License Agreements: Aim for Fairness — But Words Have Meaning

licensing

It can be said that a licensing arrangement is inherently symbiotic in nature, with the good faith efforts and cooperation of both the licensor and the licensee being necessary for success. The licensor provides its trademark, perhaps some degree of design expertise (particularly in the fashion field), and perhaps also brand customer relations and certain advertising and promotional assistance; and the licensee contributes its expertise in the particular industry covered by the license and possibly its customer relations, its organizational structure and capital resources. The resulting relationship, in a very practical sense, is that of a joint venture or a partnership. Although on one level the negotiation and drafting of a license agreement must be approached as an adversarial process, both parties also should recognize that they will be more likely to view their arrangement ultimately as a success if it strikes a balance, on the one hand, between the licensor’s legitimate concerns for the maintenance of its image and quality standards, for the protection of its trademark and for fair compensation for the rights it has granted and, on the other hand, the licensee’s legitimate desire to exploit the rights granted to it in an economically advantageous manner consistent with industry norms in the applicable market segments and without fear of termination if it is performing in good faith. Ideally, therefore, the parties should approach the negotiation and documentation of the license agreement from the perspective that each of them is looking to make the venture a success for both of them and should recognize and attempt to satisfy the other’s needs.

That said, no matter how much the parties aim for “fairness,” there almost surely will be provisions that a licensor perceives as necessary to protect important interests which a licensee considers unfair, unduly burdensome or overreaching. Before proceeding with an agreement, a licensee must remember that words have meaning and a licensor can seek to force the licensee to conform in its performance to what the agreement says. A licensee cannot rely on its business sense (or gut) to assume that a licensor would “never do that,” even if the licensor assures it that the licensor never has done so before. There also can be no great comfort in the thought that the provision might not be enforceable, since the time and cost involved in adjudicating the issue can be enormous, even if the licensee succeeds. If the agreement requires certain conduct or prohibits certain acts, a licensee should assume that those words control and that, if it ignores them and its licensor’s demands for conformance, it does so at its peril.

Credit:  Jonathan R. Tillem


Our Fashion Law Team

ALAN BEHR, Chairman, Fashion Law Practice
Alan is a member in the Corporate & Business Law Department and Intellectual Property Practice, and chairs the Fashion Law Practice.  Alan concentrates his practice on international intellectual property, fashion and entertainment law.  He provides ongoing anti-counterfeiting, trademark enforcement and other intellectual property protection activities for leading European and American luxury and general-market brands. He also represents major retailers in the implementation of strategic initiatives, including private label programs and development of new lines of business, and represents established and up-and-coming businesses and individuals in the fields of fashion, consumer products, electronic entertainment, emerging technologies, and publishing.

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MONTE ENGLER
Monte has been engaged in the practice of corporate and business law for over 35 years.  He has developed a significant clientele in a number of businesses, including the representation of well-known personalities in the fashion, home furnishings, design and entertainment industries. Monte’s extensive experience includes the negotiation and completion of a multitude of transactions, including mergers, acquisitions, and private and public financing. He counsels clients at all levels of their representative business operations, and provides dispute resolution assistance among shareholders of privately-held corporations.

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MICHAEL S. FISCHMAN
Michael’s (“Mike”) practice focuses on civil litigation and arbitration.  He represents both plaintiffs and defendants in a wide range of complex commercial matters from the pre-complaint stage through trial and appeal. Mike’s clients have included well known fashion and home furnishing designers and manufacturers, diamond businesses and trade organizations, women’s wear licensing agents. His representations have involved disputes over licensing, copyrights, trademarks, insurance, shareholder, buy-sell and employment agreements and chargeback disputes with national retailers.

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BARRY H. FISHKIN
Barry is a member of the Corporate, Technology and Intellectual Property Departments. Barry’s principal areas of concentration are (1) corporate law, including mergers and acquisitions, particularly in the fashion industry, purchase and distribution arrangements, commercial finance, joint ventures, IP licensing and corporate governance; (2) technology law, including outsourcing agreements, software development and licensing agreements, website development and service agreements, information technology licensing agreements, content acquisition and sharing agreements and master service agreements for technology development services; and (3) trademark law, including trademark clearance and registration, opposition and cancellation proceedings and the maintenance of trademarks domestically and internationally. Barry chairs our Firm’s trademark prosecution practice.

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HELENE M. FREEMAN
Helene’s practice is focused on all facets of entertainment, publishing, the arts and fashion. As a litigator with more than 30 years experience, Helene has been trial and appellate counsel in precedent setting cases under both copyright and trademark law throughout the United States. She provides assistance in securing registration of copyrights and trademarks in the United States and developing plans for the worldwide exploitation and protection of creative property. She also regularly advises on international transactions involving the acquisition of rights in entertainment and media properties.

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DONALD L. KREINDLER
Donald (“Don”) specializes in the resolution of business disputes – by negotiation where possible, and otherwise through trial in arbitration or in court. Don has tried cases in court and in arbitration which cover virtually the entire spectrum of business disputes, including disputes involving sales contracts, acquisition agreements, license agreements, brokerage agreements, partnership and shareholders’ agreements and employment contracts, copyright infringement claims (representing both copyrights holders and claimed infringers).

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MARC A. LANDIS
Marc, Co-Chair of the Real Estate Department and Firm Managing Partner, maintains a diverse real estate and corporate transactional practice focused on the acquisition, development and preservation of affordable housing, commercial leasing matters, the representation of lenders and borrowers in real estate financing transactions, loan workouts and foreclosures, architectural and construction agreements, and the representation of cooperative corporations and condominium associations. He also serves as general counsel to an acclaimed luxury fashion brand.

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LAURA E. LONGOBARDI
Laura as a multi-discipline background in complex commercial litigation, with concentrations in employment litigation and real estate litigation. She advises clients on pre-litigation matters; develops case strategies; prepares clients and other witnesses for depositions and trial; supervises the discovery process; argues motions and appeals; attends court conferences and negotiates settlement agreements. Laura also counsels clients in connection with employment contracts, severance agreements and other matters concerning their employment relationships.

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JONATHAN R. TILLEM
Jonathan (“Jon”) is a general corporate practitioner with a significant clientele in the domestic and international apparel and fashion industries.  He has a concentration in licensing, representing licensors and licensees, including, numerous high-end designer and luxury brands and other major, as well as up-and-coming, American and European fashion companies and apparel manufacturers, in their licensing activities.  Jon also represents a number of “brand management” companies that have acquired prestigious brands for the purpose of establishing licensing programs.

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ANDREW J. TUNICK
Andrew (“Andy”) represents both foreign and domestic corporations, partnerships, other business entities and individuals in a wide variety of corporate and commercial matters including licensing, franchising, mergers and acquisitions, shareholders’ and partnership agreements, distribution agreements, employment agreements, financing agreements, security agreements and also trademark and intellectual property matters.  Andy’s clientele includes foreign and domestic apparel designers, manufacturers and distributors, jewelry designers and manufacturers, fragrance and cosmetics companies, retail enterprises, footwear designers and manufacturers, and licensing representatives.

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