Adidas and musician/entrepreneur Ye, better known as Kanye West, have halted their multibillion-dollar relationship over intellectual property rights. Mascotte Holdings, Ye’s organization, manages a portfolio of more than 160 trademark applications and registrations for his Yeezy brand. However, Adidas controls the design rights to the majority of Yeezy sneakers.
The division of IP rights has had an impact on the divorce, albeit the contents of Adidas and Ye’s 2016 deal are not public. If the deal lets both parties retain control of their intellectual property, Ye may be able to sell Yeezy gear with fresh designs on his own.
Adidas severed their collaboration when Ye made anti-Semitic statements and stirred controversy by donning a “White Lives Matter” shirt. Adidas might owe Ye royalties for all sales since the previous royalty payment, which could be in 2023.
According to US Patent and Trademark Office filings, Adidas controls the “design rights to existing items” as well as previous and future color combinations of Yeezy sneakers. The collaboration looks to be a “normal license agreement,” with Adidas producing and developing Yeezy items. Through 2020, the Yeezy company generated more than $500 million in total royalty payments and marketing costs.
The impact of this split should serve as a wake-up call for businesses to conduct thorough due research in co-branding arrangements, which have grown in popularity in recent years. When engaging in such collaborations, companies must assess all potential risks, including intellectual property rights and potential problems.
The Brand Don provides consultation in the area of due diligence and brand protection so that businesses can move forward with confidence in their brand as it grows.