It’s only natural that when choosing a business name, you feel pulled towards your namesake. It’s the obvious choice, but compared with creating a brand new brand, how does it measure up?
Trading under your family name is a common convention, being a way to signify your reputation and distinguish yourself from other traders. Many fashion and beauty brands are named after their founders; some names that come to mind in New Zealand are lipstick-maker Karen Murrell, and apparel designers Juliette Hogan and Jarrad Godman.
By using your name for your business, you attach a figurehead to your brand, as well as boosting your personal profile. However, your business will be adversely affected if you act out as an individual, as your actions are intrinsically connected to your brand. For example, when makeup mogul Jeffree Star was outed on the internet for making racist comments, his makeup brand’s social media following decreased in numbers.
Aside from this type of controversy, there are significant legal implications that can affect your business if it is named after you. You may not own the trademarks used by your business, therefore limiting the ways in which you can use your name as an individual. Problems may also occur if you sell your business, which will likely include the sale of all trademarks and their associated goodwill. The new business owners will not want to see you diluting the reputation of their business by use of your own name in relation to the promotion of competing goods and services. Of course, the same would apply if your business was named something entirely different. This is because a brand is the most valuable asset of a business.
United States menswear designer Joseph Abboud is one business owner who realised the error of his ways by choosing his moniker for his business name. He registered his first trade mark in 1987, and in 2000 he sold his business, which included the sale of his trademarks. He then launched a new menswear line called ‘jaz’, using his own name to promote the line. Then, Abboud was successfully sued by his former company for trade mark infringement. Now, he can only use his name in a limited matter, which must be accompanied by a disclaimer that he does not own the corresponding trade mark.
Another case in point is clothing designer Karen Millen. She sold a majority stake in her business to an investor in 2004, and found herself in a dispute with the investor as to how she could use her name in relation to her new business ventures afterwards. A judge found that her use of the trademark Karen Millen in relation to homewares would cause confusion with the clothing business. Not only was she barred from using her namesake, this finding also applied to the use of the names ‘Karen M’ and ‘Karen’.
These complications are why well-known fashion designer Kate Spade adopted the name Frances Valentine for her shoe and handbag business after she sold Kate Spade & Company. She was serious about distancing herself from her former company, and even changed her last name to Valentine.
Donna Karan is designer who thought ahead before selling her namesake business. Her trademarks were owned by a separate company, and were licensed to the majority buyer of her clothing business. After making an attractive sum of royalties from the licensing agreement, she later sold her trademarks outright to luxury conglomerate LVMH for a reported $450 million. It is clear from this arrangement and sum that trademarks are a company’s most valuable asset.
While there is the possibility of invoking an ‘own name’ defence to trade mark infringement to carry on using your name as you please, this is not readily available to business figureheads who have signed away their trademark rights. If business owners want to avoid the complications and extra care that come with naming their brand after their name, they need to consider the long-term implications and seek appropriate advice. While they will want to exercise an appropriate level of control over their business trademarks, on the other hand, potential buyers will be waryif they cannot acquire the trademarks outright. A buyer will want to acquire the goodwill or reputation attached to the trademarks which is where the real value lies. Although it worked out for Donna Karan, who adopted a licensing agreement, not every buyer will be on par with LVMH or the particular circumstances of that case.
Disclaimer: This article does not constitute legal advice, only information. If you are seeking legal advice, please consult a legal professional.