Legal Question: Something Borrowed - The Downside of Trading Your Name for Cash
This week’s question comes from Abby via the form. Abby asks:
“So I'm not sure if you have heard or are following anything happening with the wedding dress designer Hayley Paige. From her account, the company JLM Couture has taken all rights to her name, including her presence on social media. I've tried reading the court doc that JLM posted in their Instagram bio but it's all gibberish to me. Is what they're doing justified? What is their claim to her name anyway?”
Excellent question, Abby!
Here’s a short-ish run-down of the situation going on in the wild world of wedding gowns. For a longer play-by-play, check out this piece from Business Insider.
On July 13, 2011, budding wedding dress designer Hayley Paige Gutman signed an employment agreement with JLM Couture, a bridalwear manufacturer. At just 25 years old, Gutman was offered the opportunity of a lifetime – design bridal gowns for a heavy hitter dress manufacturer and receive their support and compensation in exchange.
In an email at the time of signing, JLM wrote to Gutman, saying, “Attached is a signed contract. Hayley please confirm you have reviewed this with your attorney.”
Gutman responded, “Thank you for sending! I have reviewed with my attorney accordingly.” She’s now saying that email was a lie, and she never hired an attorney to review the agreement. Honestly, that may be the case.
If I had reviewed her employment contract, I would have had a couple notes. First of all, the language in her contract is pretty broad. It gives JLM the exclusive rights to use and trademark the name “Hayley Paige” and variations thereof as well as “the exclusive world-wide right and license to use her name ‘Hayley’, ‘Paige’, ‘Hayley Paige Gutman’, ‘Hayley Gutman’, ‘Hayley Paige’ or any derivative thereof” during the stated term of the employment contract and for two years thereafter.
Even if you’re not a lawyer, you can imagine that “exclusive right” and “exclusive world-wide right and license” are pretty broad and sweeping. That means only JLM can use those names or decide who else can use them.
The rights also last for the entire term of the contract PLUS two years. So, she should have been real sure about what she was giving up – in this case, her name – even though she was being compensated for it.
That compensation came in exchange “for the assignment of the Designer’s Name and the Trademarks” to the Company. She literally traded her name for compensation. This is a big decision. Huge! Not one to undertake without representation.
To really finalize the deal, JLM had Gutman sign a trademark registration acknowledgment, confirming that she had transferred all trademark rights in the name “Hayley Paige” and any derivatives thereof to JLM and that she consented to the registration of the trademark “Hayley Paige.” After that, JLM actually owned her name for use in business.
Over the next few years, Gutman created a brand around herself and her designs, posting them across social media including on Instagram under the handle @misshayleypaige. The Instagram gained over a million followers as fans followed her posts about her dog, her personal life, and especially her bridal gown designs. She became more and more well known and even appeared on the wedding show Say Yes to the Dress on TLC.
In late 2019, after extending her contract through August 2022, Gutman created a TikTok using @misshayleypaige on which she posted mostly personal content. JLM’s CEO Joe Murphy then allegedly asked her to post brand-approved content only.
Instead, she changed the password to the 1.1 million-follower @misshayleypaige Instagram account, locking out JLM’s social media manager who had been assisting with the account. Over the next few months, she removed some posts regarding JLM and her bridal line and took two influencer deals to make money posting about unrelated third-party products on the account. One was a salad dressing company and the other was whey protein. She also removed references to JLM in the account’s bio.
JLM and its CEO Joe Murphy didn’t seem to care for this too much. They requested login credentials to the @misshayleypaige accounts. According to JLM, Gutman allegedly ignored or refused these requests. In response, JLM sued Gutman on December 15, 2020 for a long list of stuff, including trademark infringement and dilution, false designation of origin, unfair competition, conversion, trespass to chattel, breach of fidelity, breach of contract, breach of fiduciary duty, and unjust enrichment.
Since then, a federal court has granted a temporary injunction giving JLM control over all of the @misshayleypaige accounts. JLM also sought the court to order the-designer-formerly-known-as-Hayley-Paige from “publicly disparaging JLM” and from “continuing [her] social media bullying campaign” against JLM. The court denied this part of the request as it would constitute “prior restraint” in violation of Gutman’s First Amendment rights.
On April 9, 2021, JLM announced that a new designer would be creating the gowns under the Hayley Paige line. That person? Not named Hayley Paige. She is Francesca Pitera, a former designer for Monique Lhuillier who had prior experience with JLM on another line.
With that injunction, Gutman has been restrained from using her own name in business and is enjoined from using the @misshayleypaige social media accounts. Now to answer the questions…
Is What They're Doing Justified?
It would appear so. It super sucks that she gave away the rights to her name in that contract. I have no clue in what universe you would negotiate a deal to assign the “exclusive right” and “exclusive world-wide right and license” to your name without a lawyer. I do not live there. I get that she was 25 at the time, but in the eyes of the law she was still grown and able to make that agreement.
When I was 25, I was just starting law school. I don’t think I would have even trusted myself to sign something like that without a lawyer. Bless her heart, as we say in Texas, but the language of that contract is mega-broad and she agreed to it.
In another provision of the contract, she agreed that any other “works” conceived of or developed by her in connection with her employment with the Company are “the sole and exclusive property of the Company.” In the court’s opinion, the term “works” includes the Instagram and TikTok accounts she created after her employment term began.
Because her contract required her to assist with advertising, the creation and use of the accounts to promote the brand fell under “employment” and were “works for hire” belonging to JLM. It appears from the language in the court order that she operated the account as an extension of her duties at JLM. She got input from JLM and its employees on what captions to use and on responding to DMs. Therefore, the court said, the social media pages were created by Hayley Paige the employee for work purposes and therefore belonged to JLM.
Gutman argued that the accounts were created for her personal use rather than business use. However, there was internal communication that indicated she mixed in the personal stuff as a marketing tactic, rather than as a form of personal expression. She stated in an email that she needed a social media director to help with the account to “maintain the balance specifically on the @misshayleypaige account . . . [because] I think it’s important that we do not dilute this Instagram with too much promotion/advertisement so that we can maintain the aesthetic and personality of the brand.”
Were the cute dog and fiancé photos really to express her joy? Or were they posted to avoid “diluting” the page with promotion/advertisements to preserve the aesthetic of the brand? The court decided it was the latter.
In its order on the temporary injunction, the court concluded that she assigned “Hayley”, “Paige”, “Hayley Paige Gutman”, “Hayley Gutman”, “Hayley Paige” and any derivative thereof to JLM. The court also concluded that the language of the contract “unambiguously encompasses” both “misshayleypaige” and “@misshayleypaige,” which are derivatives of “Hayley Paige” because they only add the word “miss” to the beginning.
So yeah, at least according to the federal court and based on the language of the contract, they are justified in claiming use of those accounts.
What is Their Claim to Her Name Anyway?
They paid for it. Not only did she receive a base pay and additional sales volume-related compensation, she is also entitled to receive a further percentage of “net revenues derived from the sale of goods” sold under her name and the other Hayley Paige trademarks for ten years following the termination of her employment with the company.
This means even after her contract ends in August 2022, she is entitled to receive payments based on future sales that use her name for another full decade.
Is that compensation worth it to give up your name? I don’t know. I wouldn’t shake on that deal, but everybody is free to make whatever deals they want to make. Maybe JLM will sell an ass load of Hayley Paige wedding dresses and Gutman will never have to work again so it will all have been worth it. On the other hand, maybe they’ll sell a bajillion dresses, but even then she may not feel like it is enough compensation to warrant losing her name.
The real rub is that, as it stands, she is pretty much bound. Absent the court undoing the contract (which I doubt will happen given the court’s language in the preliminary injunction docs) that’s the deal she made and that’s the deal she’s gotta live with. This is especially true since the contract does not include a provision permitting Gutman to terminate it on her own (“unilaterally”). She’d have to get JLM to agree to releasing her. Otherwise, her actions may be considered repeated breaches of the terms of her agreement, subjecting her to having to pay damages or to further injunctions.
The answer to all this is probably negotiating a settlement. From JLM’s perspective, it looks pretty bad to be doing this, even if they are within their rights under the law. The @misshayleypaige account currently under the control of JLM has turned its comments off, attempting to avoid online backlash. JLM also claimed in its complaint that some bridal boutiques have quit carrying the line due to the legal drama.
For what it’s worth, Gutman has counter-sued JLM, claiming (1) JLM “willfully failed to pay and/or unlawfully deducted Additional Compensation due to” her, (2) she was defamed by JLM in private and in public, and (3) JLM CEO Joe Murphy sexually harassed Gutman and others and created a hostile work environment.
If they don’t settle, then at least Gutman will get her day in court. Until then, she’s known on Instagram as @allthatglittersonthegram where she recently put out a request for suggestions on an all-new name she plans to choose for herself.
I hope that answers your question, Abby! Thanks for sending.
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This piece first appeared in Sunday Morning Hot Tea. Subscribe so you don’t miss another piece.