karen Millen Holdings Ltd, together with the intellectual property rights in the “Karen Millen” brand, to acquisition vehicles for capital investors financed in Iceland. Following the Icelandic banking collapse in 2008, Karen Millen Fashions Limited was incorporated in 2009 as part of a restructuring. The 2004 share purchase agreement contained numerous restrictive covenants and obligations on the part of Millen and Stanford which were intended to protect the intellectual property rights of the “Karen Millen” brand by precluding their use of her name to compete with the retailer. It is the effect and extent of these obligations that is under contention in the current proceedings.
The litigious background of this case has rumbled on for some time. Following an article in the Daily Mail in 2011 in which Millen purportedly indicated that she planned to launch a new clothing line under the label “Karen”, Karen Millen Fashions wrote to Millen advising her that this would amount to trademark infringement. The retailer argued that Millen’s use of the name “Karen” would likely cause confusion in the minds of the public citing numerous examples of brands using their designer’s forename for more affordable diffusion lines, such as “Marc” by Marc Jacobs, “Sonia” by Sonia Rykiel, and “Paul” by Paul Smith. Consumers might assume that the proposed “Karen” line was part of the “Karen Millen” brand, which not only risked financial losses but potentially jeopardized the reputation and goodwill of the retailer.
Proceedings were subsequently issued against Millen in the UK and the claim was settled under an agreement that Millen would not trade in the EU under a mark similar to the “Karen Millen” trademarks owned by the retailer. In retaliation, in 2014, Millen applied to a US court for the cancellation of “Karen Millen” trademarks in the US. She also opposed the “Karen Millen” trademark applications filed by the retailer in China.
Millen clearly wishes to resume trading under her name and is now challenging the retailer’s right to extend the “Karen Millen” brand to perfumes, eyewear, watches, fabrics and home furnishings. Millen claims that the restrictions under the share purchase agreement only apply to the intellectual property rights in existence as at the date of the agreement, and Millen’s use of her name to compete with the business as it existed at that date. She also challenges the retailer’s entitlement to enforce the restrictive covenants against her. Karen Millen Fashions disputes this and contends that it purchased the entire rights to the “Karen Millen” name in relation to the business not only as it existed then but including any future expansion of that business, whether in geographical operation or product offering. The trial has been set for this June.
It is the personal nature of these namesake brands that makes them so appealing to consumers and investors. The fashion industry has expanded as an increasing number of brands have extended their offering to include products such as accessories, cosmetics and interiors; accordingly, the shopping experience has become more immersive and, rather than buying products in isolation, consumers are buying into the ethos of a brand with which they identify. Unsurprisingly, the products created by the founders of labels bearing their own name are naturally imbued with the character of their creator, be it the nostalgic insouciance of Anna Sui, the polished elegance of Giorgio Armani, or the ultimately prophetic macabre mystique of Alexander McQueen before he took his own life.
This distinctive personality of eponymous brands not only draws in, but also retains, loyal consumers. This is also why relinquishing control of a business trading under their moniker is very personal and highly emotive for the founder, particularly where that business is sold, the intellectual property rights are assigned, and the individual is precluded from trading under their name and derivatives or abbreviations of that name. This is the downside of using one’s own name as a brand name.
In such circumstances there will, invariably, be conflicting interests between the founder and the purchaser of the brand. The founder will want to outline the exact parameters under which they may trade in the future and will strive to do so without completely relinquishing the ability to do so under their moniker, while the purchaser will want to ensure they have the flexibility to expand both the brand and the business without facing restrictions or challenges by the founder.
How these divergent interests are balanced will depend on the relative bargaining strength of the parties at the time. However, what the parties share is a mutual interest in preserving the integrity and constancy of the brand name, with the purchaser wanting their investment to succeed and the founder wanting to protect the credibility of their name.
Therefore, whether the founder retains ownership of the trademark and simply licenses it to the business or withdraws from the brand entirely, it is in the interests of both parties to consider the long-term effects of their agreement. Thereafter, it is crucial that the parties make contingencies for disputes, ensuring that the agreement precisely and thoroughly encapsulates the agreed terms and contains adequate provisions for dispute resolution; because, when it comes to valuable brands, a rose really wouldn’t smell as sweet by just any other name.
*Article courtesy of Collyer Bristow LLP, which provides legal advice to international and UK clients including businesses, individuals & families, and ambitious entrepreneurs.