Are collaborations for you? FASHION LAW


Collaborations are popular in the fashion industry, and they can be very beneficial to all/both the parties involved. But why should brands collaborate, and what steps can be taken to try to avoid potential issues?


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ollaborations happen all the time in the fashion industry whether it be Balenciaga x The Simpsons, Netflix and Lacoste, Castore x Andy Murray and infamously Adidas x Yeezy. But as discussed on our podcast, what went wrong with the Adidas x Yeezy collaboration, why should brands collaborate, and what steps can be taken to try to avoid potential issues?


The Adidas x Yeezy collaboration is an example of how things can go wrong, even for high-profile collaborations. Ye (formerly Kanye West) allegedly made antisemitic comments and wore a t-shirt that read “White Lives Matter” at Paris Fashion Week. As a result, certain brands, including Adidas, subsequently disassociated with Ye.


As the Adidas x Yeezy collaboration highlighted, collaboration agreements can, and should, restrict what a brand collaborator can say and do, although it is impossible to absolutely control a collaborator’s actions.


As well as reputational issues, Adidas also faced inventory issues. Adidas could not simply destroy the products due to environmental reasons and the potential backlash this could create. It also could not simply give away the inventory, as it would suffer huge losses from no longer selling the Yeezy products.


According to The Guardian, this was part of the reason Adidas reported a £350m decrease in sales in the first quarter of 2023. Therefore, Adidas decided to sell some of its inventory (Ye would continue to receive royalties) and donate some of the proceeds to organisations affected by the statements, such as the Anti-Defamation League, Philonise & Keela Floyd Institute for Social Change, and Foundation to Combat Antisemitism.


Why do fashion brands collaborate with other brands?


Collaborations can be risky but there can be major advantages. For example:  It may be a way of trying something new for the brand. For example, the Nike x Tiffany Air Force 1 shoes and the Lacoste collection related to Netflix shows such as Stranger Things, Bridgerton and Money Heist.  You may be able to target a new audience, work with a party with a bigger reach or a party which shares your values and could help promote this.  It may lead to excitement and increased social media engagement. The 10-minute Simpsons episode showing the collaboration with Balenciaga certainly had people talking.  The products may be a limited edition, meaning people rush to buy the product. The Tiffany x Fendi collaboration bag was available for just 24 hours!  The party you are collaborating with may be able to introduce you to manufacturers or distributors.


How to address potential collaboration issues A written collaboration agreement should address many of the potential issues which can arise during a collaboration. The agreement should include provisions dealing with the following:


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Parties – Who you are contracting with (the company or an individual) and that party’s role?


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Products – What are the collaboration products, how many are going to be made, where and how will the products be made, how many drops will there be, and what happens to unsold products?


Branding – Clarification on branding will be needed as well as if you are going to create a sub-brand.


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IP Ownership – Who owns the intellectual property (IP) rights and who will apply for registered IP rights if any (including for the


name)?


IP Infringement – Who will take the lead in dealing with the infringement and on what terms? Will it be different if infringement is being claimed against one of the parties to the collaboration?


Territories – To which countries does the collaboration apply, which country’s laws will govern the agreement; and which country’s courts will determine disputes?


Payment – What will be paid, how payment will be made (lump sum, royalties and in what currency?), when payment does not have to be made, and who pays expenses.


Warranties – Contractual promises such as that the products will not infringe a third party’s IP and the party you are collaborating with will not damage your reputation.


Termination – When can you terminate the collaboration and what happens once the collaboration is terminated?


If the collaboration works well it can be expected to be of benefit to both parties. As with any commercial venture, prevention is better than cure and the need for a collaboration agreement to address potential issues is key.


Scott Steinberg is a Senior Associate and Stephen Sidkin is a Partner at Fox Williams LLP (www.fashionlaw.co.uk; www.foxwilliams.com).


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