The Evolution of Brand Licensing

AuthorMichael Sanford Stone
ProfessionB.A. from Hamilton College and a J.D. from Emory University School of Law
The Evolution of Brand
As you have learned, corporate brand licensing has evolved
from a largely transact ional and promotional tactic to a strate-
gic tool that is aligned w ith and supports a company’s overall com-
munications goals and objectives, engagi ng with consumers in an
authentic way. is evolution is worth exami ning in detail. Besides
being a highly entertai ning history lesson, the story of e Coca-
Cola Company’s changing and brilliant use of licensing, wh ich is
worth studying in a nd of itself, provides insight into how and why
brand licensing has become such an eective marketing tool.
e history of licensing is also the history of the relationship
of consumers with media and with brands. To grasp the value of
licensing in today’s marketing and retail env ironment, you need to
see how it evolved over time as the consumer/media relationship
cha nged . As yo u’ll dis cover, e ach t ime l icen sing e volve d, it was t he
result of innovative thinking that took advantage of changes and
cultural sh is that were occurring in a given era.
Consider the historical context. Simply, licensing and its pre-
cursor, merchandising, started as advertising vehicles. Traditional
The Power of Licensing
radio and television advertising then ca me along and ultimately
became the marketing focus. A nd, more recently, as traditional
advertising declines, licensing has been embraced again, but this
time as a dierent ki nd of marketing tool.
at’s the highly condensed elevator version of licensing’s
evolution. But to see why brand licensing is a discipline whose
time has come, we need to delve a bit deeper into the history.
The Early Years
Although it’s impossible to know who was the rst person or
company to use licensing, we do know that at the start, licensing
involved the following very basic criteria: A person or an entity
owns an intellectual property and grants permission to a third
party to use that propert y on a specic product that will be sold to
consumers at retail. Now let’s break down that denition into its
component parts: rst, ownership of intellectual property ; second,
a grant by the owner to a third par ty to use that property; t hird,
a description of the product to be sold at retail to consumers that
can feature the property.
at’s about as simple a “license” as one can have. Other crite-
ria to consider are compensation by the third party (the licensee)
to the property owner (the licensor) for the usage; a term of years
during which the usage may continue; licensor approval rights
with respect to the product; and a writ ten document. Without the
existence of a written document, however, it’s dicult to deter-
mine the “contractual” ter ms of what might have been agreed to
or appear to be a license. Indeed, many lawyers would argue that
a written document is absolutely necessary unless the agreement
was for less than a year. Moreover, in the United States today,
under federal law, a license agreement without product approval
provisions (or any exercise of control over the quality of the prod-
uct) is deemed a “naked license” and can lead to the abandonment
of the tr ademark.1 For t his p art icula r his toric al exe rcise , be awa re,
1. In Eva’s Bridal Ltd . v. Halanick Enterpris es, Inc., 639 F.3d 788 (7th Cir. 2011), the court

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