Source: GQ.com Photo Credit: Getty Images
Last week, a bankruptcy court in Poughkeepsie, New York approved the sale of the illustrious retailer, Barneys New York. The sale will result in the shuttering of Barney’s Manhattan flagship store and Authentic Brands Group shall become the new owner. Authentic Brands’ plan for restructure involves separating the Barneys name and brands from Barneys’ assets. This essentially results in the Barneys name and intellectual property being licensed to Saks Fifth Avenue and their inventory handed over to the financial liquidation firm, B. Riley.
There are several intellectual property issues at hand. Sam Ben-Avraham, a retail and trade show entrepreneur and rival to the Authentic Brands Group plan, argued that “turning Barneys into an intellectual property license operation would vanquish the store’s ‘unique identity, point of view, cutting-edge agenda.’” Authentic Brands Group has a past of striking licensing deals with other companies to use the brand name in new products, international collections and elsewhere. The ultimate result is that Authentic Brands Group receives licensing fees and royalty payments, while bypassing the costs of hiring store staff and paying rent. (Fun fact: Authentic Brands Group owns the exclusive rights tied to Marilyn Monroe’s likeness!)
A license agreement is a partnership between an intellectual property rights owner (licensor) and another who contracts with and is authorized to use these rights (licensee) in exchange for an agreed payment (fee or royalty). A licensing agreement should not be taken lightly, and due diligence should be conducted before signing any document.
Above the Law lays out several steps that should be considered before licensing intellectual property (Click here to read more about licensing)
- Do your due diligence – never assume things! Do the homework of understandingwhat is being licensed.
- Set boundaries – understand the business implications of licensing for both parties
- Test the waters, where possible – “prove out” the concept under a limited license before signing a longer term deal
- Take care with exclusivity – consider other obligations to other intellectual property owners
- Balance the agendas – consider both long-term and short-term agendas of both parties
Article by Carissa Chow