WHAT ARE CO-BRANDING AGREEMENTS

INTRODUCTION:

In today's times, the global market is ever-expanding and because of this it is becoming a very large and expensive stage for buying and selling goods and services, many companies have adopted co-branding as a very cost-effective method of reaching a large number of consumers possible available in the market. Co-branding as a method for increasing reach and scope for the company in the market has its positive and negative aspects. Co-branding helps in improving cooperation and creates a brand stronger than before providing larger opportunities for both the companies coming in together for a mutual interest in an agreement with each other as it creates and encourages competition.  Generally, Co-branding is considered as a legal and marketing vehicle that is used for the cross-licensing of trademarks within different companies to form a brand-new product, attract more consumer interest and increase sales for both the companies.

CO-BRANDING AGREEMENT:

Co-branding agreements provide a platform for trademark owners to expand their consumer reach scope and create a base. It involves the combination of well-reputed brands with consumer or retail brands.  Co-branded social media personality marketing has become popular on all social media platforms like Instagram and Twitter. For marketers, a co-branding is a form of a line which is used as an extension to create new products with a new feature by using trademarks from a different company that achieves a new audience for a specific product. The basic principle of co-branding is that the brands should work together in different commercial scopes which would result in showing an unlikely result to see co-branding from direct competitors.

SCOPE OF CO-BRANDING:

Co-branding helps in generating more and more publicity for the companies being part of it in the form of news or articles of the industry, exposure on social media. These activities are helpful in multiple products and can provide them with wider scopes in various fields like fashion, food, retail and beverage, cosmetics, toiletries, electronics and household cleaning, and are beneficial for the service providers in fields like media, sports, finance, entertainment and transportation.

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ESSENTIAL FEATURES OF CO-BRANDING AGREEMENTS:

In legal terms co-branding basically considered as a trademark licensing agreement, rather than a joint venture or partnership type of agreement. A co-branding structure relies on a trademark cross-licensing with each party licensing its rights to the other party. Co-Branding Agreements have the potential and power and authority to prove out to be beneficiary for both the parties. The Co-Branding agreements should be drafted with care as because of this the cross-license will be able to rely on the existing Intellectual property rights of each party for launching a co-branded product in new markets. For the license to show the utmost effectiveness it must consist:

1. Correct licensor and licensee:

The licensor must be the rightfully registered owner or can be any another party similarly authorised to use the mark under an existing agreement. The licensee should rightfully be the partner using the mark in commerce.

2. Intellectual property should be licensed:

The licence should clearly talk about protected trademarks, there should always be an appropriate use of restrictions and acknowledgement that use of the licensor’s mark by the licensee will inure to the benefit of the licensor.

3. Ownership of co-branded properties and their revenue sharing:

The ideal licence should provide ownership of co-branded properties which is a result of the joint efforts of the parties. The licence should also identify royalty shares that will be affected by the co-branding venture.

4. Exclusivity:

The parties must specifically mention in the grant-clause that the rights are to be exclusive or non-exclusive. The exclusive licences generally allow higher royalty payments nut if there is an increase in a party’s bottom line then it will ultimately level out due to ever-changing consumer behaviour or market positions.

5. Specific Territory:

The territory of the licences should show the validity of the trademark rights of the parties. therefore, it is not very uncommon for parties to become a partner with different brands in different markets as it may not give them much of a benefit but might cost a lot which is not in favour of the company as with that much cost they can do so much other things for expanding and growing their business rather than coming in a partnership which is not even fruitful for them.

6. Quality control assurance:

It is very important that the license should include provisions that allow the licensor to retain quality control over the licensed goods or services during the licence period. In absence of such control, a ‘naked’ licence may come into existence which will be resulting in the loss of trademark rights.

7. Indemnifications and insurance:

The co-branding agreement must involve all necessary indemnifications and insurance clauses as each party will in effect be authorised to use the other party’s mark in the structure of the agreement. Giving the other party full right and authority to do the work in other company’s name making it very clear in the market that which all companies have decided to come together and authorise each other to do any such task involved in the co-branding agreement in the company’s own name.

8. Distribution, marketing, and consumer relations in the market:

A co-branding agreement when imposed and comes into practice always creates some initial confusion and means for competition. The agreement should always specifically separate the campaign from the normal branding activities of each party. This can be accomplished by designating a subsidiary or related company and making them solely responsible for the activities associated with the co-branding.

9. Trademark use requirements and ownership acknowledgements:

The Parties to the co-branding agreement should retain with themselves the right to review and approve advertising and promotion for the co-branding venture and product packaging as it will be then in their control to govern such activities and take decisions according to their convenience.

10. Renewal, renegotiation, phase-out and termination:

Automatic renewal provisions can prove out to be appropriate for production and manufacturing licences and ensure that supply-chain concerns are satisfied. These things can be kept in mind and be included in provisions of the contract so they could be helpful to brand owners taking part in a co-branding agreement venture because such campaigns are often public-facing and prone to drawbacks and spikes in demand and popularity over span time.

Famous examples of Co-branding Agreements in the world are:

1. Apple working with Mastercard to create Apple Pay
2. Versace teaming up with H&M to create a “Versace for H&M” collection,
3. BMW partnering with Louis Vuitton to manufacture a luggage line created for a hybrid BMW car.

CASE STUDY:

LEVIS AND GOOGLE

Levi’s teamed up with Google through a Co-branding Agreement to enter the wearable technology market and launched a product with Codename of the Project being Jacquard, the Jacquard produced by Google in partnership with Levi’s manufactured a touch-and-gesture interactive denim jacket created to prevent cyclists having to reach for their pockets to grab their phones while riding.

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BY- GAURAV GUPTA