The value of successful brands and characters to merchandising (and vice versa) in today's commercial world is pretty inescapable. This is particularly clear to those with children, where a favourite TV show or film can quickly lead to a house full of themed action figures, lunch boxes, games, duvet covers, back-packs, posters, pencil cases, toothbrushes ... (I could go on for some time here, probably best I stop now).
The drivers behind licensing arrangements for both licensor and licensee are clear. At its simplest:
- maximum exposure with minimum effort for the IP owner
- increased demand for products for the manufacturer / distributor
- increases in revenue all round
In the article below, Raconteur looks at the advantages of licensing IP for merchandising purposes (there are plenty). It emphasises that making sure your brand is suitably protected with appropriate trade mark registrations from an early stage will underpin a longer term licensing strategy.
I completely agree that a strong, recognised and well-protected brand is what creates licensing opportunities in the first place, but I would add that it's important to make sure that the deal itself doesn't undermine or endanger the brand. Raconteur briefly touches on this, acknowledging the risk to a brand's reputation if it becomes linked to an inappropriate or poor quality product or service.
It's important to make sure that the terms of any merchandising or other licensing deal are considered and clearly documented. A few particular points to address include:
- Control over how the brand is used (e.g. approval or veto rights for products, packaging and materials)
- Whether to grant exclusivity (e.g. for particular products, or in a particular field or territory)
- How royalties will be calculated - how will these calculations be verified?
- Quality control, e.g. how would you know if there was an issue with quality, and what would you want to do about it?
- Termination - in what circumstances would you want to bring the agreement to an end?
If you need any assistance with IP licensing (whether granting or seeking a licence) please do contact us.
From iPhone cases to Christmas decorations and meat grills, merchandising is a blockbuster business that can turn intellectual property into gold. Global retail sales of licensed merchandise and services reached $241.5 billion in 2014, generating royalty revenue for IP owners of $13.4 billion, according to the International Licensing Industry Merchandisers’ Association. Famous brands such as Disney, with its slick licensing operation, made up a large proportion of that figure, earning hundreds of millions of dollars from the sales of consumer goods. But it’s not just Star Wars and the like that can benefit from leveraging IP; anyone with IP assets should be considering what sharing their brand could do for the bottom line.