“Whether negotiating from the brand side or the influencer side, these are the issues to consider for the ‘prenup’ provisions of a collaboration agreement.”
Trust and estate attorneys regularly advise their clients to enter into prenuptial agreements to protect the valuable assets each spouse brings to the marriage as well as how to distribute community property in the event of a divorce. Brand collaborations with celebrities, influencers or other brands are much like marriages, but brand collaborations are even more unlikely to last.
Why not plan for the split, whether it be a conscious uncoupling or a Page 6 kind of divorce, with a prenup?
The high profile split between Adidas and Ye (fka Kanye West) reminds us that collaboration agreements should not only plan for the best of times, but it is worth setting up the agreement to account for a sudden and troubling end.
Brand collaborations (like marriages) bring together the goodwill of two parties to create something unique – often a co-branded product, sometimes an entirely new trademark and almost always new content. Key provisions in a collaboration agreement should set forth which party will own any and all intellectual property rights created as a result of the relationship. There can be new trademarks, new trade dress rights, new patentable designs and inventions, new material subject to copyright protections, and potentially even trade secrets. When Adidas announced it was ending its partnership with Ye for the Yeezy brand line of footwear, it included one sentence towards the bottom of its press release that shows its intellectual property attorneys thought well ahead to the end of the once highly 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 from the brand side or the influencer side, here’s a list of issues to consider for the “prenup” provisions of a collaboration agreement:
- Morals For the Influencer: Consider what type of behavior should trigger termination rights. Pre-internet, such clauses in sponsorship agreements were largely focused on criminal charges, but today, brands should consider a broader set of circumstances, depending on their partner and their negotiating power. Also consider the brand’s consumers and their level of sensitivity to certain issues. Does the brand want the power to terminate in the event of hate speech? It is probably a good idea, but who gets to decide what is hate speech and how quickly can that decision be made? What about allegations of wrongdoing without formal charges? Is that enough? What about past bad acts that come to light during the term of the contract? From the brand’s perspective, it is obviously better to be over inclusive without being vague, but it is difficult to imagine all the ways your partner could let you down. Considering the facts of recent high-profile scandals is a great place to start. istorical
- Morals for the Brand: Recently, celebrities and other influencers have been demanding that morals clauses apply to their brand partners as well. Many influencers have cultivated followings (e. their owns brands) based not only on personal preferences, but personal ideals and standards. Corporate scandals can taint not only the company, but their influencers, and thus put the authenticity of an influencer at-risk. Areas to consider include hot-button issues like the environment, diversity practices, political contributions and social issues, such as abortion.
- Ownership of Collaboration IP: These provisions are key. Ensure the collaboration agreement clearly sets forth who owns what intellectual property and contains an assignment clause in the event one party is legally deemed to be the owner outside of the contract. While an agreement to cooperate to sign additional documents clauses is nice to have, don’t necessarily count on that cooperation being easy to obtain if the breakup is nasty. As noted above, think through trademarks, trade dress, design rights, patentable inventions, copyrightable material and trade secrets. If the collaboration involves two companies or a company and individual, it might be easier to part ways after you get through the tough decisions of who owns what. While co-parenting after a divorce is often a good idea, joint ownership of intellectual property, particularly brands, might not be the best idea for most. Unlike with children, sometimes the best thing to do for truly comingled IP is for both parties to walk away at the end of the relationship. And while joint ventures have clear business advantages in certain situations, they can make all of these ownership issues much more difficult unless you have a complex plan to divest in case of a morals clause trigger. Other assets that fall into this same category, but are often forgotten, are domain names and social media handles.
- Separate Property: Collaboration agreements, like prenups, should set forth separate property. This includes the intellectual property 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 be terminated. Take a look at various press releases, like the Adidas one, and consider, from a brand perspective, what you’d like to be able to say and also if you’d like to be able to come to some agreement about what your partner can say.
- Social Content Post-Breakup: What happens to all those Instagram posts featuring your brand with the now disgraced celebrity? Do you want them to come down, or do you not care because it is one more thing to chase after and nobody looks at old TikTok posts anyways?
- Sell-Off Provisions: Depending on the circumstances, a sell-off period for co-branded products might be okay. In others, you’ll want an immediate break, like what Adidas did.
As this issues list shows, brand collaboration agreements can greatly benefit from well-drafted prenup provisions. They might take a little of the sting, reputational and monetary, out of the hit from a partner gone bad.
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