Fashion brands are recognized and loved by consumers for their ingenuity and innovative approach to apparel and accessories.
Loyal consumers gravitate to high-quality products produced by a fashion brand and are eager to acquire these exclusive goods. Once earned, consumers’ enthusiasm, loyalty, and trust are powerful factors that drive the profitability of the enterprise.
Many fashion brands launch with a narrow focus on the designer’s expertise, whether it be in apparel, footwear, or accessories. This expertise in design is invaluable in creating captivating products that draw consumers to a brand. However, the narrow scope of a brand’s product offering can limit the potential profitability. To increase profits, the brand must either sell more of its limited offering or expand its line to include additional complimentary goods.
Many fashion brand owners are reluctant to expand. Their expertise with respect to a par ticular class of good is the foundation of their commercial success. Expanding a fashion line to include additional products with which the designer lacks familiarity creates the risk that consumers may be disappointed by the goods produced.
To balance the risks associated with consumers’ expectations and brand expansion while maximizing enterprise profitability, fashion brands must rely on the value of their trademarks. By capitalizing on consumer recognition of a fashion brand’s trademarks, fashion brands are well-positioned to expand their line through partnership with producers that have a track record of quality. These partnerships are created through licensing arrangements.
Well-drafted licensing agreements provide fashion brands with ultimate creative control and approval over producers’ use of their trademarks. Further, through licensing, a fashion brand can shift the burdens associated with expansion to licensees.
To design an effective trademark licensing program, a potential licensor must ensure that it possesses trademark rights covering the proposed goods for expansion in all relevant jurisdictions. This protection provides potential licensees with assurance that a licensing relationship with the brand will be a profitable investment and that the licensee will not run afoul of third-party rights.
Any brand licensing agreement must be carefully drafted with provisions to ensure that the brand owner retains sufficient control over the ultimate quality of the goods to which the trademarks will be applied. These provisions are essential for the continued validity of the trademarks that are licensed and to protect the reputation of the fashion brand.
Beloved fashion brands have the ability to augment their successes by licensing their trademarks to producers of quality complimentary goods that have a proven track record of quality. To fully exploit the benefits of a licensing program, fashion brands must be highly selective in identifying new licensees and must carefully draft agreements to protect the value of their brand.
- Ensure key trademarks are registered in jurisdictions important to the brand and that cover the goods to be offered by licensees.
- Conduct trademark clearance searches for goods not covered under existing registrations and in jurisdictions where the mark is not yet registered.
- Consider whether licensees will be responsible for the costs associated with new trademark applications, domain names, and advertising.
- Identify goods complimentary to the ethos of the fashion brand.
- Carefully vet potential licensing partners to ensure they have the experience, financial strength, and proven record of quality necessary to fulfill their obligations under the agreement.
- Work with an experienced intellectual property attorney to draft and negotiate licensing agreements.
- Consider whether licensees will be responsible for distribution and sales of the licensed goods.
- Consider whether licensees will be responsible for marketing the brand or committing a portion of their sales to a general marketing fund.
- Ensure that the license agreement includes provisions that provide the brand with adequate creative control.
- Create an internal structure dedicated to managing licensing arrangements, such as quality control and approvals.