Should I use my own name for my business? There’s more to consider than you think.

21 March, 2017

 

On setting up a new business, a key decision for the owner(s) will be finding the right business name. Many will want to choose a name that means something to them, and for businesses with one or two creators, the most obvious is their own name(s).  Indeed, many of the world’s most iconic businesses and brands contain the names of the individuals who created them e.g. Disney, Louis Vuitton and Marks & Spencer, but this can cause complications further down the line.   You need to take steps at the very beginning of your business venture to protect your right to use your name in business – many people would be shocked to know it is entirely possible to lose this right, as recent high profile cases involving Jo Malone, Karen Millen and even Kylie have shown.

 

Firstly, it is important to know that there is a difference between the registered name of a business and the trading/business name. Many businesses will have a different trading name which may be the popular (or only) name the business is generally known by. Behind this, there will be the registered name of the business and this will be the name on invoices and contracts, and recorded at Companies House.   The registered name has to end in “Limited” or “Ltd” (or LLP if it is a limited liability partnership) but sometimes traders don’t like the look or sound of the business name so choose to continue to trade with the original as a trading name.   

 

Do your homework at the start.  Check before you begin trading that your chosen name is available – search the registry at Companies House, do a “Google” search, check domain names registries (see our guidance on domain names here) and at the Intellectual Property Office.  If they are free, register your chosen name and most of the close derivatives you can think of to give you the broadest protection.  When registering the business name as a trade mark, if the name is your own name register the mark in your own name so that you own the trademark. That way if the company is eventually sold you will own the trademark (which a buyer will inevitably want) and at this stage you can truly consider what price the name is worth. The recent high profile dispute between Kylie Minogue and Kylie Jenner over use of the “Kylie” name in the US, demonstrates the importance of obtaining international trademark protection in a full range of categories.

 

Any individuals working in-house should consider whether they want their name appearing at all with their employer’s brand. Tom Ford (while employed at Gucci) did not allow his name to be used for any of his work; it all went under Gucci. This allowed Tom Ford to retain all his rights to trademark his own name and endorse his own brand when he left Gucci.  Businesses employing talented/creative individuals should be alive to this issue.

 

If you have a business partner, it is particularly important to deal upfront with ownership of the name and what would happen to the business name if you go your separate ways once your business is established.  Brands are not created as an immediate asset to the business, rather the value in a brand grows with the reputation of the business.  Taking as an example M&S, there is now clearly significant value in the business name. If Marks and Spencer were to be sold, a large part of the sale price would be attributable to the goodwill in the brand. But, what would have happened back in 1900 when the partnership between Michael Marks and Thomas Spencer had only just got going, if the parties had wanted to go their separate ways? What would have happened to the goodwill in the brand? In the absence of a prior agreement, the parties would have to decide who would get the right to continue using the business name and attribute a value to that, with obvious scope for disagreements.  The party taking forward the business name would likely want some sort of protection to prevent the outgoing party from using a similar name in the future, usually in the form of restrictive covenants.

 

Think ahead to your exit.  Restrictive covenants are common in business sale agreements, and can be used to prevent the seller from setting up a similar business and/or using any intellectual property in the business being sold. Depending on the intellectual property in question, these restrictive covenants may go further than expected. Karen Millen discovered this to her detriment in 2016 when Karen Millen Fashions Ltd made a successful claim against her, following her declaration that she was planning a return to the fashion industry under the name of “Karen”. Clearly, the main reason Karen Millen Fashions Ltd requested restrictive covenants in respect of the name of the business was that a significant amount of value resided in the name. If “Karen” had been successful, it is likely the new business would have taken customers from Karen Millen Fashions Ltd. 

 

It pays to give proper consideration from the outset to using your own name for your business.

 

If you would like any further information on branding or trademarking, please contact Harry Partridge on +44 (0)1732 224 092.  If you have any questions about setting up or selling your business, please speak to Aleks Wulff on +44 (0)1892 506 127.