July 10, 2008
Joseph Abboud Learns the Hard Way About Naming, Branding and Goodwill
Famed designer Joseph Abboud is offering two new fall collections next month bearing the names Black/Brown 1826 and Jaz, a luxury menswear brand that is a clipping of the word "Jazz," originally suggested by his daughter.
The reason he doesn't have his own name on the label is because he's not allowed. He lost naming rights to his own name after selling his fashion company in 2000 for $65.5 million to JA Apparel Corp, which now owns "associated names, trademarks, etc., including Joseph Abboud, designed by Joseph Abboud, JOE, JA, and similar or derivative terms."
After the seven-year non-compete clause had expired, Abboud pushed to use his name "in an informational way" to indicate that he was the designer of Jaz. In fact, he wanted to have a tagline that said "a new composition by designer Joseph Abboud."
The courts have ruled that he cannot do this legally. He is only allowed to "be himself" and make media appearances as himself, but he cannot use his own name to promote goods and services.
That's harsh, but as the Likelihood of Confusion blog asks, "why did he think he was getting $65.5 million?"
This is the inherent danger in using a personal name as a trademark. When things go wrong, as they did for Mr. Abboud, you lose the rights to your name for your next venture.
But what is interesting here is the technicality around what the word name means legally. The court seems to have interpreted it stringently but fairly. The key clause in the contract states that Abboud agreed to sell "all of [his] right, title and interest in and to: ...names, trademarks, trade names... and the goodwill related thereto."
This really leaves little room for argument that $65.5 million deal stripped Abboud not only of his trademark, but use of his name and goodwill. Michael Lechter of the Start-Up Blog says that the lesson here is "if you (or your attorney) are careless in drafting the agreement, then you may lose the benefit of your reputation as well."
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