What brands can learn from the Kanye West/Adidas IP breakup

“Whether it’s negotiating on the brand side or the influencer side, those are the issues to consider for the ‘prenup’ provisions of a collaboration agreement.”

Writing your prenuptial agreement, heart shaped card on weathered wood background with Prenup text on each piece of card

Trust and estate lawyers routinely advise their clients about entering into prenuptial agreements to protect the valuable assets each spouse brings to the marriage as well as how to divide community assets in the event of a divorce. Brand collaborations with celebrities, influencers, or other brands are a lot like marriages, but brand collaborations are even less likely to last.

Why not plan the separation, be it a conscious separation or some sort of divorce, with a prenuptial agreement?

The highly publicized split between Adidas and Ye (fka Kanye West) reminds us that collaboration agreements should not only provide for the best of times, but that it is worth putting the agreement in place to take into account a sudden and disturbing end.

Brand collaborations (like weddings) bring together the goodwill of two parties to create something unique – often a co-branded product, sometimes an entirely new brand, and almost always new content. The key provisions of a collaboration agreement should state which party will own all intellectual property rights created as a result of the relationship. There may be new trademarks, new trade dress rights, new patentable designs and inventions, new material subject to copyright protection, and potentially even trade secrets. When Adidas announced it was ending its partnership with Ye for the Yeezy-branded line of shoes, it included a phrase near the bottom of its press release that shows its intellectual property lawyers have given serious thought to the end of a once very successful partnership: “Adidas is the sole owner of all design rights to existing products as well as previous and new colorways under the partnership.

Whether negotiating on the brand side or the influencer side, here is a list of issues to consider for the “prenuptial” provisions of a collaboration agreement:

  • The morality of the influencer: Consider what type of behavior should trigger termination rights. Prior to the Internet, such clauses in sponsorship deals were largely focused on criminal charges, but today brands must consider a broader set of circumstances, depending on their partner and their bargaining power. Also take into account the brand’s consumers and their level of sensitivity to certain issues. Does the brand want to have the power to terminate in case of hate speech? It’s probably a good idea, but who decides what is hate speech and how soon can that decision be made? What about allegations of wrongdoing without formal charges? Is it sufficient? What about past bad deeds revealed during the term of the contract? From a brand perspective, it’s obviously best to be overly inclusive without being vague, but it’s hard to imagine all the ways your partner could let you down. Considering the facts of recent high-profile scandals is a good place to start. historical
  • Moral of the brand: Recently, celebrities and other influencers have demanded that moral clauses also apply to their brand partners. Many influencers have cultivated followers (e. their own brands) based not only on personal preferences, but also on personal ideals and standards. Corporate scandals can taint not only the company, but also their influencers, and thus jeopardize the authenticity of an influencer. Areas to consider include burning issues such as the environment, diversity practices, political contributions, and social issues, such as abortion.
  • Ownership of Collaborative Intellectual Property: These provisions are essential. Make sure the collaboration agreement clearly states who owns what intellectual property and contains an assignment clause in the event that one party is legally deemed to be the owner outside of the contract. While a cooperative agreement to sign additional paperwork clauses is nice to have, don’t necessarily count on that easy-to-obtain cooperation if the breakup is unpleasant. As noted above, consider trademarks, trade dress, design rights, patentable inventions, copyrighted material, and trade secrets. If the collaboration involves two businesses or a business and an individual, it may be easier to part ways once you’ve made the tough decisions about who owns what. While co-parenting after a divorce is often a good idea, joint ownership of intellectual property, especially trademarks, may not be the best idea for most. Unlike kids, sometimes the best thing for truly mixed IP is for both parties to walk away when the relationship ends. And while joint ventures have obvious business advantages in some situations, they can make all of those ownership issues that much more difficult, unless you have a complex disposal plan should a morality clause be triggered. Other assets that fall into this same category, but are often overlooked, are domain names and social media IDs.
  • Separate ownership: Collaborative agreements, like marriage contracts, must define separate assets. This includes intellectual property that each party entered the relationship with and wants to walk away with free and clear after the breakup, and even what they plan to use separately during the relationship.
  • Communication after the breakup: Who can say what after a fallout is almost as important as when the relationship can end. Take a look at various press releases, like this one from Adidas, and consider, from a brand perspective, what you would like to be able to say and also if you would like to be able to agree on what your partner can say .
  • Social Content After Breakup: What happens to all those Instagram posts featuring your brand with the now-disgraced celebrity? Do you want them to go down, or do you care because it’s one more thing to chase and no one is looking at old TikTok posts anyway?
  • Redemption provisions: Depending on the circumstances, a sales period for co-branded products may be appropriate. In others, you’ll want an immediate break, like what Adidas did.

As this list of issues shows, brand collaboration agreements can greatly benefit from well-drafted prenup clauses. They might take a bit of a sting, reputational and monetary, from a partner gone bad.

Image Source: Depot Photos
Image ID: 161221670
Author: Karen

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