Company Founder Loses Karen Millen Brand Dispute

The High Court has ruled against individual Karen Millen (Millen) in a long running contract dispute with her former company for the right to trade under her own name (the Brand) in the US and China.

The case concerned the company (now Karen Millen Fashions Limited) set up and a share-purchase agreement entered into to facilitate capital investment in 2004. The share-purchase agreement contained various clauses restricting the activities of Millen (and her ex-husband, who was in business with her at the time) in respect of the Brand (the Agreement). The purpose of the restrictive aspects of this agreement was to protect the value and integrity of the Brand for the investors (to prevent Millen from using the Brand in competition with investors).

In summary, Millen argued the limitations as to her use of the Brand applied only to the Brand as it was in 2004, and only to intellectual property rights in existence at that time. The Defendants, Karen Millen Fashions Limited and Mosaic Fashions US Limited, argued that they had effectively purchased the entire Brand as it stood and also as it evolved, inclusive of all future expansions, either geographically or in terms of expansions of product ranges. Millen was intending to launch a new homeware and lifestyle range under the Brand in China and the US.

The Court held that Millen's use of the Brand in China and the US would breach the agreement, as would use of the Brand without the word Millen.

The underlying nature of the dispute is a commercial reality for business owners seeking investment. Investors want contractual assurance that they will be assigned full control of a brand along with the flexibility to expand and develop that brand, whereas designers and business owners seeking investment want to retain control of their creation. The reality may be, and has been, that those seeking investment have less bargaining power and ultimately will surrender their rights to investors. In any event, this case demonstrates that it is always important to consider the potential long-term implications of dealings concerning intellectual property rights.

If you have any questions on the above please do not hesitate to contact the team at McDaniel & Co. on 0191 281 4000 or legal@mcdanielslaw.com.