What's In A Name?
14th November 2016 Emily Arnold & Alicia Mendonca, Farrer & Co
Karen Millen has recently lost a claim in the High Court against Karen Millen Fashions Limited, over the right to use her name in respect of her own ongoing business ventures.
Family business owners should bear the case in mind when considering how to protect their brands, particularly where they trade under a name they hold dear. The case is also an important reminder of the need to pay close attention when selling your business.
Fashion designer Karen Millen founded her clothing business, Karen Millen Fashions Limited, in 1983. In 2004, she sold her stake in the business to an Icelandic consortium, Mosaic Fashions, under a share purchase agreement (SPA). The terms of the SPA prevented Karen Millen from using her name in connection with any similar businesses or competition in the future, anywhere in the world. This included using confusingly similar names, such as "KM" or "K Millen".
Several years later, Millen tried to use her name in connection with new business activities, including a homeware range. Her business ventures were based in several different jurisdictions, including the US and China. As a result, trade mark disputes have arisen in the US and China over marks containing the words "Karen", "Karen Millen", and "KM".
In the UK, Millen took her case to the High Court. She applied for negative declarations from the Court that would enable her to use her own name, including:
- that she could apply for and use various trademarks without breaching the SPA;
- that she could carry out a homeware business in the US under the name, "Karen Millen", without breaching the SPA; and
- that using the name "Karen" on its own would not be confusingly similar to "Karen Millen", even for clothing.
The High Court rejected Millen's application on the grounds that according to UK case law, negative declarations can only be granted where the underlying issue is clearly defined. In this case, the negative declarations were not clear and specific enough.
However, the Judge did say that many of the acts falling within the negative declarations would have breached the terms of the SPA anyway. This meant that regardless of the negative declarations, Millen could not use the name, "Karen Millen" or any of the related names, without breaching the SPA. The judge therefore found in favour of the Defendants in relation to the USA and China, as well as the UK. He also found in favour of the Defendants in relation to both the "Karen Millen" and the "Karen" marks.
Karen Millen's defeat over the right to use her own name in business is a reminder to companies, as well as to prospective purchasers, of the value that can be attached to a brand name, and the importance of ensuring that restrictions around the use of a particular name are closely regulated upon a sale. Considering Millen's desire to pursue future business ventures using her name, the terms of the SPA that she entered into were too restrictive.
The case is also an important reminder to those selling and acquiring brands of the importance of preserving rights in the use of names associated with the relevant brand. Karen Millen is now in a position where she cannot capitalise on the goodwill she built up through her designs and her brand, even to pursue business ventures in connection with other products. Where a brand has been carefully built up, a decision to transfer over extensive rights in relation to the use of the brand name must be carefully considered.
Authors - If you require further information on anything covered in this briefing please contact Emily Arnold (firstname.lastname@example.org, 020 3375 7601) or Alicia Mendonca (email@example.com, 020 3375 7614)