Introduction:
In the world of fashion and pop culture, collaborations between artists and brands can lead to tremendous success, both creatively and financially. One such iconic collaboration involved Ye (formerly known as Kanye West), the renowned artist and fashion designer, and Adidas, resulting in the immensely popular ‘Yeezy’ line of sneakers. However, after a series of contractual disputes and controversial public statements by Ye, Adidas has decided to sever ties with him, leaving a significant question unanswered: Who owns the rights to produce, design, and sell the highly sought-after ‘Yeezy’ sneakers? In this newsletter, we explore the groundbreaking deal, the applicable laws governing such high-profile collaborations, and how this breach of contract case could impact you and your stakeholders.
The Deal/Pitfalls in the Contract:
Starting nearly 7 years ago in 2016, the partnership between Kanye West and Adidas was initially hailed as a groundbreaking collaboration, producing innovative and highly desirable sneakers that became a cultural phenomenon. In 2018, Kanye West brought his notorious shoe, the Yeezy® Boost 350, to the Copyright Office to gain protection under Star Athletica v. Varsity Brands. After a few attempts, he was able to convince the Copyright Office that his “2-D and sculptural claims” were copyrightable subject matter and not just an attempt to copyright a shoe. The registration of the two Yeezy® Boost 350 designs show the inherent inaptitude of Star Athletica and highlight the concerns professed by Justice Breyer.
Three years into the partnership, Adidas and Ye together launched Adidas + KANYE WEST, which was described by the company as a “YEEZY branded entity creating footwear, apparel and accessories for all genders across street and sport.” The collaboration led to several seasons of designer clothing, countless shoe designs, and more.
However, like any business venture, collaborations have their risks, particularly when involving influential and outspoken artists like Ye. With his controversial public statements, Ye’s actions have impacted the brand image of both Adidas and other collaborators like Balenciaga, leading to their decisions to part ways with the artist.
This situation highlights the importance of carefully crafted contracts in such partnerships. Brands must include provisions that protect their reputation and provide an exit strategy in the event of unforeseen circumstances, such as damaging public statements. The termination of the partnership with Ye also raises questions about ownership and licensing rights related to the ‘Yeezy’ line of products, as well as the potential legal ramifications of ending the collaboration prematurely.
Deal Falls Through:
As a result of the fallout from Ye’s controversial remarks, the Adidas deal has indeed fallen through, leaving the future of the ‘Yeezy’ line uncertain. The financial impact of this separation is significant, considering that at one point, ‘Yeezy’ collaborations made up a substantial 8% of Adidas’ total sales. Directly after the split, Adidas took an immediate financial blow of around $250 million to its net income. According to estimates by Adidas, the fallout from this deal could lead to the company posted a loss for the first time since 1992. Additionally, other brands that collaborated with Ye, like Balenciaga, are also dealing with similar consequences. This scenario serves as a cautionary tale for companies engaging in high-profile endorsements and collaborations, emphasizing the need for clear and protective contractual agreements.
Applicable Law:
The legal implications of this failed collaboration are multifaceted. Ownership and licensing rights to the ‘Yeezy’ line of products are likely to be subject to the terms of the original contract between Kanye West and Adidas. Trademark laws may also play a crucial role in determining who has the rights to use the ‘Yeezy’ brand and logo moving forward. Additionally, there may be contractual disputes and potential litigation over the termination of the partnership and any financial losses incurred by either party.
The Yeezy-Adidas contract is not publicly available. In its 25 October 2022 statement, Adidas said that it is “the sole owner of all design rights to existing products as well as previous and new colorways under the partnership.” In an analysis of the brand and its ownership, CNN’s Jon Sarlin reported that although the brand name ‘Yeezy’ might be owned by Ye, Adidas holds intellectual property rights over the designs of the Adidas Yeezy sneakers.
How this Impacts You/Your Clients:
For businesses, particularly those in industries which work with celebrity spokespeople, the Ye-Adidas fallout serves as a wake-up call to carefully consider the potential risks and consequences of entering into high-profile collaborations with artists or influencers. Comprehensive contracts that address potential pitfalls and provide for an exit strategy can help protect a brand’s reputation and financial interests in case of unforeseen circumstances.
Conclusion:
The termination of the Adidas-Ye collaboration raises complex legal and business implications. As the situation unfolds, the business world will be closely watching to see how ownership rights, contractual obligations, and brand reputations are affected. For businesses considering collaborations with artists and influencers, this case underscores the importance of robust and well-considered contracts to safeguard their interests and mitigate potential risks. In navigating these partnerships, seeking legal counsel and advice on intellectual property and contract law is vital to ensure a smooth and mutually beneficial collaboration for all parties involved.
