Co-branding

Co-branding, or brand alliance, refers to the association of two or more trade marks belonging to separate businesses on the same product, service or campaign. It is not a nominate contract and is governed by the general law, trade mark law and competition law. Each party retains ownership of its sign and authorises the other, by a limited reciprocal licence, to affix it on the agreed terms.

Forms of alliance

Practice distinguishes the functional alliance, in which a branded component or ingredient is incorporated into a finished product and identified as such, from the symbolic alliance, in which two brands come together for a limited edition or joint collection in order to capture each other’s image. In both cases each trade mark continues to be used to designate its own contribution, which preserves its function as an indication of origin. Where the signs are merged into a new composite sign, the parties must decide who will file it and how it will be exploited after the operation ends, failing which the joint sign may be left without a clear owner.

The agreement

The co-branding agreement sets up cross-licences that are non-exclusive and limited to the products and duration of the operation. It lays down the guidelines for affixing the signs, their visual hierarchy, quality control and mutual approval of communication materials. It allocates ownership of joint creations, whether designs, visuals protected by copyright or new signs, and provides for the fate of stock on expiry. Since trade mark licences are enforceable against third parties only once recorded in the register, the parties must decide whether the operation warrants recordal, in particular where one of the partners must be able to bring infringement proceedings.

Legal risks

The association may create a likelihood of confusion as to the origin of the goods or mislead the public about the existence of a lasting economic link between the businesses. Use of a trade mark with a reputation by a partner beyond what the licence permits exposes it to an infringement action. The operation may also undermine a trade mark’s distinctiveness if it comes to be perceived as a mere feature of the other party’s product. Lastly, an alliance between competitors must comply with the rules on anticompetitive agreements, particularly where it involves exclusivities, customer allocation or exchanges of sensitive information.

Key points

Co-branding rests on cross-licences limited in scope and duration and on precise guidelines for affixing the signs. Each party remains owner of its trade mark and must control the other’s use of it. Ownership of joint creations, the fate of stock and the end of the operation should be settled in advance, and it should be checked that the association creates neither confusion as to origin nor a prohibited restriction of competition.

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This glossary entry is general in scope and does not constitute legal advice.

Dhenne Avocats is a patent litigation firm. Matters outside that field, such as trade marks, designs, copyright and IT contracts, are handled by practitioners the firm works with regularly, and by the firm itself when they arise in a patent dispute.

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