Collaborations in the fashion industry between brands are widespread. Target x Marimekko, Kenzo x H&M, and Palace x adidas Originals are just a few of the design partnerships that have taken place this year alone. These branding partnerships can be great for several reasons, such as making a company’s products more accessible to consumers that would otherwise not be able to afford them, increasing a brand’s popularity among the masses, or acting as a testing ground for new product offerings. While crowds of people line up outside stores trying to get their hands on pieces from these collections, months prior to such launches, lawyers are working behind the scenes to fine-tune the terms of these collaborations. With the number of such co-branding ventures growing each year, it is vital that all parties familiarize themselves with the business and legal aspects of such business transactions. If your brand is thinking about joining forces with another, be sure to keep in mind the following considerations:
1. How will the brand be used?
Because your company’s brand name stems from its trademark, it would be beneficial to set rules on how it will be used in support of a collaboration. In many cases, one brand will license its trademark to another, and it should be made clear that the mark is to be used only in furtherance of the collaborative relationship. The license should also define the term of the permitted use, indicate the products the mark can be placed on, and spell out the territories in which use is limited. Quality control measures should also be put in place so that you are able to keep a handle on your brand’s integrity. Such measures may include putting in place mechanisms that ensure manufacturing standards are on par with your company’s usual standards, specifying any wording or language you do not want associated with your brand, and identifying spokespersons you do not want connected to your company.
2. Address Intellectual property concerns
You should also determine how the intellectual property that is created within the collaboration is used. Who will own the copyright in any advertising copy that is used to promote the partnership? What will happen with any jointly owned intellectual property? If a new product or logo is created under the collaboration, does either party have rights to it upon the collaboration’s termination? You may find it useful to repurpose the features and concepts of a pattern or product that proved to be especially lucrative, while your co-branding partner would like to prevent such use.
3. Define the parameters of the business relationship
Is the partnership exclusive, or can the parties enter into simultaneous collaboration agreements with other companies? If your partner launches another co-branding venture at the same time of or too close to your own launch, it might be seen as competition and detrimental to your own venture’s success. What are the grounds for early termination? Plans for logistical cleanup should be contained in the contracts in the event the partnership is terminated early. If there are confidential or trade secrets that will be shared with the other party, non-disclosure agreements should be put in place. The financial matters of these transactions should also be hammered out. Will the parties split the costs associated with the co-branding arrangement? How will royalties or profits from the collaboration be allocated between the parties? Putting in place auditing procedures would also be beneficial to promote financial transparency.
In summary, while these types of relationships can be advantageous on many levels for your company, if the deals are inadequately structured, misunderstandings could arise and you could find yourself with a fashion disaster on your hands.
Disclaimer: This article is for educational purposes only. It is not legal advice, nor are there any attorney-client relationships formed by this article or any comments to this article.