Own-Name Brands: Are They Worth It?
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Legal decision: UK Own-name brands: are they worth it? THE CASE: Millen v Karen Millen Fashions Ltd and Anor Court of Appeal of England and Wales 15 January 2016 When fashion designer Karen Millen sold her eponymous business in 2004 trademarks bearing her name went with it, but does that stop her using her own name in other business ventures? Rachel Cook discusses Fashion designer Karen Millen was last a different name, he came full circle, ultimately While she also left her name behind, month back in the news and back in buying back the right for an undisclosed sum. in 1998 she opposed a further trademark dispute with the operator of the Karen If I didn’t make it – then is the public application made in respect of ELIZABETH Millen brand, Karen Millen Fashions. Millen deceived by the trademark? EMANUEL and followed this with an application sold the business in 2004 to Mosaic Fashions, for the ELIZABETH EMANUEL trademark to be with the designer giving the new owners revoked. Her argument was that there was a various restrictive covenants over her future “The judgment genuine risk that the average consumer would use of the name Karen Millen, KM or K.Millen be confused when buying products bearing or any others confusingly similar to them. In underlined that a the ELIZABETH EMANUEL trademark. 2011 Karen Millen Fashions sued Millen. Those trademark is an article Article 3(1)(g) of the First Trade Marks proceedings were settled, but subsequently Directive states that in order to be refused Millen issued further proceedings against of property, which or declared invalid, trademarks would need Karen Millen Fashions and Mosaic Fashions US. to be “of such a nature as to deceive the Separate proceedings are also ongoing can be bought and public, for instance, as to the nature, quality or in the US courts in connection with US sold as any other geographical origin of the goods or services”. trademarks filed by Millen for word marks such For Emanuel a part of the nature of goods as KAREN BY KAREN MILLEN and HOME BY asset. To have allowed bearing the ELIZABETH EMANUEL mark was KAREN MILLEN. The bone of contention is the ‘own-name’ trademarks that she had been involved in their creation. extent to which Millen is restrained from using The trademarks owner’s argument was that, in her own name in a business. to have become a practical terms, this would make it impossible to assign a business together with the goodwill I made this – what’s in a name? special class outside and the trademark. Eponymous brands are common in the fashion would have undermined The case ended up in the Court of Justice industry. Some of the largest, most famous of the European Union (CJEU) in 2006. The corporate brands, such as Gucci, Chanel, Louis this principle.” CJEU held that to refuse registration under Vuitton and Christian Dior, were all named Article 3(1)(g) there must be actual deceit to after real people. a sufficient serious risk of consumers being However, the role of the founder becomes Elizabeth Emanuel, who rose to prominence deceived. The court noted that while the more difficult with the involvement and after designing Princess Diana’s wedding dress, average consumer might imagine when buying interests of investors, when the name of the tried to use the courts to reclaim her name. an ELIZABETH EMANUEL product that Emanuel founder is also at the same time the asset of By 1996 she was conducting her business was involved in the design, the characteristics the business. There are a number of high- through Elizabeth Emanuel plc, which owned and qualities of that product were guaranteed profile fashion designers who have lost control the business of designing and selling clothing by the trademark owner. The name Elizabeth of their own names. Neither Thierry Mugler nor as well as all its assets, including its trading Emanuel in and of itself was not enough to Herve Leger are involved with their eponymous goodwill and an application for the trademark deceive the public about the nature of the brands any more. Calvin Klein retains a financial ELIZABETH EMANUEL. In September 1997, goods. stake in the brand that bears his name, but has following financial difficulties, Elizabeth The judgment, while not stated on its no creative control over the company’s product Emanuel plc assigned its business to another face, underlined that a trademark is an article lines. company that then changed its name to of property, which can be bought and sold as Roland Mouret lost control of his name Elizabeth Emanuel International. Emanuel any other asset. To have allowed ‘own-name’ to his business partners following managerial worked as an employee for Elizabeth Emanuel trademarks to have become a special class difficulties. Having founded a new brand under International for a month and then she left. outside would have undermined this principle 58 Intellectual Property Magazine March 2016 www.intellectualpropertymagazine.com Legal decision: UK and also could have acted to unwind countless stays within the group. There can be no group this finality could on one hand be attractive to transactions connected to the sale of brands. members or group without KMHL and so the Karen Millen Fashions. But the flipside is that assignment to Karen Millen Fashions is void the risks are high. The arguments put forward Most recent claim by Karen Millen and unenforceable. by Millen, while of radical effect in the context So what grounds are being relied on by Millen? If Millen is correct then the terms of the SPA of the particular SPA, are limited to their facts As part of the 2004 sale of Karen Millen fall away in their entirety and any restraints to and would not have significant wider impact on Holdings Limited (KMHL), Millen agreed with use her name under the SPA would be lifted. own-name trademarks in the way that success clause five of the Share Purchase Agreement However, Millen’s alternative argument for Emanuel would have. It remains to be seen (SPA) to not directly or indirectly “at any time is that even if the restrictions in the SPA as trial approaches whether commercial risk after completion in any connection with any are effective, her obligations are limited to will be outweighed by legal certainty and an business which is similar to or competes with competing with the business that existed as accommodation is reached. the business of the KMHL Group (not only at 2004 and in relation to the IP rights that in the United Kingdom but anywhere in the existed at that time. This could open to Millen Are there any steps that an own- world) use the name Karen Millen or any other the possibility of using her name in relation to name brand owner can take? name confusingly similar thereto (including products that were not being sold by KMHL as In reality, practical steps are limited: if you want names which use, as a prefix or suffix KM or at 2004 outside of the EU (which is governed by outside investment or to sell the brand then the K.Millen).” a settlement agreement between the parties). quid pro quo of any investor will be restrictions However, Millen argues that no company This would relate in particular to homeware. As on use. An investor is not going to pay millions now exists that has standing under the stated above, Millen has already applied for US for you to be free to take the major asset of terms of the SPA to enforce the covenant. trademarks, which are being challenged in the the brand and immediately start to undermine Therefore, she claims she is released from it. US courts. it if things don’t work out. Even to get minimal KMHL was acquired by a group of investors relaxations may have a cost in terms of the including the Icelandic private equity fund purchase price or may result in a flat no. Baugur. The companies referenced in the “The better It may be possible to agree with a purchaser restrictive covenant were Mohave (the rollover that you would be free to sell certain types purchaser), Noel (the cash purchaser), the approach may of goods and services. For instance, Millen rollover purchaser’s group (Mohave and each be to accept that in could have sought to agree a carve-out for of its affiliates) and the KMHL Group (KMHL homeware, which might have been agreed in and each of its subsidiaries). any future business 2004. The difficulty with this approach is that KMHL was caught up in the Icelandic fashion brands have increasingly morphed into financial crisis in 2008. The fallout led to venture you would lifestyle brands, which means clothing, bags KMHL and Mohave entering administration in need to use a and accessories go hand in hand with wider March 2009. Both these companies were then goods such as perfume, beauty (make-up and ultimately dissolved. Mosaic US, one of the completely different cosmetics), bedding and linens, decoration and defendants in Miller’s claim, was incorporated name or to think furniture. in 2001 and as at 2004 was a subsidiary of It could be possible to try to agree a time- KMHL, falling within the definition of a group carefully before you limited restriction. Millen agreed not to use her member of KMHL. Karen Millen Fashions name at any time. A purchaser may consider was incorporated in 2009 and is now a sister use your own name that after a certain length of time the business company of Mosaic US.