Licensing represents an opportunity for a fashion brand founded on one or a small number of product lines to stretch into almost any clothing, jewelry, beauty or accessories category—and beyond. Moving into a broad range of products and services has been an especially successful strategy for luxury brands. Consider that Ralph Lauren started as a maker of men’s neckties and that Hermès began as a maker of harnesses for carriage horses. Although you sometimes hear the saying that, “No one ever got rich licensing a brand,” licensing can be a useful, even necessary tool to build brand awareness among both old and new classes of customers. When you leap into categories that have specialized production requirements, unique distribution methods or simply just high barriers to entry—consider timepieces, fragrances and eyewear—licensing is about the only sensible way to make it happen.
But what is a legal article without a warning about pitfalls? (Just as designers are paid to create and merchants are paid to awaken and satisfy customer desire, lawyers are paid to worry.)
- For the licensor, a key concern is that its licensing agent or licensees themselves may prove unmotivated or unable to bring the brand’s image to new product lines. A licensor can find itself devoting an inordinate amount of time to servicing the product development needs of its licensees—to the point that, in extreme cases, the licensor can start to feel as if it is working for its agent or licensees. On the other hand, licensees’ successes may kindle the temptation to over-license, risking dilution of the brand.
- For the licensee, pitfalls can include disapprovals of products by the licensor that result in missed shipping dates, lost markets or revenue, confusing or incomplete branding direction or support (especially after a change of control at the licensor), and all the potential dangers that come from devoting your business to enhancing the goodwill of someone else’s brand.
Any one of those concerns can cause serious—and in extreme cases terminal—problems for participants in the licensing game.
In subsequent posts, we will review the ins and outs of licensing in more detail. As with a good story, where the art is in the telling, with a good license, the art is in the drafting.
Credit: Alan Behr
In business law, whatever the business might be, commercial considerations come first. An airtight contract or brilliantly argued appeal means nothing if it showcases the lawyer’s prowess but fails to deliver on the client’s business objectives. For anyone practicing fashion law, the first rule, after knowing the law, is to know fashion and the fashion business.
Within that broad mandate, we all bring our personal points of view, as future posts on these pages will surely reveal. And here are a few of mine:
Our Fashion Practice Group represents designers, manufacturers, brands and retailers. That translates roughly into hope, expectation and reality. Design has every right to be seen as one of the applied arts; as with all the arts, practitioners must be mindful of the marketplace but not be a slave to market expectations. Overall, I see designers as optimists by nature; they are energized by hope even as they labor to fulfill our dreams.
In representing designers, we borrow methods from our art law and general business practices, working to defend originality in design with the legal tools of copyright, trade dress and design patent protections. In contracts, we help designers in their relationships with the makers of the fashions they conceive and in the protection of their names as brands.
For a manufacturer or brand owner, the designer’s work has transformed into expectation–of sales, market share and ultimately of brand enhancement. Here is where we devote much of our work to trademark protection, contracts with suppliers ranging from manufacturing sources to advertising agencies, to factoring deals, and contracts with retailers.
What is retail if not a bucket of true reality for every fashion design ever to make its way to the judge and jury of all fashions—the eye and wallet of the consumer? To make that a successful encounter, we help with store leases; the employment of sales staff and others; stop-in-shop deals; and, of such increasing importance, website development and maintenance, and social media utilization. However inspired the vision, however brilliant the execution, and however clever the marketing and display, if the customer does not buy it, what you have on the racks are rags, not riches. The job of the fashion lawyer is to do what he or she can to bring each fashion fairytale to a close in the way that all fairytales should—with a happy ending.
Credit: Alan Behr