Strategy: Unconventional
IP strategies
The pros and cons
of using real names
as trademarks
Picture: Addy Tsl / Shutterstock
Karen Fong, managing partner at
Rouse, discusses how Tiffany can
protect its trademarks following
the departure of one of its
best known designers
E
lsa Peretti was a striking and glamorous 34-year-old,
already part of New York’s fashion scene, when she entered
into a contract with the legendary jewellery company
Tiffany to design an exclusive range of jewellery. She had
already begun to create designs for some of the country’s
leading fashion houses, but was, at the time, relatively unknown as
a jewellery designer. Neither she nor Tiffany could have predicted just
how successful the relationship was to be.
Over the years Elsa Peretti jewellery, sold under Peretti’s trademarks,
which include her actual signature, has become a household name and
one of Tiffany’s most sought after and profitable lines, responsible in
recent years for 10% of net sales.
Now 38 years later, it seems that Peretti and Tiffany are likely to
go their separate ways, with Tiffany acquiring the relevant intellectual
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property, including the Elsa Peretti trademarks. If this happens, Elsa
Peretti will no longer have any connection with the Elsa Peretti brand.
The scenario is a familiar one. Bizarre as it sometimes seems, many
designers have, in recent years, become entirely separated from
the brand that bears their name. The Jil Sander brand no longer has
anything to do with Jil Sander, the Helmut Lang brand with Helmut
Lang, or the Thierry Mugler brand with Thierry Mugler. And the hugely
successful French designer, Roland Mouret, who lost his name after a
company buy-out, has recently paid an undisclosed amount to buy it
back. The examples are legion, and the stories not always happy ones.
The possibility that Tiffany will acquire the Elsa Peretti brand
highlights an issue to which insufficient attention is often paid by
young designers: whether or not they should use their own name as
a brand name. There are many reasons why they will be keen to do
July/August 2012
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so – and obvious advantages to be derived. But there are downsides
as well. Designers should be made aware of both the advantages and
disadvantages at an early stage so that they can make an informed
decision.
Much will depend on the personal position and aspirations of the
designer, and these should be fully explored and understood by those
providing advice. Time should also be spent exploring possible future
scenarios in relation to development of the brand. Some designers
may then decide to use their own name. Some, instead, may decide
to market their products under a distinctive trademark, remaining free
to use their own name whatever the future may hold – and, just as
importantly, free to prevent their name being used by others, particularly
in relation to designs they might consider unappealing or inferior.
“Jimmy Choo is now happily
back creating shoes by hand –
but to do so he has to licence his
own name from Jimmy Choo Ltd,
a company with which he no
longer has any connection.”
Designers who have adopted the latter approach include Tom Ford
and Sarah Burton. Although Ford’s name became very well-known
during his time as Creative Director at Gucci, it was never used as a
brand name. Whether or not it was a deliberate strategy on his part,
it meant that when he left the company in 2004 over issues relating
to artistic control, he was free to develop the Tom Ford brand. Sarah
Burton, Alexander McQueen’s Creative Director and, famously, the
designer of the Duchess of Cambridge’s wedding dress, is in a similar
position. Her name has become very well known, but it has not been
used as a brand. If Burton were to leave McQueen, she would be free
to use her name, which is now a potentially very valuable brand, in any
way she chose.
The numerous cases arising out of disputes over the right to use
a designer’s own name indicate the range of problems that can arise.
After selling her company and trademarks, Elizabeth Emanuel,
possibly best known as one of the designers of Lady Diana Spencer’s
wedding dress, said she was “heartbroken” to see her name being
used on clothes that had not been designed by her.
“I am a designer. I am who I am, Elizabeth Emanuel, but it is their
name to use, not mine,” she said. Her subsequent application for
revocation of the trademark registration in question was dismissed.
Although the public had been deceived and confused into thinking that
she was connected with the mark when she was not, such deception
and confusion was the inevitable consequence of having sold the
business previously conducted under her name.
More recently, the well-known American menswear designer,
Joseph Abboud, having sold his company and the ‘Joseph Abboud’
trademark, suffered a similar fate when a US court held that he was
not entitled to use his name, whether as a trademark or otherwise, in
connection with the promotion or distribution of any goods or services.
The decision in this case was based, in large part, on the wording of the
contract: the assignment could have been limited to ‘trademarks’, but it
had specifically referred to ‘names’.
Then there is the case of Jimmy Choo, who started as a shoe maker
in East London, making shoes for the rich and famous, including Princess
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Diana. Largely due to the entrepreneurial talents of Tamara Mallon, his
name subsequently became a global brand – and shoes with which he
no longer had any connection a regular feature on the Oscar night red
carpet. As a result of various fallings out and takeovers, Jimmy Choo
is now happily back creating shoes by hand – but to do so he has to
licence his own name from Jimmy Choo Ltd, a company with which he
no longer has any connection.
As well as illustrating the nature of the problems that can arise,
these cases serve as a reminder of the amount of time and money that
is likely to be spent on lawyers. As the famous American jeweller Henry
Dunay said, having become entangled in a dispute over the right to use
his name, “The case is worse than the bankruptcy... I just want this to
be over so that I can do what I do best, not spend time with lawyers”.
For young designers, time spent at the outset giving proper
consideration to these issues is the first step. But whatever is ultimately
decided in relation to branding, the wording of the contract will be
absolutely crucial in defining and securing the rights and interests of
the parties. As far as possible, the contract should be clear as to what is
intended to happen in the event of termination. It seems that Elsa Peretti
and Tiffany did turn their mind to this, eg, Tiffany apparently has the
right to continue producing products for six months after termination
and selling for a further one-year period. These are the sort of issues
one would normally expect to find in the termination provisions of a
licence agreement – and they are important. But equally important,
and less often adequately addressed, are issues relating to the ongoing
right to use names and trademarks. The failure to address these
issues adequately is, no doubt, sometimes caused by the difficulty of
contemplating failure in the excitement of doing a deal, but it may also
reflect the draftsman’s lack of awareness of how the industry works.
It seems that, at the moment, the sticking point in the Peretti/
Tiffany negotiations relates to the value of the relevant intellectual
property. It is clear that Tiffany has advertised and promoted the Elsa
Peretti name heavily, as it was obliged to do under the terms of the
original agreement. As a result, it will have contributed significantly to
the brand’s current value, and this too is something that the agreement
will, hopefully, have addressed.
Whatever Peretti and Tiffany ultimately agree, the terms of the
settlement agreement will be just as important as the terms of the
original licence agreement. They should make quite clear (a) exactly
what is being assigned to Tiffany and, in particular, whether Peretti
retains any goodwill in the brand; and (b) the extent to which, and
the manner in which, she will be entitled to continue using her own
name and signature. The clearer and more detailed the provisions in
relation to these issues, the less will be the likelihood of subsequent
dissatisfaction or dispute.
The Peretti/Tiffany negotiations highlight two important issues
for designers: the need to spend appropriate time at the outset on
branding issues; and the overwhelming importance of a carefully
drafted contract.
July/August 2012
Author
Karen Fong is the managing partner of
Rouse Legal. She advises clients on all
aspects of IP with a particular focus on
dispute resolution. She has extensive
experience advising businesses on global
IP strategy and protection, drafting
commercial agreements, and representing
clients in enforcing and defending their
rights (including mediation, arbitration and
litigation).
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