In a decision of 16 August 2016, the UK High Court has refused to grant a declaration to the designer Karen Millen that she is permitted to use the mark KAREN MILLEN for homewares and the mark KAREN for clothing and other goods in China and the USA.
The Court reviewed a share purchase agreement that had governed Ms Millen’s sale of her “Karen Millen” fashion business in 2004 and concluded that her proposed use of KAREN MILLEN and KAREN would breach that agreement. It also held that the negative declarations sought by Ms Millen were not sufficiently clearly defined for the Court to grant them, since Ms Millen had not stipulated what her intended business would be like, other than in a very broad sense.
Ms Millen founded her “Karen Millen” fashion business (with her co-founder) in 1983 and subsequently sold her shares in the business to an Icelandic banking consortium in 2004. As part of that sale, she entered into a share purchase agreement (“SPA”) which contained a number of restrictive covenants governing her future conduct.
Broadly speaking, and in addition to other restrictions, the SPA prevented her from: using or attempting to use any intellectual property rights owned by the “Karen Millen” business; carrying out any act which would adversely affect any concession of the “Karen Millen” business or its arrangements with department stores; and/or using the name KAREN MILLEN or any other confusingly similar name “in any connection with any business which is similar to or competes with” the “Karen Millen” business.
In 2011, Ms Millen announced her intention to return to the fashion business under the name KAREN. This led to litigation which settled in 2015 on terms which prevented Ms Millen from using the marks KAREN or KAREN MILLEN in the UK or EU. However, the settlement did not regulate the position between the parties in other territories. This most recent High Court action related to the position in the USA and China.
In her claim, Ms Millen sought what the Court characterised as “wide and extensive relief”, including negative declarations that:
- Use of the name KAREN MILLEN in the US in relation to homewares (but not women’s apparel or women’s fashion accessories) would not breach the SPA; and
- Use of the name KAREN (i.e. without MILLEN) in relation to any goods or services would not be confusingly similar to KAREN MILLEN and therefore would not breach the SPA.
Ms Millen also sought declaratory relief in respect of the application for and maintenance of various registered trade marks, including in the USA.
The Defendants (i.e. the current owners of the “Karen Millen” fashion business) counterclaimed for injunctions to prevent Ms Millen carrying on business anywhere in the world under the names KAREN or KAREN MILLEN (or anything confusingly similar) in relation to various goods covered by Ms Millen’s US trade mark applications.
Use of KAREN MILLEN
The Court first considered Ms Millen’s proposed use of KAREN MILLEN in relation to homewares.
Mr Meade QC, sitting as a deputy judge of the High Court, referred to the evidence of the Defendants that the “Karen Millen” business had goods other than women’s clothing, including bags, belts, purses, scarves and footwear. Whilst they did not ever sell homewares, there was a general intention and desire to continue to expand the range of goods on offer and the geographical reach of the business. He also considered the positioning of the “Karen Millen” brand in the market, noting that there was an extensive debate at trial about whether it was a “bridge luxury” brand, a “niche specialist retailer” brand, a “lifestyle” brand and so on. Taking into account the evidence submitted by the parties of other fashion-led businesses, (including DKNY, Ralph Lauren, Hugo Boss, Ted Baker, Calvin Klein, Paul Smith, Michael Kors, Tory Burch, Next, Zara, Oasis, Whistles, Reiss, Hobbs and others), he concluded that there was a very wide variety of types of business, and a “very wide variety of goods that they deal in or branch out into.” It was therefore not the case that only “bridge luxury” brands were known for dealing in a range of goods including homewares.
On that basis, he held that consumers generally would be aware that fashion-led businesses often diversified into a wide variety of associated products. He also concluded that there was a “natural connection” between fashion and interiors given that both are “about colours and proportions”. The practical effect of this was that, if Ms Millen marketed KAREN MILLEN bed linen, for example, consumers would not know whether it was the full extent of her range of goods. Seeing KAREN MILLEN homewares would therefore suggest that there might well be KAREN MILLEN clothing from the same source.
The Court accordingly refused to grant the negative declaration sought be Ms Millen in relation to her proposed use of KAREN MILLEN.
Use of KAREN
Turning to Ms Millen’s proposed use of KAREN, the Deputy Judge acknowledged that the Defendants’ position was a lot weaker here, since KAREN is an ordinary female first name and it was MILLEN that gave the combined KAREN MILLEN mark its distinctiveness.
However, he also stressed the fact that, before a Court can make a negative declaration, the underlying issue must be sufficiently clearly defined. In this case, Ms Millen had sought a declaration in relation to her use of KAREN alone for any goods or services. She had not stipulated what her business would be like, other than in this very broad sense. This left a great deal of uncertainty; for example, the Deputy Judge considered it would make a “very great difference” to his assessment of likelihood of confusion if Ms Millen were to use KAREN on women’s clothes and, in combination, use KAREN MILLEN on perfume, candles and eyewear. She might also make statements about her former connection with the “Karen Millen” business and whilst she was entitled to do so, this could increase the likelihood of confusion.
In the circumstances, the Deputy Judge refused to grant the declaration sought by Ms Millen in relation to her proposed use of KAREN. He seemed to have some reluctance in reaching this decision – stating that this aspect of her claim might have succeeded if she had defined her intended use more closely in terms of geographic positioning and other details. Indeed, he noted that because of the weak distinctiveness of KAREN alone, and given that there were other KAREN brands in the fashion industry, it was possible to conceive of “perhaps many uses” of KAREN which would not cause confusion and would not breach the SPA.
This case is yet another example of a fashion designer being prevented from using his or her own name after parting with their original businesses.
In this case, the SPA entered into by Ms Millen appears to have been particularly restrictive, since it has operated to prevent her from using KAREN alone. The case is therefore a reminder that any restrictive covenants must be carefully negotiated and that any future business plans – even if they seem remote at the time – must be considered when entering into these types of agreements.
For fashion designers in particular, it is worth considering at an early stage how best to protect themselves when they are contemplating launching a clothing line under their own names. One option is to come up with a name that does not incorporate their own names, meaning that they will ultimately retain ownership of their own personal “brand” if and when they move away from those businesses. They could also consider retaining ownership of any trade marks which incorporate their own names, perhaps with a licence of these trade marks to their fashion business (although it may not ultimately be commercially viable to sell the business without assigning the relevant trade marks).
This case also underlines the importance of being appropriately specific when applying for negative declaratory relief. Such applications will be carefully scrutinised by the Court and, in the absence of the applicant giving appropriate consideration to the nature and scope of the relief sought, the relief may well be refused.