Managing IP is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Consider risk and damage control in licence agreements, say in-house counsel

globaltrademarkpanel1.jpg

Panellists at this year’s Managing IP Global Trademark Forum in New York discussed the perils of bloodied presidential heads and when brand licensees have jumped the gun

“If a licensee messes things up, a licensor’s brand could be damaged irreparably,” remarked Oliver Herzfeld, chief legal officer at brand extension agency Beanstalk in New York.

Speaking at Managing IP’s Global Trademark Forum yesterday in New York, Herzfeld and his fellow panellists were commenting on licensing brands to third parties, which gives these parties the right to create products with the brand owner’s trademark.

He argued that this process carries risks for licensors that licensees don’t have to worry about.

“I’m not saying that the licensee should just roll over and play dead,” said Herzfeld. “But if the licensee takes a very heavy-handed approach, it doesn’t make things move quickly.”

Speakers noted that brands also have to determine whether a licence will be exclusive or non-exclusive when drafting agreements.

Herzfeld said that the licensee typically wants an exclusive licence because it is investing money into products and would be wary of having competition in the marketplace.

But a licensor will want the freedom to license its brand to another party if the agreement with the original licensee does not go as well as it hoped.

Herzfeld added that there is a middle ground, however. Licensors and licensees can agree to a non-exclusive exclusive licence, where a licensor agrees not to license the mark to other parties so long as the licensee meets certain sales requirements or adheres to all the terms in the agreement.

Edward Clough, corporate counsel at Sequential Brands in New York, added that licensors should be mindful of which products they are allowing licensees to use.

He added that licensees often want rights to apparel, but that apparel is a broad category and that a licensee who wants rights to such goods might have no expertise in producing footwear, for example.

He said that licensors might want to maximise revenue by splitting up their licences into as many categories as they can.

Social pressures

The panellists also discussed challenges that brands face when working with celebrities and social media influencers.

Clough at Sequential said that when brands are working with celebrities, they should aim to craft an exclusive relationship to avoid said celebrities endorsing direct competitors.

Herzfeld at Beanstalk referenced a story where comedian Kathy Griffin secured an agreement to do an advertising campaign with Squatty Potty, a toilet stool company. Griffin later posted a tweet with a replica of the severed and bloodied head of Donald Trump. Squatty Potty then suspended its campaign featuring Griffin.

“For every agreement you draft, you should consider how you get out of it and what damage control you might have to do,” Herzfeld said.

Miri Miller, associate general counsel at digital marketing communications firm Dentsu Aegis Network in New York, said that she tries to educate her team about IP and to make sure that employees are aware of the Federal Trade Commission’s social media guidelines.

To make the point stick, her company has developed an ‘is-this-legal?’ quiz. She shows her team members different tweets and Facebook posts and asks them to identify potential pitfalls, including issues around the right of publicity.

“If a celebrity tweets about the brand, you can’t go and do paid advertising around it and say that this person really loves your products. That would violate their right of publicity,” she said.

Miller also spoke about the importance of making sure that licensees are adhering to regulatory requirements.

She told the audience about her own experience working with the launch of hunting video games, which were packaged with video game accessories that resembled guns. Miller said she learned a lot about toy gun regulations while working on this project and what colours were okay to use with the products.

One day someone she was working with showed her a magazine, which said that the US army was bringing out a line of video game accessories.

The magazine showed the gaming accessories using the army’s camouflage colour in a way that did not meet the regulatory requirements. Miller later found out that the licensee had not actually been approved to use those colours.

“It jumped the gun in marketing the product,” she said.

more from across site and ros bottom lb

More from across our site

A New York federal court heard oral arguments this week in a copyright case pitting publishing giants against a digital library
Commissioner Hamano Koichi shares his vision for the JPO and explains that IP offices must promote innovation that drives social change
The Asia-Pacific awards research cycle has now begun – don’t miss on this opportunity be recognised in 2023
The Supreme Court, which is hearing two IP cases this week, should limit the power of US courts to rule on foreign sales
Safety standards wouldn’t lose copyright protection when named in law, so long as they were accessible for free online
In-house tech sources say Amgen v Sanofi has the potential to stifle their prosecution and litigation strategies if SCOTUS’s decision is too broad
We provide a rundown of Managing IP’s news and analysis coverage from the week, and review what’s been happening elsewhere in IP
The Federal Circuit said tech firms can challenge the way the USPTO implemented Fintiv, but that won’t mean much for practitioners, say counsel
The England and Wales High Court handed down one of the most hotly anticipated FRAND rulings for some time
Funders discuss different IP portfolio funding options and how they decide whether to offer preferential terms and pricing