Whose Brand Is It, Anyway?
There was one piece missing: the name. If Terri Williamson was going to build a great brand, she would need a great name. She'd thought about it constantly and looked high and low for inspiration. She wanted something simple, clean, expressive -- a perfect reflection of the products she'd be selling. She jotted down all kinds of possibilities, but none seemed quite right.
Then, one Sunday, she was standing outside her church, the famous Agape Church of Religious Science, renowned for its minister, the Reverend Michael Beckwith, and its 150-person choir, including members of Madonna's backup group and other celebrity singers. As she was getting ready to go inside, she ran into a friend, who commented on how happy she looked. "You have a glow about you," the friend said.
"I thought, 'Glow,' " Williamson recalls. "What a great name!"
The word was still running through her mind when Beckwith began his sermon. "He started to talk, and I swear that every other word out of his mouth was glow. I thought, 'This is a sign from God.'"
Williamson was ready for such a sign. A management consultant for eight years, ever since she'd gotten her M.B.A. from the University of Chicago, she had spent a lot of time around start-up companies and had found the entrepreneurial spirit contagious. Now she wanted to launch her own business, something involving scented bath and body products. She'd been fooling around with them since the age of five, when she'd made bath sachets out of Kleenex, Dixie cups, and perfume and given them to her mother and sister as Christmas presents. In high school and college, she'd excelled at chemistry, and she'd been experimenting with fragrances her entire adult life, constantly mixing up body lotions and bath potions in her kitchen.
As soon as she got home from church, Williamson began searching the Web to see if anybody else had claimed the word glow as a brand name for a cosmetics or fragrance business. To her delight, she found nothing. "At that moment, it all gelled," she recalls, thinking back to February 1999. "The name just absolutely crystallized everything for me. You know, you reach a point, when you're starting a business, that there is just no way you can't do it. I mean, everything in your body, everything in your mind tells you that you must go forward because you can already envision success."
The next day, Williamson started building her new brand, Glow.
About a year and half later, Andy Hilfiger was struck by a similar epiphany. A professional rock musician, he had been working with his older brother, Tommy, at Tommy Hilfiger Corp. since 1991. Among other things, he'd been in charge of promoting the brand by dressing rock and hip-hop stars in Tommy Hilfiger clothes. By most accounts, the company's takeoff had come in March 1994 when Andy went to Snoop Doggy Dogg's hotel and gave him a rugby shirt emblazoned with the Hilfiger logo to wear on Saturday Night Live that evening. In the year that followed Snoop's appearance, the company's sales climbed by almost $100 million, and Tommy Hilfiger Corp. became the model for businesses seeking to tap Gen-Y -- the 60 million or so kids born after 1978 who make up the largest and most affluent generation in American history.
Andy Hilfiger had played a key role. As vice president of publicity for Tommy Jeans, he had dressed Aaliyah, Britney Spears, the Fugees, Kid Rock, Sheryl Crow, Kate Hudson, The Who, the Rolling Stones, the Ramones, Cheap Trick, Metallica, TLC, and Destiny's Child, among others. While Levi Strauss faltered, Tommy Hilfiger became the denim of the new generation. On the street, they called it Tommy Hill, a phrase that turned up repeatedly in hip-hop lyrics: "Stick up kids with the Tommy Hill wear the mask," sang the Fugees.
The success of the strategy got Andy Hilfiger to thinking. Instead of getting a star to promote a product, he wondered, why not have the star launch the product? The more he thought about it, the more convinced he became that the time was ripe to start a sort of clearing-house for celebrities who wanted to build their own fashion companies. He felt ready to go out on his own, and his brother promised to help. In February 2001, Hilfiger and his partner, Joe Lamastra, launched MEFI (for Music Entertainment Fashion Inc.). The first celebrity they went after was Jennifer Lopez.
Hilfiger had known Lopez's manager, Benny Medina, for many years, and he was aware that Medina and Lopez were interested in doing a clothing line. It was, of course, a natural. An explosive success in music and film with broad crossover appeal, the then-30-year-old J.Lo would soon be starring in movies like The Wedding Planner and Maid in Manhattan, and getting $12 million a picture. Her first album had gone five times platinum, and her next two debuted at No. 1 on the pop charts. At the same time, she'd become a femme fatale of fashion, setting the standard for provocative dressing at the Grammy and the Academy Awards ceremonies. Hilfiger, Medina, and Lopez started talking, and in April 2001 announced the formation of Sweetface Fashion Co., LLC, a partnership between Lopez and MEFI.
Sweetface was to be the vehicle for creating -- or licensing others to create -- a full range of fashion products that would allow Lopez's Gen-Y fans to emulate her style. There would be sportswear, eyewear, swimwear, intimate wear, just about every kind of wear. What would tie everything together would be the brand: J.Lo by Jennifer Lopez. "It has huge potential," Kal Ruttenstein, Bloomingdale's senior vice president for fashion direction, gushed to Women's Wear Daily. "Jennifer Lopez has an image that is perfect for fashion right now." Other people had the same reaction. "Our phones rang off the hook," says Hilfiger.
In March 2002, Sweetface signed a worldwide licensing agreement with the Lancaster Group, the prestige division of the giant perfume and beauty company Coty Inc., to develop and market fragrances and cosmetics under the J.Lo by Jennifer Lopez brand. The accompanying press release noted that the line would be launched in the fall of 2002 -- less than six months later. Normally, it takes 18 months to bring a new fragrance to market, but Lancaster and Sweetface both wanted it on the market in time for the holiday season, while Jennifer Lopez's star was still white-hot.
On June 27, Lancaster and Lopez threw a lavish party to launch the new fragrance at the Trump World Tower in Manhattan. Beauty magazine editors flew in from around the world to join the festivities in a private apartment on the 90th floor, overlooking the East River. Donald Trump joined Lopez and Coty CEO Bernd Beetz in greeting the 200 guests, who were treated to a sumptuous feast and each given a bottle of the new fragrance. To top it all off, a fireworks display launched from a barge on the river spelled out the name of the fragrance in glittering letters. That name was Glow.
"Are You Working With Jennifer Lopez?"
just six days earlier, oblivious to the fireworks to come, Terri Williamson had slipped into the San Miguel Room of the Albuquerque Convention Center. A breakout session on branding was already under way, and she didn't want to interrupt the speaker, a well-known expert on the subject. About 75 people were seated at round tables, listening attentively. Williamson settled into a chair in the middle of the room, pulled a pad of paper from her briefcase, and began taking notes.
As she sat there listening and scribbling, the speaker began to talk about co-branding and brand ruboff, wherein a lesser-known brand is associated with a better-known brand and gains strength as a result. "We have a great example of that right here," he said, pointing directly at Williamson. "I know about Terri Williamson's company, Glow, because I travel a lot and stay at Ritz-Carlton hotels. Ritz-Carlton offers a special bath to customers using Glow products, which get the recognition and the brand ruboff. That's a classic example of how you can build a brand through co-branding." Williamson was stunned. She had never met the speaker. She had no idea that he knew who she was. Yet here he was, holding her up as an example of the right way to build a brand.
In fact, Williamson was beginning to get a lot of recognition. It had been just three years since she and her partner, Jennifer Levy, had opened their Glow boutique on trendy West Third Street in Los Angeles -- not far from Beverly Hills -- and already the company had a national reputation and presence, not to mention more than $1 million in sales. And the partners had done it on their own. The only outside capital had come from friends and family. As for marketing, it had pretty much taken care of itself. Williamson and Levy hadn't bought any advertising, and they'd hired a publicist for all of three months. The truth was, they hadn't needed one. The beauty magazines had come looking for them, and so had 20 high-end retailers from around the country who had signed on to carry Glow products.
Both Williamson and Levy had been professional branding consultants, and they'd been meticulous, almost obsessive, about the details of creating a distinctive look and feel -- from the colors on the store walls (pale gray-blue), to the shelving (like you'd find in a restaurant kitchen), to the product packaging (clean, simple, unisex), to the typeface used on labels and signage and even in e-mail messages.
As consultants, the partners had also learned the importance of establishing a strong, intimate relationship with their target market. With that in mind, they'd used their shop as a laboratory for testing products and developing a clear sense of the consumers Glow attracted. Williamson, for one, had expected customers to be drawn mainly to the natural aspect of her products. She hadn't realized how much Glow's success would be driven by the scents she used in making them.
Although the scents had common names -- sandalwood, gardenia, grapefruit, vanilla -- they were actually her own creations, distinct from similar fragrances available elsewhere. Working in her home, she would mix and remix complex blends of essential oils and other ingredients to create fragrances with the qualities she wanted. One of those qualities was the ability to hold the initial smell -- the so-called "top note" -- on the skin for several hours, right through the "dry down" stage. To accomplish that, she favored oils with more "base notes," such as sandalwood and amber, which cause a scent to linger.
As it turned out, Williamson's scents were especially popular with celebrities, which was another surprise. Yes, she'd selected the shop's location in part because it was an area frequented by Hollywood's elite, but she'd never dreamed how many stars would find their way to her door, or how widely they would spread the Glow name. The list of celebrities who'd become devoted customers read like the lineup of Entertainment Tonight. Reese Witherspoon was a regular, as were Laura San Giacomo, Gina Gershon, Sharon Osbourne, and Kid Rock. Stars of The West Wing and Alias came in frequently, while other celebrities -- RenÃ©e Zellweger, Julia Roberts, Michael Douglas -- sent assistants. Cameron Diaz, Drew Barrymore, and Lucy Liu had a full supply of Glow products in their relaxation trailer on the set of Charlie's Angels II. Michael Bay, the director of Pearl Harbor, ordered so many Glow products that the head of his production company insisted on putting Glow in the movie's credits. Pamela Anderson was so enthralled with Glow's sandalwood scent that Williamson created a sandalwood perfume just for her -- and later added it to the Glow product line.
Aside from cachet, the celebrities brought credibility and PR. Within a year of the company's founding, Glow's name began to surface regularly in publications such as Gourmet, InStyle, and The New York Times Magazine, often in connection with a celebrity's name. Whenever such an endorsement appeared, sales would jump. As word spread, retailers began calling to ask about carrying Glow products. The first to contact Williamson -- in January 2000 -- had been Gloss.com, a beauty website. A couple of months later, Bergdorf Goodman showed up, followed by a parade of high-end specialty retailers, more than a dozen altogether, in New York, Orlando, Chicago, San Francisco, Seattle, and other cities. Williamson divided her time between developing new products and setting up these retail partnerships, while Levy focused on the Glow shop in L.A. (Levy later pulled back from Glow to "pursue other opportunities," she says.)
Then, in 2001, the Ritz-Carlton deal came along, and Williamson seized on it. By partnering with Ritz-Carlton, she realized, she could expand awareness of the Glow brand in her target market, and the cost would be nothing but the time she spent helping Ritz get the bath experience right. For a company that could not afford advertising, such partnerships were ideal mechanisms for promoting the brand. Sometimes they even resulted in free advertising. Gloss.com, for example, used Glow in its own national ads. Subsequently, Reebok featured the company and its two founders in a six-month advertising campaign that was called "Women Defy."
Yet, as important as all that was, Williamson knew that the company's long-term success depended mainly on getting Glow into major department stores. The reason had to do with the economics of bootstrapping in the cosmetics industry. Like any other fashion business, a cosmetics company has to come up with new products continually, or its customer base will go elsewhere in search of the next cool thing. That poses a particular challenge for a small, young company that is rapidly increasing sales of its current products. Most of the cash flow from those sales goes into financing current-product growth (manufacturing, adding inventory, and so on). The capital for new-product development -- from $5,000 to $20,000 per product -- has to come from somewhere else.
That's where the department stores come in. It doesn't take much more time to do a deal with a department-store buyer than to do one with a specialty shop -- but the buyer can deliver up to 130 stores, while the specialty shop has only one. Williamson understood that if she could sign up a couple of national chains, she would have the cash flow she needed to develop new products. She'd been encouraged in the spring of 2001 when she was approached by a buyer at Nordstrom. That fall, the chain ran a test of Glow products in its Columbus, Ohio, store. Despite the struggling economy and 9/11, the test went well, and Nordstrom began a national rollout, beginning with four stores in the Midwest.
Williamson was feeling good about all that as she drove back to L.A. from that conference in Albuquerque in June 2002. It was somewhere in the middle of Arizona that she first heard about Glow by J.Lo. One of her retail partners, a woman who owned an upscale apothecary in Florida, called Williamson's cell phone: "Are you working with Jennifer Lopez?" the woman asked.
"No," Williamson said, taken aback.
"She's coming out with a product called Glow."
"What are you talking about?" Williamson asked. Jennifer Lopez? Glow? It didn't make any sense.
"It's in Us Weekly," the woman said. "There's a big article about her, and it says she's coming out with a Glow perfume."
At first, Williamson wasn't that concerned. It seemed farfetched that someone could take the Glow name. Even when Williamson got home and read the article, she remained dubious: "I called the attorney who'd done my trademarking and said, 'Is this infringement? Because it sure feels like it.'"
Williamson was certain that Lopez and her people knew about her company. After all, until recently, J.Lo's manager's office had been located just a block away from the Glow shop. His employees had frequently ordered gift baskets of Glow products for clients. Come to think of it, hadn't Lopez herself received a Glow gift basket from a movie director around the time of the 2001 Academy Awards ceremony? And what about Lopez's sister, Lynda? She had featured Glow products on her cable show about beauty and fashion -- a show that just happened to be called Glow. The E! cable channel had called about using the name, and Williamson had granted permission.
Still, she assumed that since the fragrance hadn't come out yet, there was time to head off J.Lo's people. "I thought we'd write a letter, and they'd stop using the name," she says. But Glow by J.Lo was much closer to market than Williamson realized.
For all the hoopla and fireworks in the summer of 2002, there was great uncertainty about the prospects for Glow by J.Lo. Department store buyers, Women's Wear Daily was reporting, considered the fragrance "a wild card." The product was an eau de toilette -- a perfume that has been watered-down so that it can be sprayed -- aimed at 15- to 25-year-old girls. Could Jennifer Lopez really get them to lay down $38 for a small bottle of it?
Adding to the concern, the J.Lo clothing lines had not done nearly as well as expected. The first, introduced the previous October, had disappointed both customers and department-store buyers. Bloomingdale's Kal Ruttenstein, who had expressed such high hopes for the brand initially, wound up deciding not to carry it. "I was worried about quality and fit," he told The New York Times. Customers were less diplomatic. "I don't like it," 15-year-old Christina Torres -- a Puerto Rican girl from the Bronx, just like Jennifer Lopez -- told the Times, referring to a $24 T-shirt with a glittery J.Lo logo. "It looks cheap."
Moving to address the problems, Sweetface announced a major shakeup in June 2002, bringing in Denise Seegal as the new chief executive. An industry veteran with a sterling reputation, Seegal had previously been the founding president of DKNY and president of Liz Claiborne Inc., as well as an executive at Calvin Klein and Ralph Lauren. In addition, Sweetface lured a top designer, Heather Thomson, away from Sean John, the highly successful clothing company of Lopez's former boyfriend, Sean "P. Diddy" Combs.
The new team went into action immediately, changing the positioning of the brand, adding new lines of clothing, upgrading the design, generally improving quality. Although the early reviews were encouraging, it would be fall before anyone could assess how effective the changes had been. One factor, Seegal and her colleagues believed, would be the success of the fragrance. If customers really liked it, they would be more inclined to take a second look at the clothing. But no one could predict how Glow by J.Lo would do. Never before had a one-year-old fashion business, a start-up really, launched a fragrance on the scale that was contemplated for Glow.
So the Sweetface people had a lot riding on Jennifer Lopez's new juice (as it's known in the trade), and so did Coty and Lancaster. Arguably, Lancaster's Catherine Walsh had the most at stake. If Jennifer Lopez was the face of Glow, Walsh was its driving force. An 11-year veteran of EstÃ©e Lauder, she had just joined Lancaster as a senior vice president when Sweetface contacted the company in the fall of 2001. Since she was in charge of American licensing, the query had been forwarded to her office in Paris -- where she jumped on it. "I had come in with the intention of looking for new opportunities for Lancaster," she says. "Jennifer Lopez was definitely on my list. She was getting bigger and bigger every day." Which posed a challenge: If Lancaster took the customary 18 months to bring the fragrance to market, a huge opportunity could slip away. "Okay, here's this woman," Walsh remembers thinking. "She's skyrocketing. She's a dancer, a singer, an actor, and now a fashion designer. She's a movement! So how do we ride that wave and launch when it's at its peak?"
Walsh thought the new fragrance should come out no later than the following September, in time for the 2002 holiday season. To do that, Lancaster would have to start shipping by early July, which meant the fragrance would have to be in production by May. Before production could begin, a glass manufacturer had to create the tooling that would be used to make the bottles, so the design of the bottle had to be pinned down. For that matter, the advertising campaign had to be shot, which couldn't happen until the parties had agreed upon the concept, the packaging, the colors, and the name -- to say nothing of the fragrance itself. Yet as late as December 2001, the two sides had barely begun discussing a licensing agreement. And once the lawyers got involved, Walsh knew it could be months before an agreement was signed.
So, with the support of Coty CEO Bernd Beetz, she took the highly unusual -- and risky -- step of starting work on the product while still negotiating for its rights. It was a huge gamble, and whether it paid off would depend, first and foremost, on Jennifer Lopez. If she were difficult to work with, the process would be a nightmare, and they would probably miss their deadline. If she were businesslike, then they'd have a shot at coming in on time.
In late December 2001, Walsh, understandably apprehensive, showed up for her first meeting with Lopez at the Four Seasons Hotel in Milan. "I went to her hotel room, and she came out in a bathrobe," Walsh recalls. "We shook hands, and I said, 'Jennifer, you know, I'm here to talk to you about developing your fragrance.' She said, 'Oh, great! Smell me.'"
The meeting lasted for about two hours. Also in attendance were Sweetface's head of licensing, Chip Rosen, and Lopez's ever-present manager, Medina. Much of the discussion centered on the bottle. Walsh had brought drawings of some designs, none of which Lopez liked. Walsh suggested that Lopez walk around the hotel suite and pick out objects -- a light fixture, a vase -- whose shapes appealed to her. About half an hour later, Walsh was able to sit down and sketch a new shape based on Lopez's comments and observations. "That's it," Lopez said. "That's the bottle." It was, many people later noted, a shape that bore a striking resemblance to Lopez's own famous figure.
The two women also talked about the fragrance itself. Lopez, it turned out, was a bit of a "nose," as they say in the industry. She also had a clear idea of what she wanted -- she liked the smell of clean, soapy skin. Walsh asked her about other scents that appealed to her, and she mentioned vanilla and grapefruit. Walsh says she got enough out of the conversation to start the development process.
Although Walsh was pleasantly surprised that the meeting was so productive, she still felt a bit nervous when she left. Lopez clearly intended to be deeply involved in every aspect of the project. At first, Walsh wasn't sure whether that would help or hinder, but her anxiety soon dissipated. "The second meeting and the third meeting, it just got progressively better and faster," Walsh says. "That's mainly because she knows what she wants. She doesn't look back."
In the world of big-time perfume, producing a fragrance is much like coming up with an advertising campaign -- only using fragrance houses instead of advertising firms. The project leader contacts the houses, describes what he or she is looking for, and asks them to submit samples. A few samples are chosen and then refined until one emerges as the winner. In this case, Walsh told the houses that Jennifer Lopez was the celebrity behind the fragrance; that she loved the smell of freshly scrubbed skin; and that the target market would be young women from 15 to 25 -- an important consideration. To appeal to a 15-year-old, fragrances generally need a pleasing, unsophisticated, somewhat fruity or floral top note. That's followed by the "heart," which is the smell after the scent has been on the skin for 15 or 20 minutes, and then the dry down several hours later. Lopez wanted the dry down of her fragrance to smell fresh, clean, and a little soapy -- like her skin just after a shower.
In the end, it was Lopez's call. Walsh would collect the samples, narrow them down, and fly to wherever Lopez happened to be. Lopez would try the fragrances and talk about what she did or didn't like. Afterward, Walsh would fly back to Paris, where she would work with the fragrance houses to make adjustments. Then she'd report back to Lopez, who'd respond and decide.
They followed the same routine with other aspects of the project. Walsh, for example, came up with the idea of having a J.Lo pendant around the bottle -- a little something extra for her fans. Lopez thought there should be rhinestones in the letters. Done. Indeed, they were able to agree quickly on almost everything -- the scent, the bottle, the colors, the box. The only sticking point was the name. "It was one of the more difficult parts of the project," Walsh says, "because it wasn't an immediate love."
The naming discussion had begun in January 2002. Walsh had flown to Frankfurt, Germany, with a list of possible names, none of which included the word glow. Once again, says Walsh, the meeting took place in a hotel room. In addition to Lopez, Rosen, and Medina, some staff members from Jennifer Lopez Entertainment in Los Angeles were there. The group began to brainstorm, and at some point someone threw out the name Glow. Someone else suggested Glow by J.Lo. Then several people said, "Oh, that's perfect."
But it was only one of many names that came out of the session, several of which were also appealing. The debate continued as the trademark searches were being done. "We went back and forth on the name a lot," says Walsh. Eventually, the lawyers reported back that Glow could be used but that it was highly unlikely that Lopez could ever trademark the name or keep others from using it. According to Walsh, the lawyers strongly recommended that Glow be attached to J.Lo, because Glow by J.Lo -- they said -- was a protectable trademark.
So the issue was settled just in time to shoot the advertising campaign in the third week of February. Meanwhile, the juice was being mixed and shipped to Lancaster's manufacturing facility in Monaco. Point-of-purchase materials such as posters and shopping bags were being produced. Boxes were being turned out by the thousands, each covered with a special coating meant to be "sensual like her skin," as the ads later said. By May, filled bottles were rolling off the production line, with the J.Lo pendant applied to each by hand.
Throughout the spring and into the summer, the operation gained momentum, rolling toward its September deadline. It was a mammoth and expensive enterprise. Before Lancaster had a signed contract, it had invested hundreds of thousands of dollars in Glow by J.Lo -- most of it spent on shooting the ads and creating the tooling to make the bottles. By the time the fragrance was introduced to the press on June 27, total expenditures on advertising and development alone came to more than $2 million. The first shipments to stores went out the following day. And then, in early July, the letter from Terri Williamson's lawyer arrived -- and caused considerable alarm.
"Gee, Did They Do Their Homework?"
Williamson was still thinking the matter could be resolved quickly and amicably when her trademark lawyer wrote to Lopez's trademark lawyer on July 3, asserting that there was already a Glow in existence and that its owner didn't want someone else using the name. On July 31, Williamson received a reply in the form of a stack of material documenting the large number of trademarked beauty products that had the word glow in their names -- Amber Glow, Ultra Glow, Fresh Glow, and so on. The message was clear: Lopez and Coty had every intention of proceeding with Glow by J.Lo.
And yet, even then, Williamson didn't fully comprehend just how big a problem she was facing. "I was in denial," she says. "A lot depended on how prominently they were planning to use the word glow." She soon found out. On August 2, her retail partner in Florida sent her another magazine article on Lopez's new fragrance, including photographs from the upcoming advertising campaign. What stood out, in large orange letters, was one word: Glow. Even the typeface was similar. Williamson stared at the photo, and her heart sank. Suddenly it all hit her. What store would carry her Glow products if it also had Glow by J.Lo? The confusion would hurt sales of both and create all kinds of customer-service headaches. Given the number of retailers that were likely to carry Lopez's perfume, Williamson's Glow could well be shut out of a large portion of the market.
On August 7, 2002, Glow Industries -- the company's formal name -- filed suit against Jennifer Lopez, Coty, and various unnamed parties, alleging trademark infringement, trademark dilution, and unfair competition. Within hours, the news spread through the industry, making a lot of people nervous. "I was definitely concerned," says Hal Kahn, chairman of Macy's East -- which is, among department stores, the largest fragrance retailer in the country. "My question was, 'Gee, did they do their homework?' I didn't care about the name. If they changed the name to Chopped Liver, I couldn't care less, as long as it's Chopped Liver by J.Lo. I was just worried that they would be blocked in their marketing campaign for Christmas. They might have to kill all the ads."
In Paris, Catherine Walsh had even bigger concerns. Not only had huge amounts of advertising been purchased, but tons of product were being shipped to stores in the United States and more than 15 other countries. Enough articles had already appeared in magazines and newspapers to fill three enormous binders in her office. Changing the name at that point would cost a fortune, if it could be done at all.
In any event, Walsh's lawyers assured her it wasn't necessary. There were simply too many products out there, they insisted, with the word glow in their names. But the lawyers did think it would be prudent to make sure the complete phrase Glow by J.Lo, rather than Glow alone, appeared in all the advertising -- which was a bit of a problem. Ads had already been produced and placed that used just the word Glow. Walsh says those ads were pulled, although Williamson insists they continued to appear throughout the fall.
While the legal battle lines were being drawn, shipments of Glow by J.Lo were arriving in store warehouses. The first bottles were due to go on sale in Macy's at the end of August, with the national rollout beginning on September 1. As the launch approached, Walsh felt excitement laced with anxiety. "As much as we all believed in the product," she says, "as much as we thought everything was right -- the juice, the box, the price point, the ads -- there's always that anticipation."
It didn't last long. Within a week, Lancaster knew that Glow by J.Lo was going to be a phenomenal success. The biggest challenge would be keeping the bottles in stock. "I think we were all surprised," says Macy's East chairman Hal Kahn. "From the time it came in, it was by far our leading performer, which is a tremendous achievement -- to go from new to No. 1."
It was a similar story all over the country. Midway through the Christmas season, Women's Wear Daily reported that "on the top-five list of nearly every major department store retailer is Lancaster's J.Lo scent, called Glow." Outside the United States, sales were just as strong. In Germany, Walsh and her people knew within three weeks that Glow by J.Lo was a hit. Test markets in Spain and Italy did so well that Lancaster began rolling out the product there. In its first month, the fragrance did an astonishing $17.9 million in sales, which led Lancaster to forecast $47 million for the year. Even that prediction would prove too timid. Sales would reach that level in less than six months.
The good news for Catherine Walsh and Jennifer Lopez was, of course, bad news for Terri Williamson. Desperate to limit the damage, she turned to federal court. On September 24, her attorney filed a motion for a preliminary injunction, asserting that Glow -- her Glow -- was suffering irreparable harm and requesting that a judge intervene as soon as possible to stop Jennifer Lopez and Coty from using the name Glow in any way, shape, or form.
The two Glows would meet in court.
"They Are Putting My Client Out of Business"
Last November 7, Terri Williamson walked into federal district court in Los Angeles fearing, above all, that she'd be told she had no case and sent home. She was accompanied by her two attorneys. One was Arthur Aaronson, a partner in a small firm in Encino, Calif., who had handled all of Glow's legal work from its inception. The other, O. Yale Lewis, was an intellectual-property litigator from Seattle whom Williamson had contacted after realizing that the case was likely to go to trial. Lewis had agreed to come in for the hearing, he says, to "buttress her team." Team J.Lo, meanwhile, was represented only by its lawyers, led by Lisa Pearson, a New York City-based trademark litigator with Fross, Zelnick, Lehrman & Zissu.
Both sides had an enormous amount riding on the hearing. Williamson believed her company's long-term viability hung in the balance. There had been such an avalanche of advertising for Glow by J.Lo since late August that she felt completely overwhelmed. Every time she turned on the television, it seemed, she saw a commercial for the fragrance, often with the tag line "It's the Glow." The ultimate indignity came in October, when the November issue of Elle appeared with an article about things that could be found in the purses of celebrities. Pamela Anderson was quoted as saying she always carried Glow by J.Lo. Williamson saw the item and immediately guessed what had happened. She contacted Anderson's assistant, who confirmed that the article had credited the wrong Glow. Even Williamson's celebrity endorsements were being hijacked by J.Lo!
But the most unsettling developments were on the department-store front. After the launch of Glow by J.Lo, Nordstrom halted its rollout of Williamson's products to other stores. In addition, two department-store chains that had been interested in getting her line for the Christmas season suddenly decided to think about it. "We hope you'll understand," the buyers said.
On the other side, Lopez and Coty knew that, if they lost the injunction battle, Glow by J.Lo would probably have to be pulled off the market at the height of the holiday season and at great expense. Coty had already invested more than $29.5 million in the manufacture, advertising, and promotion of Glow by J.Lo in the United States. More than $5.2 million had been spent on advertising alone. Much of that would be wasted if the motion were granted and production shut down while the packaging was changed -- which could take four to six months. Coty estimated it would lose $13 million in U.S. sales during that time.
Such an outcome was by no means inconceivable. In 1987, a strikingly similar case had gone to court in New York. The dispute arose when the Elizabeth Taylor Cosmetics Company came out with a fragrance called Elizabeth Taylor's Passion. At the time, renowned Parisian perfumer Annick Goutal was selling her own fragrance called Passion. Goutal sued and won an injunction. But could Williamson pull off the same trick? To do so, she would have to convince the judge of three things: first, that she had a protectable trademark; second, that consumers might confuse the brands; and third, that Glow Industries would suffer irreparable harm as a result.
Glow should have had an easy time proving protectability -- all you need is a registered trademark. If you have one, you are presumed to have the exclusive right to use it commercially. This path was not open to Williamson, however, because the Patent and Trademark Office had not yet finished dealing with her trademark application. Although the company had submitted it way back in April 1999, the registration process had dragged on far longer than usual. At the end of 1999, the Patent Office's examining attorney had raised questions about possible conflicts with three existing trademarks. Aaronson had provided answers shortly thereafter, but then nothing happened for two and a half years. (He says the process took so long because the Patent Office lost the Glow file at one point and then kept switching examiners.) Not until November 5, 2002 -- two days before the hearing -- did the office clear the application to go to the final phase of the process: publishing the trademark to see if anybody wished to challenge it. As a result, the Glow trademark was still not registered.
The J.Lo team moved quickly to exploit this vulnerability. Just two days after Glow submitted its motion for a preliminary injunction, Jennifer Lopez paid roughly $40,000 to buy one of the trademarks that the Patent Office's attorney had raised questions about. The mark, Glow Kit, had been registered by a dermatologist in the Chicago suburbs who put together packages containing sunscreen, cleansing lotions, alpha-hydroxy acid products, and the like. His two dermatology centers then sold these Glow Kits to treat minor skin disorders. Under the terms of his deal with Lopez, the dermatologist would be allowed to license the trademark and continue using it as he had before, but Lopez would own the Glow Kit mark and all the rights that came with it. The deal meant Lopez could turn around and sue Glow for -- guess what -- patent infringement.
And that's precisely what she did on October 8. Responding to the motion for a preliminary injunction, Lopez and Coty made a counterclaim, in effect accusing Williamson of stealing the Glow trademark from them! Williamson saw the move as a blatant attempt to intimidate her into dropping her suit, which it may have been, but it also had a strategic purpose. Lopez's attorneys could now argue that the Glow Kit mark was the senior one and that therefore Glow's mark was not protected.
That was, however, just one piece of evidence the judge would use in deciding whether to grant the motion for a preliminary injunction. The other evidence was contained in the filings both sides had submitted prior to the hearing. As the plaintiff, Glow Industries got the opening shot and could include as much evidence as it liked in its motion papers. The defendants -- Jennifer Lopez and Coty -- would offer their evidence when they filed their response. Glow could then respond to the response, thus getting two bites of the apple while the defense would get only one. The judge would take all the information, weigh it, and issue a tentative order. At the hearing, the two sides would argue their respective cases. The judge would think it over and issue a final order.
That's how it was supposed to work, at any rate. Within those guidelines, there was room for maneuvering, and Arthur Aaronson used a tactic that he no doubt believed would give his client an advantage. In making his motion for a preliminary injunction, he chose to include little information about Glow and little evidence to support Glow's allegations. In effect, he forced the other side to lay out its case first. It's an unusual tactic that can work, but it's fraught with risk. Among other things, it can antagonize the judge.
Williamson says she was unaware of that risk when she walked into the courtroom on November 7. Soon after she and her lawyers arrived, they were handed copies of the judge's 45-page tentative order. Sitting in the back of the room, Williamson tried to absorb as much of it as possible while she waited for her case to be called.
At first glance, the order was discouraging. Judge Margaret Morrow said she was planning to deny Glow's motion for a preliminary injunction. But on a closer reading, Williamson was able to take some comfort in the details. The judge found that Glow probably did have a protectable trademark, if not a terribly strong one, and she felt the two sides came out even on the confusion issue, with some points favoring Glow and others favoring the defense. On the points that Glow lost, moreover, Judge Morrow clearly didn't have all of the evidence. In any event, Williamson could put aside her main fear: the case wasn't being thrown out. Then the hearing began, and everything went to pieces.
Almost at once, Aaronson got into an argument with the judge. In her tentative order, Aaronson asserted, the judge seemed to agree with Glow on the likelihood of confusion. Judge Morrow said Aaronson was misreading the order. She didn't believe the two Glow marks were all that similar.
"These marks are the same," Aaronson insisted. "The primary term that is used in the defendant's product is Glow.... Why did they need to take my client's goodwill?...They are going to put my client out of business."
"And where is the evidence of that, Mr. Aaronson?" the judge asked pointedly.
"We would like an opportunity to present it," he said.
"You've had lots of opportunity to present lots of evidence," the judge replied. "Why isn't it already in the record?"
Aaronson argued that some of the evidence was in the record, but the judge was clearly unconvinced. After Aaronson sat down, J.Lo's attorney Lisa Pearson took the floor and zeroed in on the same issue. The record, she contended, contained little evidence to support Glow's claims and little evidence that Glow had a market presence beyond Los Angeles. Just because Williamson was using the name Glow on some natural bath and body products she sold in her little shop in West Hollywood, Pearson argued, she shouldn't be allowed to block Lopez and Coty from using the name Glow by J.Lo everywhere else in the country.
Williamson watched and listened, barely able to contain herself: "They depicted me as a little mom-and-pop store in West Hollywood while they're holding up a product of mine they'd bought in New York. I thought, 'How can they say that if they know it's not true?'"
Toward the end of the hearing, Aaronson requested permission for Yale Lewis to speak, and the judge agreed. Lewis acknowledged that the record contained little information about the damage Williamson would suffer if the preliminary injunction were not granted. But given the stakes that were involved -- specifically the possibility that her business might not survive -- he asked the judge to defer a final decision until he and Aaronson had a chance to present evidence of irreparable harm.
The judge asked the defense to respond. "Well, they put in a lot of new evidence in their reply papers, your honor," Pearson said. "And I have not vented about how sandbagged I felt about that ... I must say I object to giving them a third bite at the apple."
Judge Morrow said she'd consider the request, but added, "I must agree with Ms. Pearson that the initial motion papers were about as devoid of facts as is possible.... And that is not good practice." The judge then said they'd reconvene on December 16 to schedule a trial date. At that time, she would either allow Glow to present additional evidence or simply issue her final decision on the preliminary injunction.
On December 16, when Williamson, Aaronson, and Lewis showed up for the scheduling conference, the final order was waiting for them. On the basis of the evidence in the record, Judge Morrow denied Glow Industries' motion for a preliminary injunction. In the conference itself, however, she strongly urged both sides to reach a settlement. Addressing Williamson and her attorneys, she said that "one of the major problems [you will have] is going to be proving that you have a protectable trademark in any kind of significant geographic area. And if that is the case, then you never get to likelihood of confusion."
But the judge also had a warning for Lopez and Coty. On the confusion issue, she told Lisa Pearson, it had been a very close call, even though a lot of the evidence wasn't in the record. When that evidence was introduced at trial, "It could easily swing the other way. And the more money Coty and Ms. Lopez put into this product over time, the harder any permanent injunction will fall" if they lose.
Morrow then proceeded to set a trial date -- in the middle of the next holiday shopping season.
"The Damage Has Been Done"
In the wake of Judge Morrow's decision, Terri Williamson's life has changed drastically. If running Glow Industries used to be two full-time jobs, she says she's now added a third: legal assistant. From 6 a.m. to 1 p.m., she works on Glow business. From 1 p.m. to 8 p.m., she works on her case. She does it seven days a week. "If you'd come by a week ago," she says, showing a visitor the living room and dining room of her Santa Monica home, "you'd have seen this whole area covered with documents that needed to be tagged and stamped. We had to get them ready as part of the discovery process."
Following the November hearing, she asked Yale Lewis to take over as her lead attorney. In February, she parted company with her original attorney, Arthur Aaronson. "I've learned a lot of lessons," she says, "and this is one of them. From the beginning, from the time you file for a trademark, you need to be represented by a firm capable of handling any problems that might arise. It's worth whatever it costs. And if you do run into a problem, make sure you bring in an experienced litigator right away."
"Terri doesn't understand that I have a lot of litigation experience," says Aaronson. "I've been practicing law for 28 years, and I've litigated hundreds of cases. But getting a preliminary injunction is a tough hill to climb. I think that the judge was wrong to deny it. I also think Terri will win her case in the end."
Win or lose, Williamson says she has learned things that will make her a better businessperson in the future. She believes, for example, that working on the case has greatly enhanced her ability to think strategically, to look four or five moves ahead before making a decision. And yet, she can't deny that the J.Lo episode has done nothing good for her business. Her old customers, including the celebrities, have remained loyal, showing their support by increasing their purchases, but overall, holiday sales were down from the previous year. Nordstrom still hasn't decided whether to carry Glow in any more of its stores, and Williamson still hasn't heard anything from the other department stores she'd been talking to before Glow by J.Lo came along. Up to then, Glow had been growing even faster than she'd hoped back in 1999, when she'd dreamed of building a $30 million business within 10 years. Now, her annual sales seem stuck at less than $2 million, and although she has recently come up with a new scent, fig, she says she has had to cut back on the time she spends developing products and working with retail partners. There are, after all, only so many hours in a day.
But that's a sacrifice Williamson believes she has to make. "I went through a period of thinking, 'I'm not built for this, I don't want to do this,'" she says. "But then I realized that walking away from the lawsuit would be the worst disservice I could do to my company. I have to give as much to my attorney as he needs to win the case. It's a test of whether I'm willing to stand up for my brand."
Her time is not the only cost of pursuing the case. "There's also the stress associated with this sort of litigation, which is enormous," notes Yale Lewis. "She's doing admirably so far, from what I can see." In addition, Williamson has out-of-pocket litigation costs she has to cover -- for copying discovery documents, transcribing depositions, travel, hiring experts, and so on. Those expenses could run into tens of thousands of dollars before the case is decided. And, of course, there are the legal fees. "For something like this, they could easily exceed $1 million," Lewis says. Both he and Williamson decline to discuss their financial arrangement, but it is common in such situations for a lawyer to be paid at least in part on a contingency basis.
The corollary, of course, is that neither the plaintiff nor the attorney are likely to go forward unless they believe they have a good shot at winning. Lewis says he does, in fact, consider the case to be strong. If the final verdict is that Lopez, Coty, and Sweetface have infringed on Williamson's trademark, they would have to pay damages to Glow Industries. Included in those damages could be the profit Glow Industries has lost, plus all or most of the defendant's profit on Glow by J.Lo. In addition, there might be punitive damages -- possibly triple damages -- as well as reimbursement of litigation costs and legal fees.
While Williamson could walk away with a bundle of money, she has insisted from the very beginning that the case isn't about money -- that all she really wants is to get back her company's name so that she can finish building the brand she started in February 1999. But that may no longer be realistic. "Right after Christmas, when I had time to sit down and think, I really saw how difficult it would be to keep the name Glow under any circumstances," she says. "They could stop using it today, and Glow would still be linked with J.Lo. We may never get into some stores for that reason alone. Will Macy's East take our products if it's still carrying J.Lo's fragrance under another name? The problem is that the damage has been done. Even if I win the case, I might have to change the name."
But then, wouldn't she be better off making the change sooner rather than later? If Lopez, Coty, and Sweetface were to offer a settlement, shouldn't she take the money and move on? "I really haven't even considered the possibility," she says, "because it hasn't been presented to me." Shouldn't she think about going forward anyway? Isn't she going to look back after the trial, when she starts the long, hard process of rebranding, and think, "Why didn't I do this sooner?"
Williamson demurs. "Rebranding is a very expensive process," she says. "It's not just a matter of changing a name. I regard it as a whole other job. Yes, I've thought about how I might do it, but I can't even consider starting on it right now. I don't have the resources in terms of time or money."
The House of Jennifer Lopez
By contrast, the denial of the motion lifted a huge burden from the shoulders of all the people associated with Glow by J.Lo and allowed them to enjoy what they'd accomplished. In early January 2003, industry observers were estimating that sales of the fragrance had totaled $44 million in its first four months. (Sweetface and Lancaster say that estimate was low.) Whatever the actual number, Coty CEO Bernd Beetz told Women's Wear Daily that he knew of only four other fragrances in history that had rung up sales of more than $40 million in their first four months: "We think we're well on the way to $100 million" in the first year.
Catherine Walsh, for her part, was already moving on. From the beginning, her vision had been to build what she called "the House of Jennifer Lopez," a full line of cosmetics and fragrances that reflected her many audiences and the many facets of her personality. One audience was the Gen-Y, urban-oriented, hip-hop-loving 15- to-21-year-old girls who identified with "Jenny from the Block." Glow by J.Lo was directed squarely at them. But there was also the Jennifer Lopez in the Versace peek-a-boo dress at the Grammy Awards, and the stunning white Valentino bridal gown at her most recent wedding -- to Cris Judd, the guy she was with before Ben Affleck. That Jennifer Lopez appealed to a more sophisticated and mature audience, Walsh believed, and there should be a fragrance for them as well.
Meanwhile, back at Sweetface, Glow by J.Lo had had exactly the effect Denise Seegal and Andy Hilfiger had hoped for. Sales of the J.Lo by Jennifer Lopez fashion lines had surged in the fall, driven by the success of the fragrance. "No question, it spilled over to the apparel, which had no marketing," says Kahn of Macy's East. "That's the interesting thing. No marketing. There wasn't one ad. [Lopez] didn't introduce it. She didn't model for it. She didn't come to make a personal appearance. The J.Lo [clothing] line just lived off the brand recognition of the fragrance and of Jennifer's name, and it was very, very strong." It was, in fact, one of Macy's East's best performers in its category through the fourth quarter of 2002.
On a cold February morning at the Sweetface offices in New York City, no one was looking back. In the lobby, eight large television screens on one wall showed all J.Lo, all the time. In one room off the lobby, the women in merchandising were checking the back-to-school clothing that would be shipped in June, while in another room the members of Heather Thomson's design team were hard at work on ideas for the next holiday season.
As Andy Hilfiger showed a visitor around, he talked about how the company had grown and changed in its first 18 months. Beyond Glow by J.Lo and the main clothing lines, there were other licensed products -- for example, preteen apparel, swimwear, and sunglasses. The company was also expanding the international distribution of its clothing, and talks were under way to extend the brand further with licenses for accessories and footwear.
Hilfiger and Seegal are reluctant to give out numbers on Sweetface's performance, but Seegal says the company exceeded its projection of $130 million in retail sales in 2002. That figure includes sales of both the main apparel lines, which Sweetface produces itself, and the licensed products like the fragrance and the swimwear, for which it receives a royalty of between 5% and 10% of sales. Like most apparel start-ups, Sweetface lost money on its clothing lines in its first full calendar year, and the royalties weren't enough to produce a profit overall, but Seegal expects the company to be profitable in 2003, thanks in no small measure to Glow by J.Lo.
In the long term, Seegal's challenge is to build a company that will continue to thrive after Jennifer Lopez's celebrity fades. In the short run, Seegal says she has focused on expanding retail distribution, particularly in department stores that have underestimated the appeal and potential of the brand. She also has to keep her eye on a parade of other celebrities -- including Gwen Stefani, Eminem, and Eve -- who, inspired by J.Lo, are launching their own fashion lines.
And what about the trademark suit? Does she spend much time dealing with that? "No," she says. "It's being handled through our attorneys. I don't spend any time on it at all."
The trial is set to begin on October 21.
Bo Burlingham is an Inc. editor-at-large.[hr][/hr]
Business by J.Lo
While Jennifer Lopez was not available to be interviewed for this story, she did engage in an e-mail discussion with editor-at-large Bo Burlingham. Some excerpts:
Given all the things you have on your plate, why did you decide to go into business?
I love fashion. I love clothes. Designing clothes has always been a dream of mine.
What do you like about business?
I have a creative passion for all that I do. The satisfaction I get back from giving something my all and feeling good about the effort really keeps it all alive for me.
Where did you get the ability and confidence to pick such a successful fragrance?
Giggle, right? I had a very clear concept and direction for our first juice -- it was all about being fresh, sexy, and clean. We talked about the scents I like: soap, vanilla, white flowers, grapefruit, and we put together the right combination! Through detailed descriptions of my favorite scents, we were able to come up with Glow by J.Lo very quickly.
What did you know about the other Glow before you chose the name Glow by J.Lo?
What has been the biggest mistake you've made in business?
I try not to get too crazy about mistakes in business or lapses in judgment. No matter what the mistake, there is always a lesson to be learned behind it. I take the good, leave the bad, and move on.