There have been some high profile reports in the press in recent months, relating to celebrities navigating their rights to use their own names after having sold their eponymous brands to third parties. For companies thinking about acquiring eponymous brands, these press reports are a good reminder of the potential difficulties and pitfalls of this type of acquisition and the importance of including the correct contractual rights and restrictions on the founders of eponymous brands. For a complete guide to acquiring an eponymous brand, see a previous article in FashionIPsta, 'Commercialising image rights: reach for the stars'.
For a quick re-cap, here are our top 10 tips on issues to consider when acquiring an eponymous brand:
1. Previous transfers: your due diligence process should ascertain whether the founder has transferred any image rights previously (whether by assignment or licence).
2. Past conduct: are there any risks to the brand as a result of the founder's past conduct? If any are identified, it is advisable to include warranties which address any behaviour that might damage the brand. Negotiations on this kind of issue can be tricky and should be judged based on the founder's profile.
3. Clearly define the IP rights being acquired: do you need to exploit the founder's name, image, signature, voice, caricature, or even use them as an avatar? There are multiple IP rights in the founder's image, from trade marks to social media handles and accounts, which the definition of acquired rights may need to cover.
4. Get a licence of anything that can't be assigned: get an exclusive, perpetual, irrevocable, royalty-free, freely assignable and sub-licensable licence to use any image rights of the founder that can't be assigned.
5. Founder's post-acquisition rights: the founder will want to keep using their own name for personal, domestic, historical, family, biographical, purely factual and non-commercial purposes. It is worth clearly specifying the founder's rights as, if you do not do so, there is a risk that a court will imply terms as to what the founder can do.
6. Restriction of third parties: you should consider including restrictions on the founder setting up other businesses or brands in the future, either alone or with a competitor. If the founder has any family members who may seek to use the name for commercial purposes, you may wish to extend contractual restrictions to them.
7. Undertaking regarding future actions: it is worthwhile seeking an undertaking from the founder not to bring any proceedings against you for use of the name. On the flip side, founders may seek an undertaking about the manner in which you will exploit their image rights, e.g. restricting associations with certain types of products that he or she does not want to be associated with.
8. Role of the founder: clearly define if and how the celebrity is going to be involved with the brand going forward.
9. Future conduct: include undertakings about the founder's future behaviour together with provisions about the consequences of breach or incentives such as retention of purchase price or an earn-out period.
10. Death of the founder: in some jurisdictions, image rights are transmissible on death. Consider where any residual rights left with the founder might pass to next of kin and any implications that might have. For example, Robin Williams bequeathed his image rights to a trust, which restricts the exploitation of his image rights for 25 years following his death.