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Sorry, But Your Name Is Mine (How Joseph Abboud Lost His Name)
 

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Believe it or not, you can lose the right to your own good name.

Consider the case of fashion designer Joseph Abboud. Several decades ago, Abboud registered his personal name as a trademark for use with men's clothing and licensed JA Apparel (which he was partially owned) to manufacture and market clothing under the Joseph Abboud brand.

Then, in 2000, for a reported $65 million, Abboud sold his interest in JA Apparel, including the rights to "names, trademarks, trade names... and the goodwill related thereto." He stayed on in a creative role for several years, but after falling out with new owners of JA Apparel in 2005, he left. Soon after, he jumped back in the industry with a competitive line of clothing called Jaz, hoping to use the tagline "a new composition by designer Joseph Abboud" in his marketing materials. But the owners of JA Apparel sued to prevent him from doing so--and won. Earlier this month, the court forbade Abboud from not only using his name in advertising materials, but from even identifying himself as the designer of the clothing. Abboud had signed away the right to use his own name in the trade.

To be sure, this was an unusual case. As often as not, when you sell a company, the name and trademarks it used are part of the deal. After all, the company's goodwill is tied to the name and trademarks, and the purchaser typically wants that goodwill as part of the deal. Usually, though, someone selling a "namesake" trade name or trademark is precluded only from using the name as a tradename or trademark; in most cases, he or she may still take advantage of personal reputation, as long as the way the name is used doesn't create the impression of affiliation with the mark holder.

Because of the particular language in the contract with JA Apparel, however, the restrictions on Abboud were more stringent than normal. In particular, the court noted that Abboud agreed to sell, "all of [his] right, title and interest in and to: … names, trademarks, trade names... and the goodwill related thereto." In other words, the contract called for transfer of "names" in addition to trademarks and trade names. To interpret the contract otherwise would mean that the term "names" added nothing--had no meaning.

The lesson: Name a company after yourself or turn your name into a trademark--and beware. If you sell (or lose) the company, you may have to include the exclusive right to use your name as part of the company assets transferred--and then find yourself competing against someone else using your name. And if you (or your attorney) are careless in drafting the agreement, then you may lose the benefit of your reputation as well.

Last updated: Jun 20, 2008




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