Make sure you know your brand partner - Alison Bryce

In one of his most famous songs, American rapper and producer Kanye West sampled a line from the film Blades of Glory, in which Will Ferrell tells Jon Heder: “No-one knows what it means, but it’s provocative.”

Recent outbursts from West seem to have gone far beyond provocation – and cost the musician some of his most lucrative collaborations.

West is one of the most high-profile recording artists in the world, finding fame with hits like Stronger and Gold Digger and through his collaborations with Jay-Z, Rhianna and even Sir Paul McCartney. Yet West (also known as Ye) is arguably even more famous for his life and activities away from the recording studio.

His marriage to socialite and media personality Kim Kardashian spawned even more headlines than his records, whilst his 2020 United States presidential campaign garnered a slender 60,000 votes. Notwithstanding these activities, it’s his outspoken comments that have continued to court controversy.

June 28, 2016 in Hollywood, California; adidas and Kanye West announce the future of their partnership  (Photo by Jonathan Leibson/Getty Images for ADIDAS)

In late October, shoe brand Adidas cut its ties with the rapper after “unacceptable, hateful and dangerous” comments that had resulted in the musician being blocked from the social media platforms Instagram and Twitter earlier in the month. The German shoemaker reported that it “does not tolerate anti-Semitism”, and that ending production of West’s Yeezy trainers would result in a short-term hit of €250 million (£217m).

Balenciaga, Gap and JP Morgan Chase also chose to end their collaborations with West, prompting Forbes magazine to downgrade its estimate of his personal fortune from US$4 billion (£3.5bn) to a more modest US$400m. The controversy has highlighted the risks associated with partnerships between brands.

While collaborations can create exciting commercial opportunities for businesses and give them access to previously untapped markets, they do involve a number of risks. Negative publicity for one partner can trigger concern for the other, as shown by last month’s fallout from West and Adidas.

Getting the tone of the collaboration right is absolutely key. Back in 2017, American model Kendall Jenner and soft drink maker Pepsi were criticised for trivialising Black Lives Matter protests when Jenner was featured giving a police officer a can of soda during a rally in a television commercial.

Two years later, clothing label Forever 21 came under fire for sending out Atkins diet bars with online orders for larger sizes of clothes. Accusations of “fat-phobia” would not have been either brand’s intention.

Away from the public’s view, brand collaborations also raise many behind-the-scenes questions regarding the legal paperwork that underpins such partnerships. Could one of the partners breach their contract if they suddenly cancel the collaboration?

What happens if jointly branded goods have been produced, but the collaboration then ends due to a controversy? Can one or both partners continue to sell those goods – and would doing so simply amplify the damage to one brand or both?

Such concerns highlight the need to carefully scope out the breadth of the licensing agreement surrounding the use of each other’s brands. Contracts covering collaborations must also make the ownership position clear on any jointly created intellectual property (IP) created during the partnership and what happens to branded products on exit.

No matter how clear the contract, a better strategy is to avoid controversy in the first place – unless that’s what your brand wants. West has been well known for a long time for his controversial outbursts and the ensuing publicity has only served to increase his notoriety.

Yet controversy can go too far. Anti-black and anti-Semitic comments are clearly an anathema for publicly listed companies with shareholders, such as Adidas, Gap and JP Morgan Chase. There are only so many bad headlines that large companies can endure before they need to distance themselves.

Ultimately, due diligence is the key. Do your homework, learn about your partner and be honest about your appetite for risk.

As back-up, make sure you have an appropriate and considered exit strategy in place, just in case some unexpected controversy does arise. It is also important to ensure that the contracts you sign are structured to cover any damage to the reputation or goodwill of your business.

Alison Bryce is a Glasgow-based intellectual property partner at Dentons