Know-How Exchange : Student Questions

Hello! We are a designer clothing company that has built a solid customer base, and a fairly recognizable name brand in the luxury clothing industry for over 20 years. The company originally started in Europe, and then in 2002 it traveled to the U.S. and became larger and more recognizable, thanks to the U.S. market.

About 1 month ago, the two CEO's (the designer and the original business partner) split because of differences. In order to reconcile, the company went bankrupt and a bidding war was established so the company could go to the highest bidder. The designer -- based in Europe -- won, and with it she won the rights to start fresh. She acquired all the staff, name and product etc. The designer currently has ownership of the label in Europe. I am an employee of the designer, but I am based in the U.S. and am responsible for the U.S. market.

Unfortunately, while this was happening, the other CEO flew to the U.S. on a tourist visa and claimed the trademark rights to the name here in the U.S. Before the split, the company worked as an LLC, and we did not realize we needed to trademark it in each country it expanded in. It was our mistake not to do this. So now there will be two companies, one in Europe and one in the U.S., with the same name in the same industry, but two different owners. Technically, the owner of the company in the U.S. has no product, since the designer who is based in Europe designs everything, but he is planning to "steal" the intellectual property and mass produce the product with lower quality factories and continue to sell it in the U.S. Essentially, he has the designer "name" but will now begin selling lower quality stolen copies of the product. This can tarnish all our hard work into building the name with the product for the past 20 years.

Meanwhile, the designer has the name and the product in Europe, but she cannot use it in the U.S. without his threat of lawsuit for infringing his trademarked name. In addition, he is contacting the U.S. customers and threatening them by saying if they take product with his company name in the U.S. without his consent, he will issue a lawsuit.

The U.S. customers side with the designer and the product.. and do not want to purchase low quality items. But some are too scared to involve themselves with "lawsuits" and may back out of previous deals. They are also concerned a similar item they sell in their stores can be found elsewhere but of lower quality in discount department stores.

We are forced to either fight for the name in the U.S., or to conduct a global name change and start fresh. I have been doing research on company name changes and re-branding, but all the case studies seem to come from the perspective of a company changing its name because of new products and services or acquisitions -- no one has been "forced" to change their name for legal reasons. We have nothing new to offer our customers, just the same great luxury designs.

We have a solid customer base, and in an industry like fashion where a NAME is very important -- we are unsure how to proceed. In an ideal world, we would like to keep our name, but we are afraid of being sued or having our product mistaken for a new product the old CEO is going to mass produce. We pride ourselves on the quality and luxury of our product. Our safest bet is to change the name, but our customers may have a hard time transitioning from something name-brand to something unknown.

Any advice or perspective from you experts would be SO much appreciated. Thank you!