Four Wheel Fashion

by Sheppard Mullin Richter & Hampton LLP

If you’ve ever wondered what the “lifestyle” of a Porsche driver looks like, look no further than Porsche Design’s latest fashion catalog. Twenty-three glossy pages of sleek leather jackets, modern business blazers, and retro-futuristic day-to-evening wear attempt to define what Porsche drivers look like, what they wear, and what they do in their free time. Porsche is selling more than just a vehicle—Porsche is selling a lifestyle.

Lifestyle branding is one of several strategies that auto companies are currently using to expand their consumer base. Businesses are no longer limiting themselves to one category of goods or services; companies recognize the benefits in tapping into markets that are not normally their own. Brand extension licensing, where a company sticks its trademark onto a new product line, is one of the most effective marketing strategies an already-successful brand can utilize. Take a look at what else your customers spend money on, and make it. Porsche drivers already spend money on high-end apparel by other retailers; now they can spend that money on Porsche-brand apparel instead.

Cobranding is another opportunity for companies to tap into the devoted consumer base of another, benefit from that brand’s popularity, and consequently expand their reach. This Spring, Chrysler teamed up with cutting-edge designer John Varvatos to introduce a limited-edition model of their classic sedan. This cobranding venture is beneficial to both parties: Chrysler gains a modern edge from having attached itself to Varvatos, and Varvatos has made his name more accessible and recognizable to Chrysler drivers. Cobranding in the auto industry certainly isn’t new—Ford has an Eddie Bauer-edition Explorer and Fiat had a Gucci-edition 500—but every venture presents a multitude of complicated legal issues.

These deals necessarily involve the licensing of trademarks and/or copyrights for use with a product, service, or promotion. A manufacturer will look to use a popular logo, graphic, or brand in order to promote their product, or a popular brand will allow their trademarks to be licensed onto a new product in order to reach more consumers. Often, consumers are not even aware that the product they are purchasing is the result of a licensing agreement.

Brand extension occurs when the brand’s trademarks and copyrights are licensed for use on products that are not typically manufactured, marketed, or distributed by the brand. This form of licensing allows a brand to begin marketing a new type of product without many of the costs or risks associated with doing so. Developing, manufacturing, and distributing a new product line is an expensive and time-consuming endeavor—licensing allows a brand to enjoy the benefits of the new product line without dealing with the headache of actually creating it.

Cobranding is the practice of combining two or more brand names or trademarks to be used on one product. When John Varvatos and Chrysler join forces, they have to clearly delineate which brand will have creative controls and approval, which brand will be responsible for promotions and marketing, and how each trademark will be licensed. Businesses seeking to engage in a co-branding venture should determine ahead of time the nature of the relationship between the parties, so that any obligation to perform for the venture is clearly established. Cobranding agreements should also explicitly state how much each brand is responsible for marketing, promotional expenditures and obligations, and most importantly, how each brand will profit.

Brand extension can be incredible beneficial, but companies should be selective when associating their intellectual property with other products. A successful licensing agreement will exist between a brand and a product that is related to the interests of the brand’s existing consumer base. Licensing a trademark onto an unrelated product or a product of significantly lesser quality will dilute the strength of the brand and confuse customers. Successful cobranding requires similar selectivity—combining brands that have radically dissimilar messages, qualities, and reputations will probably just hurt both.

Keeping a brand relevant and profitable in the current economy requires creative business strategies. Lifestyle branding and cobranding ventures can be an effective means of attracting new customers while engaging existing customers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sheppard Mullin Richter & Hampton LLP | Attorney Advertising

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Sheppard Mullin Richter & Hampton LLP

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