The licensing agreement

The IP of a fashion brand company (e.g., patent, trademark) is generally used by the fashion brand company itself. However, in specific situations, a fashion brand company may license their IP to other companies.

In addition, fashion brand companies may use a license to use copyrighted images (e.g., Disney characters) on their merchandise.

What is a licensing agreement?

A licensing agreement is a contract “between two parties whereby one party grants the other party the right to use its IP, subject to various limitations” (Kolsun and Kosinski 2010). Because the use of licensing within the fashion industries is common, an understanding of the legal aspects of licensing and the role it plays in the extending brands is important.

Understanding licensing

In the fashion industry, licensing is the process by which the owner (licensor) of a particular patent, brand name, trademark, graphic design, or other IP (referred to as the property) grants another party (licensee), typically a manufacturer, the right to use the IP, in exchange of payment of royalties.

Brand extensions

An established fashion brand company (licensor) may use licensing agreements to expand their product offerings by creating brand extensions, or new products with their brand name. For example, Kenneth Cole has successfully licensed a broad range of merchandise, including all of the company’s non-footwear products except handbags. Fashion brand companies may also use licensing agreements to expand their production and distribution in other countries.

For example, Hong Kong–based brand Esprit (licensor) recently signed a licensing agreement with retailer Groupe Zannier (licensee) to develop, produce, and distribute Esprit Kids in Europe and the Middle East. The licensee buys the right to use the property on merchandise to add value to the merchandise and create immediate brand recognition.

In the next step we will help you uncover the various categories of licensed intellectual property within the fashion industry.