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Karen Millen - lessons from an SPA (Brands & IP Newsnotes - issue 3)

24 October 2016

Karen Millen, founder of the Karen Millen fashion brand has lost a High Court challenge to use her own name for homeware in the US and China.

In 2004, Karen sold her shares in the Karen Millen business to an Icelandic consortium. The share purchase agreement (“SPA”) contained a number of restrictive covenants as to her future conduct.

In 2011, Karen was ready to start her next fashion business under the name “Karen” and announced the plan in the press. This led to a lengthy dispute with the consortium that was settled in 2015. That settlement prevented Karen from using KAREN or KAREN MILLEN but it only covered the UK and the EU, not the rest of the world.

Whilst negotiating the settlement, on-going disputes in relation to the US and China had already arisen and court action was underway in which Karen sought a number of negative declarations from the court including that use of her name for homeware in the US would not breach the SPA.

The dispute centred on the interpretation and enforceability of the SPA. Whilst the Court found in Karen’s favour on some points, the key finding was that Karen could not use her own name in China and America for use on homeware items. In his judgment, Richard Meade QC also made a number of potentially useful comments in relation to the similarity between clothing and homeware businesses which may assist brand owners in future.

Founders of eponymous brands should think carefully when negotiating the sale of their business to ensure they are not unduly restricted in the future, particularly in the global market place.

This article was first published in the Brands & IP newsnotes publication - issue 3

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