Nowadays the global fashion industry is a crucial sector of the economy with British fashion contributing almost £21bn to the UK economy.
Despite the fact that intellectual property is not generally enforced as it is within the film and music industries, trademarks have a significant role in the fashion industry.
Trademarks designate the origin of goods (such as clothes, hand bags or shoes) and distinguish them from those of competitors. Designers will commonly use their own names as trademarks – so we have names like Paul Smith, Calvin Klein, Donatella Versace and Fiona Swarovski, to name a few.
This can raise various problems when the designer whose name is a registered trademark decides to leave a company for which he or she has worked – for example by building up a business. What happens to the rights to use their own name when they transfer the business to a third party?
Elio Fiorucci v. Edwin Co. Ltd.
What can happen is illustrated in the court battle between Elio Fiorucci and Edwin Co Ltd. Elio Fiorucci, a well known Italian fashion designer in the 1970s, sold his business (the company Fiorucci) in the 1980s to Edwin Co. Ltd. a Japanese multinational, due to financial difficulties. Under the terms of the purchase agreement all trademarks, trademark applications and distinctive signs of the company Fiorucci were assigned to Edwin Co. Ltd.
Subsequently, in 1997 Edwin filed an application to register the word mark “ELIO FIORUCCI” as a Community trademark for, among other things, clothes. Elio responded by applying for a declaration that the application was invalid. A law suit which is still pending then ensued.
One question at issue concerns a provision in Italian law which prohibits the exploitation of names of famous people. The question is whether it prevents Edwin from exploiting the name FIORUCCI as it is a famous person’s name. No conclusive decisions have yet been reached.
Elizabeth Emanuel v. Elizabeth Emanuel International Ltd.
The background to this case is that Ms Emanuel and another company formed the Elizabeth Emanuel Plc (EE Plc) in the 1990s. Ms Emanuel assigned to EE Plc her business of designing and selling clothes, including a trademark application for the word ELIZABETH EMANUEL which included a heraldic device and was registered in 1997.
Elizabeth Emanuel plc then transferred the business (goodwill and the now registered trademark) to Frostprint Ltd which went on to become Elizabeth Emanuel International Limited. The new company employed Ms Emanuel until she ceased working there one month later.
Shortly after, the registered trademark was assigned to Oakridge Trading Limited (Oakridge). Oakridge went on to file a new trademark application for just the word mark ELIZABETH EMANUEL and assigned its trademark rights to Continental Shelf 128 Ltd (CSL).
Ms Emanuel opposed this trademark application for ELIZABETH EMANUEL and also filed to revoke her earlier trademark registration on the basis that the public would be deceived and confused into thinking that she was in some way associated with CSL. However, the court did not agree with her and said the name ELIZABETH EMANUEL could not be regarded as likely to deceive the public as to the nature, quality or geographical origin of the products it designated. The Court said that even if customers may be influenced by linking the trademark ELIZABETH EMANUEL with Ms Emanuel this trademark is still connected with the undertaking which owns the trademark. Hence, the trademark was not revoked and Elizabeth Emanuel had to accept that a third party has the rights to use her name as a trademark.
Consequently, Ms Emanuel may use her own name to indicate that she is behind any business, but she cannot use her name as a trademark to designate the origin of her goods. She has to choose another mark to avoid any confusion with CSL. This means she loses the benefit of the name recognition she had generated for being the designer of Lady Diana Spencer’s wedding dress.
Lessons to learn
These cases highlight what it means on the one hand to transfer the trademark which protects one’s own personal name and on the other hand to acquire such a trademark. Businesses which act in this field should draft clear provisions in connection with the use of the trademark rights in future in order to avoid expensive and time consuming litigation.
But what can or should designers do to safeguard the rights in their own name? If designers need or want to keep using their name in business in future they should consider licensing the trademark rather than transferring all rights in it by assigning the registered trademark. Obviously, if a designer is in financial difficulties there may be little bargaining power. Still it is worth trying to ask for a (back) license even if they do assign the rights over.