LICENSING INFORMATION AND IDEAS TO BETTER YOUR BUSINESS J u n e 1 4 A Global Perspective: Looking for a Rebound From Tough Times 2011 As the U.S. economy makes its way through the early stages of a slow but steady recovery, there is every reason to believe that the licensing business is beginning on that same path. Anecdotal evidence WHAT’S INSIDE indicates that – after a long period in which many potential agreements seemed to be frozen by uncer- tainty about economic conditions, as well as retail conservatism – the atmosphere in the U.S. is more positive. Retail sales are creeping up, and business seems to be on the upswing. The Legal Corner: In the following pages, we’ve asked LIMA’s Managnig Directors and representatives from around the The Importance of Maintaining world to give a picture of conditions in their local licensing markets. Brand Standards Page 2 Japan Charity Campaign: 2:46 p.m. on 11th March 2011 is a moment in time that will “I Give Because I’m Grateful” remain etched on Japanese minds forever -- the unprecedented Page 3 triple crisis of an earthquake, tsunami and nuclear accident in To- hoku and Fukushima. The TV images were indescribable, the num- Nominees for the 2011 bers inconceivable -- a magnitude 9 earthquake, nearly 10 meter- International Licensing high tsunami waves, over 15,000 deaths, more than 9,000 missing, Excellence Awards 5,000 injured, over 125,000 buildings damaged or destroyed, in- Page 8 frastructural damage estimated at JPY25 trillion (US$306 billion). At retail, lost sales has been estimated to be ¥18 trillion (US$220 billion); that represents 3.3% of overall annual Japanese Comment Deadline Approaching retail economy. on Marketing Food to Kids For the Japanese licensing industry, whilst there are of course Page 9 serious consequences in terms of plummeting royalty income, the licensing community here is pulling out all stops to help the survivors, particularly children, through Please turn to page 4 The flip Side SHOWING WHY LICENSING IS SUCH A VITAL TOOL By Charles Riotto, President Page 11 Another Licensing International Expo will soon be upon us -- our chance to show the global business world why licensing is such a vital tool for driving sales of Welcome, New Members retail merchandise and services. As always, LIMA will be in the forefront with Page 12 a full range of programs to provide information and knowledge on current trends and happenings, as well as the industry’s premier networking event for connect- ing with friends new and old. Once again we will be kicking off this year’s show with a dynamic Keynote Presentation on the global marketplace, delivered this year by Rick Darling, presi- dent of LF USA. In his role at the center of global sourcing and marketing, Rick has a unique perspective on the challenges and opportunities facing suppliers, brand owners, retailers and others. “The New Realities of the Global Consumer Product Marketplace... In- flation, Consumption & the Global Consumer” will take place at 8:45 on Tuesday morning before the Show www.licensing.org Please turn to page 9 THE LEGAL CORNER The Importance of Maintaining Brand Standards By Jed Ferdinand, Jeffers Cowherd P.C. There is an inherent tension in every mer- jewelry line: “the Marks are and shall be chandising program. Brand owners strive associated with a first-class prestige luxury to maintain product quality in an effort to image that is equal to or greater than the ensure that the goodwill associated with image of the most prestigious fine jewelry their valuable brands is not diminished by brands and designers sold in jewelry spe- THANK YOU substandard products or improper distribu- cialty stores such as Tiffany’s and depart- tion channels. On the other hand, licensees ment stores such as Saks, Neiman Marcus, We would like to thank want the freedom to develop products and Bergdorf Goodman and Bloomingdale’s ….” the outgoing members to sell through the broadest possible dis- Brand standard clauses like these are of- of the LIMA Board of tribution channels in an effort to maximize ten found in celebrity and fashion licenses, Directors for their revenues. where maintaining a first-class image is These considerations are not limited to critical. To that end, it is very common to dedication and hard luxury and high-end brands – virtually all see specific references to famous brands work: licensors are concerned with maintaining or designers used as the brand standard brand standards for quality and image. by which licensed products are measured Adam Beder, How does a licensor protect itself? Trusting against. Yet, there is no reason that this Spin Master Ltd. the licensee to do the right thing is not good type of provision could not be used in li- enough. A properly drafted license agree- censes for mid or lower-tier products as Rick Mallow, ment is the only way. If strong and clear well, so long as the licensor identifies com- Making Connections, brand standard protections are not includ- parable brands and lists them as the brand LLC ed in the written license agreement, they standard. may as well not exist because the licensee Quality Acknowledgement: As a won’t be bound by them. corollary to the brand standard clause, the Maura Regan, There is a fundamental legal requirement license agreement should also contain an Sesame Workshop of trademark and brand licensing that the express recognition by the licensee that if licensor must exercise a certain degree the licensed products were of inferior qual- Stu Seltzer, of control over the quality of the licensed ity in design, material or workmanship, Marketing on Demand products or risk that the license is deemed a it would impair licensor’s goodwill.There LLC “naked license,” which may result in aban- should be an express representation that donment of the licensor’s rights. But this the licensed products shall of “high standard Holly Stein, Mattel column will focus on the practical impli- and of such style, appearance and quality” cations of brand standard protections, not to protect and enhance the licensed brand the legal ones. The intent is to give brand and maintain the related goodwill. It is also Robert Strand, Strand owners a checklist of provisions related to important to prohibit the licensee from sell- IP the protection of product quality and brand ing damaged or defective merchandise, or image. products considered “seconds” based on Careen Yapp, Brand Standard Clauses: The industry standards. Konami Digital most direct way to address the issue of Product Approvals: Licensors Entertainment brand image is to include a clause in the should have full approval rights throughout license agreement requiring the licensee the entire production process. Depending to maintain a specific and defined brand on the type of licensed product, this could standard that compares the licensed brand include: (1) design or concept approval; (2) with other brands or names particular retail prototype approval; (3) pre-production ap- stores. Here is an example of a brand stan- proval; and (4) post-production approval, dard clause from a license for a high-end Please turn to page 11 2 www.licensing.org CHARITY COMMITTEE “I Give Because I’m Grateful” By Cheryl Stoebenau, Charity Committee Co-Chair This year’s fundraising campaign theme Children’s Brain Tumor Tissue Consortium. STATISTICS by funding the Children’s Brain is “I Give Because I’m Grateful.” I’m sure Brain and Spinal Cord Tumors are the Tumor Tissue Consortium. Tissue Banks are that most of us can find many reasons to deadliest of pediatric cancers. This disease the way other forms of cancer have made so be grateful in our lives --- and many of you randomly reaches out and strikes perfectly much progress and we have every reason to have also found a reason to give! healthy kids. One-third of the children af- believe that the results of the Consortium Thanks to the generosity of those who flicted with this type of cancer die within will help in speeding a cure for this disease. have already donated, I am pleased to say five years. Those who survive face long- One hundred percent of the money we that we are very close to raising $600,000 – term effects that profoundly challenge raise is used to fund the Children’s Brain 60% of the way to achieving our 2011 goal them throughout their lives. As a parent, Tumor Tissue Consortium. It costs $1,000 of reaching $1,000,000. This is a wonder- imagine how you would feel to hear that to collect and process each tissue sample. ful attribute to our industry! A very special your child has been diagnosed with this In order for researchers to conduct a mean- thank you to those who have donated and disease ---- and then you hear those devas- ingful analysis of the more than 100 differ- to the Charity Committee for their dedica- tating statistics. ent types of pediatric brain and spinal cord tion and support of our efforts to fund the Together, we are going to CHANGE THESE tumors, they need to process 3,000 tissue samples. Munchkin Inc., The NPD Group Inc., Random Without LIMA’s support this research will LIMA Donor List House, Rubie’s Costume Co., Sakar Inter- not be funded. The quicker we can raise national Inc., Scholastic Media, Simon & the money needed to support the Consor- PLATINUM LEVEL Schuster, Spin Master Ltd., Surge Licensing, tium, the sooner we will see positive re- American Greetings Corp., Cartoon Network, Toys “R” Us Children’s Fund sults, bringing hope to the kids and families JAKKS Pacifics Inc., Jay at Play International, who are afflicted by this terrible disease.