By Elena Varese and Andrea Michelangeli
As the 2020 Spring/Summer Milan Fashion Week goes on, it is now time give you some stylish tips on how to draft your co-branding agreement!
First and foremost, co-branding is a mutual alliance between two or more brands that come together to create a new consumer perception. It combines two different brands and might imply a cross-license of IP rights (mainly trademarks and designs) as well as image rights.
Co-branding can be made by marketing a product which has been jointly devised by two or more fashion companies, with the aim to underline the high quality of the product and of the manufacturers’ capabilities (functional co-branding), or by accompanying a brand of a manufacturer with another one, so as to determine new symbolic attributes to the first brand (symbolic co-branding).
When successful, co-branding alliances enhance visibility, strengthen consumer loyalty, grow profits and help companies to expand into new markets and customers bases. Yet, if not regulated properly, co-branding agreements might lead to a potential loss of the brand value.
So, here you have out top 5 tips for drafting a fashion co-branding agreement!
1. Trial periods – It is crucial for the successful implementation of your co-branding strategy to evaluate carefully your partner’s corporate mission, in order to build a relationship with a partner that reflects similar brand values. To this end, considering a trial period in your co-branding agreement will enable the two parties to test the collaboration and devise reciprocal milestones for the completion of the product’s prototypes and branding strategies. In case something goes wrong, there will be the chance to anticipately terminate the agreement, before the co-branded products are marketed.
2. Ownership of the IP rights on the co-branded products – Establishing who owns the IP rights on the products arising from a co-branding agreement is essential for the success of a co-branding strategy. Typically, this entails the license of already existing designs and the creation of new products exclusively devised for the collaboration, the ownership of which shall be clearly provided. The same applies to the temporary websites, social media contents, domain names and hashtags created in the context of the collaboration.
3. Use of the combined trademark – Another essential provision for a proper co-branding agreement must clarify how and until when the involved trademarks will be used in the course of the collaboration. In this respect, there are several options that run from the mere juxtaposition of the two existing brands to the creation of an original brand, as well as to the use of one brand in the fonts of the other one. To this end, it is important to establish who owns and can register the newly created mark and what are the limitations for its use. Remember that joint ownership of a mark seems to be a fair solution, but a regulation of trademark use shall be carefully crafted. In order to avoid stallmates, it is important to clarify upfront what are the respective uses that need the consent of the other party.
4. Sale and advertising of the products – Devising a joint marketing strategy is also key in the context of a co-branding agreement, by clarifying how the brands will appear and through which channels (websites, social media, involvement of influencers, TV or YouTube ads, etc.). Approval rights of the marketing campaigns and the liabilities arising from the devising of such campaigns are crucial. The same applies to the responsibility for potentially defective or infringing products.
5. Post-termination rights – Time is also an important factor, as co-brandings are successful only if the concerned trademarks are used for a limited period, to avoid blurring the distinctive capacity of the respective marks. Post termination rights to cease any use of the products as well as of the relevant advertising materials shall envisage clear time limits. Further, setting-up in advance who will be in charge of the sale of the co-branded products will bring the issue of how the remaining stock of co-branded products shall be sold-out. Typically, no sale-out of co-branded products is allowed outside the collaboration period.
With these hints, your co-branding agreement is all set and the relevant products are ready for the catwalk!
If you would like to know more about co-branding agreements or fashion licensing in general, please contact elena.varese@dlapiper.com and andrea.michelangeli@dlapiper.com.