The High Court has ruled that designer Karen Millen is not permitted to use the name KAREN on clothing or the name KAREN MILLEN on clothing or other goods (such as homeware) in the US or China, following the sale of the Karen Millen business in 2004 where the designer agreed to restrict her future use of the name.
The decision highlights the complexities that may arise where designers use their own name as a brand and the importance of ensuring that the implications of selling an own name brand are identified when negotiating the sale. In particular, it shows the importance of obtaining clarity for both the designer and the purchaser in any restrictive covenants in sale agreements.
Advice for designers
For designers starting out, whilst they are likely to prefer to choose their own name as their brand, it is certainly worth considering instead adopting a unique and distinctive name. By doing so, they will be free to sell the brand in due course, and associate their own name with future work. This is particularly relevant now given the increasing crossover between clothing and luxury lifestyle or homeware items.
For designers who are already successfully using their own name as a brand and considering a future business sale, ultimately the agreement reached with a purchaser will depend on the parties' relative bargaining power. If the designer is in a strong position, they should seek to agree to as few restrictions on future use of the name as possible, e.g. only being restricted in relation to currently marketed goods and potentially agreeing a time limit on the restriction.
Designers should also be careful not to relinquish too many rights at an early stage of their growth and make sure they are fully aware of and advised on the implications of any restrictive covenants they enter into. Whatever position a designer is in, they should push for as much clarity as possible in the agreement so the parameters of use are unambiguous going forward. This could avoid costly and time consuming litigation in the future.
The Karen Millen business was founded in 1983 and sold in 2004 to an Icelandic consortium. As part of the sale agreement, Millen agreed to certain restrictive covenants in relation to use of her name (and confusingly similar variations).
In this case, Millen sought pre-clearance from the Court (in the form of negative declarations) for the planned use of her name in China and the US. In summary, Millen wanted to use the brand KAREN in relation to any goods or services (i.e. including clothing) and to use the brand KAREN MILLEN in relation to homeware (but not women's apparel or fashion accessories).
The Court held that Millen's proposed use would breach her agreement not to use the name Karen Millen or anything confusingly similar (including KM or K.Millen) in relation to a competing business.
Millen argued that whether or not a business would be competing should be assessed in relation to the position of the Karen Millen business at the time of sale (2004), which would essentially limit it to clothing. The Court disagreed and took into account the Karen Millen business expansion since 2004 and the fact that consumers are used to seeing fashion brands develop into lifestyle and homeware brands.
The judge explained that, if consumers encountered a KAREN MILLEN branded shop selling, for example, rugs, they would almost inevitably conclude that they were from the same source as KAREN MILLEN clothes purchased previously and that it was hard to see how any reasonable range of goods (as proposed by Millen in this case) sold in any reasonable format under KAREN MILLEN would not be confusing to consumers if those goods were reasonably likely to come to the attention of customers of KAREN MILLEN.
Millen may have been more likely to be successful if the type of clearance she had sought was more specific and showed exactly how the mark would be used to avoid confusion e.g. not in the same physical place as existing KAREN MILLEN stores or with different trade dress.
To read more about the IP services we offer please click here.