Expanding Horizons: How Brand Collaboration can help a company grow and expand its activities to new markets

Collaborations between two companies which decide to share their intellectual property has become a common form of cooperation which allows the expansion of activities into a new market. This can take varying forms, which can broadly be divided into two categories: technology transfer, in which companies share innovation and (you guessed it) technology through the license of patents or confidential know-how; and brand collaboration, through which one company allows another to use its brand to commercialise new products. This latter form will be our focus in this post. Whether through a co-branded product, a joint marketing campaign, or a strategic partnership, these alliances can bring two main benefits:

• the introduction of your products into new markets by taking advantage of the distribution structures and manufacturing network of already established third parties, while reducing the inherent risks and costs of expanding to new markets;
• and the diversification of your range of product portfolio, complementing your intangible assets with the products and technologies from other companies.

Let’s explore a few examples of companies that turned brand collaborations into successful stories, where the image and original creations of one company was successfully shared with another for the benefit of both, that may help understand its commercial value and the opportunities they can create for any business.

Successful cases of IP collaboration 

• Lego: Nowadays, Lego is renowned as one of the most iconic toy companies globally, but its journey was fraught with challenges. In 2003, the company faced a severe financial crisis that nearly led to bankruptcy. By embracing digital innovations and forming strategic partnerships, Lego not only survived but successfully extended its market reach and product portfolio. The turning point was its collaboration with the Star Wars franchise that allowed them to launch Lego sets from the saga, fact that attracted adult consumers to the Lego products. The success of this approach led them to maintain the partnership strategy with other major brands, such as Harry Potter, Lord of the Rings, and the Super Hero universe, significantly boosting Lego's product offerings. This strategy has been a resounding success, becoming a perfect case study on the value of IP licensing and brand collaboration, and was followed by other companies across various sectors that adopted similar strategies. For instance, luxury brands like Lladró and Swarovski have also thrived through collaborations. Lladró, known for its porcelain figures, and Swarovski, renowned for its jewelry, have engaged in strategic partnerships and licensing agreements with iconic franchises such as Disney and Star Wars. These collaborations have allowed them to create unique pieces that appeal to a broader audience.

   

• FIFA and Electronic Arts (EA): This partnership stands as one of the most lucrative and well-known brand collaborations of all time. For 30 years, FIFA licensed its intellectual property (including, crucially, its name used for the game’s title) to the Video Game distributor Electronic Arts, enabling the expansion of FIFA’s brand to the videogame and entertainment industry. To enhance the uniqueness of their product, EA also forged additional exclusive agreements with leagues, clubs, and players, so that they could use their real names in-game. This exclusivity is one of the main reasons that EA's rival, Pro Evolution Soccer, had to issue annual patches to update team names and logos, since they were not legally allowed to launch the videogames with real names and logos from clubs and players. 

  This story is also interesting for another reason: as any gamer reading us will probably know, the agreement between FIFA and EA came to an end a few years ago, after they failed to reach an agreement regarding the fee EA had to pay to FIFA for the license of its IP.  Consequently, EA rebranded its game and continued its success while retaining other league and club licenses, whereas FIFA lost a significant revenue stream, meaning they probably overplayed their hand. 

The two cases mentioned above involve large companies. It would however be a mistake to think that only large companies can benefit from brand collaboration. Here are some successful stories of SMEs that have benefited from entering into lucrative brand collaboration agreements: 

• Brewdog: Founded in 2007 with a £20,000 bank loan, Brewdog has transformed from a small craft beer manufacturer into a global success, nearly reaching a valuation of £1 billion within a decade. This impressive growth is largely attributed to its strategic collaborations that leveraged existing manufacturing and distribution networks, enabling market expansions while minimizing costs and maintaining independence from larger multinationals. A recent partnership with Budweiser China exemplifies this strategy, allowing Brewdog to use Budweiser's extensive distribution network to enter into China's fast-growing craft beer market. In this collaboration, Brewdog may have to accept risks and obligations, such as to share its recipes, marketing strategies, packaging, and trade secrets , but in exchange, this allows them to benefit from Budweiser's market expertise to adapt its products for local preferences.

  Brewdog is also an interesting example because it has found that collaboration can be an effective alternative for resolving intellectual property disputes. When they launched their “Lone Wolf” product, they faced a trade mark conflict with a Scottish distillery that already owned a used name. Instead of entering into a legal fight for the right to use this name, the two parties rather decided to collaborate under a shared brand.: the beer producer partnered with the distillery to create a new gin, where the pub team was invited to collaborate in the recipe of the product. 

• Hawkers: what it started as a 5-friend startup converted into a big international success. Hawkers, a company selling quality sunglasses at affordable prices, took advantage of the opportunities given on the early days of digital marketing to effectively promote the brand and expand their sales. In addition, by collaborating with influencers and celebrities, they significantly enhanced their brand presence and increased their sales. Today, Hawkers operates in 140 countries, successfully implementing localized strategies to connect with and appeal to customers around the world.

   

How intangible assets must be protected prior to engage with potential collaborators?

All these success stories were only made possible through the implementation of strong IP internal policies and practices, and involved in one way or another, the licensing of one company’s intellectual property to another company. FIFA licensed its name and logo to EA; Brewdog and the Scottish distillery agreed on the use of a common IP, the brand name; Star Wars licensed the copyright and trade marks over its characters, locations, names, etc.. Before engaging with potential partners for collaborations, it is essential to determine what the company’s strategy is, and implement prior measures to protect your intangible assets, which are the core of your business. Here’s a recommended steps to follow:

1. Internal evaluation: identify the assets that hold an economic value and can be effectively exploited in the market. Develop a business plan including new markets of to grow.
2. Business Strategy: Once you understand your strengths (valuable assets) and weaknesses, and have developed a business plan outlining where and how you intend to sell or offer your products, identify potential countries or sectors for expansion. Evaluate collaborators and partners who can complement your efforts. This does not necessarily only apply to expanding your own IP, but also to use other party’s IP through collaboration with them!
3. Preliminary Protection: Take the necessary steps to protect your intellectual property and implement safeguard measures. Note that it is advisable in all cases when you engage with potential partners and share sensitive business information, to do so under strict confidentiality obligations under strict confidentiality obligations – such as requiring them sign a Non-Disclosure Agreement (NDA).
4. Engagement with Potential Partners: Once these safeguards have been put in place, you can confidently engage with potential partners.

Therefore, the starting point is to evaluate and identify which assets need protection and determine the most effective protection, to then proceed with them. For example, if you have designed a chair and are seeking partners to commercialize it in another country, consider protecting it as a design.  We recommend seeking legal assistance to help you draft a comprehensive IP strategy tailored to your specific needs, taking into account key factors related to your situation, commercial interests and legal considerations.

Once the above has been taken care of, it is necessary to make sure that the collaboration terms are beneficial. With that in mind, here are some aspects to consider. These are general indications and you may require a tailored strategy to your specific circumstances or commercial interests.

Aspects to consider when licensing your IP assets

Clauses and terms applicable to the mentioned types of IP assets (trade marks, designs, copyright):

• Scope of the License: Clearly define what is being licensed (e.g., specific trade marks, designs, or copyrights), including the intended purpose and extent (e.g., nature and duration of use). Note that there might be specifics depending on the IP right, such as the following:
• Ownership and Usage Rights: It is also crucial to include an authorship/ownership disclaimer regarding authorship to clarify the rights of the original creator. In addition, to determine clearly the ownership of the new IP resulting from the collaboration, and to address the implications of modifications, improvements, and alterations to the original work, including the ownership rights associated with any changes made. Also to determine whether new products will be co-owned or solely owned by one party, as this can prevent legal disputes and facilitate cost-sharing for protection and enforcement in new markets. We also encourage to address the implications.
• IP Integrity Guidelines: Protecting the integrity and reputation of each brand during collaboration is crucial. Clear agreements regarding the use of trademarks, designs, and copyrights can help prevent consumer confusion and infringement issues. Companies should establish brand guidelines to safeguard their integrity and ensure that their values and reputations align. Both parties should be aware that any amendments to trademark usage may lead to infringement or loss of IP protection (e.g., revocation of a trademark due to lack of genuine use).
• Costs and Profits: Introduce measures for profit sharing and cost control to ensure the collaboration’s success.
• Reporting and Infringement workflows: Implement quality control measures and reporting procedures to address potential infringements and ensure compliance with established standards.

• Non-Competition Clauses: Include provisions that prevent either party from engaging in activities that directly compete with the collaborative project for a specified period, thereby safeguarding proprietary knowledge, trade secrets, and other sensitive information.

   

Summary of benefits and risks

Like any other business strategy, brand cooperation and IP licensing has its benefits and its drawbacks, and it is up to the parties involved to decide whether the former outweigh the latter. Here is a brief recap of the main benefits and disadvantages of IP licensing.