What happens when a designer sells the company that bears her name? Can she still use her name for future fashion businesses or for any business at all?
Barbara Kolsun is a professor of fashion law at Cardozo Law School and the director of its F.A.M.E. Center.
Barbara Kolsun: The company Kate Spade, Inc. was recently sold to Coach for over $2 billion dollars, and the question often asked is, “Is the individual Kate Spade entitled to use her name going forward?”
I’m Barbara Kolsun, I’m the director of the F.A.M.E. Program and a professor of fashion law at Cardozo Law School. I was also, for many years, the general counsel of several fashion companies including Kate Spade.
The answer to the question is no. Kate Spade sold her name the first time she sold the company. Once a designer creates an entity that owns her brand, which is likely to happen very quickly, she no longer necessarily owns that brand, but again it depends on the contract. It depends on what’s known as the name and likeness agreement, which all designers will be asked to sign if and when they sell their companies, or before that when they create an LLC or other business entity that owns the intellectual property involved in the brand. Can the designer thereafter open up shop selling apparel or something else, some other product in the fashion business? Probably not, but it depends on the agreement, the name and likeness agreement. Can the designer go into another business, say selling swimming pools? It depends on the agreement. But generally no. Once a designer puts her name on the brand and sells the brand, then the name is no longer hers. Can a designer, after she sold her name, go into business in the same industry? If she uses a different name, probably. Kate Spade recently launched a brand called Frances Valentine. It’s an interesting, very complicated case, but she has a new shoe business called Frances Valentine, but she doesn’t use the name Kate Spade.
So once a designer sells her name, sells her company, can she continue to use her name in the same industry? Probably not, but again it depends on the name and likeness agreement that she signed. This is Barbara Kolsun, and thanks for watching TalksOnLaw.