What’s in a name? Jo Malone lawsuit spells danger for founder-led businesses

With founder-led businesses hitting the headlines and going viral on social media, the recent legal proceedings brought by Estée Lauder against Jo Malone and Zara present an interesting challenge for those with businesses named after them, looking to sell up in the future. While the lawsuit is still in its early stages and could still be settled, it does reinforce the IP risks that come when linking your brand to a personal attribute such as your name or likeness.  

Estée Lauder bought the Jo Malone perfume line in 1999; as part of this deal, they also bought the rights to her name. The IP rights will no doubt have significantly increased the value of the business sale at the time, but since the sale has caused a minefield for Jo Malone’s new business ventures, including her new fragrance brand, Jo Loves, and the subsequent collaboration with fashion retailer Zara.  

Estée Lauder’s claim appears to rest on three different arguments. Firstly, the description included in the marketing collateral – “A creation by Jo Malone CBE, founder of Jo Loves” – infringes the trademark ‘Jo Malone.’ There is some debate over how strong this argument is. On the one hand the name ‘Jo Malone’ is trademarked for relevant goods including perfume and cosmetics, however, by using clear branding on the products that does not refer to Jo Malone and adding the description ‘CBE, founder of Jo Loves‘ this does make it clear to the customer that this is a collaboration with the individual and founder of a different company. The company is also making a claim of passing off, which will turn on whether customers are misled regarding the origin of the goods on the facts. 

While there is also an “own name” defence to trademark infringement provided by section 11(2)(a) of the Trade Marks Act 1994, this only allows an individual to use their own personal name in the course of trade, provided that such use is consistent with honest commercial practices. This has been interpreted narrowly by the Courts and does not permit just any use of your own name, particularly when it is used in direct competition with a well-known brand, as here. 

Lastly, Estée Lauder is claiming that only they have the right to use Jo Malone’s name commercially as a result of the terms of the deal agreed in 1999. Although dependent on the exact terms of the contract, this could be the strongest argument. While the non-compete clause ended in 2011, allowing her to set up her new brand “Jo Loves,” her name is still part of the registered intellectual property owned by Estée Lauder, and the contractual restrictions on its use going forward also remain in play.  

The end of the non-compete clause as part of the deal, with Estée Lauder still retaining the IP rights to her name, has presented a legal grey area. Upon the sale of the business, discussions from both parties about how Jo Malone could use her name in other business ventures as a promotional tool should have been had, with terms negotiated and then clearly stipulated in the written contract. Not only could this have prevented a costly lawsuit, as both parties would have been clear as to what would and would not be considered a breach of contract, but it would have also mitigated potential negative publicity. All potential future uses are, however, inevitably difficult to predict at the time of contracting. Furthermore, in purchasing the brand, for what we assume was a substantial sum in 1999, Estée Lauder would presumably not have agreed to any express terms that allowed any use of the name going forward in relation to a competing business venture. 

It’s also crucial that everyone in the business is aware of how the brand can be used, and perhaps more crucially, how it can’t. After clear usage rights have been agreed upon during contract negotiations, these should be communicated in robust brand and usage guidelines. It’s vital that these guidelines are accessible, for example, saved on a company intranet rather than published in a physical guidebook, and clearly explain how the brand, logos, message, name, and any straplines can and can’t be used, utilising realistic examples. Including training on this as part of employee onboarding and hosting refresher training sessions regularly will also ensure that employees are reminded of its importance, as well as the risks of getting it wrong. It’s also crucial for legal teams to be aware of and involved with any branding decisions, especially when there are such complex intellectual property considerations.  

This case is a timely reminder that founders who lend their name or likeness to their business should tread carefully when exploring new business ventures after exiting. While selling the rights to a founder’s name could increase the value of the business and the sale price exponentially, it can limit or complicate future opportunities. It’s crucial that the legal team cover these risks with their clients and ensure that any grey areas are negotiated and fully understood by both parties, as well as being included in the contract, to prevent costly disputes later down the line.  

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