by Marc Bain
To see your name on your business, or on the products you’ve designed, can be a tremendous source of pride for an entrepreneur with a new venture. But as good as it may feel, naming your company after yourself is a potentially terrible decision.
The moment you give your company your name, that name becomes a corporate asset, which can lead to all sorts of legal disputes if you encounter another company that had a similar idea, or if you eventually bring on investors. For small businesses, it can be an extremely costly mistake, and for founders, it can mean losing the rights to your name altogether.
The smartest choice is to create a name for your company separate from your own, says Susan Scafidi, founder of the Fashion Law Institute at Fordham University. “It avoids so many potential problems down the line that it just strikes me as a no-brainer,” she explains. “I really wish designers would exercise just a little bit of the creativity they put into their clothing and so forth into choosing the names for their labels.”
Scafidi is very familiar with the problems caused by going the eponymous route. In the fashion industry, it’s extremely common for a designer to use their own name for their brand, and not by coincidence, there’s perhaps no better arena to see the problems that decision can cause.
Right now, for instance, the Fashion Law Institute is working pro bono on behalf of emerging New York designer Thaddeus O’Neil, who is battling against the surf brand O’Neill for the right to use his own name on his label. Thaddeus O’Neil launched his eponymous surf-inspired label in 2013, but as Business of Fashion reports (paywall), the mass surfwear label O’Neill, established in California in the early 1950s by Jack O’Neill, has filed a legal challenge alleging that his brand is “confusingly similar” to its own. The O’Neill family sold the trademark a decade ago to Netherlands-based Sisco Textiles, but it’s still a family name that’s at issue.
Thaddeus O’Neil has a strong case in that consumers aren’t likely to confuse the two, but just carrying on a court battle can be prohibitively expensive for a small label. In 2012, handbag designer Clare Vivier was sued for copyright infringement by Tod’s Group, which owns the Roger Vivier brand. Clare Vivier ultimately changed her brand to Clare V. because she says she didn’t have the money to fight.
But still another issue with using your own name can arise if you want outside investors. “Once your name is a corporate asset, then investors are going to want a piece of that corporate asset—or full ownership of that corporate asset—which is great as long as you and your investors are getting along,” Scafidi says. “But typically there will be some point at which you, the designer, and your investors part company, and that leaves you walking nameless into the night.”
Numerous brands bear the names of deceased founders, such as Lanvin, Chanel, Dior, and Yves Saint Laurent, but the scenario is trickier when the founder is still alive and wants to get back into business. Menswear designer Joseph Abboud sold his company and the rights to his name to JA Apparel in 2000 for $65.5 million, only to decide later he wanted to create a new men’s line. He chose the name JAZ, which was fine in itself, but the press reported that he wanted to use the tag line “a new composition by designer Joseph Abboud.” JA Apparel wasn’t having it, and sued to keep Abboud from using his name in any way related to the marketing or selling of the new line. JA Apparel initially won its case, though on appeal Abboud was granted limited rights.
You may know the handbag brand Kate Spade, but you may not realize that Kate Spade herself hasn’t been involved since she sold the line years ago. After a hiatus, she returned last year with a new line, though of course she can no longer use the name “Kate Spade.” Her label, which also has the color and cheer of her original creation, is called Frances Valentine, and Spade has since changed her own name to Valentine to match (paywall). Similarly, if Donna Karan, Helmut Lang, and Jil Sander wanted to launch new brands, they’d have to find other monikers, since those names all have other owners.
These scenarios aren’t limited to high-profile fashion. In the 1970s, Steve Herrell launched Steve’s Ice Cream, which became a beloved ice-cream chain in Boston. He eventually sold the company and naming rights, but not his recipes. When he chose to get back into ice cream some years later, he couldn’t call his business Steve’s, opting to name it Herrell’s Ice Cream. For a founder, this sort of situation can mean having to build a new label from scratch, and for consumers, it can be deeply confusing.
Still, Scafidi says the practice is understandable, especially in fashion. It’s a tradition going back to the man known as the first couturier, Charles Frederick Worth, whose House of Worth dominated Parisian fashion in the late 19th century. It also connects brands to their founders in the minds of shoppers.
But she says that the potential costs and hassles just aren’t worthwhile. “Prophylactic legal thinking is always better than trying to pick up the pieces after there’s a problem,” she says. “Unless you’re prepared to have a litigation fund set aside, it’s just bad business to have your name on the label.”
Image by Travis Wise on Flickr, licensed under CC-BY-2.0.