Yeezy & Adidas: The Intersection of Intellectual Property, Licensing, and Contracts
November 2022 | Tia Zghaib (Staff Writer and Editor)
Louboutin’s red bottoms, the Coca Cola recipe, Tiffany blue – these are all examples of intellectual property. Intellectual property (IP) refers to works that are created by an individual or group’s original ideas – their intellect. Intellectual property law governs the author’s ability to exercise special rights over these works. Despite many peoples’ lack of knowledge or notice of it, intellectual property has infiltrated almost every aspect of human life. Every time one sees an advertisement, buys or consumes a product, reads a book, listens to a song, or watches a movie, they are actively interacting with a form of intellectual property.
Celebrities and public figures in particular are, in many ways, dependent on the benefits that intellectual property rights can generate. Following his extremely controversial public statements, rapper-turned-businessman Kanye West admitted to losing $2 billion worth of brand deals and business relationships in one day due to public outrage. [1] Most notably, Adidas – the manufacturer and distributor of West’s “Yeezy” products – has publicly severed ties with him and is attempting to lay claim to a large portion of the intellectual property associated with the brand. Adidas stated that it is “the sole owner of all design rights to existing products as well as previous and new colorways under the partnership.” [2] Thus, examining this dispute and its consequences provides for an effective framework to analyze the inner workings of IP as a whole.
The three main categories of IP are copyright, trademark, and patent. Copyright protects an author’s ability to distribute and replicate their work; this includes songs, books, and films. In contrast, trademarks do not focus on replication and instead are marks that identify a particular product or company and distinguish it from others. [3] This includes logos, business names, jingles, colors, and slogans. The name and logo of West’s brand “Yeezy” are the registered trademarks of his company, Mascotte Holdings, Inc. [4] Thus, through his company, West has exclusive and sole ownership of the Yeezy trademarks and brand. Similarly, Adidas has its own registered trademarks for its name, logo, and other identifiers. The two brands’ decision to partner up for the Yeezy-Adidas line did not affect the separation of their trademarks or change their ownership.
The third main category of IP is patent. Title 35 of the U.S. Code governs patents and requires that they be registered with the U.S. Patent and Trademark Office (USPTO). [5] Patents allow the creator of a unique invention to exercise sole and exclusive rights to produce, distribute, and profit from their invention. Utility and design patents are two types of patents. While utility patents protect the way an invention functions or how it is used, such as digital software and medical patents, design patents protect the appearance or design of a product—like the physical layout of an iPhone. [6] Design patents are often used in the fashion industry, particularly for sneakers. Thus, it is no surprise how important design patents are to the Yeezy-Adidas partnership. A close investigation of the USPTO design patents registrations for Yeezy shoes reveals that Adidas is the owner of every Yeezy design except for one: the Yeezy slides. [7] Therefore, the Yeezy-Adidas partnership is not clear cut regarding the ownership of the different IP associated with the fashion line.
Considering the amount of IP involved in the Yeezy-Adidas line, it becomes obvious that the parties entered into a licensing agreement. Intellectual property licensing involves an owner of IP allowing another entity to use its IP in exchange for a fee, called a “royalty.” [8] Although the licensing agreement for the Yeezy-Adidas partnership is private, it is reasonable to make some conclusions regarding its nature. The agreement most likely provided for Adidas designing, manufacturing, and distributing the Yeezy products, which is why Adidas is the registered owner of these design patents under the USPTO. However, the licensing agreement allowed Adidas to distribute these products under the Yeezy name—West’s trademark—in exchange for a 15% royalty on the wholesale price per product. [9] Thus, both Adidas and Yeezy were able to profit from each others’ IP, with Yeezy using Adidas’ designs and Adidas using the Yeezy name. However, this formerly harmonious partnership now faces a potentially messy legal battle due to the recent split.
Beginning with its statement severing ties and claiming that it is the “sole owner” of Yeezy designs, Adidas has made it clear that it intends to continue to own and profit from these designs. However, West has disputed these claims by alleging that Adidas stole his designs. [10] So, what does this mean for Yeezy? The private nature of the licensing contract limits the conclusions that can be drawn regarding possible legal battles that may stem from the dispute. If Adidas did not have the legal grounds to terminate the contract prior to its expiration, then West may be able to sue for breach of contract and other related claims. Moreover, if the contract provided that the designs be registered under Yeezy and Adidas violated this provision, West could be entitled to damages and possibly invalidate the company’s rights to the patents. However, it is highly unlikely that Adidas breached the contract in this way and exposed itself to these legal claims.
Assuming that Adidas is indeed the rightful owner and designer of the patents, it could technically continue to distribute the Yeezy products. However, Adidas no longer has the right to use the Yeezy brand name since they terminated their contract with West, who was allowing the company to use his trademarks. Theoretically, Adidas could continue selling Yeezy products exactly how they are designed, provided that they remove any Yeezy logos and sell them under a different brand. In fact, Adidas CFO Harm Ohlmeyer confirmed the company’s intentions to sell the designs associated with Yeezy under a different trademark. Ohlmeyer summarized the implications of the Yeezy-Adidas IP split when he stated, “We own all the IP, we own all the designs… It's our product. We do not own the Yeezy name.” [11] He also stated that Adidas would be saving money because they no longer have to pay West the royalties for the use of his trademark. As for Yeezy, the brand could continue to operate, but it would have to come up with entirely new designs for all products that were associated with the Adidas partnership, since Adidas owns all the design patents except the slides. Therefore, both companies would be losing some of the benefits they gained from their partnership, but at least they would be able to walk away maintaining some of their intellectual property.
Examining the Yeezy-Adidas split sheds light on the complexity of IP law and how it intersects with other areas of law. The IP associated with one brand can range from clear-cut ownership to a very messy relationship. Different owners of different categories of IP can split and cause more confusion about who owns what. Moreover, the licensing agreements and contracts that dictate ownership of the IP can both help and hinder this confusion. As such, it is more important than ever for both attorneys and the public to expand their knowledge of the complex yet essential area of law that governs intellectual property.
Sources
Hipes, Patrick, “Kanye West Says He Lost $2 Billion In One Day Amid Controversy, Calls Out
Ari Emanuel.” (Deadline: October 2022).
Sarlin, Jon, “Yeezy Without The Ye? Who Is New ‘Sole’ Owner?” (CNN: October 2022).
“Trademark, Patent, or Copyright.” (USPTO).
Isaiah Poritz, Chris Dolmetsch, and Bloomberg, “Adidas Might Be Cutting Ties to Kanye west, but The Company Could Still Be Paying Him Millions of Royalties Into 2023.” (Fortune: October 2022).
“U.S. Code: Title 35.” (Legal Information Institute).
“1502.01 Distinction Between Design and Utility Patents [R-07.2015].” (USPTO).
Vlahos, Nicholas, “What We Know About Kanye’s Contract With Adidas.” (Sole Retriever:
September 2022).
Isaiah Poritz, Chris Dolmetsch, and Bloomberg, “Adidas Might Be Cutting Ties to Kanye west, but The Company Could Still Be Paying Him Millions of Royalties Into 2023.” (Fortune: October 2022).
Ibid.
Ciment, Shoshy, “Does Kanye West Have a Legal Claim Against Adidas?” (Footwear News:
September 2022).
Fox 13 News Staff, “Adidas owns rights to Yeezy designs, CFO says; will sell products with different name after Kanye West fallout.” (Fox 13 News: November 2022).