Coursebook Fashionlaw 061915

City Bar Center for Continuing Legal Education
THE NEW YORK CITY BAR

42 West 44th Street, New York, New York 10036
10th Annual Lawyering in the Fashion Industry:

A Practical Guide to Licensing,
Trademark Protection & Other Industry Issues
June 19, 2015

9:00 a.m. 1:00 p.m.
Sponsoring Association Committee
Fashion Law
Marc Lieberstein, Chair
June 19, 2015
Program Chair
Kenneth P. Kopelman
Kramer Levin Naftalis & Frankel LLP
Faculty
Arthur W. Bodek
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
Darlene Collova
Vice President, Global Customs Compliance
Kate Spade & Co
Christopher T. Di Nardo
Senior Vice President, General Counsel & Corporate Secretary
Kate Spade & Company
Elisheva M. Jasie
Vice President, Assistant General Counsel
Coty Inc.
Ali Grace Marquart

Marquart & Small, LLP
Jonathan M. Wagner
Agenda
9:00 a.m.-9:05 a.m. Introduction
9:05 a.m.-9:55 a.m. An Insiders Look at Fashion Trademark License Agreements

& Arrangements
Elisheva Jasie & Kenneth P. Kopelman
9:55 a.m. -10:45 a.m. Successful Approaches to Trademark Protection

Christopher T. DiNardo & Jonathan M. Wagner
10:45 a.m. -10:55 a.m. Break
10:55 a.m. -11:35 a.m. Introduction to the Law of Fashion Modeling

Ali Grace Marquart
11:35 a.m. -12:10 p.m. Current Topics in the Importing/Sourcing Area

Arthur W. Bodek
12:10 p.m. -12:45 p.m. Implementing & Administering a Successful Social

Compliance Program
Darlene Collova & Christopher T. DiNardo
12:45 p.m.-1:00 p.m. Questions & Answers

Panel
New York Credit: 4.0 Professional Practice

This live program provides transitional/non-transitional credit to all attorneys.
California Credit: 4.0 General

New Jersey Credit: 4.2 General
Pennsylvania Credit: 3.5 General
Friday, June 19, 2015

9:00 a.m. to 1:00 p.m.
Table of Contents
Notes on Faculty .............................................................................................................................. i
An Insiders Look at Fashion Trademark License Agreements and Arrangements (Outline) ........1
By: Kenneth P. Kopelman
Form of Fashion Trademark License Agreement ..........................................................................11

By: Kenneth P. Kopelman
Successful Approaches to Trademark Protection (PPT)................................................................91

By: Jonathan M. Wagner
Successful Approaches to Trademark Protection (Outline).........................................................111

By: Jonathan M. Wagner
Right of Publicity in the Age of Social Media (PPT) ..................................................................135

By: Ali Grace Marquart
Current Topics in the Importing/Sourcing Area (PPT) ...............................................................149

By: Arthur W. Bodek
McKinneys Civil Rights Law 50. Right of Privacy, NY CIV RTS 50.................................172
McKinneys Civil Rights Law 51. Action for Injunction & for Damages,
NY CIV RTS 51........................................................................................................................173
Wests Ann. Cal. Civ. Code 3344. Use of anothers Name, Voice, Signature, Photograph, or
likeness for advertising or selling or soliciting purposes, CA CIVIL 3344..............................175
Association of Model Agents: Terms and Conditions for Booking Models (July 2009) ............177
Danish Fashion Ethical Charter (March 2015) ............................................................................186
Implementing & Administering a Successful Social Compliance Program (PPT) .....................190

By: Christopher T. DiNardo
Implementing & Administering a Successful Social Compliance Program (Outline) ................202

By: Christopher T. DiNardo
Notes on Faculty
Arthur Bodek is a partner at Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP. His
practice is focused on import and export trade law, Customs law and other regulatory law as it
relates to international trade. Much of his work centers around developing creative strategies to
maximize benefits under Free Trade Agreements and a host of other duty-free/reduced duty tariff
programs (e.g., North American Free Trade Agreement, Central American Free Trade
Agreement, Generalized System of Preferences, Caribbean Basin Initiative, 9802 program, etc.).
Mr. Bodek also works with clients to develop favorable tariff classifications that can be applied
to the entry of their products. He devotes much of his time to assisting clients with importer
security programs such as the Customs Trade Partnership Against Terrorism (C-TPAT). He has
represented clients before US Customs and Border Protection and other federal agencies in
connection with audits, investigations, penalties and other enforcement actions. Mr.
Bodek regularly counsels clients on compliance issues and frequently speaks to trade audiences
on these topics.
Darlene Collova is the V.P. Global Customs Compliance at Kate Spade & Company. Previous
to Kate Spade, Darlene held the position of V.P. of Global Customs Compliance at Liz
Claiborne. Darlene has been in the fashion and apparel industry for more than 25 years and is
experienced in several areas of compliance. Darlenes role at Kate Spade & Company includes
Customs & Trade, Social Compliance and Product Safety. Darlene is a member and participates
with American Apparel & Footwear Association (AAFA), International Customs Compliance
Professionals Association (ICPA) and Society of Corporate Compliance and Ethics (SCCE).
Christopher T. Di Nardo is Senior Vice President, General Counsel & Corporate Secretary at
Kate Spade & Company. In 2001 he was promoted to Deputy Counsel, in 2006 he was promoted
to Vice President, Deputy Counsel and in 2009 he became Vice President Deputy General
Counsel. Mr. Di Nardo serves on the Board of Directors of the American Apparel & Footwear
Association, and is a member of that organizations Executive Committee.
Elisheva Jasie is Vice President and Assistant General Counsel at Coty Inc. Elisheva has been
with Coty from 2005 and her practice focuses on licensing, general Intellectual Property,
trademark clearance and portfolio management. Her role also includes contract and marketing
support for Cotys prestige brands and she works with the business development group on M&A
and other strategic relationships. Elisheva takes pride in partnering with her business and
marketing counterparts to find creative, out of the box solutions. Prior to her tenure at Coty,
Elisheva was in private practice with a focus on a wide range of trademark and intellectual
property matters as well as licensing, technology, venture capital and all manner of commercial
transactions. Elisheva is a member of both the Israeli and New York Bars.
Kenneth P. Kopelman is a partner and co-chair of the Corporate Governance practice within
Kramer Levin Naftalis & Frankel LLP Corporate Department, advises businesses, Boards, Board
committees (compensation, audit and governance) and directors on a full range of governance,
compliance and disclosure matters, providing counsel both on a regular ongoing basis and in the
context of special situations, including contests for corporate control and internal inquiries and
investigations. Areas of focus include representation of compensation committees (including
i
advice regarding "say on pay", executive compensation plans and individual packages), evolving
director responsibilities, "corporate democracy" issues, and formulation and implementation of
the full range of Board policies, including "best practices". Ken's approach to working with
Boards is informed by his own 20+ years' service as a director of public companies, including an
S&P 500 consumer products company (NYSE) and a computer software firm (NASDAQ). Most
recently, Ken was recognized as one of the most influential people in corporate governance by
the National Association of Corporate Directors' (NACD's) national magazine, Directorship -
who named him to its annual list, the "Directorship 100". Ken has written extensively on
governance-related topics, and lectures regularly on a variety of governance, compensation and
related topics, including at the New York City Bar Association, the NACD, TIAA-CREF, the
NYSE and the Conference Board. He has been named as a New York Super Lawyer in
Corporate Governance since its inception. Over his career, Ken has regularly acted as corporate
counsel to a number of significant companies in a wide variety of industries, with a special
concentration within the apparel and fashion fields. Work includes the full range of business
transactions, including mergers and acquisitions, licensing arrangements, financings, joint
ventures and executive compensation. Ken organized and is chair of the program "Lawyering In
The Fashion Industry: A Practical Guide to Licensing, Trademark Protection & Other Industry
Issues," held annually at the New York City Bar Association. Ken also has extensive experience
in the corporate side of bankruptcies, being the senior-most member of the Kramer Levin
corporate team in the firm's representations of the creditors' committees in the Chrysler, GM and
Capmark cases, and of St. Vincent Catholic Medical Center. Ken is a graduate of Columbia Law
School and Cornell, and received a general course certificate from The London School of
Economics.
Ali Grace Marquart is a partner at Marquart & Small, LLP and is an accomplished
transactional lawyer focused on advising companies and individuals in the fashion and
entertainment industries. Prior to founding Marquart & Small, LLP, Ali served as the Director of
Business and Legal Affairs for Wilhelmina Models, one of the most influential model
management companies in the world. In that role, she managed all legal matters for Wilhelmina,
ranging from immigration to intellectual property issues. Ali is also an adjunct professor at
Fordham Law Schools Fashion Law Institute, where she created and teaches the first-ever
course on Fashion Modeling Law. She received her JD from UC Hastings College of the Law,
where she was an editor for the Hastings Law Journal, and her BA magna cum laude, with
Honors in Psychology, from the University of Southern California, where she was a Renaissance
Scholar. Ali is admitted to practice in New York and is a member of the Fashion Law
Committee of the New York State Bar Associations Entertainment, Arts and Sports Law
Section.
Jonathan M. Wagner is a litigation partner at Kramer Levin Naftalis & Frankel LLP. He has
been litigating trademark, advertising and other unfair competition suits for nearly twenty-five
years, including some of the most significant Lanham Act decisions during that period. He has
handled matters for the firm's major intellectual property clients, as well as for smaller and
medium-sized clients, including retailers, apparel firms, consumer products companies, and
software firms. Mr. Wagner also has extensive trial experience in the Lanham Act field and has
published widely on the subject.
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AN INSIDERS LOOK
AT
FASHION TRADEMARK
LICENSE AGREEMENTS
AND
ARRANGEMENTS
Lawyering in the Fashion Industry:

Trademark Protection &
Other Industry Issues
Kenneth P. Kopelman
June 19, 2015
2015 Kramer Levin Naftalis & Frankel LLP
KL2 2701331.7
1
An Insiders Look At
Fashion Trademark License Agreements
And Arrangements
I. Fashion Licensing Rationale
A. Overview
1. Licensing permits a company that has developed/established a mark/brand

name to leverage its marks value by expanding product lines and/or
territories to include products/territories where it might otherwise lack the
expertise, financing, or operational base to establish and grow its own
operations.
2. This is especially so since different product lines/territories within the

fashion industry often have significantly different designers, product
development calendars, global production chains, and channels of
distribution.
3. Licensing can be efficient because it allows each party to specialize in

those portions of the product development, production and sales chains
(i.e., design and marketing v. production and distribution) where it is
strongest.
B. Product Expansion
1. A company that has developed a reputation in one area (e.g., apparel) can,
as licensor, extend its reputation into adjacent, non-core complementary
products (e.g., fragrances, cosmetics, accessories, shoes, jewelry, eyewear,
and home collections).
2. A high performing licensee may be able to establish a business around the

new product offering more quickly, and at far lower cost to licensor, than
the company could itself accomplish via a direct entry.
3. Expanding its product offerings may also expand the companys consumer
base by enabling consumers who might otherwise not be able to afford the
core brand to participate in the brand at a more manageable price point
(e.g., fragrances, handbags and small leather goods, sunglasses). Risks
may include diminishing the value of the mark (e.g., high-end fragrance
sold at lower-end store).
4. Expanding its product offerings may also enhance the companys brand
awareness and consumer base, e.g., via a new products location within
the retail store itself (e.g., fragrances and cosmetics are generally sold on
the first floors of department/specialty stores) or at single category
retailers (e.g., optical and home-goods stores).
KL2 2701331.7
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5. These new product offerings will likely involve back-end considerations
quite different from those applicable to the companys core products,
ranging from different calendars (e.g., trade shows) to selling and
consumer models (e.g., gift with purchase); licensees are already
familiar with these considerations.
C. Territorial Expansion
1. Licensees may be able to more efficiently produce or sell products in

geographical areas not yet penetrated by licensor.
2. Licensees may be able to leverage existing relationships with specialized

local resources (e.g., handbag or shoe manufactures) and/or retailers in
foreign territories.
3. Licensees may be more familiar with local consumer preferences, as well

as operational matters such as applicable production, customs and import
regulations.
D. Potential Benefits to Licensor
1. Expand operations into new product categories.
2. Expand distribution channels.
3. Increase marketing opportunities, brand awareness and customer base.
4. Increase revenue and profit streams without having to build its own
organization, or otherwise devote significant capital/operating dollars;
capital-light business model.
E. Potential Benefits to Licensee
1. Ability to enter a new market segment with products that have immediate
consumer recognition.
2. Ability to leverage its existing retail relationships and back-end

operations over an increased sales base.
3. Create long-term relationships with larger, well-funded licensors.
F. Potential Overarching Issues/Pitfalls
1. Licensor needs to make sure licensee is in synch with its philosophy/

approaches at all levels, as the style, approach and quality of a licensed
product needs to conform to/complement the style, approach and qualify
of core line. As far as the consumer knows, the licensee and licensor
are one and the same company.
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3
2. Diligence on licensing partners is absolutely key; no contract, no matter
how strong, will fully protect a licensor. Mere termination/contractual
damages (even liquidated damages) may not be sufficient to recompense
licensor when a license goes awry.
3. Licensor should want the licensee to be financially successful, thereby

hopefully aligning incentives and discouraging licensee from focusing
solely on immediate, high volume product sales to the detriment of the
long-term health of the mark. This divergence of incentives can be
especially problematic in a license termination/expiration scenario.
G. The License Agreement itself
1. One size does NOT fit all!
2. Each license agreement must try and balance the relative interests of the
licensor and licensee; the final agreement is almost always a matter of
relative bargaining position/leverage.
II. Form of Fashion Trademark License Agreement (see attached)
A. Philosophy/General Approach
1. Roadmap for a constructive, interactive working relationship/

partnership, vs.
2. Minefield where Licensor tries to collect as many options as possible to

call a default/terminate, each of which may ripen into an option to
renegotiate financial/operational terms
B. Recital Clauses
1. Provide the context of the transaction perhaps not enforceable, but

may be helpful in the context of a dispute
2. May help to lay foundation for important substantive claims down the
road
C. Grant of License
1. Sets the scope of rights granted who, what, when, where, and subject to
what conditions?
2. Definitions: Licensed Mark; Products; Licensed Products
3. Exclusivity
4. Territory
3
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4
5. Approved Customers Licensor approval; ability to withdraw approval
a. Authorized Retailers
i. What happens if Licensor repositions Licensed Mark into

downmarket channels?
b. Closeout Retailers
c. Licensor Retail Stores and Licensor Outlets
d. Restrictions: diversion; direct sales; Internet sales; give-aways
D. Term
1. Initial period consider start-up period, timing with respect to Seasonal

Collections, trade shows, etc.
2. Renewal periods
a. Number and Length; Considerations
i. For Licensor: state of the business/bargaining position;

cash flow needs; desirability of Licensee (e.g., good
reputation, synergies, prior working relationship)
ii. For Licensee: value of trademark; transaction costs of

license; costs of getting line up and running and future
profitability
b. Criteria for renewal
i. Sales thresholds, as well as adjustments via ratchet and/or

core line tie in
3. Right of First Refusal; Right of First Negotiation for further extension
E. Business Deal
1. Sales Royalty based on Net Sales
2. Guaranteed Minimum Sales Levels/Minimum Royalties
a. What consequences if sales level not met?
b. Can Licensee pay up minimum, even when underlying sales

level not achieved?
3. Marketing Fee (with or without Minimum)
4
KL2 2701331.7
5
4. Stand-alone Advertising/Promotional Expenditures
F. Licensee Operations
1. Seasonal Collections; Development of Licensed Products; Approval

Standard
a. Number/size of annual collections
b. Licensor approval throughout various stages of production of all

Licensed Products and all other items or materials using the
Licensed Mark or for use in connection with Licensed Products
(e.g., labels, hangtags, cartons, containers, wrappers, packaging
materials, fixtures, displays, signage, racks, artwork, printing, etc.)
c. Approval procedures
i. Range from very general to very specific (with timetables)
ii. Construct of deemed approval if Licensee fails to

approve/reject
d. Approval Standards Licensors sole, absolute, exclusive,

subjective discretion vs. Licensees commercially reasonable
standard
e. Quality Control; Manufacturers
i. Compliance with Licensors Ethical Standards and

applicable law
2. Licensee staff/resources
a. Licensor approval of Licensee manager/employees
b. Showroom requirements
3. Advertising; Marketing
a. Licensor approval, prior to use, of all advertising/marketing

materials
b. Minimum advertising obligations
c. Licensee participation in Licensor marketing programs (e.g.,

booths at MAGIC (originally, Mens Apparel Guild in California)
shows, runway shows)
5
KL2 2701331.7
6
G. The Licensed Mark; Intellectual Property Rights
1. Confirmation that all rights are property of Licensor
2. Work for hire; assignment to Licensor
H. Representations and Warranties; Covenants
1. Restrictions on Licensees involvement with competing lines
2. Mutual Confidentiality
3. Mutual employee/contractor No-Poach
4. Restrictions on Licensors use of Licensee-introduced factories
5. Licensee minimum consolidated net worth requirement
I. Termination; Rights on Termination
1. Defaults Curable and Non-Curable
2. All IP rights revert to Licensor; Cessation of Licensees use
3. Sell-Off Period
J. Disputes and Dispute Resolution Mechanics
K. Indemnification; Insurance
L. Assignability
M. Drafting; Construction
III. The Celebrity Licensor
A. Celebrity License Agreements all of the usual fashion trademark concerns, plus
(at least):
1. The celebrity personality and appropriate market positioning
2. Heightened concerns re: long-term viability/staying power of brand
a. Bad behavior/morality clause: brought into public dispute,

contempt, scandal, scorn or ridicule or which offends the
community; perhaps coupled w/ a diminution is the value of the
Licensed Mark, or a significant drop in sales or significant failure
to meet minimum sales level, sometimes quantified as 30-50%
6
KL2 2701331.7
7
b. Death; disability
c. Loss of Interest/Retirement
i. If celebrity has discontinued maintaining a reasonably

significant publicized presence with respect to Licensed
Products and/or the brand
3. Heightened concerns regarding Licensors control/standards for approval
4. Issues re: Celebrity involvement, promotion and access
a. Should be specified in the License Agreement or in a separate

Appearance and Endorsement Agreement
1. Some clauses: how many days per

month/quarter/year; scheduling; types of activities
(e.g., trade shows, line launches, store appearances,
interviews, photo shoots); expense reimbursement
for Celebrity, staff, entourage; compensation;
injunctive relief
2. Limit Celebritys ability to enter into other

endorsement deals; restrictions on involvement with
competing products (e.g., cant appear in competing
product advertisements; no cover shoots wearing
competing product; cant publicly wear any branded
products more frequently than Licensed Products).
b. Grant of access to Celebrity, e.g., requiring Celebrity to provide

certain minimum services, including personal appearances, photo
shoots, etc.
c. Covenant to wear Licensed Product at specified industry events

(e.g., Oscars, Grammys, etc.)
i. Breach: termination or fines, which can escalate if

multiple breaches
B. Sublicense Agreements
1. Celebrity as ultimate licensor; grant of master license to intermediary who

sublicenses marks for different categories
2. Consider need for Novation by ultimate licensor of sublicense (see Exhibit

A to Form License Agreement)
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KL2 2701331.7
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IV. Alternatives to Traditional Licensing Arrangements
A. Joint Ventures, including where Licensor and Licensee form a new sole purpose
entity (Newco), and Newco enters into (i) license with Licensor, and/or (ii)
requirements contract with Licensee
B. Co-Branding Deals
1. Form of Brand Extension; Cross-Marketing Opportunities
a. Louis Vuitton and Takashi Murakami collaborations
b. Nike-Apple collaboration (Nike + iPod) to create an iPod-

compatible running shoe
c. MLB and Victoria Secret co-branded PINK clothing line
d. J.Crew co-branded everything: shoes, dress shirts, skirts, ballet

flats, etc.
2. Celebrity Endorser vs. Co-Branding Force
a. Celebrity Endorser: Look who weve got our Hanes on now

campaign (Michael Jordan, Kevin Bacon, Jennifer Love Hewitt)
b. Co-Branding: Marni, Karl Lagerfeld, Madonna, Stella McCartney,

Roberto Cavalli for H&M; Uniqlo w/Bastian, Theory
3. Co-Branding Agreement
a. Grant of License either (a) owner of mark A licenses mark A to

owner of mark B who produces the AB co-brand; or (b) owner of
mark A and owner of mark B each license respective marks to a
Newco formed to manufacture and market the AB co-brand
b. Protection of each licensors mark
i. Expressly acknowledge each partys ownership of their

respective existing brands/marks
ii. Each licensor should ensure its own trademark protections

are in order, including restrictions for (new) product classes
to be manufactured under co-brand
c. Ownership rights relating to combined mark, products featuring

multiple marks or any combined marks
i. Who owns the resulting co-brand?
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KL2 2701331.7
9
ii. What happens if the co-brand folds? (i.e. continued use of
respective and/or combined marks)
d. Use of co-brand/combined marks
i. Guidelines on permitted use
ii. Approval rights for the contributing licensor use,

products, marketing, manufacturers, retailers, channels of
distribution
e. Dilution issues protection against dilution of licensors

brand/image; restrictions on use of co-brand in a way that
competes with licensors brand
f. Profits: Equity in a joint venture/partnership vs. royalties/success

fees based on sales
g. Ability to walk away what happens if one brand tanks?
h. Other concerns when two licensors collaborate:

confidentiality/proprietary information; competition; non-
solicitation; shared costs (i.e. marketing, production);
indemnification; strategic purpose behind co-branding; joint
venture should be controlled through a limited edition or one-off
collection to retain each licensors brand identity.
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KL2 2701331.7
10
FORM OF
FASHION TRADEMARK
LICENSE AGREEMENT
Lawyering in the Fashion Industry:

Trademark Protection &
Other Industry Issues
Kenneth P. Kopelman
June 19, 2015
2015 Kramer Levin Naftalis & Frankel LLP
KL2 2698921.7
11
Note
This is not a form to be marked up and used in real life situations. Its purpose is to introduce and
comment on a variety of issues that commonly arise in the context of fashion trademark license
agreements, and thereby to better enable the reader to identify and thoughtfully approach the
drafting and negotiation of such a document. Because many of the provisions reflect different
perspectives or business considerations (e.g., some of the provisions are Licensee-friendly, some
are Licensor-friendly, and some attempt to be neutral), they may be redundant, and even
inconsistent with one another. They should not be patched together under the assumption that
the result will be a cohesive whole. I wish to thank my Kramer Levin colleagues, Jodi
Rosensaft, Paul D. Connuck and Richard L. Moss, for their contributions to this form.
Ken Kopelman
June 2015
KL2 2698921.7
12
TABLE OF CONTENTS
A R T I C L E I - G R A NT OF L I C E NSE ..........................................................................................3
1.1. License. ..............................................................................................................3

1.2. Exploitation of Rights ........................................................................................4
1.3. Approved Customers. ........................................................................................5
1.4. Additional Provisions Relating to Sale of Licensed Products. ..........................9
1.5. [Resolving Licensed Product Definition Disputes ...........................................10
A R T I C L E I I - T E R M ..................................................................................................................11
2.1. Initial Term; Licensed Term; Annual Periods .................................................11

2.2. Renewal Terms ................................................................................................12
A R T I C L E I I I - B USI NE SS DE A L ; PA Y M E NT S ....................................................................15
3.1. Sales Royalty; Net Sales ..................................................................................15

3.2. Minimum Net Sales and Minimum Royalties .................................................16
3.3. Initial Advance .................................................................................................19
3.4. Marketing Fee ..................................................................................................19
3.5. Payment Mechanics. ........................................................................................20
3.6. Payments; Currency Conversions ....................................................................20
3.7. Statements and Reports ....................................................................................21
3.8. Books and Records; Audits..............................................................................23
A R T I C L E I V - L I C E NSE E OPE R A T I ONS; L I C E NSE D PR ODUC T DE V E L OPM E NT

A ND A PPR OV A L ........................................................................................................................24
4.1. Licensee Staff and Resources ..........................................................................24

4.2. Approval Standards; Development of Licensed Products; Approvals. ...........26
4.3. Production of Licensed Products; Quality Control; Approved
Manufacturers. .................................................................................................31
4.4. Advertising; Marketing; Showrooms; Trade Shows; Announcements. ..........35
4.5. Distribution. .....................................................................................................37
A R T I C L E V - T H E L I C E NSE D M A R K A ND I NT E L L E C T UA L PR OPE R T Y R I G H T S 39
5.1. Ownership Rights.............................................................................................39

5.2. Protection and Use of the Licensed Mark. .......................................................40
5.3. Other Licenses .................................................................................................43
5.4. Third Party Infringement. ................................................................................43
5.5. Copyright .........................................................................................................44
5.6. Cessation of Rights ..........................................................................................45
A R T I C L E V I - R E PR E SE NT A T I ONS A ND W A R R A NT I E S ...............................................45
6.1. Mutual Representations and Warranties ..........................................................45

6.2. Licensor Representations, Warranties [and Covenants] ..................................45
6.3. Licensee Representations, Warranties [and Covenants] ..................................46
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KL2 2698921.7
13
A R T I C L E V I I - C OV E NA NT S ..................................................................................................47
7.1. Confidentiality .................................................................................................47

7.2. Certain Restrictions on Licensee Operations ...................................................48
7.3. Non-Solicitation; No Hire ................................................................................49
7.4. Use of Manufacturers .......................................................................................49
7.5. Consolidated Net Worth of Licensee ...............................................................50
7.6. Future Licenses ................................................................................................50
A R T I C L E V I I I - T E R M I NA T I ON; R I G H T S ON T E R M I NA T I ON ....................................51
8.1. Termination of License ....................................................................................51

8.2. Termination Rights. .........................................................................................51
8.3. Bankruptcy of Licensee ...................................................................................53
[8.4. Immediate Payment Upon Termination ...........................................................55
8.5. Continued Sales After Expiration or Termination; Sell-Off Period. ...............56
8.6. Delivery of Materials .......................................................................................57
8.7. Cessation of Use of Licensed Mark .................................................................57
8.8. Licensors Rights Upon Termination...............................................................58
8.9. Benefits Upon Termination..............................................................................58
8.10. Disputes; Arbitration; Court Actions. ..............................................................58
A R T I C L E I X - I NDE M NI F I C A T I ON; I NSUR A NC E ............................................................61
9.1. Indemnification. ...............................................................................................61

9.2. Brokerage Indemnity .......................................................................................62
9.3. Indemnification Procedures .............................................................................62
9.4. Insurance ..........................................................................................................63
A R T I C L E X - A SSI G NA B I L I T Y ; B I NDI NG E F F E C T ..........................................................63
10.1. Assignability ....................................................................................................63

10.2. Binding Effect on Successors and Assigns ......................................................64
A R T I C L E X I - M I SC E L L A NE OUS .........................................................................................64
11.1. Limitation of Relationship ...............................................................................64

11.2. Notices and Other Communications ................................................................64
11.3. Governing Law ................................................................................................65
11.4. Specific Performance to Obtain Cooperation ..................................................65
11.5. Uniqueness of Licensed Mark; Equitable Relief .............................................65
11.6. Licensors Right to Appoint Representatives ..................................................66
11.7. No Waiver of Rights ........................................................................................66
11.8. [Limitation of Liability ....................................................................................66
11.9. Force Majeure ..................................................................................................66
11.10. Complete Agreement; No Oral Modification ..................................................67
11.11. Severability ......................................................................................................67
11.12. Third Party Beneficiaries .................................................................................67
11.13. Further Assurances...........................................................................................67
11.14. Drafting; Subtitles; Construction .....................................................................67
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11.15. Survival of Provisions ......................................................................................68
11.16. No Presumptions Against Drafting Party ........................................................68
11.17. Rights and Remedies Cumulative ....................................................................68
11.18. No Franchise ....................................................................................................68
11.19. [Legal Fees .......................................................................................................68
11.20. Counterparts; Facsimile ...................................................................................68
A NNE X E S, SC H E DUL E S A ND E X H I B I T S ............................................................................70
A NNE X I : DE F I NI T I ONS ...........................................................................................................1
iii
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FORM OF FASHION TRADEMARK LICENSE AGREEMENT*
THIS LICENSE AGREEMENT (the Agreement) is made and entered into as of

[DATE], 20XX (the Effective Date), by and between [LICENSOR],1 a [STATE/
CORPORATE ENTITY], with its principal executive office at [ADDRESS] (Licensor), and
[LICENSEE], a [STATE/ CORPORATE ENTITY], with its principal executive office at
[ADDRESS] (Licensee). Defined terms used in this Agreement are set forth in Annex I.
Licensor [has adopted and used the trademarks ___, ___ and ___ and] is
the [exclusive record and beneficial] owner [, and sole licensor,] of all right, title and interest in
and to the marks and logos set forth on Schedule A hereto [, together with any and all variations
thereof (including any derivative, composite or subsidiary mark) utilized by Licensor or any
authorized licensee]2 (such trademarks, individually and collectively, the Licensed Mark), and
all good will appurtenant thereto.3
*
This is not a form to be marked up and used in real life situations. Its purpose is to introduce and
comment on a variety of issues that commonly arise in the context of fashion trademark license
agreements, and thereby to better enable the reader to identify and thoughtfully approach the drafting and
negotiation of such a document. Because many of the provisions reflect different perspectives or business
considerations (e.g., some of the provisions are Licensee-friendly, some are Licensor-friendly, and some
attempt to be neutral), they may be redundant, and even inconsistent with one another. They should not
be patched together under the assumption that the result will be a cohesive whole.
1
If Licensor is a trademark holding company, (i) consider how to deal with all of the references in the
recitals (and elsewhere) to Licensors high standing, reputation, prestige, etc., since these are likely
attributes of the operating parent of Licensor, and not of Licensor; (ii) Licensee may want to seek a parent
guaranty; and (iii) Licensor may wish to consider whether, as a holding company only, Licensor will be
able to prosecute lost profits claims on the basis that Licensor and its operating parent are a single
economic entity. See Poly-America, L.P. vs. GSE Lining Technology, Inc., 383 F.3d 1303 (Fed. Cir.
2004) (observing that, while two sister companies with a common parent corporation seem to share
interests as two entities collaborating in the manufacture and sale of textured landfill liners, such
relationship by itself is not sufficient to permit one company to claim the lost profits from the others lost
sales, and that such companies may not enjoy the advantages of their separate corporate structure and, at
the same time, avoid the consequential limitations of that structure, such as the inability of the patent
holder to claim the lost profits of its non-exclusive licensee).
If Licensors rights in the Licensed Mark derive from a third-party owner (i.e., Licensor is in fact a
sublicensor, and this Agreement is in fact a sublicense), Licensee should consider whether it will want
(among other things) (i) appropriate representations and warranties regarding the scope of the overlicense
and the ultimate ownership of the Licensed Mark; (ii) overlicensors express approval of this Agreement;
and (iii) an undertaking from the ultimate owner of the Licensed Mark to step in and grant it a direct
license in the event the overlicense is terminated for any reason (other than, perhaps, a termination based
solely on Licensees breach). A somewhat licensee-friendly form of such a novation agreement is
attached as Exhibit A to this Agreement.
2
Licensee may want to consider seeking inclusion of bracketed language. Moreover, if the business deal
is that the License is to cover an entire product category (e.g., watches) for a fashion brand, it may want to
protect itself against Licensors adopting new marks for use within the category that do not fall within the
definition of Licensed Mark. To do so, Licensee may want to consider adding a provision along the lines
1
KL2 2698921.7
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Licensor [has/and its Affiliates have] gained a high standing and reputation in the
fashion industry and with the public within the Territory as a first rate fashion firm, with
significant brand value and a reputation for products of the highest quality, and with distribution
[of first quality, in season products] limited to those retail stores whose image and operations are
in keeping with the high standards and image of Licensor.
Licensee recognizes that Licensor and the Licensed Mark have established
significant brand value and a high standing and reputation in the fashion industry and with the
public within the Territory as aforesaid, and desires to obtain a right to use the Licensed Mark in
connection with the design, development, manufacture, marketing, promotion, and the
distribution and sale to the trade, of Licensed Products.
The preservation of the reputation and prestige of Licensor, its Affiliates and their
respective trademarks, including the Licensed Mark, is of paramount importance to Licensor,
and Licensor must have and retain the right to take such actions as are necessary to ensure that
all activities in connection with the design, development, manufacture, marketing, promotion,
distribution or sale (collectively, Marketing) of products uphold and conform to the reputation
and prestige of such trademarks as designations for highest quality products, and with Licensors
Ethical Standards as in effect and modified from time to time (Licensors Ethical Standards).4
Licensee has significant experience and expertise in the production and marketing
of certain Products, and in the maintenance and buildup of brand value, and Licensor is entering
into this Agreement in order to obtain such experience and expertise for the benefit of the
business in Licensed Products [; moreover, the parties acknowledge that Licensees failure to
perform its obligations under this Agreement may result in damage to the value of Licensors
brands, including the Licensed Mark and its good will, in the minds of the trade and the public
of the following: As used herein, the term Licensed Mark is intended by the parties to include, and
shall include, any other mark identified in the mind of the trade or the public with Licensor or any of its
Affiliates, and any and all trademarks, trade names, service marks, service names, names, labels or other
designations, embodying, encompassing, or otherwise referring to, any Licensed Mark, or any variation
(including derivative, composite or subsidiary marks) thereof, adopted or otherwise used by Licensor as
part of or in connection with any items of [wearing apparel] at any time during the Licensed Term.
Licensee may want to especially consider such a provision where the Licensed Mark is relatively new to
the marketplace, such that Licensees business will be a significant driver of the success of the overall
brand (e.g., in a celebrity license scenario). Such protections might also be obtained by Licensee through
a provision granting it a right of first negotiation, or right of first refusal, with respect to the use on
Products of any new marks adopted by Licensor in the future. For a general discussion of rights of first
negotiation and rights of first refusal, see footnote to 2.2.1.
3
Licensor may want to explicitly carve out certain marks, including composite/derivative marks, from the
definition of Licensed Mark (e.g., For the purpose of clarity, specifically excluded from the definition of
Licensed Mark are the XXXX mark, the YYYY for Girls mark, and any variation thereof.).
4
Ethical Standards documents (see reference at 4.3.2.1) are often quite broad, including provisions
covering items ranging from working conditions to environmental considerations. Licensor may want to
expand the applicability of its Ethic Standards by requiring a compliance certification on each invoice
within the supply chain (e.g., fabric and other component suppliers, as well as the finished garment).
2
KL2 2698921.7
17
within the Territory].5
Licensee desires to be granted the exclusive right and license to use the Licensed
Mark throughout the Territory set forth on Schedule B hereto (the Territory; the countries
comprising the Territory are sometimes referred to individually as a Country and jointly as
Countries)6 in connection with the Marketing of the products listed on Schedule C hereto (the
Products), which bear or are Marketed under the Licensed Mark and which have been
approved by Licensor, for sale in the Territory, in accordance with the terms hereof (such
Products, Licensed Products); provided that all sales of Licensed Products shall be made solely
to Approved Customers.
Licensor is willing to grant Licensee, and Licensee is willing to accept, a license

on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual

covenants and undertakings contained herein, and other good and valuable consideration, the
receipt of which the parties hereby acknowledge, Licensor and Licensee hereby agree as follows:
ARTICLE I - GRANT OF LICENSE
1.1. License.
1.1.1. Grant. Subject to the terms and conditions of this Agreement, Licensor hereby
grants to Licensee, and Licensee hereby accepts, the exclusive, non-transferable, non-assignable,
non-sublicensable right and license (the License) to use the Licensed Mark [and the
Intellectual Property Rights] during the Licensed Term, solely within the Territory and solely in
connection with the Marketing of Licensed Products approved by Licensor, for sale solely to
Approved Customers for resale solely to consumers and other end-users within the Territory.7
5
It is a general rule that a party facing a claim for consequential damages under a contract must be aware
of the possibility of such damages at the time of entry into the deal (see, e.g., U.C.C. 2-715(2)(a)
(Consequential damages resulting from the sellers breach include . . . any loss resulting from general or
particular requirements and needs of which the seller at the time of contracting had reason to know and
which could not reasonably be prevented by cover or otherwise . . . .). As such, query whether language
along these lines is sufficient to put Licensee on notice of the possibility of such damages. See 11.8
below in this regard.
6
The licensed territory should be expressly stated; note that where the Territory specified is the United
States of America, Puerto Rico and the American Virgin Islands are often specifically added. Another
typical addition to a domestic territory license is U.S. Armed Forces Post Exchanges (wherever located).
7
Note that Licensees who sell products in violation of a license agreement (e.g., after termination or to
non-approved customers) may find themselves liable not only to their Licensor (e.g., via a breach of
contract claim), but also to customers who purchased the goods wrongfully sold. Section 2-312 of the
Uniform Commercial Code provides generally that in a sale of goods transaction, a merchant who
regularly deals in similar goods gives a warranty of title and against infringement. Accordingly, in a
jurisdiction that has adopted the UCC (such as New York), a customer of a Licensee that operates in
violation of a License Agreement may have a valid claim against such Licensee. See, e.g., N.Y. U.C.C.
3
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Subject to the terms and conditions of this Agreement, Licensee shall also have (and the License
shall include) the right and license to design, develop, manufacture and produce (but not market,
promote, distribute or sell) Licensed Products and Materials throughout the world (including
outside the Territory) on a non-exclusive basis, but only through Approved Manufacturers who
are in compliance with Licensors Ethical Standards.
1.1.2. Reservation of Rights. Except as expressly included within the License, no right
or license is granted for the use of the Licensed Mark [or any Intellectual Property Rights] for
any purpose, it being understood and agreed that, except for those rights expressly granted to
Licensee hereunder, all rights in respect of the Licensed Mark [and the Intellectual Property
Rights], express or implicit, belong exclusively to Licensor, and Licensor may exercise any such
rights, in whole or part, at any time. 8 Without limiting the foregoing, Licensor may use and may
grant its Affiliates and other Persons the right to use any trade names, service marks, or
trademarks, including the Licensed Mark and any variations (including any derivative, composite
or subsidiary marks) thereof, and any related logos, designs or graphics, whether now used or
hereafter adopted, in connection with the Marketing of any products or other items, excepting
only Licensed Products within the Territory during the Licensed Term.
1.2. Exploitation of Rights. Licensee will use its good faith, [best/commercially
reasonable/reasonable/best commercially reasonable]9 efforts to develop and promote a full line
2-312 (McKinney 2002). For example, in a recent case in the Southern District of Ohio, Luv N' Care
licensed Beatrix Potter trademarks and copyrights from Frederick Warne & Co. pursuant to a license
agreement that restricted the sale of licensed products to designated customers within the US territory
during a specified term. Luv N' Care sold licensed products to Big Lots, who was not a designated buyer
under the license, and made some sales outside of the territory and after the specified term had expired.
Big Lots demanded that Luv N' Care accept the return of all licensed products sold to it, reimburse Big
Lots for its costs and expenses incurred, and agree to indemnify Big Lots from any future infringement
action that Warne might bring. The Court concluded that the delivery of the infringing products to Big
Lots breached the warranty of non-infringement in violation of an Ohio statute (a codification of UCC 2-
312). Accordingly, the court granted Big Lots motion for summary judgment. See Big Lots Stores, Inc.
v. Luv N Care, 62 U.C.C. Rep. Serv. 2d 522 (S.D. Ohio 2007).
8
In the context of an exclusive license, Licensee may wish to consider a provision confirming that
Licensor does not itself (or though any Affiliate) retain any rights to exploit the Licensed Mark (and
thereby compete with Licensee). Such a provision might be along the following lines: The License shall
be exclusive even as to Licensor and its Affiliates, such that, during the Licensed Term, there will be no
use by or through Licensor or any of its Affiliates, directly or indirectly, whether through license, sub-
license or otherwise, of the Licensed Mark with respect to or in connection with the design, development,
manufacture, marketing, promotion, distribution or sale within the Territory of any Products by any
Person other than Licensee. Alternatively, Licensor may wish to reserve the right to Market, directly
and/or through other licensees or distributors, Licensed Products through other channels, e.g., Licensor
Stores or the Internet; in such a case, given the exclusive nature of the grant of License, Licensor will
want to expressly reserve its rights in this regard.
9
Case law differentiating the various gradations of efforts standards is thin at best. For a discussion,
see Kenneth A. Adams, Understanding Best Efforts and Its Variants (Including Drafting
Recommendations), 50 Prac. Law. 11 (2004). While there is much case law discussing the meaning of
best efforts, there is little, if any, guidance on the parameters of the other efforts standards (e.g.,
4
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of Licensed Products for each Seasonal Collection (i.e., generally comparable, in breadth and
size, to those offered by [principal competitive lines/NAME]), to exploit fully the rights herein
granted throughout each Country, to [establish and] maintain a stable and viable market for
Licensed Products, and to promote vigorously the sale of Licensed Products therein consistent
with the high standards and prestige represented by the Licensed Mark and the
advertising/marketing philosophy of Licensor. Except with the prior approval of Licensor in
each case, the Licensed Mark shall be used solely in the manner and form (including type style
and type face) set forth on Schedule A, unaccompanied by any additional word, mark, symbol, or
other designation.
1.3. Approved Customers.
1.3.1. Authorized Retailers. Licensee shall sell Licensed Products only through
Authorized Retailers. As used herein, Authorized Retailers shall mean (i) those retailers
[including Licensor Retail Stores and Licensor Outlet Stores] set forth on Schedule D hereto, 10
reasonable best efforts every reasonable effort, commercially reasonable efforts). Lore indicates
that best efforts requires making every conceivable effort regardless of cost or expense; this has led to
yet another variation, language along the lines of: in using its best efforts to [obtain such consent],
Licensee will not be required to make aggregate expenditures in excess of $XX,000. While common
perception is that best efforts is the most stringent standard, with the other efforts standards requiring
something less, the case law does not necessarily validate this conclusion. Mr. Adams observes that
[t]he case law on the meaning of best efforts suggests that instead of representing different standards,
other efforts standards mean the same thing as best efforts, unless a contract definition provides
otherwise and that [m]ost courts use the terms best efforts and reasonable efforts interchangeably. Id.
at 14 (emphasis in original). Note, however, that at least one New York court has observed a distinction
between the best efforts and reasonable efforts standards, albeit in a situation where both standards
were used in the same contract. See In re Chautergay Corp., 198 B.R. 848, 854 (S.D.N.Y. 1996), affd
108 F.3d 1369 (2d Cir. 1997) (The standard imposed by a reasonable efforts clause such as that
contained in section 7.01 of the Agreement is indisputably less stringent than that imposed by the best
efforts clauses contained elsewhere in the Agreement.) Consequently, if the parties intend a single
standard to apply throughout the agreement, counsel is advised to use the exact same language
consistently throughout, regardless of which standard is chosen and whether or not it is explicitly defined.
For this reason, the commercially reasonable efforts standard which also happens to imply some sort
of general industry practice is used throughout this Agreement, with any deviation from those words
being intended to convey a different standard. Some commentators suggest that, instead of relying on an
undefined efforts standard, drafters should spell out the steps to be taken to achieve the intended result
in each case; drafters will want to consider the cost/benefit equation of taking such an approach.
10
Some Authorized Retailer definitions list stores by category, often with examples (e.g., first class
upscale department stores, such as Bloomingdales; or mass merchants such as Kmart, Target and
Wal*Mart). The preferred approach is to list stores by nameplate, with any additions over time covered
by clause (ii) in the text above. In certain situations, the parties may wish to go into further detail, and
specify stores by grade (e.g., Macys, but only its so-called A and B doors). In order to provide it with
some protection if Licensor takes the Licensed Mark downmarket (e.g., a better department store
brand is, after a few seasons, offered for sale to mass retailers), Licensee will want (at least) for the
defined term Authorized Retailers to include any retailer that sells merchandise bearing the Licensed
Mark on an authorized basis; this will permit Licensee to follow the new distribution pattern by selling
Licensed Products into the downmarket channels. Licensors (especially those with a fragrance licensee
5
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and (ii) any other retailers approved as such by Licensor, such approval not to be unreasonably
withheld.11 Other than as set forth on Schedule D,12 no initial Authorized Retailer is an Affiliate
of Licensee; in submitting a retailer for Licensors approval as an Authorized Retailer, Licensee
shall identify whether such retailer is an Affiliate of Licensee. Once a retailer has been approved
as an Authorized Retailer hereunder, Licensor may, on [reasonable] prior notice to Licensee,
[which notice shall cite the Authorized Retailers failure to continue to qualify with respect to
one or more of the factors enumerated above and summarize the facts and circumstances
underlying its determination,] remove such retailer from the list of Authorized Retailers on a
prospective basis, [starting with shipments of items from the next Seasonal Collection of
Licensed Products,] 13 [and Licensee immediately will cease selling Licensed Products to such
retail customer, subject only to the filling of open confirmed orders as of the date of Licensors
notice, and to the requirements of applicable Law.]
1.3.2. Closeout Retailers. License shall sell Closeouts only through Closeout Retailers.
As used herein, (i) Closeout Retailers shall mean (a) those retailers set forth on Schedule E
hereto, (b) retailers who are Authorized Retailers, and (c) any other retailers approved as such by
Licensor, such approval not to be unreasonably withheld, and (ii) Closeouts shall mean
Licensed Products that are not first quality, in season merchandise, and which are (a) end of
season or discontinued Licensed Products, (b) Licensed Products sold at price equal to less than
[seventy-five percent (75%)] of Licensees initial wholesale selling price for such Licensed
Products as indicated on the relevant Licensee Price List, and (c) damaged, imperfect, irregular,
substandard quality or defective Licensed Products (also collectively referred to as Seconds).14
(Wal*Mart carries even up-scale fragrances), or who sell to warehouse clubs) can be expected to push
back on such a provision.
11
If Licensee and Licensor agree to a reasonableness standard here, Licensee might want further to
include language with some modicum of objectiveness regarding how reasonableness should be viewed,
e.g., by considering including language along the lines of the following: In determining reasonableness
for purposes of inclusion within the list of Authorized Retailers, Licensee understands that Licensor shall
approve (or withhold approval of) potential retail customers based upon their compatibility with the
image of the Licensed Mark and the customers reputation and standing in the Territory as a high quality
store selling in season, first quality products purchased from authorized sources; whose location,
merchandising and overall operations are consistent with the high quality of the Licensed Products and
the reputation, image and prestige of Licensor and the Licensed Mark; and whether or not such retail
customer sells other products bearing one or more labels of Licensor or its Affiliates, or any of the
following labels: [list of labels comparable to Licensed Mark].
12
Although 1.3.3 and 1.3.4.2 below expressly prohibit internet sales, Licensor may want to consider
modifying such provision (via a specific, narrow exception), to include a list of established reputable
internet retailers as Authorized Retailers.
13
Much of this approach is relatively Licensee-friendly, reflecting the reality that Licensee will be hard
pressed to agree to being forced to cut off its customers without good reason. Moreover, Licensees
cutting off a particular customer at Licensors direction, especially for unknown/no reasons, may
implicate anti-trust concerns.
14
Licensor may want to consider whether it will permit Licensee to sell Seconds at all; and, if permitted:
whether there should be an Annual Period percentage or dollar cap on the amount of Seconds sold;
whether Licensee will be required to mark all Seconds (by cutting or red lining labels, indelible ink
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Other than as set forth on Schedule E, no initial Closeout Retailer is an Affiliate of Licensee; in
submitting a retailer for Licensors approval as a Closeout Retailer, Licensee shall identify
whether such retailer is an Affiliate of Licensee. Once a retailer has been approved as a Closeout
Retailer hereunder, Licensor may, on [reasonable] prior notice to Licensee, [which notice shall
summarize the facts and circumstances underlying its determination,] remove such retailer from
the list of Closeout Retailer on a prospective basis, [starting with shipments of items from the
next Seasonal Collection of Licensed Products,] 15 [and Licensee immediately will cease selling
Licensed Products to such retailer, subject only to the filling of open confirmed orders as of the
date of Licensors notice, and to the requirements of applicable Law.] Notwithstanding any
provision of this Agreement to the contrary, Licensee is not permitted to manufacture or produce
Licensed Products specifically for sale as Closeouts.
1.3.2.1. Closeout Caps. In each Annual Period, Licensees total aggregate Net
Sales of Closeouts shall not exceed the greater of either (i) [fifteen percent (15%)] of the actual
Net Sales of all Licensed Products during such Annual Period or (ii) [fifteen percent (15%)] of
the Minimum Net Sales level scheduled to be achieved for such Annual Period (the Closeout
Net Sales Cap). In addition, in each Annual Period, Licensees total aggregate Net Sales to any
individual Closeout Retailer shall not exceed [twenty-five percent (25%)] of Licensees total Net
Sales of all Closeouts during such Annual Period (the Closeout Retailer Cap). [In the event
that the percentage of Closeouts sold in any Annual Period exceeds the Closeout Net Sales Cap,
or in the event that Licensees Net Sales to any individual Closeout Retailer exceeds the
Closeout Retailer Cap, then in each case Licensor shall have the right, but not the obligation, to
treat such occurrence as a material, non-curable breach of Licensees obligations hereunder.]16
1.3.3. Licensor Retail Stores/Outlets. Licensee acknowledges that one or more of

Licensor, its Affiliates, and third parties granted rights by Licensor or its Affiliates (any of the
foregoing, in their capacity as such, Licensor Store Operators), currently operate, or hereafter
may establish or operate during the Licensed Term [under a trade name or service mark that
includes or makes reference to the Licensed Mark] [within/outside the Territory], [so-called
brick and mortar] (i) retail stores, boutiques or in-store concessions (but excluding Internet or
other electronic stores) selling in-season, first quality merchandise, including Products
(Licensor Retail Stores) and (ii) retail outlet stores, boutiques or in-store concessions (but
excluding Internet or other electronic stores) selling manufacturers overages and closeouts,
including Products (Licensor Outlet Stores).
1.3.3.1. Licensor Retail Stores. Licensee will offer in-season, first quality
Licensed Products for sale to Licensor Retail Stores on the same price and terms as Licensee
offers such Licensed Products for sale to similarly situated Authorized Retailers [; provided that
stamping, or other means) prior to sale; and whether there will be a ban on any promotion/advertising of
Seconds (see 4.4.2).
15
See footnote to 1.3.1.
16
Although this point should be sufficiently covered by language in the section covering termination,
some Licensor forms repeat this kind of language within each provision that sets up the potential for a
material, non-curable default.
7
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the price to the Licensor Store Operator shall not be greater than the lowest price paid by any
Authorized Retailer purchasing like quantities.]17
1.3.3.2. Licensor Outlet Stores. Licensee will offer Closeouts for sale to
Licensor Store Operators for resale solely through Licensor Outlet Stores on the same price and
terms as Licensee offers such Licensed Products for sale to similarly situated Closeout Retailers
[; provided that the price to the Licensor Store Operator shall not be greater than the lowest price
paid by any Closeout Retailer purchasing like quantities.] 18
1.3.3.3. Sales to Licensor Retail and Outlet Stores. Orders from Licensor Store
Operators (whether for resale at Licensor Retail Stores or Licensor Outlet Stores) shall be filled
by Licensee on a first priority basis, out of available inventory. Licensee shall not impose on any
Licensor Store Operator any minimum purchase obligation inconsistent with Licensees standard
practices. Licensee will deal directly with each Licensor Store Operator in connection with any
sale of Licensed Products or Closeouts and will look solely to such Operator in all such dealings.
1.3.4. Excluded Channels; Other Restrictions. Notwithstanding anything in this

Agreement to the contrary, and without limiting the other provisions of this 1.3:19
17
Instead of this most favored nation (MFN) approach, some Licensors are able to bargain for sales to
Licensor Retail Stores being priced at a straight percentage discount off of the Licensee Price List (or
sometimes on a cost plus basis). Depending on the size of such a discount, Licensee may in turn seek to
have such discounted sales (i) be free of royalty or advertising obligation (arguing that the price discount
is sufficient benefit/compensation to Licensor and that adding a royalty/advertising payment on top would
constitute double dipping by Licensor) and/or (ii) nevertheless be counted against any Minimum Net
Sales level (arguing that sales to Licensor Retail Stores may cannibalize sales to Authorized Retailers).
Moreover, given these considerations, Licensee may seek an annual cap on such discounted sales (either a
dollar level, or expressed as a maximum percentage of Annual Net Sales). These same considerations
apply in the case where Licensor bargains for the ability to purchase Licensed Products for resale through
its own website.
18
If Licensor runs a full complement of outlet stores (directly or through a third party), it may want
additional provisions here to ensure that such outlets have a sufficient flow of inventory of Closeouts to
sell. Such provisions might include concepts along the lines of: (i) the requirement that Licensee produce
MFO (made for outlet) or SMU (special make ups) goods (typically prior season designs, or current
season designs in different fabrications or with lower quality specifications, and/or end of season
Licensed Products), per the Outlet Stores orders (Licensees would typically require such orders to be
placed far in advance), perhaps with pricing determined on a cost plus basis, (ii) Licensors obtaining a
right of first refusal or right of first negotiation (see footnote to 2.2.1) on any ordinary course sale by
Licensee of any Closeouts, and/or (iii) carving out an exception to the Closeout Retailer Cap for sales to
Licensor Outlet Stores.
19
Even though the list of retailers who are Approved Customers will be approved by Licensor, Licensor
may want to consider including a further provision here, specifically naming those retailers who are not,
and will not be, approved as Authorized Retailers, especially in the case where it has agreed to a
reasonableness standard re: future additions to the list of Authorized Retailers. Language along the
following lines might be considered: Licensee acknowledges that distribution of Licensed Products is to
be limited to those retail stores whose image and operations are in keeping with the high standards and
8
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1.3.4.1. No Diversion. Licensee shall not sell Licensed Products to any Person,
including any Approved Customer, who Licensee knows [, or should [reasonably] have known,]
or has reason to believe would, (i) sell or distribute Licensed Products to a Person other than an
Authorized Retailer, (ii) sell or distribute Closeouts to a Person other than a Closeout Retailer, or
(iii) sell or distribute any Licensed Products or Closeouts outside the Territory.20
1.3.4.2. No Direct Sales. Neither Licensee nor any Affiliate shall offer, directly
or indirectly, Licensed Products for sale direct to the consumer, including by selling to or
through (i) retail stores operated or controlled by or through Licensee or any Affiliate; (ii)
catalogs, direct mail order or direct mail channels; (iii) electronic sales channels including on-
line, Internet, or television (including home shopping programs or infomercials); or (iv) flea
markets, swap meets, street vendors and the like. Licensor expressly reserves all such rights for
itself. [Should Licensor offer a full range of products bearing the Licensed Mark for sale direct
to the consumer, it shall make a good faith effort to (but is under no obligation to) also arrange
for Licensed Products to be offered for sale as part of such direct selling effort.]
1.3.4.3. No Give-Aways/Tie-Ins. Licensee shall not sell or otherwise provide

Licensed Products for use as premiums, promotions, tie-ins with other products, give-aways,
self-liquidator programs, fund-raisers or sweepstakes without the prior approval of Licensor in
each case.
1.4. Additional Provisions Relating to Sale of Licensed Products.
1.4.1. Pricing. Licensee will set its prices for Licensed Products at a level aimed at
encouraging the development of sales of Licensed Products throughout the Territory, while at the
same time maintaining the high standards and prestige represented by the Licensed Mark, and
the image of Licensed Products as highest quality products; it being understood that Licensee is
free to set its prices for Licensed Products in its discretion and that Licensor is not empowered to
fix or regulate the prices at which Licensed Products are to be sold, either at the wholesale or
retail level.21 Licensee shall furnish to Licensor a list of unique style numbers for each item of
Licensed Products for each Seasonal Collection, together with their initial wholesale selling
image of Licensor. Accordingly, Licensee agrees that Licensed Products may not be sold to so-called (i)
mid tier and lower moderate retailers, such as Sears and Kohls; (ii) mass retailers or mass chain
stores such as Target, K-Mart and Wal*Mart; (iii) discount or budget stores; (iv) warehouse clubs or
wholesale retailers such as Costco or Sams Club; or (v) off-price jobbers or stores other than Closeout
Retailers and Licensor Outlet Stores.
20
Especially where the Territory includes foreign Countries, Licensee may want to enter into agreements
with third party distributors, who will act as Licensees sales organization covering the foreign portion of
the Territory; in such a case, Licensor will either want to approve each arrangement on a case by case
basis, or will want to set out some standards, including as to financial wherewithal, level of experience,
and contents of the distribution agreement (which agreement will presumably contain a provision
providing for automatic termination when the License terminates).
21
In order to prevent Licensee from dumping Licensed Products into the marketplace, Licensor may
want to retain a right of first refusal/right of first negotiation (see footnote to 2.2.1) with respect to any
sales of Licensed Products to be made at distress prices, e.g., 50% or more off of Licensees Price List.
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prices (each, a Licensee Price List), promptly after it is prepared but in any event at least
[twenty (20)] days prior to the date Licensee first offers such Licensed Products for sale.
1.4.2. Sales Environments. Licensee will require Authorized Retailers to present

Licensed Products within a specially fixtured in-store environment that meets with Licensors
approval (the Sales Environment). Licensee will, in consultation with Licensor, develop plans
and specifications covering the design, layout, decor and fixturing for Sales Environments, and,
within XX days after the Effective Date, present the same to Licensor for its approval. Licensee
will modify the Sales Environments from time to time as reasonably requested by Licensor so
that such Environments continue to be consistent with image and prestige of Licensor and the
Licensed Mark. Licensee will be responsible for all fees and expenses incurred in connection
with the development and implementation of the plans for Sales Environments22 [, including the
fees and expenses of Licensors personnel in connection therewith, which will be at Licensors
standard rates].
1.4.3. Dispersion of Sales; Purchase of Other Merchandise. In each Annual Period,

Licensees total aggregate Net Sales to any individual [nameplate of an] Authorized Retailer
shall not exceed [thirty-three percent (33%)] of Licensees total Net Sales during such Annual
Period.23 Licensee shall not require any Approved Customer to purchase any merchandise or
service other than Licensed Products as a condition to their purchase of Licensed Products or
Closeouts.
1.4.4. Sales Commissions. Licensee shall be solely responsible to pay all sales
commissions and other compensation that may arise from the sale of Licensed Products by
Licensee. Licensee will indemnify, defend and hold Licensor harmless from any and all
damages, disputes and liabilities, including attorneys fees and costs incurred, that in any way
arise out of or relate to any claims by Licensees sales managers, sales representatives,
employees, agents or similar parties working for or on behalf of Licensee.
1.5. [Resolving Licensed Product Definition Disputes. Licensee acknowledges that, due to
the nature of the industry, precise delineation of whether a particular item of products falls
within, or outside of, a definition of licensed products is sometimes not possible. Accordingly,
in the event of a dispute between any of Licensors licensees arising out of or based upon a claim
that a product being manufactured or sold as a licensed product by any one licensee (including
Licensee) infringes upon any other license granted by Licensor (including this License), then and
in such event, prior to exercising any legal or equitable remedies Licensee may have or believe it
has hereunder, Licensee shall notify Licensor and afford Licensor the opportunity to investigate
22
Given that Licensee will be paying the costs of remodeling/refurbishment, it may want a time frame
limitation (e.g., no more frequently than once every 36 months), and/or a dollar cap, and/or a full or
partial credit against any required marketing/promotional expenditures.
23
This type of provision (see also the Closeout Retailer Cap notion in 1.3.2.1) is aimed at ensuring that
Licensee has broad distribution for Licensed Products, and that the business in Licensed Products is not
dependent on a small number of stores. With the ongoing retail consolidation (e.g., Sears Kmart, and
Federated May) resulting in fewer store nameplates, Licensees will likely push back on such a
provision.
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the situation surrounding such claim, and attempt, within a commercially reasonable period, to
resolve the matter to the parties mutual satisfaction. Where Licensor is unable, within a
commercially reasonable period, to resolve the matter to the mutual satisfaction of the parties
involved, Licensor shall so advise the parties, who shall submit the dispute to binding arbitration
in accordance with the provisions of 8.10.4.]24
ARTICLE II - TERM
2.1. Initial Term; Licensed Term; Annual Periods. The initial term of the License shall
commence as of the Effective Date and continue for a period of XX months, through [DATE],
20XX,25 unless sooner terminated in accordance with the provisions hereof (the Initial Term).
For the avoidance of doubt, the [season] 20XX Seasonal Collection of Licensed Products shall
be the last Seasonal Collection of Licensed Products to be produced and sold hereunder during
the Initial Term.26 As used herein, (i) Licensed Term shall mean the Initial Term and the
Renewal Term(s) (if any), collectively; (ii) the period commencing on the Effective Date and
continuing through December 31, 20XX is sometimes referred to as the First Annual Period; 27
and (iii) the First Annual Period and each 12-month period commencing on each January 1st
thereafter during the Initial Term and any Renewal Term is sometimes referred to as an Annual
Period. 28
24
This provision, fairly popular, is often even more Licensor-friendly in Licensor first drafts, often
providing for Licensor to make the decision in its discretion, with such decision being final. Licensees
should beware, as the scope of the definition of Products is a question that comes up more frequently
than one might expect, and its resolution often goes to the very core of the business deal.
25
For financial statement reporting purposes, Licensor will likely want the Annual Periods to dovetail
with its own fiscal year end.
26
The last Seasonal Collection for each Renewal Period could also be included. In order to protect itself
against an outgoing Licensee flooding the marketplace with Closeouts during the Sell-Off Period, thereby
damaging Licensors ability to make a smooth transition to a new licensee, Licensor may wish to limit the
dollar value of orders that can be placed by Licensee in respect of the final Seasonal Collection (or, in lieu
of that, during the last [six] months of the term) to some percentage (e.g., 125%) of the value of orders
placed in respect of the same Seasonal Collection (or time period) during the prior year. Licensor might
also want the option to have such a provision kick in whenever it gives a default notice. Note that, in
most cases, such a provision would be an adjunct to the last sentence of 1.3.2.
27
Given the start-up time involved in properly launching a license, it is not unusual to see the First
Annual Period encompass a period of between 13 and 24 months.
28
In some situations, the License Agreement is not signed and delivered by the parties by the time
Licensee needs to start up its operations in order to meet the Distribution Date referred to in 4.5.2.
Notwithstanding warnings of potential dire consequences from both attorneys, their clients may
nevertheless move forward without benefit of a signed document. If confronted with such a situation, the
parties attorneys may want to consider a protective provision along the lines of the following:
Early Period. Notwithstanding that the actual execution and delivery of this Agreement has
occurred after the Effective Date, the parties hereby confirm that the Initial Term of the License
commenced on the Effective Date, and further as follows:
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2.2. Renewal Terms. Subject to the provisions of this 2.2, Licensee shall have the right and
option to extend the Licensed Term for [three (3) renewal terms of two (2) years each]29 (each
such renewal term, a Renewal Term). In order to exercise any right to extend the Licensed
Term, (i) Licensee shall be, [both] as of the date of its Renewal Notice [and as of the first day of
the Renewal Term], in [full] compliance with the terms of this Agreement [, in all material
respects]; (ii) Licensee shall have or will during the [last Annual Period ended within the]
immediately prior portion of the Licensed Term (Initial Term or Renewal Term, as applicable)30
(a) Early Period Activities. Licensor hereby acknowledges that Licensee (i) may
have commenced and conducted various preproduction and other preliminary activities relative to
the License and otherwise in connection with this Agreement prior to the Effective Date (such
period is sometimes referred to herein as the Early Period), including activities in the areas of
personnel, hiring, design, production planning, sample requisitions, and developing and
implementing marketing, merchandising and related plans and programs, including contacting,
and networking and strategizing with, potential retail buyers, and (ii) commenced full operations
under the License prior to the date of actual execution and delivery of this Agreement (the
Execution Date). Licensor confirms that Licensor has not and will not assert that any of the
foregoing activities or operations constituted or will constitute wrongful or unauthorized conduct,
or a breach of the License; it being understood and agreed that, for such purposes, the parties
agree to treat the License as having been in effect during the Early Period on a non-exclusive
basis.
(b) Orders. Without limiting the foregoing, Licensor acknowledges that Licensee
has shown, and accepted orders for, Licensed Products from customers within the Territory, from
and after DATE, 20XX, including having shown, commercially produced and sold Licensed
Products for the [Spring] 20XX season, and having designed and shown Licensed Products for
the [Fall] 20XX season.
(c) Sales and Expenses. For all purposes of this Agreement, any sales made, and
expenses incurred, by Licensee prior to the Execution Date shall be credited and/or counted as if
they were made or incurred within the First Annual Period. Without limiting the foregoing, there
shall be no additional minimum royalty payable in respect of the Early Period; royalties on Net
Sales made during the Early Period and not previously paid shall be payable at the time royalties
for the [last] quarter of the First Annual Period are payable; sales made during the Early Period
shall be counted against Licensees Minimum Sales Level threshold for the First Renewal Term;
and any advertising, marketing or promotion expenses incurred at any point during the Early
Period shall be counted against Licensees obligations with respect thereto for the First Annual
Period.
29
A common approach to length of term is a 36-42 month Initial Term, with two 3-year renewal periods.
Under this scenario, if Licensee meets its minimums, it can maintain the license for nearly a decade a
long enough period to give Licensee the opportunity to recoup its investment in launching the brand.
Licensees often take the view, especially when launching a new category for a mark that has been
established in another area (e.g., the first childrenswear license for a womens apparel mark), that, in
order to enhance their flexibility, they prefer to split up the two 3-year renewals into smaller, bite-sized
pieces; this Agreement posits three 2-year renewals. Note that licensors with a hot mark may be able to
limit any renewal terms, either by eliminating them altogether, or by raising the renewal threshold to an
unrealistically high level.
30
The parties may want to consider whether the measuring period for a Renewal Threshold should be an
Annual Period (as provided in the definition of Renewal Threshold, below) or a period of more than
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have met31 the applicable Renewal Threshold; (iii) Licensee shall provide Licensor, between
[nine (9) and six (6) months] prior to the expiration of the then current portion of the Licensed
Term, with a renewal notice (a Renewal Notice), exercising Licensees option to extend the
Licensed Term [and setting forth its agreement to meet the Minimum Net Sales level for the
upcoming Renewal Term], and containing a confirmation of the matters referenced in (i) and (ii)
above, and accompanied by payment of [one-third] of any remaining portion of the Minimum
Royalty still owing to Licensor in respect of the then current term; and (iv) Licensee shall make
payment of any remaining portion of the Minimum Royalty in respect of the then current term by
no later than [ninety (90)] days prior to the last day of the then current term. [Time is of the
essence of this provision.] As used herein, Renewal Threshold shall mean (a) in respect of the
first Renewal Term (to expire on [DATE], 20XX), that Licensees Net Sales for the [last Annual
Period of the Initial Term] shall have met or exceeded an amount equal to [110%] of the
Minimum Net Sales32 level for such [last Annual Period]; (b) in respect of the second Renewal
Term (to expire on [DATE], 20XX), that Licensees Net Sales for the [last Annual Period of the
first Renewal Term] shall have met or exceeded an amount equal to [115%] of the Minimum Net
Sales level for such [last Annual Period]; and (c) in respect of the third Renewal Term (to expire
on [DATE], 20XX), that Licensees Net Sales for the [last Annual Period of the second Renewal
Term] shall have met or exceeded an amount equal to [120%] of the Minimum Net Sales level
for such [last Annual Period].
2.2.1. Right of First Refusal.33 Provided that: (i) Licensee shall have duly extended the
Licensed Term through all Renewal Terms provided for herein; (ii) Licensee is then in [full]
twelve months (e.g., 18 or 24); a longer period is generally viewed as Licensee friendly in that it operates
to credit a Licensee for the amount by which its actual Net Sales in a given Annual Period exceeds the
Minimum Net Sales level for that Period.
31
The construct will . . . have met . . . the Renewal Threshhold presents some issues (though, in
practice, many parties seem willing to rise above them). Simply presented: how can Licensee confirm
that it will have met the Renewal Threshold, which pegs off of Net Sales for a calendar year, by a date
six months in advance, i.e. by June 30 of that same year? And what is the result if, having given a
Renewal Notice so stating, Licensee fails to actually achieve such level? Besides the legal issues, the
business issues loom large; among them: even assuming Licensor is later able to treat the Renewal
Notice as a nullity, can Licensor get a replacement Licensee up to speed without losing a season (at least)
at retail? One approach to avoiding these potential issues is to use Net Sales achieved during an earlier 12
month period (a Measurement Period) as the basis for determining whether or not the Renewal
Threshold has been met (e.g., the 12 (or 18 or 24) month period ended on the March 31 prior to the June
30 expiration of Licensees option to renew).
32
Although this Agreement takes the approach that Renewal Thresholds are determined by reference to
the Minimum Net Sales Level (in this provision, based on an increasing percentage), this need not be the
case; these Thresholds can be (and often are) stated on a flat dollar or other stand-alone basis. See also
the discussion in the footnote to 3.2 re: possible adjustments that could be made part of such a
calculation.
33
Posit the situation where Licensee has built a successful business in Licensed Products, has met all of
its minimums, and has exercised all of its Renewal Options. What happens next? Without some
obligation on Licensors part to negotiate a further extension of the License, Licensee is concerned that it
will not be fairly compensated for establishing and growing the business in Licensed Products and that
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compliance with the terms of this Agreement [in all material respects]; and (iii) Licensees Net
Sales of Licensed Products for the last Annual Period of the final Renewal Term shall have
exceeded [1XY% of] the required Minimum Net Sales level scheduled to be achieved for such
Annual Period, then and in such event, for a period of [eighteen (18)] months following the
expiration of the last Renewal Term (the ROFR Period), if Licensor is desirous of granting,
directly or indirectly, a new or further license of the Licensed Mark in connection with the
design, development, manufacture, marketing, promotion, distribution or sale of any Products in
the Territory (First Refusal Products), Licensor shall so advise Licensee of such intent in
writing and Licensee shall have a right of first refusal with respect thereto. In order to effectuate
Licensees right of first refusal, Licensor agrees that neither it nor any of its Affiliates shall grant,
directly or indirectly, to any Person, the right to design, manufacture, market, promote,
distribute, or sell any First Refusal Products unless and until all of the provisions of this 2.2
shall have first been complied with. Following Licensors notice of its intent to license any First
Refusal Products (an Intent Notice), Licensee shall have the right to make a offer to Licensor
to license such First Refusal Products within thirty (30) days of its receipt of the Intent Notice,
which offer shall contain all material terms, conditions and details proposed, and shall otherwise
be on substantially the same terms and conditions as those set forth in this Agreement. Upon
receipt of Licensees offer, Licensor shall have thirty (30) days to notify Licensee as to whether
it accepts Licensees offer or it intends to solicit third party licensees for such First Refusal
Products. In the event that Licensor intends to solicit third party licensees for the First Refusal
Products and comes to a bona fide agreement with a third party in respect of the First Refusal
Products, Licensor shall not grant a license covering the First Refusal Products to a third party
unless Licensor has first offered such license grant to Licensee in accordance with this 2.2.
Such offer to Licensee shall be made by Licensors notice (the Offer Notice) delivered to
Licensee and shall set forth all material terms, conditions and details of the proposed license
Licensor will be able to grant a License to a third party, capturing the entire value of the business for itself
and leaving Licensee high and dry. Licensor will suggest it would never do such a thing why would it
break up such a beautiful relationship? And in fact, there are important business considerations that tend
to support continuation. But in a world where Polo could take back the Lauren license from Jones and re-
launch a multi-hundred million dollar business in short order, Licensee is not going to be comfortable.
The permutations on this negotiation are endless. This Agreement takes a very Licensee-friendly
approach, granting it a Right of First Refusal (ROFR) that obligates Licensor to offer Licensee a new or
further license on the same terms of any third party offer that Licensor wants to accept. This requires
Licensor to bargain for a complete offer from a third party and, before entering into the license, having to
offer Licensee the chance to step in and preempt the other deal. A ROFR has a chilling effect on
Licensors ability to attract third party offers, since the third party may be reluctant to spend the time and
effort to negotiate the deal only to be preempted by Licensee. Another approach, less Licensee-friendly,
is to grant Licensee a Right of First Negotiation (ROFN); in pure form, this obligates Licensor to
negotiate, for some stated period of time (towards the end of the last Renewal Term), exclusively with
Licensee as to any extension of the license. If an agreement is reached, fine. If not, Licensee presents
Licensor, in writing, with its best and final offer, covering all material terms and provisions. Licensor is
then free to go out and negotiate with third parties, and to enter into a new license without having to go
back to Licensee, provided the terms of the new license are more advantageous to Licensor than those in
Licensees best and final offer. Note that since these ROFN and ROFR approaches key off of third
party offers, they may not cover a situation where Licensor decides to operate the licensed business
directly (e.g., as a new division or business unit).
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grant to the third party, including the name of the third party, royalty rates, minimums, duration
and other material terms. Licensee shall have the right (a Right of First Refusal) to accept
such offer and to enter into a license agreement on the terms and conditions set forth in such
Offer Notice, by giving Licensor notice (an Acceptance Notice) within twenty (20) days after
Licensee received the Offer Notice (ROFR Notice Period). When an Acceptance Notice has
been duly given, it shall constitute a binding agreement between Licensor and Licensee that the
parties will enter into a license agreement on the terms and conditions set forth in the Offer
Notice. Completion of such agreement shall occur no later than forty-five (45) days after the
date of such Acceptance Notice. If Licensee does not exercise its right of first refusal (either by
providing notice to Licensor of its intention not to exercise its Right of First Refusal or by
allowing the ROFR Notice Period to lapse), Licensor may enter into a license agreement with the
applicable third party on the same terms and conditions set forth in the Offer Notice; provided,
however, that if Licensor does not so enter into and complete such license agreement with the
applicable third party within one hundred twenty (120) days after the end of the ROFR Notice
Period, Licensor shall again provide Licensee with Licensees right of first refusal as described
in this 2.2.1 with respect to any further intention by Licensor to enter into, during the ROFR
Period, any license any covering First Refusal Products.
ARTICLE III - BUSINESS DEAL; PAYMENTS
3.1. Sales Royalty; Net Sales. In consideration of the grant of the License, Licensee shall pay
to Licensor a sales royalty (Sales Royalty) computed at the rate of [NUMBER] percent
(X.Y%) of Net Sales made during the Licensed Term or any Sell-Off Period. 34 As used herein,
Net Sales shall mean (x) the total gross amounts directly or indirectly invoiced, or charged to
others, or otherwise derived, by Licensee or any Affiliate from or in connection with the
Marketing of Licensed Products (including Closeouts) (Gross Sales) minus only (y) the
amount of credits given for actual returns, chargebacks actually allowed (including with regard
to warehousing violations or late shipment charges), reasonable employee discounts granted, and
any industry standard trade discounts and allowances actually credited or taken, including
discounts, merchandise returns and allowances (including margin support, season end
allowances, vendor retagging or mark-downs), but not including advertising or co-op advertising
expenses. All of the foregoing shall be computed based upon, or valued as if based upon, arms
length transactions with unaffiliated third parties, in accordance with GAAP. No deduction will
be made for other discounts, uncollected or uncollectible accounts, or costs incurred, directly or
indirectly, by Licensee in Marketing any Licensed Products. Notwithstanding any provision to
the contrary herein, the maximum aggregate dollar amount of deductions from Gross Sales in
any Quarterly Period for purposes of calculating the amount of Net Sales for such Quarterly
34
Licensees may seek reduced royalties (i) on an interim basis, e.g., for the First Annual Period; and/or
(ii) on Closeouts, often subject to an overall annual volume cap. In the latter case, language along the
following lines might be considered: Notwithstanding the foregoing, Licensee shall pay to Licensor a
Sales Royalty at the rate of [NUMBER] percent (Z.X%) of Net Sales of Licensed Products deemed to be
Closeouts in an Annual Period, but only to the extent that such Closeouts do not exceed [ten percent
(10%)] of Licensees total Net Sales for such Annual Period; in the event that Net Sales of Closeouts
exceed such [ten percent (10%)] threshold, Licensee shall pay the full Sales Royalty on the excess (i.e., at
the rate of [NUMBER] percent (X.Y%) of such Net Sales).
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Period shall be an amount equal to [ten (10%) percent] of such Gross Sales amount. For the
avoidance of doubt, Net Sales does not include amounts not for the account of Licensee or its
Affiliates, such as customs duties or charges, freight expenses, or sales taxes, in each case to the
extent separately identified on the invoice. All invoices covering Licensed Products shall reflect
the style numbers of the Licensed Products covered thereby.
3.1.1. Net Sales by Affiliates. Licensee shall promptly advise Licensor if any
Authorized Retailer becomes Affiliated with Licensee. As used herein, (i) a Person shall be
deemed an Affiliate (or an Affiliated Entity) of another Person if it controls, is controlled by,
or under common control with, such other Person, whether by virtue of an equity or other
business interest, or by virtue of a family relationship35; and (ii) for these purposes, control
shall mean the possession, directly or indirectly, of the power to direct or cause the direction of
management and policies of a Person, whether through the ownership of voting securities of such
entity or by contract or otherwise. If Licensee sells or otherwise transfers any Licensed Products
to any Affiliated Entity at a price (after taking into account any chargebacks, allowances or other
amounts or credits properly granted) that is less than the price (without taking into account any
chargebacks, allowances or other amounts or credits) that Licensee charges to similarly situated
nonaffiliated full-priced retailers, then the invoice price to the Affiliated Entity, for purposes of
calculating Net Sales, shall be deemed for all purposes of this Agreement to be the current
invoice price charged to nonaffiliated full-priced Authorized Retailers purchasing like quantities.
3.2. Minimum Net Sales and Minimum Royalties.36 For each Annual Period during the
Licensed Term, Licensee shall (i) achieve Net Sales equaling or exceeding the amount set forth
below under the column Minimum Net Sales, and (ii) pay to Licensor guaranteed and non-
refundable minimum royalties at least equal to the amount set forth below under the column
Minimum Royalties, as follows:37
35
In the context of a deal with a family-owned and operated Licensee, some Licensors seek to include
within the definition of Affiliate any entity (including a trust) controlled by a family member (often
defined down to the level of cousins) of a control person of Licensee.
36
Note that in the case where a license covers a number of different product lines, one or the other party
may want to have separate Minimum Net Sales and/or Minimum Royalty levels (collectively,
Minimums) applicable to the different categories of goods. The same concept might apply where more
than one mark is covered by the same license, or where different genders (mens, womens, boys, girls)
are included in a single license. By separating out the product groups, marks and/or genders, the
Agreement can provide for separate net sales calculations and royalty amounts for each and, if desirable,
can provide for a cross-default for a failure to make payments, or to satisfy one or more sets of
Minimums, in respect of an individual category. In such a scenario, consider including language that
preserves the demarcations: e.g., that no Licensed Product can contain more than a single Licensed Mark,
and/or that net sales will be determined on the basis of the department within a department store that first
purchased the goods (e.g., to take account of the situation where polo shirts in boys sizes are purchased by
the childrens department, but are displayed and sold in the womens or juniors department).
37
The parties may want to consider a number of items when dealing with Minimums: 1. Rachet. The
parties are launching a new mark or product line, and are unable to agree on realistic Minimums. As a
compromise, Licensor agrees to set initial Minimums at modest levels, but in exchange wants insurance
that if the business is a big success, either or both of the Minimums for future years will be automatically
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adjusted upward to take account of actual performance. A rachet mechanism provides for (either or both)
Minimums in years two and after to be equal to the greater of (i) the dollar level stated in the chart, or (ii)
some percentage (e.g., 80%) of actual Net Sales achievement during the Measurement Period (for
purposes of Minimum Net Sales) or of Sales Royalty actually paid in the Measurement Period (for
purposes of Minimum Royalties). Note: the Measurement Period construct is discussed in footnotes 27
and 28 above. 2. Tie-in to Core Line: This approach may be useful in a situation where there is a fairly
well established industry-wide relationship between the sales volume of a core fashion brand and the sales
volume of a category of licensed products bearing that brand (e.g., as a general rule of thumb,
childrenswear licensees will expect to generate sales equal to around 15-20% of the core brand).
Especially helpful where the core brand has not yet been established (e.g., in a celebrity brand context),
this approach provides for (either or both) Minimums in years two and after to be pegged at levels based
on some percentage (e.g., 20%) of actual achievement of Net Sales of the core line during the
Measurement Period. Licensees may want the dollar level resulting from application of the tie-in
calculation to apply as a safety net, i.e. kick in only where it results in a level lower than the dollar level
set out in the chart (while Licensors typically resist the safety net approach, note that having a Minimum
float up and down both ways will introduce enormous complexity that, from a business point of view,
may not be worth the trouble).
Another item for consideration: If Licensee fails to meet a Minimum Net Sales target, should that be a
basis for default, even if Licensee goes into its pocket and pays up to Licensor the royalty dollars it
would have owed had the target in fact been achieved? Most Licensors will want to preserve their option
to terminate by virtue of the shortfall in sales. If Licensor reserves such a right to terminate, Licensee
may want Licensors ability to exercise that right to be limited to some reasonable window (e.g., within
60 days after receipt of the annual sales report reflecting the shortfall), failing which Licensors right
would be deemed waived. (On the other hand, some Licensors retain the right to terminate after [June 30]
if it is overwhelmingly likely, in Licensors reasonable judgment based on Licensees upfront orders and
prospects that Licensee will fail to achieve the Minimum Net Sales level for that year.) Rather than have
termination flow from a single years failure to meet such Minimum, Licensee may bargain for a
compromise solution, for example, under which some percentage of a Net Sales shortfall in one year is
added to the Minimum Net Sales level for the next following year, while requiring Licensee to pay up
the non-deferred portion. (If Licensee gets the option to pay up the royalty shortfall, it should make
sure that such payment cures its failure to meet Minimum Net Sales default.) Another approach (though
rarely used in the fashion trademark context) would be to provide that Licensees failure to meet the Net
Sales Minimum permits Licensor to convert the license from exclusive to non-exclusive. Also, note that
although this Agreement takes the approach that the Minimum Net Sales level feeds into the calculation
of the Renewal Thresholds (see 2.2), this need not be the case; they can be (and often are) stated (and
adjusted by virtue of rachets, core line tie-in or otherwise) on a flat dollar or other stand-alone basis.
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Minimum Minimum
Annual Period Net Sales Royalties
Initial Term
First Annual Period $X $Y
(from Effective Date through December 31, 20XX)
Second Annual Period $X $Y
(January 1, 20XX through December 31, 20XX)
Third Annual Period $X $Y
First Renewal Term
Fourth Annual Period $X $Y
Fifth Annual Period $X $Y
Second Renewal Period
Sixth Annual Period $X $Y
Seventh Annual Period $X $Y
Third Renewal Period
Eighth Renewal Period $X $Y
Ninth Renewal Period $X $Y
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3.3. Initial Advance.38 Simultaneously with the execution of this Agreement by the parties,
Licensee shall pay Licensor a nonrefundable initial advance in the amount of [NUMBER]
Dollars ($XX,000) (the Initial Advance), which amount [is hereby deemed by the parties to be
earned by Licensor in its entirety as of the date of the execution of this Agreement, and] shall be
applied against Licensees obligations to make payment of Minimum Royalties in respect of the
Initial Term only.
3.4. Marketing Fee.39 In consideration of the grant of the License, and in addition to all other
amounts or payments due from Licensee under this Agreement, Licensee shall pay to Licensor a
marketing fee (Marketing Fee) computed at the rate of [NUMBER] percent (X.Y%) of Net
Sales made during the Licensed Term. Marketing Fees shall be retained by Licensor and used in
Licensors sole discretion for the purpose of advertising, promoting and marketing the Licensed
Mark. Such expenditures may include payments for [marketing, advertising, public relations,
fixturing, point of purchase materials, special events and promotions, including the costs of
production and administration of such programs, and other costs related thereto, all as Licensor
38
An Initial Advance gives Licensor the time value of money while acting as security for Licensees
future payment obligations. It also has the practical effect of locking the Licensee in to commencing
planning (hiring, showroom rental/build out), even where the first shipment of goods may be a year or
more down the road.
39
Licensor wants to make sure that there is an appropriate program in place covering the advertising,
marketing and promotion of Licensed Products. In addition to requiring Licensee to itself make certain
expenditures (this may be a general provision along the lines of 4.4.2, or require specific types of
expenditures along the lines of 4.4.3), fashion brand licenses almost always call for a Licensor-
controlled brand marketing contribution (here, a Marketing Fee). (Note that this 3.4 contains a
relatively standard percentage Marketing Fee provision, but does not contain any Minimum Marketing
Fee provisions, even though they are quite common in fashion trademark licenses; provisions setting out
the mechanics re: calculation and payment of Minimum Marketing Fees typically follow, often word for
word, those dealing with Minimum Royalties.) Where Licensor is going to control all advertising, the
Marketing Fee may be in lieu of any Licensee-controlled expenditures. The Marketing Fee dollars are (at
least in theory) poured into a pot together with monies collected from other licensees and earmarked for
promoting the brand; this may include advertising marketing and/or promotional activities that may
feature products (including, perhaps, Licensed Products), or not (e.g., concert or other event
sponsorships). The notion is that promoting the entirety of the brand, in whatever manner Licensor
happens to prefer, will redound to the benefit of all products bearing the Licensed Mark, including
Licensed Products. Licensor will note that, by aggregating the marketing spends of the various licensees,
the overall program will have more clout in making media buys, and also can achieve greater consumer
impact (remember when Polo would regularly take the first 10-20 pages of the Sunday New York Times
Magazine section?). Licensee may be able to bargain for some concessions from Licensor here: (i) that
Licensor will in fact spend the Marketing Fees collected, on the types of programs described (rather than
holding on to the cash; one approach would be for Licensees contribution to be on a match basis,
matching Licensors spending out of the pot dollar for dollar, up to a cap equal to Licensees percentage
Marketing Fee), and/or (ii) that at least X% of the Marketing Fee paid by Licensee will be spent on
activities/materials featuring (Licensees) Licensed Products. Also, in a situation where Licensees
Territory is outside the primary trading area for the Licensed Mark, Licensee might bargain for a
provision under which its Marketing Fee dollars will be spent in the geographies in which it will actually
be doing business (e.g., pro rata to its Net Sales projections, by Country).
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deems appropriate in its sole discretion.] Licensee will account for and pay the Marketing Fee
based on Licensees Net Sales in each Quarterly Period, each such report and payment to be
made to Licensor on the date each payment of Sales Royalty is due hereunder. Marketing Fee
payments made hereunder shall be nonrefundable and not be credited in any way against the
Minimum Royalty or the Sales Royalty due for any Annual Period.
3.5. Payment Mechanics. 40
3.5.1. Installments of Minimum Royalties. Licensee shall pay to Licensor the Minimum
Royalty in respect of each Annual Period in four equal quarterly installments, in advance, on the
first day of January, April, July and October, with the first installment due on [DATE], 20XX.
Minimum Royalty paid or payable in respect of an Annual Period will be credited against the
Sales Royalty for the same Annual Period only. Minimum Royalty payments made hereunder
shall be nonrefundable.
3.5.2. Payments of Sales Royalties. Licensee will account for and pay to Licensor the
Sales Royalty quarterly within [thirty (30)] days after the close of each Quarterly Period during
the Initial Term or any Renewal Term [, except that the first accounting and payment will cover
the First Quarterly Period (ending [DATE], 20XX)]. The Sales Royalty payable will be
computed on the basis of Net Sales during the [prior Quarterly Period] [elapsed portion of the
Annual Period,] with a credit for any Minimum Royalty [and Sales Royalty] previously paid but
as yet uncredited in respect of such Annual Period only. 41 No payment of Sales Royalty for any
Annual Period in excess of payments of Minimum Royalty for the same Annual Period will be
credited against any Minimum Royalty payable to Licensor in respect of any other Annual
Period.
3.6. Payments; Currency Conversions. All payments by Licensee to Licensor under this
Agreement shall be made in full, without deduction or set off for any reason whatsoever, in
United States Dollars, via wire transfers, corporate checks, or in such other manner that Licensor
designates to Licensee on reasonable prior notice. If Licensee sells Licensed Products in a
40
The payment mechanics here call for 8 payment dates each year: 4 Minimum Royalty payments
(quarterly in advance), and 4 Sales Royalty payments (quarterly in arrears). Although this is the standard
approach, some Licensors may permit the installments of Minimum Royalty to be paid at the same time
that the Sales Royalty payment is due, reducing the number of payment dates per year to 4.
41
For the avoidance of doubt, Licensee may wish to add language along the following lines:
Notwithstanding the forgoing, however, if at any time prior to the end of any Annual Period, Licensee
shall have paid to Licensor in respect of royalties (i.e., Sales Royalties plus installments of Minimum
Royalties) for such Annual Period a sum that in the aggregate is equal to or greater than the aggregate
Minimum Royalty payable for such Annual Period, then the Minimum Royalty for such Annual Period
shall be considered fully satisfied and Licensee shall not be obligated to make any further payments in
respect of the Minimum Royalty for such Annual Period. This covers the (admittedly rare) situation
where, for example, the Sales Royalties paid in the first part of the year exceed the Minimum Royalty due
for the entire year, and Licensee would otherwise be required under the language of the Agreement to pay
a further installment of Minimum Royalty at the start of the third or fourth quarter.
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currency other than United States Dollars, then for purposes of calculating the Sales Royalty
payable from time to time, Net Sales of such sales will be computed on the basis of the spot
conversion rate of the currency of sale into United States Dollars quoted in the Wall Street
Journal as of the close of business on the last day of the applicable accounting and payment
period.
3.6.1. Acceptance Not A Waiver. Acceptance by Licensor of any payments under this
Agreement shall not prevent Licensor, at any date within [three (3) years] after delivery thereof,
from disputing the amount owed or from demanding more information from Licensee regarding
payments finally due, and acceptance of any payment by Licensor shall not, prior to expiration of
such [three-year] period, constitute an acceptance or waiver of any breach of any term or
provision of this Agreement by Licensee if any such breach shall have occurred.
3.6.2. Failure to Make Payment. If Licensee fails to make any payment to Licensor
when due in full, then in addition to Licensors other remedies hereunder, or at law or equity,
(i) Licensee will pay interest on any unpaid balance, from and including the date the payment
becomes due until the date on which such amount is paid in full, at the Base Rate during the
period of delinquency plus three (3) percentage points, or the maximum rate of interest which
can legally be paid by [limited liability companies], if lower, and (ii) if the default continues
uncured for [five (5)] Business Days or more after notice to Licensee, Licensor may terminate
the Licensed Term and the License pursuant to 8.2.1(iv).42 Licensee will reimburse Licensor
for any costs incurred by Licensor in seeking to collect any sums due to it, including fees and
expenses of attorneys and any collection agency.
3.7. Statements and Reports.43 On or within the time periods indicated below, Licensee shall
deliver to Licensor the following statements, in a format from time to time prescribed by
42
If going straight to Licensors having the ability to terminate upon non-payment is too draconian for the
negotiation at hand, the parties might consider an intermediate step of requiring Licensee to post a
standby letter of credit in favor of Licensor, covering minimums for some future period, as part of a cure
mechanic. At the other end of the spectrum, another approach would give Licensor the right to accelerate
all remaining payments of Minimum Royalty for the balance of the Licensed Term. See Tricots St.
Raphael, Inc. v. Capital Mercury Apparel, Ltd., 287 A.D.2d 946, 731 N.Y.S.2d 906 (N.Y. App. Div. 1st
Dept. 2001).
43
An alternative (more Licensee-friendly) approach would be to include a deadline by which Licensor
must object to any statements delivered by licensee (e.g., 2 years after delivery) and/or bring an action. In
New York, these types of contractual incontestability provisions are generally enforceable. See, e.g.,
Allman v. UMG Recordings, 530 F. Supp. 2d 602 (S.D.N.Y. 2008); Franconero v. Universal Music
Group, No. 02 Civ.1963, 2002 WL 31682648, at *l-3 (S.D.N.Y. Nov. 27, 2002) (finding that plaintiff was
barred from seeking discovery of documents that were drafted prior to the contract's two-year
incontestability clause); Berkshire Life Ins. Co. v. Fernandez, 124 A.D.2d 120, 511 N.Y.S.2d 348, 350
(1987) (stating that within life insurance policies, [i]t is now well settled in New York that an
incontestability clause is in the nature of, and serves a similar purpose as a Statute of Limitations.); Cab
Assocs. v. City of New York, 32 A.D.3d 229, 820 N.Y.S.2d 21 (2006) (dismissing a contractors damage
claim as time barred and enforcing the contractual four-month limitation period, rather than the general
six-year statutory limitation period); Diana Jewelers of Liverpool, Inc. v. A.D.T. Co., 167 A.D.2d 965,
562 N.Y.S.2d 305 (1990) ([A] reasonable contractual shortening of the period of limitations is statutorily
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Licensor. Each such delivery of statements shall be accompanied by a certificate of Licensees
chief financial officer (i) certifying the accuracy of the delivered statements, and (ii) certifying
that no breach or default on the part of Licensee under this Agreement has occurred.
3.7.1. Monthly Statements. By the fifth (5th) day of the month following the end of each
calendar month ended during the Licensed Term, Licensee shall deliver to Licensor a statement
detailing total Gross Sales and Net Sales for the previous month, by Approved Customer and by
door.
3.7.2. Quarterly Statements. By the twentieth (20th) day of the month following the end
of each Quarterly Period ended during the Licensed Term, Licensee shall deliver to Licensor the
following, each covering the most recently ended Quarterly Period (and such other period(s) as
are specified below):44
3.7.2.1. Sales Royalty Statement. A statement setting forth: (i) each of (a) the
number and invoice price of all Licensed Products invoiced or shipped by Licensee or its
Affiliates, and (b) the amount of all credits, chargebacks, allowances and other items which
properly may be deducted from Gross Sales, with such items (a) and (b) listed by Country, by
Seasonal Collection, by style, by SKU, by Approved Customer and by door, all of which
information shall be presented by month and in the aggregate; and (ii) a computation of the
accrued Sales Royalty due thereon;
3.7.2.2. Marketing Fee Statement. A statement setting forth a computation of

the accrued Marketing Fee, in form and content equivalent to the Sales Royalty Statement;
3.7.2.3. Advertising Statement. A statement setting forth the amount spent by

Licensee for the advertising, marketing, promotion and publicizing of Licensed Products, by
Country, by Seasonal Collection, by style, by type of advertising, marketing, promotional and
public relation activity (including a separate statement, by type, as to launch activities), all of
which information shall be presented by month and in the aggregate;
3.7.2.4. Sales/Shipping Statement. A statement setting forth Gross Sales and all
shipments made, by Approved Customer and by door (including customer name, address and
Licensed Product shipped (in U.S. Dollars)), ranked by sales volume;
3.7.2.5. Product Classification and Style Statement. A statement providing

product classification and style breakdowns, including for each classification and style the
number of units sold (by month and year-to-date), average unit wholesale price, Gross Sales
value of Licensed Product shipped (in U.S. Dollars) and percentage of Gross Sales accounted for
by such classification and style; and
authorized [under C.P.L.R. 201] and, absent a showing of fraud, duress or misrepresentation, will be
upheld.).
44
An alternative would be to annex as exhibits specimens of Licensors actual reporting forms. Note that
Licensor may be willing to curtail the content of the various statements depending on the sophistication of
Licensees financial function; see, for example, the bracketed language at the end of 3.7.4.
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3.7.2.6. Customer and Manufacturer Information. Together with the second and
fourth quarterly statements for each Annual Period being delivered to Licensor under this 3.7.2,
(i) a list of Licensees then current customers, which also will designate which of the customers
has established a Sales Environment and the type of Sales Environment established, (ii) a list of
Licensees Approved Manufacturers, and (iii) a certification by Licensees chief
[executive/operating/financial officer] that the performance of each of the Approved
Manufacturers is in compliance with the requirements of this Agreement.
3.7.2.7. Consolidated Net Worth Statement. A statement setting forth, as of the

date of such statement, Licensees consolidated net worth, determined in accordance with
GAAP, including a description of the manner in which such computation was made and certified
by Licensees chief financial officer.45
3.7.3. Annual Statements. By the forty-fifth (45th) day after the close of each Annual
Period (or portion thereof in the event of earlier Termination) ended during the Licensed Term,
Licensee shall deliver to Licensor a statement signed and certified as accurate by Licensees
regular independent certified public accountants covering such Annual Period (or portion
thereof), which statement shall cover the same categories of information required to be covered
by Licensees statements under 3.7.1 and 3.7.2. Licensee shall also provided to Licensor, as
soon as it is available, a copy of Licensees annual audited consolidated financial statements,
including a balance sheet, income statement and statement of cash flows.
3.7.4. Other Information. Licensee shall deliver to Licensor such other statements,
reports and information relating to operations under the License, including working papers,
calculations and other backup supporting any statement or report hereunder, as are reasonably
requested by Licensor, [to the extent readily available without the need to incur any significant
costs or expenses.]
3.8. Books and Records; Audits.
3.8.1. Books and Records. Licensee will prepare, in a manner which will enable
Licensors accountants to audit the same in accordance with generally accepted auditing
standards and with the provisions of this Agreement, true, correct and complete separate books
of account and records (including the originals or copies of documents supporting entries in the
books of account), reflecting all transactions and operations under or relating to this Agreement.
Licensee shall maintain such books, records and documents at the premises of its principal
executive office. Licensee will preserve intact its books of account and records, as well as any
supporting or related documents and materials, for at least five (5) years (or such longer period
as required by Law) after the end of the Annual Period to which they relate.
3.8.2. Audits. Licensors representatives may, during regular business hours [on
reasonable/24 hour prior notice], for the duration of the Licensed Term and for [three (3) years]46
45
See 7.5 and related footnote.
46
The Licensee-friendly approach is to restrict audit rights to a specific time period (e.g., 2 or 3 years
after the close of the year to which such records pertain), thereby providing a sort of de facto safeguard
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thereafter, examine, make copies of, and audit such books of account and records, as well as any
supporting or related documents and materials including journals, ledgers, invoices, purchase
orders, cutting tickets, credits, shipping documents and inventory records.47 The costs and
expenses of any such audit shall be borne by Licensor, expect as otherwise provided in 3.8.3.
3.8.3. Discrepancies.48 If any audit of Licensees books and records discloses that
payments made by Licensee hereunder in respect of any Quarterly Period were less than the
amount required to have been paid, Licensee shall immediately pay to Licensor such amount as
will eliminate the discrepancy, together with interest on such amount from the date the
discrepancy first arose through the date of actual payment, at the Base Rate [plus three (3)]
percentage points; and, if the discrepancy is [two percent (2%)] or more of the amount actually
paid in respect of the subject period, Licensee promptly will reimburse Licensor for the cost and
expenses of the audit. In addition, if the discrepancy is [five percent (5%)] or more, interest will
be at the at the Base Rate plus [eight (8)] percentage points (or the maximum rate of interest
which legally can be paid by [limited liability companies], if lower) and Licensor may treat such
underpayment as a material, non-curable default and terminate the License by giving notice
thereof to Licensee [within sixty (60) days after receipt of the audit report disclosing the
discrepancy].
ARTICLE IV - LICENSEE OPERATIONS; LICENSED PRODUCT DEVELOPMENT

AND APPROVAL
4.1. Licensee Staff and Resources. Licensee shall, throughout the Licensed Term and at
Licensees sole cost and expense, commit the following staff and resources to its activities under
this Agreement:
4.1.1. Licensee Manager. Licensee shall employ a qualified and experienced executive
who (i) shall be Licensees principal day-to day liaison with Licensor with respect to this
Agreement, (ii) shall be dedicated exclusively to Licensees business in Licensed Products, (iii)
shall have substantial oversight responsibilities over Licensees activities in connection with this
Agreement and (iv) who shall personally attend such meetings regarding the business in
Licensed Products as Licensor shall reasonably request (the Licensee Manager). The initial
against stale suits, since Licensors ability to obtain evidence of insufficient royalty payments would
thereby be restricted (i.e., Licensor would either have to sue without the benefit of audit-generated
evidence of non-payment, or obtain some extrinsic source of this information). See also 3.7 and related
footnote.
47
Licensee may seek to limit the number of audits in any given period (any such limit should be lifted if
any audit uncovers a discrepancy), and seek to have the audit conducted by a CPA firm (i) of national
standing, or subject to the reasonable approval of Licensee, (ii) which is not compensated on a
contingency basis, and (iii) whose audit does not unduly interrupt Licensees operations.
48
In a sublicense context, this Agreement might contain a provision specifically granting, to the licensor
under the overlicense, these same audit rights. Also, note that some Licensor forms call for a zero percent
threshold for audit cost reimbursement if the underpayment is intentional. In addition, Licensee may
ask for a provision dealing with the situation where an audit reveals an overpayment by Licensee; any
overpayment would typically be held by Licensor as a credit balance.
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Licensee Manager, whom Licensor hereby approves, shall be [NAME]. Any change in the
individual assigned to be the Licensee Manager, whether such change is at Licensors request or
otherwise, shall be subject to the approval of Licensor. Licensor may, in its [reasonable / sole]
discretion and at any time during the Licensed Term, require Licensee to replace the Licensee
Manager if Licensor determines that such Licensee Manager is [reasonably] unacceptable.49
Upon being notified of Licensors request for a new Licensee Manager, Licensee shall promptly
propose a new Licensee Manager for Licensors consideration and approval. Upon Licensors
approval, Licensee shall use its commercially reasonably efforts promptly to effectuate an
efficient transition. The Licensee Manager shall at all times be the employee of Licensee, under
its full direction and control, and shall not be deemed to be employed by, or the agent or
responsibility of, Licensor. All payroll costs (including salary or bonus, health benefits and all
associated state and federal employees and employers payroll taxes and associated payroll
deductions and medical insurance costs; collectively, Payroll Costs) of the Licensee Manager
shall be borne solely by Licensee.
4.1.2. Other Employees of Licensee. Licensee shall (i) employ a qualified and
experienced sales force [of at least X employees] devoted exclusively to the promotion and
marketing of Licensed Products throughout the Territory, and (ii) employ/engage a qualified and
experienced staff [of not less than X employees/contractors] who will work exclusively on the
design and development of the Licensed Products, and who shall have accorded or transferred to
Licensee all right, title and interest in and to all work product created, designed or developed by
them within the scope of their engagement or employment, including all copyrights and other
Intellectual Property Rights therein, pursuant to an enforceable assignment or work for hire
arrangement or agreement.50 At any time during the Licensed Term, Licensor may, in its
reasonable discretion, request that Licensee remove or replace any Licensee employee then
working in connection with Licensed Products;51 upon receipt of such a request, Licensee will
use commercially reasonable efforts promptly to effectuate such request, and to effectuate an
efficient transition. Licensees employees and contractors assigned to work in connection with
Licensed Products shall at all times be employees and contractors of Licensee, under its full
49
Licensee may want a more objective standard, e.g., if Licensee has failed to meet minimum sales levels
for some period.
50
Typically, the person who creates a work is legally recognized as such works author. However, if a
work is prepared by an employee within the scope of employment, it is a work made for hire, or work
for hire, and the employer (as opposed to the employee) is considered to be the author of the work and to
own all of the rights comprised in the copyright under U.S. copyright law (unless the parties have
expressly agreed otherwise in a written instrument). See United States Copyright Act, 17 U.S.C. 101
and 201. Considering this, a license agreement should affirmatively recite that the work is deemed to be a
work for hire (and, in the event the work is not determined to be a work for hire, the agreement
should require the assignment and transfer of all right, title and interest in and to the work from the author
to Licensor), to help ensure that Licensee or individual members of Licensees design/development team
do not end up with copyright ownership rights in any Licensed Products, Materials or related designs or
Specifications.
51
In terms of Licensors restrictions on and control over the operations and actions of Licensee, Licensor
should take care to ensure that it does not inadvertently create an agency relationship with Licensee,
notwithstanding the express provisions hereof (see 11.1) to the contrary.
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direction and control, and shall not be deemed to be employed by, or the contractor, agent or
responsibility of, Licensor. All Payroll Costs of Licensees employees shall be borne solely by
Licensee.
4.1.3. Showroom. Licensee shall maintain a separate showroom devoted exclusively to

the display, promotion, marketing and sale of Licensed Products (the Showroom). The
Showroom shall be [at a location, of a size, and] designed, furnished, fixtured, decorated and
maintained in a manner approved by Licensor and that meets with Licensors continuing
[reasonable] approval at all times during the Licensed Term. [The Showroom shall be located in
a first-class building [in the County, City and State of New York/within a one mile radius of
[location], and shall be of at least X,000 square feet.] The Showroom shall have its own
dedicated public entryway, such that, in order to enter the Showroom, visitors shall not be
required to walk through any other showroom or area in which products other than Licensed
Products are displayed.
4.2. Approval Standards; Development of Licensed Products; Approvals.52
4.2.1. Licensor Standards.53 Licensee understands and agrees that Products bearing the
Licensed Mark must at all times reflect and embody the high standing and reputation, and
established prestige and good will, of the Licensed Mark, including (i) the aesthetic, design,
52
This provision sets out a fairly extensive design, development and approval process, including
timeframes for each step of the process along the way. It will not help either party if they agree to such a
detailed process in the papers, and then ignore it in practice. At the other end of the spectrum would be a
very general provision, with language that might be along the lines of the following: Licensor and
Licensee acknowledge that maintaining the value of the Licensed Mark and associated good will are
essential elements of the License granted herein. Licensee agrees that all Products shall be of high
quality. Each season, the quality, style, fabrication, color, sizes, specifications and all other aspects of the
Products shall be made available for review and approval by Licensor or its designee prior to production
[, and in accordance with the Design Calendar [to be agreed by the parties/annexed hereto as Exhibit X.]]
Any such approval shall be in writing and shall not unreasonably be withheld, conditioned or delayed.
53
In order to protect its trademark rights, Licensor must retain some level of control over the quality of
the Licensed Products and, as such, license agreements will include a requirement for Licensor approval.
Licensor typically wants sole, exclusive, absolute, subjective discretion in granting or withholding
approval; some Licensor approval provisions go as far as to state that Licensor is entitled to consider such
interests and factors as it desires in determining whether to grant or withhold approval, specifically
disclaiming any requirement to consider the interests of Licensee. Moreover, some Licensees are
concerned that, armed with a sole discretion standard, Licensor may be able to arbitrarily and
capriciously withhold approval of any Licensed Products whatsoever, effectively putting Licensee out of
business; depending on the facts, circumstances and motivations, such an approach by Licensor would put
into question its fulfilling its implied covenant of good faith. For this and other reasons, Licensee
typically looks for a commercially reasonable approval standard, often coupled with requirements that
Licensor (i) give specific reasons for each rejection of an item, with suggested changes necessary to meet
its approval; and (ii) use all commercially reasonable efforts to approve a sufficient number of Products to
enable Licensee to fill a complete line. The approach taken in this Agreement (last sentence of 4.2.1) is
a bit of a hybrid, giving Licensor the right to accept or reject, but based on a set of standards (Licensor
Standards) that contains both objective and subjective elements.
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content, quality, style, fit, price point and value which merchandise and other items bearing the
Licensed Mark have come to represent in the minds of the trade and the public, (ii) Licensors
most current general lifestyle themes and concepts for the Licensed Mark, as expressed by
Licensor to Licensee from time to time, and (iii) the values and standards embodied within
Licensors Ethical Standards (all of the foregoing, collectively, the Licensor Standards).
Accordingly, Licensee understands and agrees that each Product bearing the Licensed Mark, and
any Materials, must be approved by Licensor in accordance with the provisions of this Article IV
prior to use. In no event shall Licensee commence or permit the manufacture, advertising,
promotion sale or distribution of any proposed Product bearing the Licensed Mark, or any
Materials, unless and until Licensee has received Licensors approval therefor in accordance
with the provisions of this Article IV. Licensee further understands and acknowledges that, in
determining to grant or withhold its approval of any item subject to Licensors approval under
this Agreement, Licensor shall base its judgment on [its own [subjective, independent]
determination of whether such item conforms with the Licensor Standards.]
4.2.2. Types of Licensed Products. All Licensed Products shall conform to the Licensor
Standards. Included within each Seasonal Collection shall be certain Licensed Products which
shall specifically coordinate and be capable of being cross-merchandised with specific Licensor
products, as Licensor and Licensee shall agree.54
4.2.3. Technology and Techniques. Licensee shall use all commercially reasonable
efforts to embody within Product Concepts and Licensed Products the most advanced technology
and techniques available to it; in this connection Licensee shall utilize in the creation and
manufacture of Licensed Products all of Licensees most recent research and development
information, technologies and capacities with respect Products, including proprietary and non-
proprietary manufacturing processes, data, programs, know-how, discoveries, developments,
inventions and techniques, whether or not patented or patentable (Licensee Technology).
Licensee shall make such Licensee Technology available for purposes of such creation and
manufacture of Licensed Products without cost, charge or credit so as to ensure that Licensed
Products are afforded all competitive advantages which may be available and to enable and
encourage the development of new Licensed Products and the improvement of existing Licensed
Products.
4.2.4. Development of Licensed Products.
4.2.4.1. Collections. During each Annual Period, Licensee will manufacture and
sell four seasonal collections of Licensed Products featuring the Licensed Mark: Spring,
Summer, Fall, and Holiday55 (each a Seasonal Collection). From time to time, but at least ten
(10) weeks in advance of each Line Opening Date, appropriate representatives of Licensor and
Licensee shall, if either party so desires upon notice to the other, meet at such place in the New
54
Apparel licenses might specify various product class/type guidelines here, e.g., re: the proposed split
between basic items and fashion items, or the percentage of items to be offered to all store customers vs.
customized for particular stores.
55
Conform to actual practice, which varies by category.
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York City metropolitan area as Licensor shall designate, to confer on the tone and direction for
Products to be included within the relevant Seasonal Collection of Licensed Products. As used
herein, Line Opening Date shall mean the date of the initial trade introduction for a Seasonal
Collection of Licensed Products.
4.2.4.2. Initial Product Concepts. From time to time, but at least eight (8) weeks
in advance of each Line Opening Date, Licensee shall provide Licensor with a program of
suggested broad design themes, inspirations, ideas, information and concepts, by classification
and by category (Initial Product Concepts) for Products which Licensee believes may be
appropriate for manufacture and sale as Licensed Products. Initial Product Concepts shall be
embodied in such [oral,] written and pictorial descriptions and presentation materials as Licensee
shall reasonably determine, but shall in any event include selected prototypical silhouettes and
materials demonstrating Licensees color direction proposals, to enable Licensee and Licensor to
determine the types of Products which should be included within the relevant Seasonal
Collection. [Without limiting the other provisions of this 4.2, each such presentation of Initial
Product Concepts for a Seasonal Collection shall reflect a full range of Licensed Products, in a
mix appropriate to a balanced presentation, and shall contain not less than [NUMBER] (XO)
SKUs (the Complete Line).56
4.2.4.3. Detailed Product Concepts. From time to time, but at least four (4)
weeks in advance of each Line Opening Date, Licensee shall provide Licensor with additional
information with respect to the Initial Product Concepts previously presented. Such additional
information shall include a description of each proposed Licensed Product (by SKU), and
prototypes for [a representative cross-section/substantial portion of] the Licensed Products
proposed for inclusion within such Seasonal Collection, together with all actual related materials,
final color proposals, and any other information or items that Licensor deems appropriate (such
materials and descriptions, the Detailed Product Concepts), together with notification of any
items of proposed Products which embody any design, feature or component in which Licensee
does not have exclusive ownership or license rights.
4.2.4.4. Modifications. Promptly after Licensors receipt of the Detailed

Product Concepts, appropriate representatives of Licensor and Licensee shall meet at such place
in the New York City metropolitan area as Licensor shall designate, to confer thereon. The
parties shall make such modifications to Licensees submission of the Detailed Product Concepts
as may be required to meet Licensors approval that such Detailed Product Concepts conform
with the Licensor Standards. Licensor shall advise Licensee of its approval, modification or
disapproval as the case may be as promptly as reasonably practicable. As used herein, Product
Concepts shall include Initial Product Concepts and Detailed Product Concepts, as such terms
are defined in this Article IV.
4.2.4.5. Licensor-Requested Products. At any time or from time to time,

Licensor may, in its sole discretion, by notice to Licensee, advise Licensee that Licensor desires
a particular Product or Products to be manufactured and sold as a Licensed Product hereunder.
56
The parties may want to go into more detail about what will constitute a Complete Line (e.g., SKUs by
classification, by fabrication, etc.), even if only for the Initial Annual Period.
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Provided such request is not commercially unreasonable, Licensee shall include such items
within the requested Seasonal Collection of Licensed Products.
4.2.4.6. Initial Samples. Licensee shall, as soon as is practicable, but in no event

less than one (1) week prior to the applicable Line Opening Date, prepare and present to
Licensor, or its designee, at such place as Licensor may in its discretion designate, at Licensees
sole cost and expense, an initial Sample (Initial Sample) in respect of each Detailed Product
Concept as to which Licensors initial approval under 4.2.4.4 shall have been given. Licensor
and Licensee shall make their appropriate representatives available to meet, at such place in the
New York City metropolitan area as Licensor shall designate, promptly after Licensors receipt
of Initial Samples, to confer with respect thereto and Licensee shall make such modifications
therein as may be required to meet Licensors approval that such Initial Samples conform with
the Licensor Standards [; provided that such approval shall not be withheld unless Licensor (i)
shall not have previously approved a Detailed Product Concept with respect to such Sample, or
(ii) shall in good faith conclude that the physical embodiment of the Detailed Product Concepts,
as represented by such Initial Samples, do not meet Licensors expectations as to the execution
thereof in accordance with the Licensor Standards.] Licensor shall advise Licensee of its
approval, design modification, or disapproval as the case may be as promptly as reasonably
practicable. As used herein, the term Sample shall mean any and all models, or actual
samples, or prototypes, of Licensed Products, except that the terms Initial Sample, Final
Sample and Production Sample shall have the meanings set forth in this Article IV.
4.2.4.7. Final Samples. As soon as reasonably practicable following Licensors

approval of an Initial Sample, Licensee shall deliver to Licensor a Final Sample thereof. As used
herein, the term Final Sample shall mean a Sample of a Licensed Product, together with any
related Materials, for which an Initial Sample shall have been approved by Licensor hereunder,
which embodies all of the specifications, including with respect to quality, design, construction,
fit, dimensions, components, styling, detail, materials, fabrics, trim, hardware, colors, washes,
finishes and the like (the Specifications), as are to be used in the actual production of each
Licensed Products to be based on said Final Sample. The approval of Licensor of the Final
Samples for any Licensed Product shall be evidenced by a written list, duly signed by a
representative of Licensor, setting forth those Final Samples which have been approved for
production hereunder by Licensee. Unless Licensors written list of approvals expressly
indicates otherwise, no approval shall extend beyond the Seasonal Collection for which the
approval is granted, and in the event that Licensee intends to utilize any style for any subsequent
Seasonal Collection, such style shall be resubmitted for Licensors approval in accordance with
this Article IV. [Any approval of a Licensed Product may be withdrawn by Licensor upon not
less than [four (4)] months prior notice to Licensee given not earlier than [twelve (12)] months
after the date on which the Final Sample was approved.]
4.2.4.8. Rejection of Samples. In the event that Licensor rejects a particular

Sample or Samples, Licensor shall notify Licensee of its reasons for rejection and shall provide
Licensee with suggestions for modifying the particular Sample or Samples which Licensor is
rejecting. Licensee shall, as promptly as practicable, correct said Sample or Samples, resubmit
said Sample or Samples to Licensor and seek Licensors approval under the same terms and
conditions as set forth with respect to the first submission of such Samples; provided that
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Licensee shall not be obligated to correct any Sample if such Sample is not necessary to create a
Complete Line.
4.2.4.9. Production Samples. Licensee shall, as soon as is practicable, but in no

event less than six (6) weeks after the applicable Line Opening Date, prepare and present to
Licensor, or its designee, at such place as Licensor may in its discretion designate, at Licensees
sole cost and expense, a Sample of each Licensed Product from the initial production run thereof
(each, a Production Sample). If Licensor believes any Production Sample does not accurately
reflect the Final Sample (including all Specifications embodied therein), Licensor shall notify
Licensee thereof and Licensee shall promptly modify such Production Sample to Licensors
satisfaction.
4.2.4.10. Materials. Prior to their use, Licensee shall submit to Licensor all
Materials for Licensors approval based on the Licensor Standards.57 As used herein, the term
Materials shall mean any items or materials (other than Licensed Products themselves)
bearing, incorporating or otherwise utilizing or referring to any Licensed Mark or proposed for
use in connection with Licensed Products, including all labels, hangtags, cartons, containers,
wrappers, packages and other inner and outer packaging materials, fixtures, displays, signage,
racks, artwork and printing, stationary and invoices, and all sales, marketing, advertising
(including radio, TV, internet and ads and other commercials), and promotional materials.
4.2.4.11. Deemed Approval. In the event that Licensor fails to provide its
approval or rejection of any Concept, Sample or Material submitted to Licensor by Licensee in
accordance with this Article IV within [ten (10)] Business Days of Licensors receipt thereof,
Licensor shall be deemed to have approved of such item for all purposes of this Agreement, as
fully as if it had affirmatively approved the item.58
4.2.4.12. No Modification. After a Final Sample or Material shall have been

approved by Licensor hereunder, all SKUs (individual products) of the Licensed Products and all
Materials shall conform [in all material respects/strictly] to the Products and Materials previously
approved by Licensor, including all Specifications therefor, and no [material] modification of
any Licensed Product or Material shall be made without Licensors prior consent. If [, in
Licensors commercially reasonable judgment,] the quality of any SKU of a Licensed Product or
the quality of any Material has deteriorated, or if any SKU or Material has been altered or
modified in any [material] respect, Licensor shall have the right to require, by notice to Licensee,
57
Mechanics re: presentation and timing of approvals of Materials, often included, are mostly (see, e.g.,
4.2.4.11) omitted here. Some Licensors require that each and every request for approval, be it for
Samples or Materials, be accompanied by an approval request form, the form and content of which is
provided by Licensor.
58
The deemed approved mechanic has many permutations, including a tortured (and some would say
infantile) one called the snooze alarm that provides: if Licensor has failed to respond to a Licensee
request for approval within some period (say 10 days), Licensee must send a second, identical notice,
reminding Licensor that it hasnt yet responded to the initial request; only if the second notice is likewise
ignored for some period (say 3 days) is the approval deemed given. Feh.
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that such SKU of the Licensed Product or such Material be withdrawn from the market
[immediately/as soon as is practicable].
4.3. Production of Licensed Products; Quality Control; Approved Manufacturers.
4.3.1. Quality Control. The contents and workmanship of Licensed Products will be
substantially equivalent to the highest quality products in the market place. Licensed Products
shall be manufactured, distributed, offered for sale and sold in a manner and with Materials
appropriate for Products of the highest quality and consistent with the standing and reputation of
Licensor and its Affiliates in the fashion industry and with the public as a first rate fashion
firm.59
4.3.1.1. Licensee will submit to Licensor for inspection, upon request, items of
each Licensed Product and Materials then in production so Licensor may assure itself that
required quality standards are being maintained. Licensee will [use all commercially reasonable
efforts to] sell Licensed Products of first quality only, and any sales of Licensed Products not of
first quality will be subject to the provisions of 1.3.2. All Licensed Products and Materials will
be equal or better in quality to the Final Samples and approved Materials approved by Licensor
and shall maintain the integrity of the design/aesthetics of the Final Samples and Materials, and
Licensee will not modify any Licensed Product or approved Material without the prior approval
of Licensor, [provided that, if a Licensed Product is manufactured in accordance with the
applicable manufacturing Specifications, such Licensed Product will not be deemed to have been
modified if it varies in some immaterial respect from the Final Sample therefor, provided that
such Licensed Product is substantially identical in aesthetics and quality with the approved
Sample.]
4.3.1.2. Inspection of Licensed Products and Materials. Licensor and its duly
authorized representatives may, at any time and without notice, examine Licensed Products and
Materials in the process of being manufactured or at Licensees distribution centers and inspect
all facilities utilized in connection therewith, including any Approved Manufacturers factories
and other facilities. 60 Licensee consents to Licensors examination of Licensed Products and
Materials in the possession of its customers. Licensor will [seek to] conduct any such
examination in a manner calculated to minimize interference with normal business operations.
59
Licensor forms often include this kind of amorphous language. It arguably provides some gloss on the
parties expectations re: quality under a commercially reasonable standard. Licensee may argue,
however, that the only per se quality standard it should have to sign on to is that any Licensed Products
manufactured under the License will comply [in all material respects] to the Final Samples approved by
Licensor no more, and no less. Other approaches to providing a gloss on expectations re: quality level
might make reference to a third-party manufacturers line (the Reference Line); if the Licensed
Products are apparel products (e.g., juniors, or childrenwear) and the Licensor produces items (e.g.,
sportswear) at the same general price point, the Reference Line could be Licensors own sportswear line.
60
Of course, all provisions relating to compliance matters will need to be checked against the Licensors
particular Ethical Standards. See the last sentence of 4.3.3 in this regard. Also, in a sublicense context,
this Agreement might contain a provision specifically granting, to the licensor under the overlicense,
these same inspection rights.
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4.3.1.3. Non-Conforming Licensed Products and Materials. If, as a result of
4.3.1.1 and 4.3.1.2 or otherwise, Licensor believes that any Licensed Products or Materials
being offered for sale, or being sold or used, do not conform [in all material respects/strictly] to
the Final Samples and Materials previously approved in accordance with 4.2, then Licensor
shall so notify Licensee, specifying the manner in which the Licensed Products or Materials are
non-conforming. Upon receipt of such notice, and unless and until Licensee has made all
necessary changes to the [reasonable] satisfaction of Licensor and has received Licensors re-
approval of each of such Licensed Products or Materials, Licensee shall [immediately/as soon as
is practicable] [use its commercially reasonable efforts to]: (i) suspend and cease all
manufacture, production, sale and distribution of each of such Licensed Products or Materials;
(ii) recall from all customers [and consumers] all such non-conforming Licensed Products and
Materials; (iii) [unless otherwise agreed to in writing by Licensor,] destroy all such non-
conforming Licensed Products and Materials; and, (iv) if Licensor so requests, deliver to
Licensor a certificate certifying the completion of the foregoing items (i) through (iii). Except as
provided in this Agreement or otherwise agreed to by the parties in writing, any [knowing] sale,
distribution or use by Licensee of unapproved or non-conforming Licensed Products or Materials
shall constitute a material, non-curable breach of this Agreement.61
4.3.1.4. All Licensed Products and Materials (i) shall be suitable for their
intended use, (ii) shall not be [designed or produced so as to be] inherently dangerous and (iii)
shall be manufactured, offered for sale, sold, labeled, packaged and distributed, and advertised,
marketed, promoted, publicized and otherwise exploited, in accordance with all applicable Laws
in the Territory. Without limiting the foregoing, (x) no Licensed Products shall contain or be
packaged in any injurious, poisonous, deleterious or toxic substance or material, (y) no Licensed
Products shall be adulterated or mislabeled, and (z) all Licensed Products and all manufacturing
methods used to produce the same shall meet or exceed all applicable industry and governmental
safety standards. Licensee shall assure that all Laws which may be applicable to the
manufacture, advertising, merchandising, promotion, sale or distribution of Licensed Products
shall be strictly observed and complied with, including those promulgated under the Fair
Packaging and Labeling Act, all child and other labor Laws, all customs requirements and
country of origin regulations, Laws relating to health and safety, such as flammability-related
Laws, and Laws relating to the disclosure of information to the consumer, such as truth-in-
advertising and fiber content labeling Laws. Licensee shall perform such tests on the Licensed
Products as is commercially responsible for manufacturers of high-quality products, and shall
provide Licensor, upon receipt, with copies of all test results. The tests shall be performed by a
reputable independent testing laboratory on a reasonable quantity of representative samples of
the items of Licensed Products comprising each Seasonal Collection, which samples shall
include Licensed Products manufactured at each factory used by Licensee or its Approved
Manufacturers. Licensee shall promptly notify Licensor of any complaint by any consumer,
industry or governmental body relevant to the Licensed Products or Materials, and the status
thereof, and shall cooperate in all reasonable ways with Licensor expeditiously to resolve any
such complaint and to achieve as good a reputation and press as possible for the Licensed
Products and the Licensed Marks. In the event that Licensee becomes subject to any voluntary
61
See footnote to 1.3.2.1.
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or involuntary order of any consumer, industry or governmental body involving the recall of any
Licensed Products or Materials because of safety, health or other hazards to the public, then such
Products or Materials shall be considered to be non-conforming and all such Products or
Materials shall immediately be withdrawn from the market by Licensee and recalled from all
customers and consumers.
4.3.1.5. Licensee represents, warrants and covenants that it does not and will not
engage in any conduct that would violate any applicable labor Law or practice62 or engage in any
form of unlawful discrimination, including discrimination based on race, color, religion, sex, age,
disability, sexual orientation or national origin. Licensee shall use its [best] efforts to monitor
the performance of its Approved Manufacturers to assure compliance with these Laws in
accordance with the Laws of the United States and of all other Countries, as applicable. In
particular (and without limiting the foregoing), Licensee agrees that it will not engage, and will
require its Approved Manufacturers, suppliers and vendors not to engage, in tying practices,
unlawful group boycotts or refusals to deal or any other illegal restraints of trade. Licensee will
notify Licensor upon obtaining knowledge or notice of a [material] failure by any Approved
Manufacturer to comply with any applicable Laws or Licensors Ethical Standards and also will
take all corrective actions as may be necessary or otherwise reasonably requested by Licensor;
and Licensee will terminate any Approved Manufacturer which intentionally or repeatedly fails
to comply therewith.
4.3.2. Approved Manufacturers. Licensed Products will be manufactured only by

Approved Manufacturers. As used herein, Manufacturer shall mean any manufacturer,
factory, vendor, supplier, contractor, resource, facility, or other Person, and each of their
respective subcontractors, appointed or engaged by Licensee or any of the foregoing to
manufacture or produce, directly or indirectly, Licensed Products or Materials (or any
components of the foregoing bearing, incorporating or otherwise utilizing the Licensed Mark, or
used in connection with Licensed Products). As used herein, Approved Manufacturers shall
mean (i) those Manufacturers whose names and addresses are set forth on Schedule F hereto, and
(ii) any other Manufacturers approved as such by Licensor, such approval not to be unreasonably
withheld or delayed.63 Other than as set forth on Schedule F, no initial Approved Manufacturer
is an Affiliate of Licensee; in submitting a Manufacturer for Licensors approval as an Approved
Manufacturer, Licensee shall identify whether such Manufacturer is an Affiliate of Licensee.
Once a Manufacturer has been approved as an Approved Manufacturer hereunder, Licensor may,
on reasonable prior notice to Licensee, [which notice shall cite, in reasonable detail, the
Approved Manufacturers failure to continue to meet Licensors standards for approval,] remove
such Manufacturer from the list of Approved Manufacturers [on a prospective basis, and
62
Licensors Ethical Standards will presumably cover much of this ground.
63
If Licensee and Licensor agree to a reasonableness standard here, Licensee might want further to
include language with some modicum of objectiveness regarding how reasonableness should be viewed,
e.g., by considering including language along the lines of the following: In determining reasonableness,
Licensee understands that Licensor shall approve (or withhold approval of) potential Manufacturers based
upon the Manufacturers reputation and standing in terms of the quality of goods it manufactures, its
financial standing, creditworthiness and general operations and its compliance with the standards of
engagement of its various customers, and all applicable laws and regulations.
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Licensee immediately will cease using such Manufacturer in connection with any Licensed
Products or Materials, subject only to the requirements of applicable Law.]64
4.3.2.1. Licensee shall not engage in any business or transaction with any
Approved Manufacturer with respect to any matter under this Agreement unless and until it shall
have first entered into an agreement with such Manufacturer (including any Manufacturer
comprised of or utilizing Licensees own facilities) embodying the provisions set forth on
Schedule G hereto (a Manufacturers Agreement). Each Manufacturers Agreement shall
include provisions requiring each Approved Manufacturer (i) to comply with (among other
things) Licensors Ethical Standards as in effect and noticed to65 such Manufacturer from time to
time, and (ii) to permit and cooperate with any investigations of its factories and other facilities
pursuant to 4.3.1.2 or 4.3.3.66 The version of Licensors Ethical Standards in effect on the date
hereof is set forth in Schedule H hereto, and such Standards are hereby incorporated in full into
this Agreement. Licensee shall forward to Licensor a true, correct and complete copy of each
executed Manufacturers Agreement as promptly as practicable, but in any event within thirty
(30) days after the execution thereof. Licensee will strictly enforce the provisions of each
Manufacturers Agreement, and shall promptly advise Licensor of any [material] breach of any
provision thereof by any Approved Manufacturer.
4.3.2.2. All Licensed Products shall be manufactured in accordance with

Licensors Ethical Standards and all applicable Laws, and in compliance with all regulatory or
governmental agencies having jurisdiction over such matters, including with respect to wages,
overtime compensation, benefits, hours, hiring and employment, workplace conditions and
safety, the environment, collective bargaining and freedom of association. Without limiting the
provisions of Licensors Ethical Standards, no Licensed Products or Materials (or the
components thereof) shall be made or produced using child (persons under the age of
[NUMBER] (X) or under the age for completing compulsory education, if that age is higher than
[NUMBER] (X)), prison, indentured, exploited, bonded, forced, slave or other unlawful labor.
4.3.3. Inspection of Manufacturing Facilities. Licensor and its duly authorized

representatives may, at any time and without notice, inspect, at Licensors sole expense,
Licensed Products and Materials in the process of being manufactured and at Licensees
distribution centers, as well as inspect all facilities utilized in connection therewith, including
any factories operated by any Manufacturer. Without limiting any right or remedy of Licensor
under or in connection with any Manufacturers Agreement, if (i) any Approved Manufacturer
fails to pass any such inspection, based on a [material] deviation from Licensors Ethical
Standards, [industry standards or failure to comply with applicable Law,] (ii) any Approved
Manufacturer is otherwise in breach of its Manufacturers Agreement, or (iii) the Licensed
64
Note that this would leave Licensee at risk with respect to orders in process and non-cancellable orders.
65
Licensee will want some reasonable period to put any new requirements contained in Licensors revised
Ethical Standards into effect, including via notice to its Manufacturers, and, if necessary, to amend its
Manufacturers Agreements.
66
In a sublicense context, this Agreement might contain a provision specifically granting these same
inspection rights to the licensor under the overlicense.
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Products or the Materials are being produced, assembled, completed or stored at the inspected
site in a manner that violates this Agreement, then in any such event, such Manufacturer shall be
immediately removed from the list of Approved Manufacturers, and Licensee immediately will
cease using such Manufacturer in connection with any Licensed Products or Materials. Licensee
shall not thereafter use such Manufacturer to manufacture the Licensed Products or Materials (or
components thereof) without the express prior consent of Licensor. If any of the provisions of
this Agreement conflict with Licensors Ethical Standards, Licensors Ethical Standards shall
control.
4.3.3.1. [Licensees program for monitoring its Approved Manufacturers

facilities is set forth in Schedule I hereto.]
4.3.4. Labels. In order to help preclude diversion, Licensee shall maintain a strict,
accurate and current inventory of all labels bearing the Licensed Mark or to be affixed to any
Licensed Product. Licensee shall cooperate in all commercially reasonable respects with
Licensor and other licensees of Licensor in developing an appropriate universal product code
(UPC) or other similar labeling system at such time as Licensor deems necessary or appropriate.
Licensee shall cooperate in all commercially reasonable respects in the implementation of any
security label program that Licensor may adopt for Licensed Products. Licensee shall itself pay
for the security labels and all appropriate hardware and software necessary to install the labels,
provided that the cost incurred by Licensee does not exceed [$.XY] per unit; in the event the cost
per unit exceeds [$.XY], Licensor will have the option of incurring any excess cost or excusing
Licensees action under this provision.
4.3.5. Responsibilities for Compliance. Notwithstanding any provision to the contrary

herein, the parties expressly confirm and agree that Licensee shall remain fully responsible for
compliance by it and its Manufacturers with all provisions of this 4.3, notwithstanding that
Licensor may have expressly or implicitly approved any item, Manufacturer or conduct.
4.4. Advertising; Marketing; Showrooms; Trade Shows; Announcements.
4.4.1. Business and Marketing Plans. Not later than [sixty (60)] days prior to the
commencement of each Annual Period within the Licensed Term, Licensee shall provide
Licensor with a comprehensive business and marketing plan (the Business Plan) detailing
Licensees plans for the Marketing of Licensed Products during the next [three (3)] Annual
Periods so as to meet or exceed the applicable Minimum Net Sales level, and the upcoming
Renewal Threshold. Each Business Plan shall include information pertaining to the number of
styles of each Licensed Product within each product category that Licensee intends to
manufacture and sell, the intended distribution to Authorized Retailers and Closeout Retailers by
retail account, projected marketing and advertising programs and expenditures, and projected
Net Sales levels, as well as any other information that Licensor may request to be included in
such Plan.
4.4.2. Advertising; Restrictions. Licensee will, during each Annual Period, support all
categories of Licensed Products through co-operative and trade advertising, marketing, and
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promotional and sales efforts and expenditures [in an amount consistent with amounts spent in
support of competitive products].67 Licensee shall not, however: (i) advertise, promote,
publicize or otherwise exploit Licensed Products or the Licensed Mark on the Internet; (ii)
advertise or promote any [Seconds or other] Closeouts; or (iii) advertise, market, promote,
publicize or otherwise exploit Licensed Products or the Licensed Mark, or otherwise use the
Licensed Mark, in conjunction with any other trademarks or names or any other products. Any
use by Licensee of any celebrity or organization to provide an endorsement of any Licensed
Products, or otherwise to be associated with, or appear in any advertising or at any promotion or
event relating to, Licensed Products shall be subject to the prior approval of Licensor. Subject to
applicable Law, Licensee will require all Approved Customers to comply with the foregoing
restrictions, including in connection with cooperative advertisements and point-of-sale materials.
4.4.3. Minimum Advertising Obligations. In addition to its obligations under 3.4 and
4.4.2, Licensee shall make [out-of-pocket] expenditures of not less than the following amounts in
connection with consumer media advertising (each such amount, a Minimum Advertising
Obligation): (i) $XXX,000 during the first Annual Period; (ii) $XXX,000 during the second
Annual Period; and (iii) during each Annual Period of the Licensed Term (whether Initial or
Renewal) after the second Annual Period, [NUMBER] percent (X.Y%) of Licensees projected
aggregate Net Sales for such Annual Period as set forth in the relevant Business Plan. Only sums
paid directly in connection with [media creation, production and] placement of approved
consumer media advertising will be credited against the Minimum Advertising Obligation; for
the avoidance of doubt, sums spent in connection with cooperative, trade or any other advertising
activities (other than consumer media advertising) or marketing and promotion activities, are not
credited against such Minimum Advertising Obligation.
4.4.4. Marketing Participation. Licensee acknowledges that the marketing programs

that may be developed by or for Licensor are for the benefit of all licensees of Licensor and the
Licensed Mark, and that Licensees cooperation and support thereof are an integral part of such
programs. Licensee shall support all marketing programs developed and adopted by Licensor,
including by direct participation in (i) sales and retailer presentations and fashion shows, (ii)
Licensor-directed distributions to the media, and (iii) special events and special promotions.
Such participation shall include the timely submission to Licensor of such Licensed Products,
sales and other relevant information, as may be requested by Licensor.68 In addition, Licensee
agrees to make a major presentation of each new Seasonal Collection at its Showroom during
market week.69
67
This is a general (soft) provision re: Licensees advertising/marketing obligations; in contrast, 4.4.3
is an example of a provision requiring Licensee to expend specific minimum dollar amounts on specific
types of advertising.
68
Licensee may seek an annual dollar cap.
69
Either Licensor or Licensee might want more specificity around the contours of what constitutes a
major presentation; this can be done in a variety of ways, including by a comparison to events hosted
by other labels, or an estimated range of (or cap on) dollars to be spent.
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4.4.5. Trade Shows. Licensee shall display and offer the Licensed Products for sale
[within Licensors booth] at the MAGIC Apparel shows which are held in Las Vegas, Nevada,
twice yearly. Licensee shall attend every MAGIC show, and staff each MAGIC show with such
number of personnel as Licensor reasonably requests, and shall reimburse Licensor for the
proportionate costs of each selling station that Licensee occupies within Licensors presentation
space. Licensee agrees to reimburse Licensor for such proportionate costs; Licensee shall itself
bear all other costs associated with Licensees attendance at each MAGIC show. [Participation
in any other trade shows shall be at Licensees sole discretion and expense.]
4.4.6. Runway Shows. Should Licensor, in its sole discretion, elect to conduct a runway
show in New York City, which show will [prominently] feature, among other items bearing the
Licensed Mark, one or more Licensed Products, Licensee shall share in the costs and expenses of
such runway show, provided that Licensees costs in connection with all such shows in any
Annual Period shall not exceed [NUMBER] Dollars ($X0,000).
4.4.7. Promotional Products. Licensee shall timely comply with any reasonable request
by Licensor to provide it with a reasonable quantity of Licensed Products or Samples (including
prototypes and pre-production Samples) of items intended to be sold as Licensed Products
(collectively, Promotional Items) for Licensors use at fashion shows, showroom and window
displays and presentations, promotional photo shoots and layouts, retail displays and similar
Licensor promotional efforts and events. Licensee shall furnish Licensor with such quantity of
Promotional Items as Licensor may from time to time reasonably request, with the first
[QUANTITY] of such Promotional Items in each Annual Period provided free of charge, and
any excess reasonably requested provided at Licensees out-of-pocket cost.
4.4.8. Public Announcements. Neither party shall issue any press release or make any
other public announcement concerning this Agreement or the transactions hereunder or
contemplated hereby without the prior approval of the other party; provided, however, that
Licensor or its Affiliates may, upon notice to Licensee, (i) issue press releases or make public
announcements in the event of any recall of Licensed Products, or similar situations, and
(ii) describe this Agreement and the transactions contemplated hereby in any press release or
filing with the SEC or other Governmental Body it is required to make under applicable Law,
and if required, necessary or desirable, file this Agreement with the SEC.
4.5. Distribution.
4.5.1. Sale and Distribution of Licensed Products. Licensee shall present for sale,
through showings to the trade, promotional activities and otherwise, and shall use all
commercially reasonable efforts to promote the sale and distribution of, substantially all
Licensed Products in respect of which Final Samples have been approved by Licensor in
accordance with the terms hereof, but in any event shall present for sale sufficient Licensed
Products to create a Complete Line.
4.5.2. Availability for Distribution. The first Seasonal Collection of Licensed Products
(for the [season] 20XX Seasonal Collection) shall be available for delivery in commercial
quantities to Authorized Retailers on or prior to [DATE], 20XX (the Distribution Date). [If
Licensee shall have failed timely to comply with this requirement, other than by reason of Force
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Majeure, Licensor shall have the right (but not the obligation) to treat such occurrence as a
material, non-curable breach of Licensees obligations hereunder.]70
4.5.3. Shipping Threshold. In each Quarterly Period during the Licensed Term,
Licensee shall timely ship, in the aggregate, no less than [eighty percent (80%)] of the Licensed
Products subject to orders accepted by Licensee and calling for shipment during such Quarterly
Period. [If Licensee shall have failed timely to comply with this requirement, other than by
reason of Force Majeure, Licensor shall have the right (but not the obligation) to treat such
occurrence as a material, non-curable breach of Licensees obligations hereunder.] Licensee will
use all commercially reasonable efforts to ensure that it at all times has sufficient inventory of
Licensed Products on hand to fill the reasonably expected volume of orders therefor.
4.5.4. Returns Threshold. In the event that the percentage of returns of Licensed
Products [on the basis of quality] exceeds [three percent (3%)] of Licensees total Net Sales in
any Annual Period, then Licensor shall have the right (but not the obligation) to treat such
occurrence as a material, non-curable breach of Licensees obligations hereunder.
70
See footnote to 1.3.2.1.
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ARTICLE V - THE LICENSED MARK
AND INTELLECTUAL PROPERTY RIGHTS
5.1. Ownership Rights. Licensee acknowledges and agrees, and shall require all Approved
Manufacturers to acknowledge and agree, that (i) Licensor is the sole and exclusive owner of all
right, title and interest in and to the Licensed Mark and any associated good will and all other
Intellectual Property Rights; (ii) all uses of the Licensed Mark by Licensee and any rights or
good will that may arise therefrom shall inure to the sole and exclusive benefit of Licensor; and
(iii) all rights in and arising from the Licensed Mark (including trademark, design, patent and
copyright rights), other than the rights expressly granted by Licensor to Licensee under this
Agreement, are hereby reserved to Licensor.
5.1.1. Intellectual Property Rights. All right, title and interest in and to any Intellectual
Property Rights (including in respect of all artwork, designs, patterns, CAD and similar files,
grading and marking files, labels, prototypes, hangtags, promotion pieces, packaging,
advertisements or promotional materials of any kind (including television or radio commercials),
and any trademarks, designs, patents or copyrights)71 created or acquired by or for Licensee in
conjunction with Licensed Products or Materials shall vest, immediately upon creation or
acquisition (as the case may be), in Licensor, and shall entitle Licensor to the exclusive
ownership and, subject to the terms of this Agreement, use, of such Intellectual Property Rights
in any manner Licensor may deem beneficial anywhere in the world in perpetuity,
notwithstanding Termination. Subject to the terms of this Agreement, Licensor shall have the
unrestricted right to utilize, exploit and dispose of the Intellectual Property Rights in any manner
that it deems appropriate, in its sole discretion.72 Licensee acknowledges that it shall not,
whether during the Licensed Term or thereafter, engage in the Marketing of any products
comprising or covered by any Intellectual Property Rights, except as expressly authorized under
this Agreement, without the prior consent of Licensor.
5.1.2. Assignment to Licensor. In furtherance of the provisions of 5.1.1, and in order

to assure that all right and title in and to the Licensed Mark and any Intellectual Property Rights
vest fully and exclusively in Licensor, if Licensee or any Manufacturer, or any other Person
employed or engaged by Licensee or any Manufacturer shall have obtained or created any right,
title or interest in the Licensed Mark (or in any trademark incorporating the Licensed Mark,
including any variation (including derivative, composite or subsidiary marks) of the Licensed
Mark, or any future trademark rights created by other use on or in association with the Licensed
Products) or any other Intellectual Property Rights, then (i) where Licensee or any Affiliate shall
71
This might be expanded to cover explicitly certain items unique to the Product category under license
and necessary to product continuity. For example: in the case of a fragrance license, Licensor may want
the Intellectual Property Rights to expressly also include items such as the formula for the scent, as well
as the shape of, and graphic designs used on, all bottles, containers and packaging; in the case of a shoe
license, this might also include lasts and insole designs.
72
If Licensor intends to take the production and pre-production information with respect to certain
Licensed Products, and turn it over to foreign licensees (outside the Territory) who will produce items
using such information, it may want to consider more detailed specific provisions providing for such
activity.
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have obtained or created any such right, title or interest, Licensee for itself and its Affiliates
hereby irrevocably assigns and transfers all such right, title and interest to Licensor and its
assigns, and (ii) where any Manufacturer or other Person engaged by Licensee shall have
obtained or created any such right, title or interest, Licensee will promptly obtain and deliver to
Licensor assignments of such right, title and interest from them to Licensor and its assigns; any
such assignment and transfer, whether by Licensee, any Affiliate, any Manufacturer, or any other
Person, shall include the good will attaching to that part of the business in connection with which
any trademarks or other Intellectual Property Rights are used, and shall be effective as of the date
of creation of such right or interest.
5.1.3. Further Assistance. Whenever requested by Licensor, whether during the

Licensed Term or thereafter, Licensee shall, and shall cause any Affiliate, Manufacturer or other
Person engaged by Licensee to, promptly execute, acknowledge and deliver (or cause to be
executed, acknowledged and delivered) to Licensor such notices, instruments and other
documents and take (or cause to be taken) such other actions as Licensor may reasonably deem
necessary or advisable (i) to effectively assign, transfer and convey to and vest in Licensor all or
any part of rights in the Licensed Mark or other Intellectual Property Rights, (ii) to evidence,
confirm, establish, register, record, maintain, continue, perfect, protect, exercise, enforce or
defend Licensors rights with respect to any of the Licensed Mark or other Intellectual Property
Rights, or (iii) otherwise to carry out the intent and accomplish the purposes of this Agreement, it
being understood and agreed that all such notices, instruments and other documents shall be in
form and substance reasonably satisfactory to Licensor. All such assistance shall be at
Licensors sole cost and expense. Licensee hereby grants to Licensor a[n irrevocable] power of
attorney [coupled with an interest] on behalf of Licensee to execute, acknowledge and deliver in
Licensees name and on Licensees behalf any such notices, instruments and other documents
which Licensee fails to execute, acknowledge and deliver within ten (10) days after Licensors
request therefor.
5.2. Protection and Use of the Licensed Mark.
5.2.1. Acknowledgements. Licensee hereby acknowledges and agrees, and shall require
all Approved Manufacturers to acknowledge and agree, as follows: (i) the good will associated
with the Licensed Mark is of great value; (ii) the Licensed Mark and its good will enjoy
worldwide recognition; and (iii) the Licensed Mark and other related words, devices, designs and
symbols are inherently famous, and are distinctive or have secondary meaning firmly associated
in the mind of the general public with, Licensor, its Affiliates and their activities.
5.2.2. Restrictions. During and after the Licensed Term, Licensee shall not, and shall
require each Approved Manufacturer to agree not to, directly or indirectly:
(i) attack or question, or assist any Person in attacking or questioning, the

title, good will or any rights of (or claimed by) Licensor, its Affiliates, and their respective
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licensees and sublicensees, in and to the Licensed Mark or any other Intellectual Property
Rights;73
(ii) use or seek for itself, or assist any Person to use or acquire, any rights,
proprietary or otherwise, in the Licensed Mark, any mark confusingly similar to the Licensed
Mark, or any other Intellectual Property Rights associated or connected with, or in any way
confusingly similar to, the Licensed Mark;
(iii) in any way seek to avoid Licensees duties or obligations under this
Agreement because of the assertion or allegation by any Person that the Licensed Mark or any
other Intellectual Property Right is invalid by reason of any contest concerning the rights of (or
claimed by) Licensor;
(iv) file or prosecute any trademark application with respect to Licensees use
of the Licensed Mark anywhere in the world;
(v) use or permit the use of the Licensed Mark or any other Intellectual
Property Right in any manner or form unless such manner or form has been approved by
Licensor pursuant to the provisions of 4.2; without limitation, Licensee shall not use or permit
the use of (a) any variation of the Licensed Mark (including any derivative, composite or
subsidiary mark, or any similar logos, designs or graphics) or (b) the Licensed Mark in
connection with or juxtaposed to any other trademark, trade name, or business name (including
trademarks, trade names and business names of Licensee or its Affiliates);
73
It is highly advisable for Licensor to include this provision prohibiting Licensee (or its agents) from
challenging the validity of the licensed trademarks. Historically, such challenges have been limited by
the common law doctrine of licensee estoppel: when a licensee enters into an agreement to use the
intellectual property of a licensor, the licensee effectively admits the validity of that intellectual property
and is estopped from contesting its validity in future disputes. With respect to patents, the Supreme Court
struck down the doctrine of licensee estoppel in Lear, Inc. v. Adkins, 395 U.S. 653 (1969) and more
recently upheld the standing of patent licensees to challenge the validity of licensed patents while
maintaining their rights under the license in Medimmune, Inc. v. Genentech, Inc., No. 05-608 (U.S. S.Ct.
Jan. 9, 2007). While the doctrine of licensee estoppel continues to exist in the realm of trademark
licenses, it is unclear as to whether a similar line of Lear/Medimmune case law will develop in the
trademark arena. Moreover, the Second Circuit has adopted a balancing test pursuant to which the public
interest in challenging invalid trademarks may, in a given case, outweigh the licensors interest in the
contractual ordering of trademark relationships. Idaho Potato Commission v. M & M Produce Farm &
Sales, 335 F.3d 130 (2d Cir. 2003), cert. denied, 541 U.S. 1027 (2004) (holding that, in light of the public
interests served by certification marks, a licensee was not estopped from challenging the validity of a
certification mark despite the licenses express no-challenge clause ). Given these developments, it is
best practice to include an express no-challenge provision, thereby supporting a contract-based claim that
the licensee is foreclosed from challenging the validity of the licensed intellectual property. For a more
detailed discussion of the Medimmune case, its impact on patent licensing and drafting suggestions for
patent license agreements, see Paul Dennis Connuck, Intellectual Property Alert: Patent Licensing Law
Developments: Learning to Live with Medimmune License Drafting Strategies (2007) (available at
http://www.kramerlevin.com/news/detail.aspx?id=53a3bbf7-5a38-40b6-b29b-085c7ddaa98d).
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(vi) use the Licensed Mark as part of the name of any business entity,
enterprise or Person, or identify itself as the owner of the Licensed Mark or any right, title or
interest therein except in its capacity as licensee;
(vii) seek to expand its License rights to any Licensed Mark within the
Territory for any goods or services through either use or filing for registrations, except with
respect to licensed goods or services which must be done under written license agreements with
Licensor (such as this Agreement), and where all trademark and service mark applications and
registrations will be solely under Licensors name;
(viii) at any time do any act or thing that may in any way weaken or impair the
value of the Licensed Mark or other Intellectual Property Rights, or the exclusive ownership
rights, interests or good will of Licensor therein;
(ix) use the Licensed Mark or any other Intellectual Property Rights in a
manner that [Licensee knows] constitutes a conflict with, or constitutes infringement of, the
rights of any third party; and
(x) use the Licensed Mark or other Intellectual Property Rights in any manner,
or take or omit to take any other action, that may tarnish, degrade, disparage, dilute or reflect
adversely on the Licensed Mark or on Licensor, its business or reputation, or on any of the
Licensed Products.
5.2.3. Requirements. During the Licensed Term, Licensee shall:
(i) use the Licensed Mark as permitted under this Agreement in each
jurisdiction within the Territory strictly in accordance with the legal requirements in such
jurisdiction;
(ii) affix or imprint irremovably and legibly on each of the Licensed Products
and on or within all Materials incorporating the Licensed Mark, any and all trademark notices,
copyright notices and legends as Licensor directs;
(iii) purchase all labeling, packaging and materials bearing the Licensed Mark
only from sources authorized by Licensor;
(iv) in accordance with 5.1.3, cooperate fully and promptly with Licensor and
provide Licensor with any information or assistance that Licensor may reasonably request in
order to apply for, prosecute, register or maintain registrations for any Licensed Mark or other
Intellectual Property Rights, or any logos, designs or graphics owned by Licensor or any of its
Affiliates, in any jurisdiction within or outside of the Territory, at Licensors cost; and
(v) promptly notify Licensor, where Licensee has knowledge, of any legal
action that has been or is likely to be instituted against Licensee or Licensor relating to the
Licensed Mark or other Intellectual Property Rights, including by promptly forwarding to
Licensors attention copies of all documents relevant to such commenced or possible action.
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5.2.4. Changes to the Licensed Mark. Upon notice from Licensor to Licensee, Licensor
may change, in its sole discretion, the approved form, type style, type face, color, size or manner
of use of the Licensed Mark, and Licensee shall comply with said changes immediately,
provided that Licensee may distribute or use any inventory of Licensed Products or Materials on
hand, or subject to non-cancellable orders as of the date of its receipt of such notice, until such
inventory is fully depleted, but in no event beyond [six (6) months] after receipt of such notice.
Licensee shall provide a detailed accounting of such inventory within [thirty (30)] days of receipt
of such notice.
5.2.5. Domain Names. Licensee shall not use or reserve any domain name that includes,
or is confusingly similar to, the Licensed Mark.
5.2.6. Identification as Licensee. Licensee shall have the right to identify itself as a
licensee of the Licensed Mark on its stationary, business cards, invoices, statements, packing
slips, and other business forms used for transactions related to Licensed Products, provided the
size, form and content of such identification is approved by Licensor.
5.3. Other Licenses. Licensee acknowledges that Licensor has previously licensed the use of
the Licensed Mark to other licensees in connection with products other than the Licensed
Products, and that Licensor may grant additional licenses to other Persons in the future for
territories or products that are not within the scope of this Agreement. If at any time Licensor
permits Licensee to manufacture or distribute a product which is not, in Licensors reasonable
opinion, within the scope of this Agreement, such permission shall only apply to the precise
product, seasons, or territories specifically authorized by Licensor and shall not constitute a
continuing approval or waiver of the right of Licensor subsequently to disapprove of such
manufacture or distribution by Licensee.
5.4. Third Party Infringement.
5.4.1. Counterfeit and Parallel Goods. Licensee will use all commercially reasonable
means to prevent the creation of any counterfeit goods or parallel goods by Approved
Manufacturers, other Manufacturers, or by its employees, agents, representatives, or any others
operating under its direction, supervision or control. Licensee will cooperate in all reasonable
ways with Licensor, and shall itself use [all commercially reasonable] efforts, to prevent
unlawful use of the Licensed Marks, including via counterfeiting.
5.4.2. Licensor-Lead Litigation. If either Licensor or Licensee becomes aware of any

possible infringement, misappropriation, imitation, counterfeiting or other violation of rights
with respect to Licensed Products, the Licensed Mark or other Intellectual Property Rights (e.g.,
of proprietary design features), such party shall promptly notify the other party, and Licensor
will take such action as it, in its sole discretion, deems advisable for the protection of its rights
therein, including commencing litigation (Licensor-Lead Litigation). If reasonably requested
to do so by Licensor, Licensee will cooperate with and follow the directions of Licensor in all
reasonable respects in connection therewith, including by acting as a plaintiff or co-plaintiff in
lawsuits and by causing its officers, upon review of Licensees counsel, to execute appropriate
pleadings and other related documents, and Licensor shall reimburse Licensee for its reasonable
out-of-pocket costs incurred in connection therewith.
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5.4.3. [Licensee-Lead Litigation. Should Licensor notify Licensee that it does not
intend to pursue such infringer, Licensee may itself commence an action against the possible
infringer with the approval of Licensor, which may be withheld in Licensors sole discretion
(Licensee-Lead Litigation).]
5.4.4. Control of Litigation. Whether the action is a Licensor-Lead Litigation or a

Licensee-Lead Litigation, (i) the party taking the lead in the litigation shall control the litigation
(except that in no event may Licensee settle any claim without the consent of Licensor); (ii) the
party not taking the lead in the litigation may, within sixty (60) days following commencement
of the suit, elect to share in the litigation by providing notice thereof to the other party; and (iii)
the party not taking the lead in the litigation shall cooperate in all commercially reasonable
respects in the litigation and provide such assistance as the other party may reasonably request in
the prosecution of the litigation.
5.4.5. Costs, Fees and Expenses. Where the party not taking the lead in the litigation
timely exercises its right under clause (ii) of 5.4.4, the costs, fees and expenses (including
investigatory expenses and legal expenses such as attorneys fees, court costs and filing fees)
incurred by Licensor, in the case of Licensor-Lead Litigation, or by Licensee, in the case of
Licensee-Lead Litigation, in connection with any action taken under this Section will be shared
equally by Licensee and Licensor, and any damages recovered or sums obtained in settlement in
or with respect to any action where the said 5.4.4(ii) election has been timely made first shall be
applied to reimburse each of Licensee and Licensor for expenses respectively borne by each, and
the balance, if any, shall be shared by Licensor and Licensee equally. Any damages recovered or
obtained in settlement of or with respect to any Licensor-Lead Litigation for which Licensor bore
sole cost and expense shall be retained solely by Licensor. Any damages recovered or obtained
in settlement of or with respect to any Licensee-Lead Litigation for which Licensee bore sole
cost and expense [first shall be applied to reimburse Licensee for expenses borne by it, and the
balance, if any, shall be shared by Licensor and Licensee equally] [shall be retained solely by
Licensee].74
5.5. Copyright. In furtherance and not limitation of the provisions of 5.1, any copyright
which may be created in any Licensed Products or any Materials, including photographs and
their content, designed or approved by Licensor will be the exclusive property of Licensor or its
Affiliates, whether or not used in connection Licensees activities under this Agreement.
Licensee will cooperate with the owner thereof in the preparation, filing and prosecution of
applications in the name of the owner to record any claims to copyrights in any Licensed Product
or Material. Licensee and its Affiliates will not take any action which may affect adversely any
of the owners rights in Licensed Products or Materials, including filing any application in its
74
These are pretty even-handed (or even Licensee-friendly) approaches to damages recovered or
settlements obtained in situations where Licensee pays for some or all of the litigation costs. Many
Licensors will insist that all such amounts (after reimbursement of Licensees reasonable costs) go
entirely to Licensor in all cases, even if Licensor did nothing to participate in the litigation. Another
Licensor approach is to count any amounts received by Licensee in the nature of damages or settlements
(over reimbursement of costs) within the calculation of Net Sales, such that Licensor receives its royalty
payment thereon.
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name to record any claims to copyrights in any Licensed Products or Materials, and will do all
things required by Licensor to preserve and protect those rights, including placing the copyright
notice specified by the Universal Copyright Convention or otherwise on all Licensed Products
and all Materials.
5.6. Cessation of Rights. Subject only to Licensees rights to sell-off its then existing
inventory of Licensed Products in accordance with the provisions of 8.5, upon Termination, all
rights herein granted to Licensee shall immediately cease and all rights shall automatically revert
to Licensor. Except as expressly permitted by 8.5, Licensee shall then immediately and
permanently discontinue any and all uses of the Licensed Mark or other Intellectual Property
Rights, and shall not thereafter use the Licensed Mark or any confusingly similar marks, names
or trade dress.
ARTICLE VI - REPRESENTATIONS AND WARRANTIES
6.1. Mutual Representations and Warranties. Each party hereby represents and warrants to
the other party as follows:
6.1.1. Organization and Good Standing. It is a [limited liability company] validly

existing and in good standing under the Laws of its state of organization, with all requisite power
and authority to own, license, and operate its assets, and is duly authorized and qualified to do
business in all jurisdictions in which the nature of its business requires such qualification, except
in such jurisdictions where the failure to be so qualified would not have a material adverse effect
on its business, or on the ability of Licensor or Licensee to enforce as against third parties all
rights contemplated by this Agreement, including all such rights in and to the Licensed Products,
Materials, Licensed Mark and other Intellectual Property Rights.
6.1.2. Power and Authority; Execution; Binding Nature. It has full right, power and
authority to enter into this Agreement and to perform its obligations hereunder; the execution,
delivery, and performance of this Agreement has been duly and properly authorized by all
necessary corporate actions; this Agreement has been duly and validly executed by such party;
and this Agreement constitutes the valid and binding obligation of such party, enforceable
against it in accordance with its terms.
6.1.3. No Conflicts. Neither the execution and delivery, nor the performance, of this
Agreement, does or will violate, conflict with or (with or without the passage of time) constitute
a default under, any provision of any Law, or any governing documents, agreement or
understanding to which it is a party or by which it or any of its properties may be bound.
6.1.4. No Bankruptcy. No Act of Insolvency has occurred, is pending, or is reasonably

likely to occur, with respect to it or its Affiliates.
6.2. Licensor Representations, Warranties [and Covenants]. Licensor represents, warrants

[and covenants] as follows:75
75
Note that there are a variety of covenants baked in here, among the reps and warranties.
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6.2.1. Ownership of Licensed Mark. Licensor is [, and throughout the Licensed Term
together with its Affiliates, shall remain,] the sole and exclusive beneficial and record owner of
all right, title and interest in and to the Licensed Mark and all good will appurtenant thereto,
within the Territory, with full right and authority to grant to Licensee the License and other
rights granted in this Agreement, and to perform all of Licensors duties and obligations
hereunder.
6.2.2. No Current Claims. No claim currently is being asserted or, to Licensors

knowledge threatened, by any governmental body or third party and, to Licensors knowledge,
there exists no valid basis for any claim (i) that the use of the Licensed Mark in connection with
Licensed Products infringes, dilutes, impairs or otherwise violates the trademark or other
proprietary rights of any third party in the Territory; (ii) challenging Licensors ownership, or the
enforceability or validity, of any registrations for the Licensed Mark or challenging Licensors
ownership, or the validity, of any applications for the registration of the Licensed Mark; or (iii)
challenging the use of the Licensed Mark on the grounds that such use violates the legitimate
rights of a third party.
6.2.3. Other Licenses. Except as set forth on Schedule J hereto, Licensor has not
previously assigned, transferred or conveyed or otherwise encumbered or limited in any manner
its rights to use or to license the Licensed Mark with regard to Licensed Products anywhere in
the Territory [; and Licensees right to use the Licensed Mark in accordance with the terms of
this Agreement will not be interrupted or otherwise disturbed or limited in any manner by any
Person asserting a claim related thereto.]
6.2.4. [No Other Representations. Except as specifically set forth herein, Licensor has
not made and is not making any representation or warranty hereunder, including with respect to
Licensor, the Licensed Mark, or Licensed Products.]
6.3. Licensee Representations, Warranties [and Covenants].76 Licensee represents, warrants

[and covenants] as follows:
6.3.1. No Registrations. Neither Licensee nor any Affiliate of Licensee has made or
filed any prior applications, registrations or filings of any trademark, trade name or other
intellectual property that is confusingly similar to the Licensed Mark.
6.3.2. Right to Use Intellectual Property. Licensee has the full legal right to use all
software programs it may use in connection with the Licensed Products and is not using, and
shall not use, any software or hardware programs or any other intellectual property in connection
with the Licensed Products that will misappropriate or infringe upon any trademark, trade name,
copyright, patent, trade secret or other proprietary right of any other Person.
76
Licensor may want to confirm a number of diligence items regarding Licensee and its operations by
adding additional reps, e.g., re: absence of judgments, pending or threatened lawsuits, previously
terminated licenses, prior bankruptcies, prior human rights type claims, foreign corrupt practices act
issues, or financial wherewithal.
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6.3.3. [No Other Representations. Except as specifically set forth herein, Licensee has
not made and is not making any representation or warranty hereunder.]
ARTICLE VII - COVENANTS
7.1. Confidentiality.77 Each party and its Affiliates, and their respective Authorized Persons,
shall regard and preserve as confidential all information related to the business of the other party
and its Affiliates (such information, Confidential Information) which may be obtained by it
(the Receiving Party) from the other party or its Affiliates or Authorized Persons (the
Disclosing Party) in connection with this Agreement. The Receiving Party shall confine and
limit the use of all such Confidential Information to the purposes of this Agreement, and except
as expressly authorized by the provisions of this Agreement, shall not use or disclose such
Information without the express prior consent of the Disclosing Party. Upon Termination, and
upon request of the Disclosing Party, the Receiving Party shall forthwith return to the Disclosing
Party any Confidential Information in its possession. Without limiting the generality of the
foregoing, Confidential Information shall include information: (i) relating to the customer
lists, pricing, methods, processes, apparatus, programs, practices, employees, and contractors of,
and other materials conceived, designed, created, developed, or assembled for or by, Licensor, its
Affiliates, or their respective licensees or agents; and (ii) respecting designs, advertising,
promotions, marketing plans or other information which Licensor may provide to Licensee to
assist it in the development and sale of the Licensed Products.
7.1.1. Authorized Use. The Receiving Party shall instruct its officers, directors,
partners, principals, members, employees, agents and representatives who need to know such
Confidential Information in furtherance of the Agreement (collectively, Authorized Persons)
not to copy, duplicate, or otherwise use or disclose Confidential Information to third parties,
except as authorized by this Agreement. The Receiving Party shall effect reasonable security
precautions to safeguard Confidential Information from theft or from disclosure to or access by
Persons other than its Authorized Persons using it in accordance with this Agreement, and shall
promptly notify the Disclosing Party of the nature of any unauthorized possession or use that
may take place. [The foregoing will not be deemed to prevent Licensor or its Affiliates from
disclosing any of Licensees Confidential Information to their professional advisors and lenders
and other sources of funds on a need to know basis and, if approved in advance by Licensee in
its reasonable discretion on a case-by-case basis, in connection with such activities as are
reasonably necessary for the operation or financing of the businesses of Licensor or its Affiliates;
provided, however, that such Persons are advised of the confidential nature of such Confidential
Information and agree to be bound by the terms of this 7.1.]
77
This provision, fairly typical, is quite broad in its coverage, covering all information related to the
business of the other side. Since, as a general matter, overly broad provisions might result in unintended
restrictions and other consequences (see, e.g., the footnote to 7.4), each of Licensor and Licensee should
consider what information will, as a practical matter in the context of a fashion trademark license, be truly
confidential. Presumably at least deal-specific financial information, pre-release designs, marketing plans
and manufacturing resources (see 7.4 below) would make the list. Also, public company licensors and
licensees will need to take SEC and stock exchange disclosure requirements into account.
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7.1.2. Exceptions. The Receiving Party shall have no obligation with respect to any
Confidential Information which (i) is now or hereafter becomes publicly known other than as a
result of a disclosure by the Receiving Party in breach of this Agreement, (ii) is disclosed to the
Receiving Party on a non-confidential basis by a third party that is legally entitled to disclose
such Confidential Information, (iii) is known by the Receiving Party prior to its receipt of the
Confidential Information, (iv) is disclosed with the Disclosing Partys consent, or (v) is
independently developed by the Receiving Party without reference to or use of any Confidential
Information. Additionally, the Receiving Party shall have no obligation with respect to any
disclosure by the Receiving Party of Confidential Information that is (x) required to be disclosed
by a court of competent jurisdiction, administrative agency or governmental body, or by Law, or
by subpoena or any other administrative or legal process; provided, however, that the Receiving
Party has provided the Disclosing Party with prompt notice (to the extent permitted by Law) so
that the Disclosing Party may seek a protective order or other appropriate remedy, and that [, if
such protective order or other remedy is not obtained,] the Receiving Party furnishes only that
portion of the Confidential Information that is so required, or (y) reasonably necessary in
connection with any judicial, arbitration or other proceeding involving the parties relating to this
Agreement or the purposes hereof.
7.2. Certain Restrictions on Licensee Operations. Except as set forth on Schedule K hereto,
none of Licensee, its Affiliates or any of their respective officers, directors or principal equity
holders, has any agreements, arrangements or understandings covering, or otherwise in
connection with, any facet of Marketing any items or products that compete with Licensed
Products, in terms of market positioning, target demographic, channels of distribution or price
points (any business so engaged, a Competing Business).78 [In order to avoid confusion within
the marketplace, Licensee shall [seek to] consistently distinguish the Licensed Products from all
other products manufactured or sold by or for Licensee, including under the brands referenced on
Schedule K.]79 Neither Licensee nor its Affiliates, nor any of their respective officers or
78
If a Licensee handles many brands in the market segment for Products (whether via its license of other
marks, or its ownership of in-house brands), Licensor will want to understand the scope of Licensees
existing arrangements and commitments during the Licensed Term. Depending on the size and financial
capability of Licensee, as well as the depth of its design, merchandising, production and general
management teams, Licensor may be concerned that Licensee will be unable to perform at an optimal
level under this Agreement while at the same time having significant obligations under other licenses. An
often used compromise here is to lift the covenant if Licensee meets (or exceeds by some percentage) the
Renewal Threshold for the First Renewal Period, on the theory that a covenant is appropriate during the
launch and early years of the License forcing Licensee to concentrate its efforts solely on the launch of
the business in Licensed Products but that by the end of the Initial Term, if Licensee has achieved Net
Sales level sufficient to enable it to renew, it has presumably established a healthy business in Licensed
Products, and should no longer be constricted from pursuing other business opportunities.
Also: The approach here is to broadly define a prohibited Competing Business. The use of or in the
list of attributes may act as a complete bar to Licensee taking on any new business whatsoever. In light of
this, some agreements prohibit Licensee only from working with brands that are included on an agreed
attached list.
79
Where Licensee operates a number of licensed businesses in the same market niche, it will want to
avoid being accused of taking designs from one licensor, and using them in its licensed lines produced
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directors, is party to, or shall enter into any new agreement, arrangement or understanding
covering any portion of the Licensed Term that would constitute a Competing Business, without
Licensors prior consent, which may be granted or withheld in Licensors sole discretion. For
the avoidance of doubt, no amendment, revision, extension, expansion or restatement of, or
exercise of rights under, any existing licensing agreement or arrangement of Licensee or any of
its Affiliates that does not expand the scope of such existing arrangement or agreement by the
grant or exercise of any rights or license in respect of any additional Competing Business, shall
constitute entry into a new license agreement for these purposes.
7.3. Non-Solicitation; No Hire. Neither Licensee nor Licensor shall, during the Licensed
Term and for a period of [two (2) years] thereafter, directly or indirectly, solicit or cause to be
solicited any employee or independent contractor of the other who worked at any time on matters
relating to Licensed Products; provided, that this prohibition shall not apply to (i) any employee
or contractor of a party who, on an unsolicited basis, initiates contact with such other party
related to employment, and (ii) any general advertisement for the solicitation of employment or
engagement not specifically directed towards Persons known to be employees or contractors of
the other party. In addition, neither Licensee nor Licensor shall, during the Licensed Term, hire
any former employee or contractor of the other, for [six (6) months] after the affected employee
or contractor has left the employ of or engagement by the other, unless consented to by the other.
7.4. Use of Manufacturers.80 During the Licensed Term and thereafter for a period of [two (2)
years], Licensor shall not, either by itself or through any Affiliate or any other party, directly or
under another licensors mark. Licensee-friendly language along these lines might be as follows:
Licensor acknowledges that Licensee and various Affiliates act as licensee for various other trademark
owners, and also own certain trademarks outright, and as such, Licensee and such Affiliates produce
directly and under license a variety of lines and items of womens small leather goods that are likely to be
competitive with Licensed Products (collectively, the Competitive Lines). In addition, the parties
acknowledge that various market and consumer trends are often quickly reflected in the design and
merchandising of disparate lines of womens small leather goods, and that various Licensed Products will
likely be substantially similar to other womens small leather goods, including items within one or more
Competitive Lines, in look, attitude, design, detail, styling, fabrication, color and the like. As between
Licensor and Licensee, Licensor shall have all right, title and ownership of all designs that are unique,
fanciful and distinctive and are approved by Licensor for use in Licensed Products hereunder, and
Licensee shall use all commercially reasonable efforts, both during and after the term of the License, to
preserve for the benefit of Licensor such rights, if any, as may accrue to Licensor in respect of such
unique, fanciful and distinctive designs. Licensee shall not otherwise be responsible hereunder, however,
by virtue of any similarity between Licensed Products and items within one or more Competitive Lines.
(Note also the interplay with various provisions of 5.2.2.)
80
Licensee may seek inclusion of this provision, arguing that it has developed its supplier network over
time and at great expense, and that it is entitled to continued exclusive use of its factories without fear of
competition from Licensor or a successor licensee. Moreover, Licensee may argue that, in the days
before Licensor inspections became commonplace, the identity of Licensees factories was often
unknown to Licensor, for fear that Licensor would find a pretense to terminate the License, and then
contract directly with Licensees resources, cutting Licensee out of the equation. Licensors will push
back, as if Licensee does get into trouble, Licensor will need access to factories familiar with the
production of Licensed Products, and cannot be left high and dry. Consider also whether the identity of
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indirectly, enter into or engage in any contract, agreement or arrangement for the production,
manufacture, design or distribution of any [Products] with any Manufacturer, other Person, or
any of their related manufacturing facilities, that Licensee uses or used at any time in connection
with its design, production, manufacturing, design or distribution of Licensed Products under this
Agreement; provided that such restriction [shall apply only to Manufacturers as to which
Licensor first obtained knowledge as a result of Licensees disclosures hereunder] [shall not
apply to any Manufacturer which Licensor had, prior to the date of execution of this Agreement,
used for production, in commercial quantities, of items of merchandise sold bearing the Licensed
Mark.]
7.5. Consolidated Net Worth of Licensee. Licensee hereby covenants and agrees that, so long
as the License shall be in effect, the consolidated tangible net worth of Licensee shall equal or
exceed [NUMBER Dollars ($X,000,000)] (the Minimum Consolidated Net Worth).81
7.6. Future Licenses.82 For the avoidance of doubt, Licensor shall be free to engage at any
time in discussions and negotiations with third parties relative to an agreement or arrangement
covering Licensed Products in the Territory (i.e., which may be a successor (in whole or part) to
this Agreement); provided that any resulting agreement or arrangement entered into by Licensor
shall not permit the shipment of Licensed Products to customers, in commercial quantities, prior
to the date of Termination.
Licensees factories and other resources would fall within the definition of Confidential Information in
7.1.
81
Including a Minimum Consolidated Net Worth requirement, together with a periodic statement of
compliance by a Financial Officer of Licensee (see 3.7.2.7), and coupling these with an immediate right
to terminate for failure to meet the Minimum Net Worth requirement (see 8.2.1(xii), should give
Licensor the ability to terminate the License prior to Licensee actually becoming insolvent. This
mechanism may work as a pre-bankruptcy tripwire, enabling Licensor to extricate the Licensed Mark
before all of Licensees assets and contracts are frozen in bankruptcy. It may be helpful to include a
precise definition of consolidated tangible net worth (omitted here), notwithstanding the last sentence of
11.14.
82
Consider the interplay between this provision and Licensees Renewal Term rights, especially in the
case where Licensee has a right of first refusal or first negotiation to continue the term beyond the stated
Renewal Terms. See 2.2 and related footnotes.
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ARTICLE VIII - TERMINATION; RIGHTS ON TERMINATION
8.1. Termination of License. As used herein, Termination shall mean the expiration, or
earlier termination for any reason, in accordance with the terms of this Agreement, of the
Licensed Term and the License. Upon Termination, all rights of Licensee under and in
connection with the License shall cease and automatically revert to Licensor, who shall be free
from any restriction whatsoever to use and to license others to use the Licensed Mark and other
Intellectual Property Rights in connection with the Licensed Products within the Territory.
Termination by Licensor shall be without prejudice to any rights which it may have, whether
pursuant to this Agreement, at law or in equity, or otherwise. Termination is not Licensors
exclusive remedy, and Licensor shall be free to pursue and enforce any of its other rights and
remedies at any time and without limitation.
8.2. Termination Rights.
8.2.1. Certain Breaches by Licensee. Licensor shall have the right, but not the
obligation, to terminate the Licensed Term and the License, effective immediately upon giving
Licensee notice of termination in accordance with 11.2, upon the occurrence of any one or more
of the following events:
(i) If Licensee shall have [knowingly] sold Licensed Products (a) that have
not been approved by Licensor in accordance with the provisions of this Agreement, (b) that do
not conform [, in all material respects,] to the approved Samples therefor, (c) bearing a name or
mark other than, or in addition to, the Licensed Mark, (d) outside of the Territory, (e) to
customers other than Approved Customers or (f) in violation of the provisions of 1.3.4.1 or
1.3.4.2;
(ii) If Licensee shall have [knowingly] breached or defaulted under the

provisions of 4.3 hereof, or under Licensors Ethical Standards;
(iii) If there shall have occurred a transfer of, or change in the direct or indirect
beneficial ownership of Licensee, or a sale of assets, or any other transaction, such that
[NAMES] shall have ceased (a) to own a controlling interest in Licensee, or (b) to have actual
control and management of Licensee, with individual authority to bind Licensee with respect to
all matters relating to the License;
(iv) If Licensee shall have failed to make any payment due to Licensor under
this Agreement when such payment is due and failed to cure such default for five (5) Business
Days or more after notice thereof from Licensor to Licensee;
(v) If Licensee shall have failed [three (3)] or more times during any period of
[twelve months] during the Licensed Term to make any payment due to Licensor when due and
in full;
(vi) If an Act of Insolvency shall have occurred with respect to Licensee [or
any Affiliate];
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(vii) If Licensee shall have defaulted on any obligations secured by a security
interest in or other lien or encumbrance on any Licensed Products and failed to cure such default
prior to the time the secured party acts [to exercise such security interest] with respect to such
Licensed Products;
(viii) If Licensee shall have failed to maintain in full force and effect the
insurance required by the provisions of 9.4;
(ix) If Licensee shall have failed to make payment in respect of its indemnity
obligations to Licensor under 9.1.2 or 9.3 and failed to cure such default for five (5) Business
Days or more after notice thereof from Licensor to Licensee;
(x) If Licensee (a) shall have failed to deliver full and accurate reports
pursuant to any of the provisions of this Agreement by the prescribed due date therefor, and
failed to cure such default within five (5) Business Days after notice from Licensor; or (b) shall
have knowingly made or furnished a false statement in connection with or as part of any report,
notice or request rendered pursuant to this Agreement;
(xi) If Licensees sale of Closeouts shall have exceeded the Closeout Net Sales
Cap or the Closeout Retailer Cap;
(xii) If Licensees Consolidated Net Worth shall have failed to equal or exceed
the Minimum Consolidated Net Worth set forth in 7.5;
(xiii) If Licensee shall have assigned, transferred or sublicensed, or attempted to

assign, transfer or sublicense, its rights under this Agreement in violation of 10.1 without
Licensors prior consent;
(xiv) If the [Chief Executive Officer or Chief Financial Officer] of Licensee

shall have been [convicted of a felony];
(xv) If Licensee ceases to operate or continuously engage in business as a

going concern for longer than [thirty (30)] consecutive days; or
(xvi) If Licensee dissolves or liquidates, or takes any steps in contemplation

thereof.
8.2.2. Other Breaches by Licensee. In the event Licensee breaches any of the [material]
terms, conditions or covenants contained in this Agreement not covered by the provisions of
8.2.1 [in a material respect], or if any of the representations or warranties of Licensee is not true
and correct [in all material respects,] Licensor shall have the right, but not the obligation, to
terminate the Licensed Term and the License by giving Licensee notice of termination in
accordance with 11.2. If the breach is not curable, then Termination shall be effective
immediately upon receipt by Licensee of such notice. If the breach is curable, Licensee shall
have [thirty (30)] days from its receipt of such notice of default to completely remedy same;
provided however that in the event that a default occurs with respect to the submission of any
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report due under the terms of this Agreement, Licensee shall have seven (7) days from receipt of
notice of such default within which to cure.83
8.2.3. Breach by Licensor. In the event Licensor breaches any of the [material] terms,
conditions or covenants contained in this Agreement [in a material respect], or if any of the
representations or warranties of Licensor is not true and correct [in all material respects],
Licensee shall have the right, but not the obligation, to terminate the Licensed Term and the
License by giving Licensor notice of termination in accordance with 11.2. With respect to any
default, Licensor shall have [thirty (30)] days from its receipt of such notice of default to remedy
same.84
8.3. Bankruptcy of Licensee.85 Notwithstanding the provisions of 8.2, if, pursuant to the
United States Bankruptcy Code, as amended, or any successor statute (collectively, the
83
Licensee may complain that it should not be at risk of losing its license on the basis of a breach by one
of its contractors. Licensor will typically respond that Licensee should pick its business
partners/associates carefully, and must remain responsible for their misdeeds. A possible compromise on
this issue would be to provide that any breach by a third party (other than a breach of Licensors Ethical
Standards) would be deemed curable; the language might be along the following lines: Notwithstanding
the foregoing, and excluding any breach or default relating to any provision of Licensors Ethical
Standards, no incurable breach on the part of Licensee shall be deemed to have occurred under this
Agreement in any case where the breach or failure is not within the direct control of Licensee (by way of
illustration, but without limitation, in the event that an Approved Manufacturer or customer diverts
Licensed Products), provided that Licensee is not a knowing participant in such breach or failure, and
provided further that Licensee takes all steps it is entitled to take under any formal agreement with the
Manufacturer or other Person who has caused such breach or failure, including such steps as are required
by Licensor, and in fact completely remedies the breach [to Licensors reasonable satisfaction] within
[thirty (30)] days of its receipt of the notice of default. Licensor-friendly breach clauses include: (i) a
requirement that, as part of any cure, Licensee be required to reimburse Licensor for its reasonable legal
fees incurred in investigating, analyzing and communicating the default, and (ii) a three strikes and
youre out clause that provides for Licensee to lose any further cure right after it has been notified of,
and has cured, the same or a similar breach three times during some specified period.
84
Note that very few Licensor first drafts include a provision along these lines, leaving Licensee to rely
on common law notions if it wishes to assert a breach by Licensor.
85
Assume, for the purposes of this discussion, that the licensee under a fashion trademark license
agreement becomes the debtor in a bankruptcy case. It is generally observed that a non-debtor party to a
license agreement (in our example, the licensor) may not unilaterally terminate the agreement after the
debtors bankruptcy petition has been filed, even if the agreement provides for such termination. See
United States Bankruptcy Code, 11 U.S.C. 365(e)(1). The trademark license is viewed as a valuable
asset of the bankruptcy estate, and the licensee-debtor may wish to assume the license and either continue
to operate it (as debtor-in-possession), or raise money by having the license sold to a third party. Note
that the Bankruptcy Code provides for an exception that may enable a non-debtor (in our example, the
licensor) to enforce terms of an executory license agreement that call for its termination upon the
bankruptcy or insolvency of the debtor (in our example, the licensee): if applicable law excuses the
non-debtor from accepting performance from or rendering performance to the trustee or an assignee of
such contract, even in the absence of an express, contractual no assignment clause. 11 U.S.C.
365(e)(2). Thus, if applicable non-bankruptcy law applies to excuse the licensor from accepting
performance from an entity other than licensee, the licensee-debtor (or its trustee in bankruptcy) generally
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will not have the right to assume and/or assign the license, irrespective of whether language of the license
prohibits or restricts such assignment. 11 U.S.C. 365(c)(1). This determination hinges upon a number
of factors, principally:
whether the license is exclusive or nonexclusive;

whether the license is found to be personal to the licensee because of circumstances
indicating the licensors reliance upon unique or special services to be rendered to or by
the licensee;
whether the licensed asset is copyrightable or patented subject matter, and whether State
or federal (i.e., patent or copyright) law controls; and
whether such assignment is barred by the trustee in bankruptcys (or debtor in
possessions) actual, present intent to assign the license (the so-called actual test), or by
the mere potential that the trustees (or debtor in possessions) assumption of the license
could be followed by its assignment to a third party (the hypothetical test).
Compare Institut Pasteur v. Cambridge Biotech Corp., 104 F.3d 489, 493 (1st Cir. 1997) (adopting actual
test), with, e.g., In re Catapult Entertainment, Inc., 165 F.3d 747, 750 (9th Cir. 1999) (adopting
hypothetical test). There are a fair number of cases applying these tests, in the bankruptcy context, to
patent licenses. See, e.g., In re CFLC, Inc. (Everex Sys. v. Cadtrak Corp.), 89 F.3d 673, 676-77, 679 (9th
Cir. 1996) (nonexclusive patent license cannot be assumed and assigned by trustee in bankruptcy because
personal and nondelegable under federal law; federal law controls assignment of license where
enforcement of State law of assignments would be inconsistent with the aims of federal patent policy)
(quoting Lear, Inc. v. Adkins, 395 U.S. 653, 673 (1969)); ProteoTech v. Unicity Intl. Inc., 542 F. Supp.2d
1216, 87 USPQ2d 1317, 1320 (W.D. Wash. 2008) (the type of . . . license, exclusive or non-exclusive,
does not affect assignability; in either event, the licensor must consent to, or the license must expressly
allow, sublicensing). There are also a number of cases that similarly hold that a licensees interest in a
non-exclusive copyright license is non-assignable without the consent of the licensor. See, e.g., Ariel
(U.K.) Ltd. v. Reuters Group PLC, 2006 U.S. Dist. LEXIS 79319 (S.D.N.Y. Oct. 31, 2006), and, In re GT
Brands Holding LLC, 2005 Bankr. LEXIS 2807, 2-3 (Bankr. S.D.N.Y. Sept. 2, 2005).
Finally, and most significantly for purposes of the fashion industry, the recent trend with regard to
trademark licenses is for the federal courts to hold that trademark licenses are not, as a general matter,
freely assignable by the licensee, because (a) trademarks are akin to patents and copyrights as creatures of
applicable federal law, and/or (b) trademark license agreements are in the nature of non-delegable, non-
assignable personal services contracts. See, e.g., N.C.P. Mktg. Group, Inc. v. Blanks (In re N.C.P. Mktg.
Group, Inc.), 337 B.R. 230, 236 (D. Nev. 2005), aff ' d, 279 Fed. Appx. 561 (9th Cir. 2008) (affirming
order granting trademark owners motion to compel licensee-debtors rejection of nonexclusive trademark
license: Because the owner of the trademark has an interest in the party to whom the trademark is
assigned so that it can maintain the good will, quality, and value of its products and thereby its trademark,
trademark rights are personal to the assignee and not freely assignable to a third party), cert. denied,
___U.S. ___, 129 S. Ct. 1577 (2009); Tap Publns, Inc. v. Chinese Yellow Pages (New York) Inc., 925 F.
Supp. 212, 218 n. 5 (S.D.N.Y. 1996) (The general rule is that unless the license states otherwise, the
licensee's right to use the licensed mark is personal and cannot be assigned to another.); In re Luce
Industries, Inc., 14 B.R. 529, 529-30, 532 (S.D.N.Y. 1981) (reversing order authorizing debtor in
possession to assume trademark license agreement where terms of proposed assumption were tantamount
to an assignment). While the decisions that have adopted this rule of non-assignability have addressed
non-exclusive trademark licenses, the greater reliance of trademark licensors upon the personal
qualifications of the operators of their exclusive licensees should militate even more strongly against the
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Bankruptcy Code), a trustee in bankruptcy of Licensee, or Licensee as debtor, is permitted to
and does assume this Agreement and the License, and thereafter proposes to assign same to a
third party in an assignment that fulfills the applicable requirements of the Bankruptcy Code,
then the trustee or Licensee, as the case may be (the Debtor), shall be required to provide
Licensor with prior notice of the proposed assignment, which notice shall include the name and
address of the proposed assignee, the proposed consideration for the assignment, and all other
material terms and conditions of the proposed assignment (the Debtor Notice). The giving of
such Notice shall constitute the grant to Licensor of an option to have this Agreement assigned to
Licensor or to its designee for the consideration (or its equivalent in money) and upon the other
terms specified in the Debtor Notice. Licensor may exercise such option and accept the offer by
giving the Debtor a notice of exercise (Exercise Notice) within [twenty (20)] days after
Licensor receives the Debtor Notice. If Licensor fails to give the Exercise Notice exercising its
option within such [twenty (20)] day period, the Debtor may complete the proposed assignment,
but only if such assignment is to the entity, for the consideration, and upon the terms and
conditions, specified in the Debtor Notice. Nothing herein is intended or shall operate to impair
any rights of Licensor as a creditor in the bankruptcy proceeding, including any right of Licensor
to oppose, restrict or prohibit the assignment or transfer, or assumption, of the License to or by
any Person.
[8.4. Immediate Payment Upon Termination. In the event of Termination by Licensor as a

result of Licensees breach or default, then, without prejudice to any other rights or remedies
which Licensor may have against Licensee or its Affiliates, the unpaid balance of all payments
owing to Licensor pursuant to Article III at the date of such Termination, as well as an amount
equal to all payments which would have been payable to Licensor pursuant to Article III during
the remainder of the Licensed Term had Termination not have occurred, shall [, at the option of
Licensor,] accelerate and become immediately due and payable by Licensee to Licensor, as
liquidated damages and not as a penalty; provided that the amount of such liquidated damages
(i) shall not exceed an amount equal to [$X,000,000 / the aggregate Minimum Royalties that
would have been payable to Licensor hereunder during the [eighteen (18)] month period
following the date of Termination (the Termination Period) had Termination not have
occurred]; and (ii) Licensor shall reimburse Licensee for any such payment of liquidated
damages received by it, to the extent of royalties received by Licensor or its Affiliates in respect
of the Termination Period under a new license agreement covering Licensed Products, net of
Licensors costs and expenses incurred in connection with its entry into such new license
free assignment of exclusive trademark license agreements. But see In re Rooster, 100 B.R. 228, 229
(Bankr. E.D. Pa. 1989) (exclusive sublicense agreement to use Bill Blass trade name and trademark was
not a personal services contract and could, therefore, be assumed and assigned by the debtor).
Note in Sunbeam Products Inc. v. Chicago American Mfg, 686 F.3d 372, 377 (7th Cir. 2012), the court
held that a debtor-licensors rejection in bankruptcy of a trademark license does not abrogate the
licensees right to use that trademark, only that specific performance of the debtor-licensor cannot be
compelled (nothing about this process implies that any of the rights of the other contracting party have
been vaporized).
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agreement, including the fees and expenses of attorneys and any licensing agent or finder, it
being understood and agreed that Licensor shall have no duty to mitigate its damages.]86
8.5. Continued Sales After Expiration or Termination; Sell-Off Period.
8.5.1. Sell-Off Period. Subject to the conditions set forth herein, following Termination
[other than pursuant to 8.2.1],87 Licensee shall have the continuing right, on a non-exclusive
basis, to complete and dispose of inventory of Licensed Products on hand or in process [, or
which, on completion, would be subject to firm orders from customers,] for a period of [one
hundred eighty (180)] days after the date of Termination (the Sell-Off Period). All of
Licensees operations during the Sell-Off Period shall be in accordance with and subject to all of
the provisions of this Agreement.88 Without limiting the foregoing, all sales of Licensed
Products during the Sell-Off Period shall be made solely to Approved Customers and shall be
subject to the payment of Sales Royalty.
8.5.2. Schedule of Inventory. No later than [thirty (30)] days prior to the expiration date
of this Agreement, or within [five (5)] Business Days after the date of Termination, Licensee will
deliver to Licensor a true and complete schedule, in reasonable detail, dated as of the close of
business on the date of Termination, listing all of Licensees and its Affiliates inventory of
Licensed Products, related work-in-process, fabrics, trim, Materials and other associated
materials on hand, whether in the possession of Licensee, third party Manufacturers or other
Persons, or in transit (collectively, including Licensed Products which result from the completion
of work in progress as of the date of Termination, Sell-Off Inventory), broken out by number
and description, location, style number, Licensed Mark, Licensed Product and cost, as well as
such other information relating to such Sell-Off Inventory as Licensor may reasonably request.
[If Licensee shall not have provided such schedule in a timely fashion, Licensee shall forfeit all
of its rights with respect to the Sell-Off Period, time being of the essence of this provision.]
Licensee shall make its books and records related to any Sell-Off Inventory available for
inspection by Licensor; Licensor shall have the right to conduct a physical inventory at its own
cost and expense. Licensee shall deliver to Licensor, at its request from time to time, a schedule
of Sell-Off Inventory, as of a recent date, and a final schedule of Sell-Off Inventory within ten
(10) Business Days of the end of the Sell-Off Period.
8.5.3. Sales Royalty on Sell-Off Period. Within thirty (30) days after the close of each
calendar month during the Sell-Off Period, Licensee shall deliver to Licensor all Statements
called for by 3.7.2, but covering the Sell-Off Period, and shall pay to Licensor the Sales Royalty
86
In the case where Termination is based on a breach of 4.5.3 (Shipping Threshold) some Licensors
would have Licensee also pay Sales Royalties through the date of Termination on the Net Sales that
would have been achieved but for the failure to ship.
87
The notion here is that if Licensors termination is based on one of the default items listed in 8.2 (a
nuclear default), not only can Licensor immediately terminate the License, but Licensee also loses its
sell-off rights.
88
Licensee may seek, in respect of sales of Sell-Off Inventory, to eliminate any Marketing Fee and/or
increase the Closeout Net Sales Cap or the Closeout Retailer Cap (or eliminate them altogether).
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in respect of the Sell-Off Period pursuant to 3.1. [No payments of Minimum Royalty
previously made and uncredited will be credited against any Sales Royalty payable by reason of
sales during the Sell-Off Period.]
8.5.4. Licensor Purchase Option. Notwithstanding the foregoing, upon Termination and
at any time thereafter during the Sell-Off Period, Licensor shall have the right and option, but not
the obligation, to purchase any or all of the Sell-Off Inventory not then otherwise subject to
orders from Licensees customers [, on such commercially reasonable terms as the parties may
agree],89 with such Sell-Off Inventory to be delivered against payment in full of the purchase
price therefor, f.o.b. the locations of the Sell-Off Inventory so purchased. If Licensor notifies
Licensee of its exercise of its right to purchase any of such Sell-Off Inventory, the notice will
apply only to that portion of such Sell-Off Inventory remaining when Licensee receives the
notice. Licensor shall exercise any such purchase option in writing.
8.6. Delivery of Materials. Upon Termination and the conclusion of any Sell-Off Period, if
any, Licensee will deliver to Licensor, at Licensees sole expense, all materials used for or in
connection with the manufacture, distribution, sale, advertising, marketing, promotion,
publicizing or other exploitation of Licensed Products, Materials, or Intellectual Property Rights,
including all samples, technical manufacturing specifications for Licensed Products, pattern
disks, computer disks with patterns and markers relating to Licensed Products and Materials, and
other materials featuring the Licensed Mark or any variation (including any derivative,
composite or subsidiary marks) thereof. Except as necessary to exercise its rights, if any, under
8.4, after the date of Termination (and the conclusion of any Sell-Off Period), Licensee will not
(i) use, provide to others or permit others to use any of these materials or any variations
(including any derivative, composite or subsidiary marks) thereof in connection with any
products, or (ii) hold itself out as being associated with Licensor or any of its Affiliates or, in its
business activities, act in a way that may lead a third party to believe that Licensee still has the
right to use the Licensed Mark, or promote or otherwise indicate its prior association with any of
them. Upon Termination (and the conclusion of any Sell-Off Period), Licensee shall, upon the
request of Licensor, return to Licensor all of Licensors Confidential Information and shall
certify to Licensor that it has not retained or made copies of any such Confidential Information.
8.7. Cessation of Use of Licensed Mark. Upon Termination and the conclusion of any Sell-
Off Period, if any, Licensee will cease the manufacture, distribution and sale and advertising,
marketing, promotion and other exploitation of Licensed Products, will discontinue forthwith all
use of the Licensed Mark, no longer may use the Licensed Mark or any variation (including any
derivative, composite or subsidiary marks) thereof and promptly will transfer to Licensor, free of
charge, all registrations, filings and rights with regard to the Licensed Mark in which it may have
an interest, and all rights granted to Licensee under this Agreement will terminate forthwith and
automatically revert to Licensor. Licensee acknowledges that, subject to the provisions of this
Agreement, any sale or distribution of unauthorized products bearing the Licensed Mark, any
unauthorized use of the Licensed Mark, any sale or distribution of any Licensed Products to any
89
Alternatively, this can be done on a right of first refusal or right of first negotiation basis (see footnote
to 2.2.1), or on a straight discount from the Licensee Price List (see footnote to 1.3.3.1), or on the basis
of Licensees cost (usually on a landed duty paid basis), or on a cost plus basis.
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entities other than the Authorized Retailers and Closeout Retailers and any use by Licensee of
the Licensed Mark after the effective date of Termination that, in each case, is not otherwise
expressly permitted under this Agreement, shall, in each circumstance, constitute an
infringement of the Licensed Mark without prejudice to any other right of Licensor, including
the right to damages or equitable relief.
8.8. Licensors Rights Upon Termination. Notwithstanding Termination, Licensor will have
all rights and remedies which it has hereunder, at law or in equity, or otherwise, (i) to enjoin the
unlawful or unauthorized use of the Licensed Mark or sale of Licensed Products or any other
breach by Licensee hereunder, including any violation of Licensees confidentiality obligations
under 7.1 or any violation of Licensees obligations under 8.5, 8.6 or 8.7, (ii) to collect
royalties and any other sums payable by Licensee, including Minimum Royalty and Sales
Royalty, and (iii) to recover damages for breach of this Agreement (whether or not notice of the
breach was given during the Licensed Term). Such injunctive relief may be sought in the courts,
notwithstanding the arbitration provisions of this Agreement, and, if applicable, also may be
sought prior to or in lieu of Termination or in aid of arbitration. Nothing in this Section is
intended to prevent Licensor or Licensee from commencing an arbitration to recover damages or
other relief prior to or in lieu of Termination.
8.9. Benefits Upon Termination. Upon Termination, all benefits which may accrue by reason
of the activities of Licensee hereunder will be deemed transferred automatically to Licensor.
Licensee will not be entitled to any indemnification, reimbursement or compensation for any
investment of capital or other expenditure which Licensee may make in connection with this
Agreement and will not be entitled to any indemnification, reimbursement or compensation for
any good will created by any activities of Licensee under this Agreement or the introduction to
Licensor of new clientele for Products (whether or not bearing the Licensed Mark). Licensee
hereby waives and agrees to make no claim against Licensor with respect to any of the
foregoing, whether or not, upon Termination, Licensor or any of its Affiliates commences, or
Licensor engages a new licensee or distributor for, any aspect of the Marketing of Products
bearing the Licensed Mark in any portion of the Territory.90
8.10. Disputes; Arbitration; Court Actions.
8.10.1. Resolutions of Disputes.91 Prior to exercising any of the dispute mechanisms set
forth in this 8.10, the person(s) with direct responsibility for administration of this Agreement
on behalf of each of Licensor and Licensee shall attempt, within [a commercially reasonable
period not to exceed XO days after notice thereof (which notice shall expressly refer to this
8.10.1)] (the Resolution Period), to resolve to the parties mutual satisfaction all disputes,
controversies and claims arising out of or relating to this Agreement or the breach, termination or
validity thereof (each, a Dispute); provided that the parties expressly reserve the right to
petition a court directly for injunctive, equitable and other relief (including money damages) in
connection with any Dispute relating to or affecting Licensors ownership of or the validity of
the Licensed Mark or other Intellectual Property Rights, or any registration (including any
90
Licensor should consider the potential applicability of good will indemnity notions where the
Territory includes Countries within the EEC or other jurisdictions that recognize that concept.
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application) thereof, or any claims of violation of such, or any other, intellectual property rights
of a party (each, a Court Action).92 If such persons are unable to resolve any Dispute within
the Resolution Period, then the parties shall proceed in accordance with 8.10.2 below.
8.10.2. Negotiation by Senior Executives. As a precondition to instituting any legal

action permitted by the provisions below, the parties shall attempt in good faith to resolve all
Disputes promptly by negotiation between senior executives of each of the parties who have
authority to settle the controversy and who are at a higher level of management than the
person(s) with direct responsibility for administration of this Agreement. For Licensor, the
senior executive is [TITLE] (or his or her successor [or designee]), and for Licensee, the senior
executive is [TITLE] (or his or her successor [or designee]). If the parties have not resolved a
Dispute under 8.10.1 within XO days after due notice thereof, either party may give the other
party notice of the pendency of such Dispute, which notice shall include (i) a statement of that
partys position, together with supporting arguments, and (ii) a request for a meeting with the
other partys senior executive, including at least [three 2-hour periods] over the next following
thirty (30) days during which the requesting partys senior executive would be available to meet
(a Dispute Notice). Within [fifteen (15)] days after delivery of the Dispute Notice, the
receiving party shall submit to the other a response, including (a) a statement of that partys
position, together with supporting arguments, and (b) the receiving senior executives acceptance
of one or more of the proposed meeting times. The senior executives shall meet together at the
designated meeting time, or at such other time as they may mutually agree, at a mutually
acceptable place, and thereafter as often as they reasonably deem necessary, to attempt in good
faith to resolve the Dispute. In this connection, each party shall honor all reasonable requests for
information. All negotiations pursuant to this clause are confidential and shall be treated as
compromise and settlement negotiations for purposes of applicable rules of evidence.
8.10.3. Non-Binding Mediation. If the parties have not resolved a Dispute by

negotiation under 8.10.2 within [sixty (60)] days after delivery of the Dispute Notice, or if the
two senior executives shall have failed to meet within thirty (30) days after delivery of such
Dispute Notice, either party may give the other party notice of the pendency of the Dispute and
its desire to proceed with mediation (a Mediation Notice). Upon the giving of a Mediation
Notice, the parties shall endeavor to settle the dispute by mediation under the [Commercial
Mediation Rules of the American Arbitration Association (the AAA)] [then currently in
effect/as in effect on the date of this Agreement] [, or any other rules mutually agreed by the
parties]. [The mediator shall be a retired judge or practicing attorney with no less than fifteen
91
This is a full blown, up the ladder dispute resolution provision. It requires a number of steps before
the parties can commence arbitration; the business people need to understand how disputes will get
resolved under such a provision, and the timeframes involved. Note: there is a carve out for certain
disputes, which can proceed directly to court or, if desired, to arbitration. For an in-depth discussion of
dispute resolution provisions, see Kathleen M. Scanlon, Drafters Deskbook for Dispute Resolution
Clauses (CPR Institute for Dispute Resolution 2002).
92
Consider whether Disputes relating to confidentiality, non-solicit, non-compete, specific performance
(see 11.4), or other matters should be added to the list of Court Actions; and whether these Disputes
should be resolved in court or by immediate arbitration (without requiring that the parties first go through
the various negotiation and mediation provisions here).
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(15) years of legal experience and experienced in the mediation of Disputes.] The mediation
shall be held, and any award shall be issued, in [the State, City and County of New York]. The
award shall provide that the fees and expenses of the mediation (including the fees of the AAA,
the fees and expenses of the mediator and the attorneys fees of the prevailing disputing party)
shall be paid by the non-prevailing disputing party.93 [All mediation proceedings shall be non-
binding.] The mediation must be concluded within [thirty (30)] days after the appointment of a
mediator, and in any event within [forty-five (45)] days after initiation of the mediation
procedure. If after proceeding in good faith (i) the parties are unable to agree on a neutral
mediator within [ten (10)] days after the delivery of the Mediation Notice, or (ii) the parties are
unable to resolve the Dispute through mediation in accordance with this 8.10.3, the parties may
proceed in accordance with 8.10.4 below.
8.10.4. Arbitration. After exhausting the procedures set forth in 8.10.1, 8.10.2 and
8.10.3 above, any unresolved Dispute shall be settled and determined by binding arbitration in
New York City in accordance with the provisions of the Federal Arbitration Act, 9. U.S.C. 1-
16, as amended (the Federal Arbitration Act), to the exclusion of state Laws inconsistent
therewith. The terms of the Commercial Arbitration Rules of the AAA (the Rules) [then
currently in effect / in effect on the date of this Agreement] shall apply except to the extent they
conflict with the express provisions of this paragraph. If the amount in controversy in the
arbitration exceeds two hundred and fifty thousand Dollars ($250,000), exclusive of interest,
attorneys fees and costs, the arbitration shall be conducted by a panel of three (3) independent
arbitrators. Otherwise, a single independent arbitrator shall conduct the arbitration. The parties
shall endeavor to select independent arbitrators by mutual agreement. If such agreement cannot
be reached within thirty (30) days after a dispute has arisen which is to be decided by arbitration,
the selection of the arbitrator(s) shall be made in accordance with the Rules as then in effect. If
three (3) arbitrators are selected, the arbitrators shall elect a chairperson to preside at all meetings
and hearings. Each arbitrator shall be a member of a state bar engaged in the practice of law in
the United States or a retired member of a state or the federal judiciary in the United States. The
award of the arbitrator(s) shall require a majority of the arbitrators in the case of a panel of
arbitrators, shall be based on the evidence admitted and the substantive Law of the State of New
York (subject to any applicable preemption or supersedence by U.S. federal substantive Law)
and shall contain an award for each issue and counterclaim. The award shall be made within
thirty (30) days following the close of the final hearing and the filing of any post-hearing briefs
authorized by the arbitrator(s), and such award shall set forth in writing the factual findings and
legal reasoning for such award. The arbitrator(s) may, in their discretion, award to any party (i)
specific performance or injunctive relief (the foregoing is not intended to limit the parties access
to the courts with respect to Court Actions) or (ii) reasonable attorneys fees and expenses. The
arbitrators may not change, modify or alter any express condition, term or provision of this
Agreement, and to that extent the scope of their authority is expressly limited. Except as
provided in the Federal Arbitration Act, the arbitration award will be final and binding upon the
93
Placing the burden of costs of mediation (or arbitration) on the non-prevailing party encourages parties
to resolve Disputes by negotiation and discourages parties from raising meritless or frivolous Disputes.
An alternative might be language along the lines of the following: Unless the parties expressly agree
otherwise, each party shall bear its own costs, legal fees and expert fees incurred in the mediation, and
share equally the fees of the AAA and the fees and expenses of the mediator.
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parties and no appeal of any kind may be taken. Judgment may be entered thereon in any court
having jurisdiction thereof. Each party shall be entitled to inspect and obtain a copy of non-
privileged relevant documents in the possession or control of the other party. All such discovery
shall be in accordance with procedures approved by the arbitrator(s). Unless otherwise provided
in the award, each party shall bear its own costs of discovery. The service of any notice, process,
motion or other document in connection with an arbitration under this Agreement or for the
enforcement of any arbitration award may be made in the same manner that Communications
may be given under 11.2. Unless otherwise provided in the Agreement, the statute of
limitations applicable under New York Law to the commencement of a lawsuit shall apply to the
commencement of an arbitration hereunder, expect that no defenses shall be available based
upon the passage of time during any negotiation or mediation called for above.
8.10.5. Court Actions. Any Court Action will be governed by the provisions of 11.3.
ARTICLE IX - INDEMNIFICATION; INSURANCE
9.1. Indemnification.
9.1.1. Indemnification by Licensor. Licensor will hold Licensee and its Affiliates, and
each of their respective officers, directors, employees and agents, and their successors and
assigns (collectively, Licensee Indemnified Parties), harmless from and will indemnify each of
them against any losses, liabilities, damages and expenses (including interest, penalties and
reasonable attorneys fees and expenses) (collectively, Claims) which any of them may incur
or become obligated or liable to pay in any action, claim or proceeding against any of them by
reason of the fact that the use, in [strict] accordance with the express terms of this Agreement, of
the Licensed Mark in connection with Licensed Products infringes upon, or otherwise conflicts
with, the trademark, trade name or other intellectual property rights of a third party.94 The
indemnification under this 9.1.1 will apply solely to (i) the amount of the judgment, if any,
entered against the indemnitee, after appeal, if applicable, (ii) any approved sums paid by the
indemnitee in settlement, and (iii) the expenses [reasonably] incurred by the indemnitee in
connection with its defense. The indemnification by Licensor will not apply to any losses or
damages sustained by the indemnitee by reason of any claim or act of infringement other than
those specified in the preceding subclauses (i) through (iii) above.
9.1.2. Indemnification by Licensee. Licensee will hold Licensor and its Affiliates, and
each of their respective officers, directors, employees and agents, and their successors and
assigns (collectively, Licensor Indemnified Parties), harmless from and will indemnify each of
them against any Claims which any of them may incur or become obligated or liable to pay in
any action, claim or proceeding against any of them (i) by reason of any acts, whether of
omission or commission, by Licensee, its Affiliates, any of its customers or Manufacturers, any
of their respective Affiliates, or any officers, employees or agents of any of the foregoing
(collectively, the Licensee Parties) arising out of or related to this Agreement, including those
arising out of or related to the use or Marketing of any Licensed Products, whether or not
94
Licensee might seek to add: or by reason of Licensees actions taken (or omitted to be taken) in
accordance with Licensors instructions hereunder.
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grounded in products liability or breach of warranty (as to performance characteristics or
otherwise), excepting only those Claims covered by Licensors indemnification obligations
under 9.1.1, or (ii) relating to the breach of this Agreement on the part of any of the Licensee
Parties.
9.1.3. Joint Defense. To the extent that, in connection with any matter for which
indemnification is sought under 9.1, the indemnitor and the indemnitee(s) are in a position of
joint defense, the indemnitor and the indemnitee(s) will conduct the defense of the action in a
manner that will preserve the attorney-client, work product, joint defense or other applicable
privilege.
9.2. Brokerage Indemnity. Each of Licensee and Licensor will indemnify the other and hold
the other harmless from any Claim for any brokerage commissions or finders fees in connection
with this Agreement or the transactions contemplated hereby insofar as such arrangements or
agreements were made by it or on its behalf.
9.3. Indemnification Procedures. Any claim for indemnification under 9.1 or 9.2 shall be
subject to the following conditions and procedures. The party seeking indemnification must give
the party from whom indemnity is sought prompt notice of any such action, claim or proceeding
to which such indemnifying party is not itself a party, but the failure to so notify such
indemnifying party will not relieve it from liability hereunder unless and to the extent such
indemnifying party did not otherwise learn of such action, and such failure results in the
forfeiture by such indemnifying party of substantial rights or defenses. [The indemnifying party,
in its reasonable discretion, then may take such action as it deems advisable to defend the action,
claim or proceeding on behalf of the indemnified party; conducting such defense diligently and
with [full and complete] control over the conduct of such proceeding on behalf of the
indemnified party, including the right to decide matters of procedure, strategy, substance and
settlement relating to such proceeding; provided, however, that any counsel chosen by such
indemnifying party to conduct such defense shall be reasonably satisfactory to the indemnified
party and the indemnifying party will not enter into any settlement without the consent of the
indemnified party, which will not be unreasonably withheld.]95 The indemnified party may also
participate in such proceeding and retain separate co-counsel at its sole cost and expense. If the
indemnifying party does not take appropriate action within thirty (30) days after its receipt of
notice from the party seeking indemnification, the party seeking indemnification may defend the
action, claim or proceeding at standard rates, but no settlement may be made without the
approval of the indemnifying party. In either case, both parties will keep each other fully
advised of all developments and will cooperate fully with each other in connection with the
defense thereof. Any amount due from an indemnifying party hereunder in respect of
95
Although this type of language probably looks pretty familiar, counsel might want to point out to
Licensor that it calls for Licensee to control all aspects of the litigation. An alternative might be for
Licensee to pay for, but not control, any Claims relating to the Licensed Mark, Intellectual Property
Rights, or rights to their ownership or use; Licensee will almost certainly resist giving Licensor this kind
of blank check. Also query whether Licensor should be held to a reasonableness standard in connection
with the settlement of any Claim whatsoever concerning matters related to the Licensed Mark or
Intellectual Property Rights.
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indemnification shall be paid within [thirty (30)] days after the presentation of an invoice by an
indemnified party.
9.4. Insurance. Licensee shall, at its own expense, procure and maintain in full force and
effect for so long as Licensed Products are sold and for at least two (2) years thereafter, with an
insurance carrier with the highest rating established by Bests Rating Guide, a public liability
insurance policy including comprehensive liability coverage and products liability coverage with
respect to Licensed Products, civil and advertising insurance and contractual liability coverage
with respect to this Agreement, with a limit of liability of not less than $X,YYY,000. The
insurance policy will be written for the benefit of Licensee, Licensor and the Licensor
Indemnified Parties, will be designated expressly as primary insurance, and will provide for at
least [thirty (30)] days prior notice to Licensee and Licensor of the cancellation, termination or
substantial modification thereof. If notice of cancellation is received, Licensee shall replace the
insurance policy with a substantially equivalent policy prior to actual cancellation. Licensee may
obtain the insurance in conjunction with a policy of liability insurance which covers products
other than Licensed Products. Licensee shall deliver a certificate of insurance to Licensor
promptly upon its issuance and will furnish to Licensor evidence of the maintenance of the
policy upon request. Licensee shall use all good faith, commercially reasonable efforts to cause
its insurance carrier to provide in the insurance policy that, if it takes title to any Licensed
Products under the policy, it shall sell the Licensed Products consistent with the manner in which
Licensee may sell Licensed Products and only to customers to which Licensee may sell Licensed
Products. Nothing in this 9.4 is intended to limit or affect the indemnification provisions of
9.1 and 9.2. In addition to the foregoing, Licensee shall, at all times during the Licensed
Term, maintain appropriate insurance to cover any loss relating to its inventory of Licensed
Products, work in process, raw materials, and Materials.
ARTICLE X - ASSIGNABILITY; BINDING EFFECT
10.1. Assignability. The performance of Licensee is of a personal nature and, therefore, neither
this Agreement nor the License or other rights granted to Licensee may be assigned, sublicensed
or transferred by Licensee, and any attempted assignment, sublicense or transfer, whether
voluntary or by operation of law, directly or indirectly, will be void and of no force or effect and
will constitute a material, non-curable breach of Licensees obligations hereunder. The direct or
indirect transfer or issuance of any [membership interests] in Licensee or the direct or indirect
transfer (including by entering into an operating or other agreement or by granting a proxy) of
the voting rights of the membership interests or the entering into of a management or other
agreement will constitute an impermissible transfer and an incurable default.96
96
This blanket prohibit on transfers of ownership interests may be problematic for larger Licensees, who
may want instead to look at a corporate poison pill type change of control definition. Moreover,
Licensee, especially if it is a family owned business with the usual attendant tax and succession planning
issues, may prefer more liberal rights re: assignment, and might consider language along the following
lines: Notwithstanding the provisions of this 10.1, [so long as Licensee is not, at the time of such
transfer, in default of any of the terms and conditions of this Agreement beyond the applicable notice and
cure periods,] the owners of the voting capital stock of Licensee or any Controlling Entity shall be
permitted to transfer such stock: (i) by gift, bequest or inheritance between or among the present
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10.2. Binding Effect on Successors and Assigns. This Agreement will inure to the benefit of
and will be binding upon the parties, Licensors successors and assigns and Licensees permitted
successors and assigns.
ARTICLE XI - MISCELLANEOUS
11.1. Limitation of Relationship. Licensor and Licensee are independent parties, and nothing
contained herein shall be construed to place either party in the relationship of legal
representative, partner, joint venturer, employee, principal, fiduciary, or agent of the other, and
neither party shall have the authority to obligate or bind the other.
11.2. Notices and Other Communications. All reports, approvals, consents, authorizations,
offers, requests, demands, notices, notifications and other communications (collectively
Communications) required or permitted by this Agreement shall be in writing97 and signed by
a duly authorized officer of or such other individual designated in writing by a party.
Communications shall for all purposes be deemed to be given by a party (i) on the date when the
notice is personally delivered and acknowledged; (ii) the first Business Day after transmission by
reputable overnight courier delivery, or (iii) five (5) days after transmission by certified or
registered mail; in each case addressed to the other party at the respective address set forth
below. Oral, faxed or emailed communications shall not constitute Communications for
purposes of this Agreement, and, except as otherwise provided in the last sentence of this 11.2,
will not be given effect hereunder. All Communications to Licensor will be sent to Licensor
c/o [NAME/TITLE/ADDRESS] with a copy to [COUNSEL], or their respective successors. All
Communications to Licensee will be sent to Licensee c/o [NAME/TITLE/ADDRESS], and
[COUNSEL], or their respective successors. Any Person entitled to receive Communications
hereunder may change its address for the purposes of this Agreement by giving the other parties
notice of the new address in accordance with this 11.2. Any notice under this Agreement may
be given by a partys legal counsel, and such notice shall have the same effect hereunder as if
given by that party. Notwithstanding the foregoing, Communications regarding the approval
process for Product Concepts, Samples, Products, Materials and the like may be made by fax or
email in accordance with standard operating procedures in the trade, or as per the custom
developed between the parties (and without copies to counsel).
shareholders of Licensee or any such Controlling Entity, (ii) to members of their immediate families (i.e.
spouses, parents, siblings, children or grandchildren), (iii) pursuant to a public offering of the shares of
the Licensee or any such Controlling Entity, (iv) to a corporation or other entity directly or indirectly
controlled by the present shareholders of Licensee or any such Controlling Entity, or (v) to any third
party, including Licensees employees, provided (a) that the present shareholders of Licensee continue
directly or indirectly to control Licensee following said transfer, and (b) that the operation of Licensees
business continues to be conducted in substantially the same manner, strategically and substantively,
including with the same current senior management of Licensee, as at the time immediately prior to such
transfer and pursuant to all of the provisions of this Agreement. For purposes of this Section, the current
senior management of Licensee shall mean either [NAME] or [NAME].
97
Note that, in reliance on this provision, the text of the Agreement does not include express references to
the requirement that Communications must be written or in writing.
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11.3. Governing Law. This Agreement, and any and all disputes arising under or relating to its
subject matter, shall be governed by and interpreted under the internal Laws of the State of New
York applicable to contracts made, and to be performed solely within, such State [, including
N.Y. Gen. Oblig. L. 5-1401].98 Any controversy arising out of or related to this Agreement,
and not restricted by the terms of this Agreement from being heard by a court, including any
Court Action, will be brought in a federal or state court of competent jurisdiction located in the
State of New York, County of New York, except that Licensor also may seek injunctive or other
equitable relief in any jurisdiction where appropriate by reason of its subject matter. Each of
Licensor and Licensee hereby (i) consents to the exclusive jurisdiction in such courts, (ii) waives
any claim or defense of inconvenient forum or lack of personal jurisdiction in such forum under
any applicable Law, decision or treaty or otherwise, (iii) waives trial by jury, (iv) represents,
warrants and covenants that it is not entitled to immunity from judicial proceedings and will not
claim any immunity from such proceedings for itself or its property, (v) stipulates and agrees that
any judgment relating to this Agreement entered by such courts shall be binding throughout the
world and may be sued upon, docketed, entered or enforced, without challenge or opposition on
its part and without re-trial of any of the issues which gave rise to such judgment, in any state,
country, province, commonwealth or territory having jurisdiction over their respective persons or
properties, and (vi) agrees that service of process or of any other papers with respect to such
proceeding may be made upon it by certified or registered mail in accordance with 11.2(iii) and
shall constitute good, proper and effective service. Notwithstanding the foregoing, Licensor and
Licensee may serve process in any manner permitted by the Laws of the State of New York, or
by the state or Federal courts located therein, or by the Laws or courts of any applicable Country
or any subdivision thereof.
11.4. Specific Performance to Obtain Cooperation. Without prejudice to any other right or
remedy that Licensor may have under this Agreement, or at law or in equity, if, after notice to
Licensee, Licensee fails to take any action which Licensee is obligated to take hereunder,
including providing any information and submitting required notices, reports, products, or uses
of the Licensed Mark, then Licensor shall have the right and option, but not the obligation, to
bring an action for specific performance to compel such action, and the prevailing party shall be
entitled to reimbursement of all of its costs and expenses and reasonable attorneys fees and
disbursements incurred.
11.5. Uniqueness of Licensed Mark; Equitable Relief. Licensee acknowledges and agrees
(i) that each of the Licensed Mark and the other Intellectual Property Rights possesses a special,
unique, and extraordinary character which makes difficult the assessment of monetary damages
which Licensor might sustain by virtue of any use other than in strict accordance with the terms
hereof; (ii) that use by Licensee (or any Licensee Party) of the Licensed Mark or any other
Intellectual Property Rights, other than in strict accordance with the terms hereof, would result in
irreparable injury to Licensor; and (iii) that injunctive and other relief, in law and equity, would
be appropriate in the event of such a use, or other breach of this Agreement. Accordingly,
Licensee acknowledges and agrees that Licensor shall be entitled to apply for and receive from
any court of competent jurisdiction a temporary restraining order, preliminary injunction and
98
Requires that the transaction involve at least $250,000.
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permanent injunction, without any necessity of proving damages, or any requirement for the
posting of a bond or other security, enjoining Licensee from breach of this Agreement or
infringement or impairment of Licensors rights. Such relief shall be in addition to, and not in
substitution for, any other remedies available to Licensor, pursuant to this Agreement or
otherwise.
11.6. Licensors Right to Appoint Representatives. Licensor shall have the right at any time to
appoint and designate in writing an authorized representative or representatives who shall be
empowered to act on behalf of Licensor with regard to any matter pertaining to this Agreement,
including the right to collect all payments due hereunder and the right to conduct the approval
procedures pursuant to the provisions of 4.2 with respect to Licensed Products and Materials.
11.7. No Waiver of Rights. The failure of a party to insist upon strict adherence to any
provision of this Agreement on any occasion shall not be considered or deemed to be a waiver
nor considered or deemed to deprive that party of the right thereafter to insist upon strict
adherence to that provision or any other provision of this Agreement. No custom or practice of
the parties hereto at variance with the terms hereof shall constitute a waiver of a partys right to
demand exact compliance with any of the terms herein at any time. Any waiver must be in
writing, signed by both Licensor and Licensee.
11.8. [Limitation of Liability. UNDER NO CIRCUMSTANCES, INCLUDING ANY

BREACH OR ALLEGED BREACH OF THE LICENSE OR THIS AGREEMENT, OR THE
FAILURE OF THE ESSENTIAL PURPOSE OF ANY REMEDY INTENDED TO BENEFIT
ANY PARTY, SHALL EITHER PARTY OR ITS AFFILIATES OR ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS,
INDEPENDENT CONTRACTORS, OR REPRESENTATIVES HAVE ANY LIABILITY OR
OBLIGATION TO THE OTHER PARTY, ITS AFFILIATES OR TO ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS,
INDEPENDENT CONTRACTORS OR REPRESENTATIVES, FOR OR IN RESPECT OF
ANY CONSEQUENTIAL, INCIDENTAL, PUNITIVE, INDIRECT, EXEMPLARY, OR
SPECIAL DAMAGES, INCLUDING IN RESPECT OF LOST PROFITS, ANTICIPATED
INCOME OR PROFITS, OR OTHER SIMILAR DAMAGES. THE FOREGOING SHALL
NOT APPLY TO LIMIT ANY INDEMNITY OBLIGATION HEREUNDER OF ANY
PERSON IN RESPECT OF THIRD PARTY CLAIMS.]99
11.9. Force Majeure. The parties will not be liable to each other for any failure or delay in
performance, other than failure to make timely payments due under this Agreement, if it is
99
Inclusion of such a provision is often a point of contention, with Licensee in most cases wanting to
include it, and Licensors typically resisting inclusion. See, in this regard, footnote 4 above. From
Licensees point of view, the parade of horribles avoided by such a provision includes a possible
Licensor claim that Licensees Marketing a poorly designed, or worse, dangerous, product significantly
diminished the value of the overall brand. Also: If Licensor agrees to such a provision, it may also seek
to add a cap on its own overall monetary liability to Licensee under the Agreement for any reason
whatsoever; this cap on Licensors exposure is often measured by the amount of dollar payments received
by Licensor under the License for some 6-18 month period prior to the date of Termination.
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because of war, terrorism, mobilization, disease, travel restrictions, earthquake, flood, fire, act of
God, or any other cause beyond its reasonable control (Force Majeure). However, either party
may terminate this Agreement by and upon notice to the other if the other is unable to perform
any of its material obligations for a period of [ninety (90)] days by reason of the Force Majeure.
11.10. Complete Agreement; No Oral Modification. This Agreement is a complete statement of

all agreements among the parties with respect to its subject matter. Any amendment,
modification, alteration, change or waiver must be in writing. Licensee acknowledges that
Licensor has made no warranties or representations except those expressly stated herein.
11.11. Severability. If any provision of this Agreement is for any reason declared to be invalid
or unenforceable, the validity of the remaining provisions shall not be affected thereby.
11.12. Third Party Beneficiaries. This Agreement does not and shall not be construed to itself
confer any rights whatsoever upon any Person whatsoever except Licensor and Licensee and
their respective Affiliates, whether upon a theory of third party beneficiary or otherwise, and
Licensee and Licensor agree on behalf of themselves and their respective Affiliates to neither
cause nor permit any of their respective Affiliates, including their respective officers, directors
and employees, to take any action inconsistent with the provisions of this 11.12.100
11.13. Further Assurances. Each party hereto shall cooperate and shall take such further action
and shall execute and deliver such further documents as may be reasonably requested by the
other party hereto in order to effectuate or facilitate the purposes and intents of this Agreement.
11.14. Drafting; Subtitles; Construction. [The recitals hereto are hereby incorporated into this
Agreement.] Headings are used solely for convenience and should not be given any weight in
the interpretation of this Agreement. All Schedules and Exhibits are hereby incorporated and
merged into this Agreement and made a part thereof. Except where the express terms or context
of the provisions of this Agreement otherwise clearly require, the term hereof, herein,
hereunder or words of like tenor used anywhere in this Agreement refers to this entire
Agreement and not any particular paragraph or clause hereof, use of the word including,
includes or words of like tenor used anywhere in this Agreement shall be deemed in each case
to mean including [or includes] without limitation, whether or not expressed, and the word
or shall be construed both conjunctively and disjunctively as in and/or. Where consent to
any matter may not be withheld on some basis, the word withheld shall mean in each case
withheld, delayed or conditioned, whether or not expressed. As used herein, the phrase to the
knowledge of a party shall mean to the best knowledge of such party, [after reasonable due
diligence]. [Whenever an item or matter is subject to the sole discretion of Licensor, it shall
mean the sole, exclusive, absolute, subjective discretion of Licensor.]101 The definitions in this
Agreement shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding masculine,
100
Query whether Licensor Store Operators that are neither Licensor nor Affiliates of Licensor should be
carved out from this provision.
101
See footnote to 4.2.1.
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feminine and neuter forms. Any reference herein to a Section (or ), Article, Annex, Schedule or
Exhibit refers to a Section or Article of or an Annex, Schedule or Exhibit to this Agreement,
unless otherwise stated. Unless otherwise stated, all accounting terms not otherwise defined
herein shall have the meanings ascribed to them in conformity with GAAP.
11.15. Survival of Provisions. Any provision of this Agreement which by its plain import is
intended to extend beyond Termination, including within Articles VII and IX, shall survive the
expiration or termination of the Licensed Term and the License.
11.16. No Presumptions Against Drafting Party. Each of the parties acknowledge that they have
been advised and represented by counsel in the negotiation, execution and delivery of this
Agreement. This Agreement shall be construed without regard to any presumption or any other
rule requiring construction against the party causing this Agreement or any part thereof to be
drafted.
11.17. Rights and Remedies Cumulative. The respective rights and remedies of the parties
hereto, whether herein specified or otherwise, shall be cumulative, and the exercise of one or
more rights or remedies shall not preclude the exercise of any or all other rights and remedies
such party has hereunder or at law.
11.18. No Franchise. Licensor and Licensee both acknowledge and agree that (i) this
Agreement is an intellectual property rights license agreement and does not constitute, and shall
not be construed as, a franchise agreement; (ii) state and federal franchise Laws do not and will
not apply to this Agreement or to the relationship between Licensee and Licensor and their
respective rights and obligations hereunder; and (iii) given their respective business backgrounds
and prior licensing experience, they do not need, and affirmatively waive, the protection of state
or federal franchise Laws.
11.19. [Legal Fees. In the event that any action or proceeding is brought by a party against the
other arising out of, or by reason of, the breach of this Agreement, including third party claims
and cross-claims, the prevailing party shall be entitled to reimbursement of all of its costs and
expenses and reasonable attorneys fees and disbursements incurred in connection with such
proceeding.]102
11.20. Counterparts; Facsimile. For the convenience of the parties, any number of counterparts
hereof may be executed, each such executed counterpart shall be deemed an original and all such
counterparts together shall constitute one and the same instrument. Facsimile transmission of
any signed original counterpart or retransmission of any signed facsimile transmission shall be
deemed the same as the delivery of an original.
[SIGNATURE PAGE FOLLOWS]
102
Consider the interplay with the various fee provisions included in the mediation/arbitration provisions
(see 8.10).
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IN WITNESS WHEREOF the parties have first caused this License Agreement
to be executed as of the day and year first above written.
[LICENSOR]
By:
Title:
[LICENSEE]
By:
Title:
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ANNEXES, SCHEDULES AND EXHIBITS
Annex I: Definitions
Schedule A: Licensed Marks and Logos103 (Recitals)
Schedule B: Territory (Recitals)
Schedule C: Products104 (Recitals)
Schedule D: Authorized Retailers (1.3.1)
Schedule E: Closeout Retailers (1.3.2)
Schedule F: Approved Manufacturers (4.3.2)
Schedule G: Form of Manufacturers Agreement (4.3.2.1)
Schedule H: Licensors Ethical Standards (4.3.2.1)
Schedule I: Licensees Manufacturing Monitoring Program (4.3.3.1)
Schedule J: Existing Licenses (6.2.3)
Schedule K: Competing Business (7.2)
103
If Licensor has a style book, or similar documentation specifying the look, color, size or other
specifications with respect to the use of the Licensed Marks, it would typically be incorporated by a
reference thereto on Schedule A.
104
For the avoidance of doubt, the four corners of what Products are (and are not) covered should be
specified in detail. If the License covers T-shirts, but not underwear, the definition of Products should
make that clear. Also note the interplay between this definition and the provisions of 1.5. A detailed and
licensee-friendly inclusive definition might be along the lines of the following: Products includes and is
limited to all categories of wearing apparel for boys, including active wear, sportswear, outerwear,
swimwear and coordinated accessories, in any and all fabrications, whether knitted, woven or otherwise,
including leather and denim, in all sizes and size ranges, including layette, newborn-24 months, toddler 2-
4T, sizes 4-7, sizes 8-20, and all husky sizes; provided that coordinated accessories shall (i) consist of a
limited number of caps and other headwear, and scarves, that are distributed and sold as a single unit
together with an item of Product, and (ii) not be sold separately from such other coordinated item of
Product.
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ANNEX I: DEFINITIONS
AAA: shall have the meaning set forth in 8.10.3.
Acceptance Notice: shall have the meaning set forth in 2.2.1
Act of Insolvency: means with respect to any Person, (i) the commencement by such
Person as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization,
liquidation, moratorium, dissolution, or similar Law, or such Person seeking the appointment or
election of a receiver, conservator, trustee, custodian or similar official for such Person or any
substantial part of its property, (ii) the commencement of any such case or proceeding against
such Person, or the seeking by another Person of any such appointment or election, which (a) is
consented to or not timely contested by such Person, (b) results in the entry of an order for relief,
such as an appointment or election, the issuance of such a protective decree or the entry of an
order having a similar effect, or (c) is not dismissed within [sixty (60)] days, (iii) the making by
such Person of a general assignment for the benefit of creditors, (iv) the failure by such Person
generally to pay its debts as they become due or (v) the admission in writing by such Person of
its inability to pay its debts as they become due.
Affiliate or Affiliated Entity: shall have the meaning set forth in 3.1.1.
Agreement: shall have the meaning set forth in the preamble.
Annual Period: shall have the meaning set forth in 2.1.
Approved Customers: shall mean, with respect to (i) Licensed Products, Authorized
Retailers, and (ii) Closeouts, Closeout Retailers.
Approved Manufacturers: shall have the meaning set forth in 4.3.2.
Authorized Persons: shall have the meaning set forth in 7.1.1.
Authorized Retailers: shall have the meaning set forth in 1.3.1.
Bankruptcy Code: shall have the meaning set forth in 8.3.
Base Rate: means a rate equal to the prime rate prevailing in New York City at [BANK]
(or its successor or assign) or, if no such rate is announced by [BANK] (or its successor or
assign), the prime lending rate announced by a New York City money center bank selected by
Licensor and reasonably acceptable to Licensee.
Business Day: means any day that is not a Saturday or Sunday or a legal holiday on
which banks are authorized or required by Law to be closed in New York, New York.
Business Plan: shall have the meaning set forth in 4.4.1.
Claims: shall have the meaning set forth in 9.1.1.
Closeout Net Sales Cap: shall have the meaning set forth in 1.3.2.1.
Closeout Retailer Cap: shall have the meaning set forth in 1.3.2.1.
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Closeout Retailers: shall have the meaning set forth in 1.3.2.
Closeouts: shall have the meaning set forth in 1.3.2.
Communications: shall have the meaning set forth in 11.2.
Competing Business: shall have the meaning set forth in 7.2.
Complete Line: shall have the meaning set forth in 4.2.4.2.
Confidential Information: shall have the meaning set forth in 7.1.
Country or Countries: shall have the meaning set forth in the recitals.
Court Action: shall have the meaning set forth in 8.10.1.
Debtor: shall have the meaning set forth in 8.3.
Debtor Notice: shall have the meaning set forth in 8.3.
Detailed Product Concepts: shall have the meaning set forth in 4.2.4.3.
Disclosing Party: shall have the meaning set forth in 7.1.
Dispute: shall have the meaning set forth in 8.10.1.
Dispute Notice: shall have the meaning set forth in 8.10.2.
Distribution Date: shall have the meaning set forth in 4.5.2.
Effective Date: shall have the meaning set forth in the preamble.
Exercise Notice: shall have the meaning set forth in 8.3.
Federal Arbitration Act: shall have the meaning set forth in 8.10.4.
Final Sample: shall have the meaning set forth in 4.2.4.7.
First Annual Period: shall have the meaning set forth in 2.1.
First Refusal Products: shall have the meaning set forth in 2.2.1.
Force Majeure: shall have the meaning set forth in 11.9.
GAAP: means U.S. generally accepted accounting principles, as in effect on the date of
[this Agreement] [their application], consistently applied.105
105
As a general matter, given that GAAP charges overtime, GAAP should be defined as of a date certain,
whether as of the date of the Agreement or as of the date of application. Setting GAAP as of the date of
the Agreement means that GAAP is known to both parties from the outset; however, it may be more
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Gross Sales: shall have the meaning set forth in 3.1.
Initial Advance: shall have the meaning set forth in 3.3.
Initial Product Concepts: shall have the meaning set forth in 4.2.4.2.
Initial Sample: shall have the meaning set forth in 4.2.4.6.
Initial Term: shall have the meaning set forth in 2.1.
Intellectual Property Rights: shall mean, collectively, all rights comprising or relating
to intellectual property of any kind, nature or description whether now existing or hereafter
arising, which are created, acquired or used (whether by or on behalf of Licensee or Licensor) in
connection with the sale or other Marketing of Licensed Products or Materials, including all such
rights in respect of any and all Specifications, Samples, Product Concepts, sketches, patterns,
designs, trade dress, logos and graphics, and any variations of such intellectual property
(including any derivative, composite or subsidiary marks).
Intent Notice: shall have the meaning set forth in 2.2.1.
Law: means any law in any jurisdiction (including common law), statute, code,
ordinance, rule, regulation, permit, order, decree or other requirement or guideline.
License: shall have the meaning set forth in 1.1.1.
Licensed Mark: shall have the meaning set forth in the recitals.
Licensed Products: shall have the meaning set forth in the recitals.
Licensed Term: shall have the meaning set forth in 2.1.
Licensee: shall have the meaning set forth in the preamble.
Licensee Indemnified Parties: shall have the meaning set forth in 9.1.1.
Licensee-Lead Litigation: shall have the meaning set forth in 5.4.3.
Licensee Manager: shall have the meaning set forth in 4.1.1.
Licensee Parties: shall have the meaning set forth in 9.1.2.
Licensee Price List: shall have the meaning set forth in 1.4.1.
Licensee Technology: shall have the meaning set forth in 4.2.3.
Licensor: shall have the meaning set forth in the preamble.
practical to set GAAP as of the date of application where Licensee is required to deliver frequent financial
statements to Licensor since Licensee will be able to use information from its general financial statements
without recalculation based on GAAP as frozen in time on the date of the Agreement.
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Licensor Indemnified Parties: shall have the meaning set forth in 9.1.2.
Licensor-Lead Litigation: shall have the meaning set forth in 5.4.2.
Licensor Outlet Stores: shall have the meaning set forth in 1.3.3.
Licensor Retail Stores: shall have the meaning set forth in 1.3.3.
Licensor Standards: shall have the meaning set forth in 4.2.1.
Licensor Store Operators: shall have the meaning set forth in 1.3.3.
Licensors Ethical Standards: shall have the meaning set forth in the recitals.
Licensor-Lead Litigation: shall have the meaning set forth in 5.4.2.
Line Opening Date: shall have the meaning set forth in 4.2.4.1.
Manufacturer: shall have the meaning set forth in 4.3.2.
Manufacturers Agreement: shall have the meaning set forth in 4.3.2.1.
Marketing: shall have the meaning set forth in the recitals; the term Marketed shall
have the equivalent definition.
Marketing Fee: shall have the meaning set forth in 3.4.
Materials: shall have the meaning set forth in 4.2.4.10.
Mediation Notice: shall have the meaning set forth in 8.10.3.
Minimum Advertising Obligation: shall have the meaning set forth in 4.4.3.
Minimum Consolidated Net Worth: shall have the meaning set forth in 7.5.
Minimum Net Sales: shall have the meaning set forth in 3.2.
Minimum Royalties: shall have the meaning set forth in 3.2.
Net Sales: shall have the meaning set forth in 3.1.
Offer Notice: shall have the meaning set forth in 2.2.1.
Payroll Costs: shall have the meaning set forth in 4.1.1.
Person: means any individual, firm, corporation, partnership, trust, limited liability
company or other organization or entity.
Product Concepts: shall have the meaning set forth in 4.2.4.4.
Production Sample: shall have the meaning set forth in 4.2.4.9.
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Products: shall have the meaning set forth in the recitals, and in Schedule C.
Promotional Items: shall have the meaning set forth in 4.4.7.
Quarterly Periods: Each Quarterly Period shall consist of a three (3) month period
ending March 31, June 30, September 30 and December 31 of each Annual Period, with the
exception that the First Quarterly Period shall consist of the period beginning on the Effective
Date and ending on [DATE], 20XX.
Receiving Party: shall have the meaning set forth in 7.1.
Renewal Notice: shall have the meaning set forth in 2.2.
Renewal Term: shall have the meaning set forth in 2.2.
Renewal Threshold: shall have the meaning set forth in 2.2.
Resolution Period: shall have the meaning set forth in 8.10.1.
Right of First Refusal: shall have the meaning set forth in 2.2.1.
ROFR Notice Period: shall have the meaning set forth in 2.2.1.
ROFR Period: shall have the meaning set forth in 2.2.1.
Rules: shall have the meaning set forth in 8.10.4.
Sales Environment: shall have the meaning set forth in 1.4.2.
Sales Royalty: shall have the meaning set forth in 3.1.
Sample: shall have the meaning set forth in 4.2.4.6.
Seasonal Collection: shall have the meaning set forth in 4.2.4.1.
Seconds: shall have the meaning set forth in 1.3.2.
Sell-Off Inventory: shall have the meaning set forth in 8.5.2.
Sell-Off Period: shall have the meaning set forth in 8.5.1.
Showroom: shall have the meaning set forth in 4.1.3.
Specifications: shall have the meaning set forth in 4.2.4.7.
Termination: shall have the meaning set forth in 8.1.
Termination Period: shall have the meaning set forth in 8.4.
Territory: shall have the meaning set forth in the recitals
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Successful Approaches to Trademark Protection
June 19, 2015

Presented by Jonathan M. Wagner
Introduction
A word,
Any d phrase,
h symbol,
b l ddesign
i or other
th
TM:
TM feature which identifies the source of a
partys goods
SM: Same as above, for services
: Registered mark
91 1
Applicable Laws
Lanham Act, 15 U.S.C. 1051, et seq.

State and common law actions
Protectability
Fanciful Arbitrary
Coined phrase Known word/unconnected to goods
Suggestive Descriptive
Some connection to goods Conveys characteristic of goods
Generic
Common name for goods
jeans
cotton
3
92 2
Secondary Meaning
When is it acquired?
F
Factors courts consider
id ini determining
d i i
whether a mark has acquired secondary
meaning include
Amount and manner of advertising
Volume of sales
Length and manner of the mark
markss use
Results of consumer surveys
To Register or Not to Register,

That is the Question
Nature of mark
Nature of use
Duration of use
93 3
Risks in Using a Mark Without a Federal
Registration
Cannot sue for federal trademark

infringement
In a state infringement suit or a federal unfair
competition suit, plaintiff needs to prove
ownership/validity of mark, use and priority
in affected regions
May have more infringers because others are
not aware of your claim to rights in the mark
A prior user may not learn of/object to your
mark until resources have been invested
6
Benefits of Federal Registration

on the Principal Register
Use of
Constructive notice of Registrants
Registrant s claim of
ownership of the mark
Legal presumption of ownership, validity, and
exclusive right to use the mark nationwide
Supports federal suit for trademark infringement
Registration may be filed with Customs to prevent
importation of infringing foreign goods
Registration can be used as a basis for obtaining
registration in foreign countries
94 4
Trademark Protection
So You Have a Registration . . .

Now How Do You Protect It?
Policing Your Trademark
95 5
Policing Methods
Engage a service to watch domestic

and/or foreign trademarks
File registration with Customs
Enlist customers and others
10
Trademark Infringement:
When to Take Action
Closeness of marks
Closeness of goods
Closeness of markets
Actual versus potential confusion
Other damage to the brand
Nature and extent of use
Collateral consequences
11
96 6
Trademark Infringement (?)
12
Non-Litigation Options for Trademark Owners
Cease and desist letter

Trademark Office actions:
Opposition/Cancellation Proceedings
Co-existence agreement
Purchasing/Licensing rights
13
97 7
Litigation
Advantages
Promptp preliminary
p y relief available
Damages
Favorable publicity
Developing an enforcement record may help police wrongful
acts by other third parties in the future
Disadvantages
Costly
Judges/juries may not be knowledgeable in trademark issues
Losing may damage ability to police other third party infringers
Three main types of federal litigation
Trademark Infringement
False Advertising
Anti-Counterfeiting
14
Trademark Infringement Litigation
Elements plaintiff must prove to prevail

O hi off a valid
Ownership lid trademark
d k
Likelihood of confusion
15
98 8
Proving Likelihood of Confusion:
the Polaroid Factors
The strength of the mark

Similarities between the marks
Proximity and marketing of the products
Likelihood of bridging the gap
Defendants bad faith adoption
Quality of defendants products
Consumer sophistication and care
Actual confusion
16
17
99 9
18
Proving Likelihood of Confusion:

Survey Evidence
Survey standards
Independent expert
Relevant universe (buyers and potential buyers)
Representative sample
Non-leading questions
Reflective of consumer environment/marketplace
Conducted by trained interviewers
Data must be accurately reported and analyzed
Controls
What are persuasive survey results?
On secondary meaning: ranges of association with a single
source of 30.5% and above have been considered sufficient
On likelihood of confusion: ranges from 7.7% to 25% have
been held sufficient
19
100 10
Help Yourself - Keep Good Records
Examples of use over time

Clearance materials
Evidence of good faith adoption
Sales records (by year/product)
Advertising records/specimens
Publicity files
20
Special Defenses to Trademark Infringement

Litigation
Fair use (all-bran cereal vs. Kelloggs All Bran

brand cereal)
Parody (artistic and editorial parodies protected to
some degree by the First Amendment)
21
101 11
Remedies for Trademark Infringement
Injunction (15 U.S.C. 1116(a))

Monetary relief (15 U.S.C. 1117(a))
Damages sustained by plaintiff
Defendants profits
Costs of the action
Recall
Treble damages in exceptional cases
Attorneys fees in exceptional cases
22
to Litigate or Not to Litigate
23
102 12
24
25
103 13
Louis Vuitton Malletier S.A. v. Sunny
Merchandise Corp. d/b/a Sunny Sunglasses
AUTHENTIC REPLICA
$760 $36
26
Louis Vuitton Malletier S.A. v. Sunny

Merchandise Corp. d/b/a Sunny Sunglasses
Strength of Mark: very strong. Court says Louis Vuittons mark is clearly
famous, increasing likelihood of consumer confusion.
Similarity between the marks: Strong. Obvious overlap. Defendant admitted
to being inspired by Louis Vuitton.
Proximity of the products: Sunny products are obviously cheap products.
People who buy Sunny products, dont buy Louis Vuitton products, but
similarity of marks could lead consumers to believe that the companies could
be in competition with one another. Consumer surveys showed 61% of
consumers believed Sunny sunglasses were made by Louis Vuitton.
Likelihood of bridging the gap: Not great relevance because mark is used on
similar products.
Bad Faith: Presumption that Sunny intentionally used its mark to copy and
benefit from the use of a mark similar to Louis Vuitton. Evidence that Sunny
had used other sunglass companies marks in other products.
Weighing the factors: High degree of similarity between sunglasses in
conjunction with bad faith shows likelihood of confusion.
27
104 14
Legends Are Forever, Inc. v. Nike, Inc.
28
Legends Are Forever, Inc. v. Nike, Inc.

Strength of mark: Weak. No secondary meaning acquired.
Similarity: Both t-shirts and use same slogan. However, graphics, style
and color completely different. Nike swoosh identifies defendants
brand.
Proximity: Weak. Only marginal client overlap.
Bridging the gap: No evidence that Plaintiff will expand to celebrity
basketball shoes or encroach on Defendants market.
Actual confusion: None. One anecdote where Plaintiff saw a customer
wearing a shirt with phrase, and who said that it was a Kobe Bryant
shirt.
Bad faith: None.
Consumer sophistication: Consumers are fans of different sports and
can decipher differences between shirts.
Balancing: Most factors heavily in favor for Nike.
29
105 15
United States Polo Assoc. Inc. v. PRL USA Holdings, Inc.
30
Issue before the court: Whether a prior

contempt order against an infringer based
on the use of the mark on perfume applies
to a new product in a different industry on
which the mark is placed?
31
106 16
No The prior order only applied to the fragrance

No.
market. The current litigation covers sunglasses.
Market by market analysis needed in confusion
analysis and is needed in contempt proceedings as
well.
Still sufficient for infringement proceedings,
proceedings but
not contempt.
32
Filling the Gap:

The Innovative Design Protection Act
Although design is the artistic and creative core of the fashion industry, design
is not protected, as design is not only a symbol of who created it
Patent law likely does not cover typical design
Copyright law treats fashion as utilitarian rather than a form of creative
expression
To fill the gap, legislation has been proposed several times
Latest proposed legislation would increase the scope of copyright protection
available to fashion designers
Would amend the Copyright Act to provide for three years of protection to
fashion design that meets defined standards of originality and novelty
The legislation is supported by the Council of Fashion Designers of America
and the American Apparel and Footwear Association
Proposed legislation has languished in Congress for several legislative sessions
33
107 17
False Advertising Litigation:
General Framework
In general
El
Elements off a false
f l advertising
d i i claim
l i under
d
the Lanham Act:
False or misleading statement about ones own or a
competitors product
In commercial advertising or promotion
A substantial portion of the target audience has been or is
likely to be deceived
ate a ty
Materiality
A connection to interstate commerce
Plaintiff has been or is likely to be damaged
No requirement of intent to mislead or deceive
34
Types of False Advertising Claims
Literal falsityy
Implied falsity (consumer survey or intent
evidence required)
35
108 18
Types of False Advertising Claims
36
Remedies
Injunction (presumption of irreparable

harm and rebuttal evidence)
Damages
Corrective advertising
Treble damages and attorneys fees in
exceptional cases
37
109 19
Questions?
Jonathan M. Wagner
212-715-9393
jwagner@kramerlevin com
jwagner@kramerlevin.com
38
110 20
K R A M E R L E V I N N A F T A L I S & F R A N K E L LLP
JONATHAN M. WAGNER
PHONE 212-715-9393
FAX 212-715-8393
Successful Approaches to Trademark Protection

I. Introduction
A. Unique issues presented by trademark protection as applied to the fashion

industry
B. Fashion design is unique in the world of creative endeavors
C. On one hand, tastes, styles, and market conditions change, putting a

premium on innovative ideas and creative expression
D. Intellectual property should incentivize such creativity by conferring

protection from unfair competition
E. At the same time, much of fashion design is derivative and driven by

functional considerations
F. Trademark law must balance incentives with the needs of the marketplace
and freedom to express ones creative ideas without being unduly
constrained by prior expression
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II. Trademarks An Overview
A. What is a Trademark?
1. Three kinds: trade (), service (SM), and registered ()
a. Trademarks are usually words, phrases, symbols, designs or

other features which identify the source of a partys goods
b. Service marks are the same as trademarks except for

services
c. are registered marks

B. Lanham Act, 15 U.S.C. 1051, et seq.
1. federal statute main source of trademark protection (trademark

infringement/dilution, false advertising, anti-counterfeiting suits)
2. state and common law actions are still available (unfair

competition)
C. Protectability mark must be distinctive. The level of protection afforded

the mark depends on how distinctive the mark is. In order of decreasing
distinctiveness, the categories are:
1. Fanciful or arbitrary
a. coined phrase or known word that is unconnected to goods

or underlying product
b. examples: Starbucks or Kodak (fanciful); Apple (arbitrary)
c. high degree of protection: do not require proof of

secondary meaning
2. Suggestive
a. some connection to goods, but requires imagination to

reach a conclusion as to the nature of the goods
b. examples: Jaguar or Greyhound
c. high degree of protection: do not require proof of

secondary meaning
3. Descriptive
a. immediately conveys to the purchaser the nature or use of

the goods
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KL3 2878743.3
b. examples: Computer Sciences Corp.
c. protected but only after acquiring secondary meaning
(i) secondary meaning acquired when the consuming

public associates that mark with a single producer
(ii) factors courts consider in determining whether a

mark has acquired secondary meaning include
(1) amount and manner of advertising
(2) volume of sales
(3) length and manner of the marks use
(4) results of consumer surveys
(iii) Proving secondary meaning in practice
(1) inferential proof proof showing plaintiffs

efforts to establish secondary meaning
(a) length of use
(b) extensive sales and customers

(dollars, units, geographical
coverage)
(c) size of the company
(d) advertising evidence (expenses,

sample ads, circulation figures, trade
show and point of purchase displays,
advertising by customers)
(e) exclusivity of use
(f) copying by defendant and others
(2) direct evidence proof showing consumer

impact of those efforts
(a) unsolicited publicity (editorial

comments/news articles)
(b) consumer testimony/ correspondence
(c) consumer survey evidence
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4. Generic
a. common name for goods
b. Examples: Raisin Bran
c. not protected/cannot be valid trademarks
d. Concept: Genericide formerly trademarked terms

become generic for the product. Examples include:
Trampoline, Kerosene, and Aspirin
D. Availability
1. Initial Search (US PTO records, international registries, internet,

domain name)
2. Full search/investigations
E. Considerations in assessing whether to register
1. Nature of mark
2. Nature of use
3. Duration of use
F. Risks in using a mark without a Federal Registration
1. Cannot sue for federal trademark infringement
2. In a state infringement suit or a federal unfair competition suit,

plaintiff needs to prove ownership/validity of mark, use and
priority in affected regions
3. May have more infringers because others are not aware of your
claim to rights in the mark
4. A prior user may not learn of/object to your mark until resources
have been invested
G. Registration
1. Principal Register
a. fanciful/arbitrary/suggestive marks
b. descriptive with secondary meaning
2. Benefits of Federal Registration on the Principal Register
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a. use of
b. constructive notice of registrants claim of ownership of the

mark
c. legal presumption of ownership, validity, and exclusive

right to use the mark nationwide
d. supports federal suit for trademark infringement and anti-

counterfeiting suits
e. registration may be filed with Customs to prevent

importation of infringing foreign goods
f. registration can be used as a basis for obtaining registration

in foreign countries
3. Supplemental Register
a. descriptive marks without secondary meaning
b. must have use
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III. Trademark Protection
A. Policing your trademark
1. Engage a service to watch domestic and/or foreign trademarks
2. File registration with Customs
3. Enlist customers
B. Trademark infringement -- when to take action
1. Closeness of marks
2. Closeness of goods
3. Closeness of markets
4. Actual versus potential confusion
5. Other damage to the brand
6. Nature and extent of use
7. Collateral consequences
C. Options for owners of marks other than litigation
1. Cease and desist letter
2. Trademark Office actions: Opposition/Cancellation Proceedings
a. Advantages of Opposition
(i) appropriate in cases of Intent-to-Use application
(ii) costs often more contained
(iii) process streamlined
(iv) not often available in counterfeit situations
(v) limited to comparison registration applications
(vi) Trademark Trial and Appeal Board (TTAB) has

expertise in area
b. Disadvantages of Opposition
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(i) TTAB only empowered to determine right to
register, not right to use, infringement or unfair
competition
(ii) TTAB cannot award preliminary relief or damages
(iii) Result: infringing activity may continue
c. Filing Extensions of Time to Oppose before resorting to

opposition proceedings, you can file an extension to
(i) further investigate use of the potentially infringing

mark
(ii) take more time to consider your position
(iii) preserve your rights during negotiations
(iv) provide an opportunity to contact the applicant
(v) determine whether there is a mutually agreeable

amicable resolution
3. Co-existence agreement
4. Purchasing/Licensing rights
D. Litigation
1. Advantages
a. prompt preliminary relief available
b. permits consideration of how marks are used in the

marketplace
c. provides forum for related claims
d. damages
e. favorable publicity
f. developing an enforcement record may help police

wrongful acts by other third parties in the future
2. Disadvantages
a. costly
b. Judges/juries may not be knowledgeable with respect to

trademark issues
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c. losing may damage ability to police other third-party
infringers
3. Three main types of federal litigation
a. Trademark Infringement
b. False Advertising
c. Anti-Counterfeiting
E. Strong public interest in preventing trademark infringement, particularly

in the apparel field
1. Encourage innovation
2. Protect consumers by preventing confusion
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IV. Trademark Infringement Litigation
A. Elements plaintiff must prove to prevail
1. ownership of a valid trademark
2. defendants use of the trademark is likely to cause confusion

concerning the source of defendants product
B. Proving likelihood of confusion -- the Polaroid factors (see, e.g.,

Polaroid Corp. v. Polarad Elec. Corp., 287 F.2d 492 (2d Cir. 1961))
1. The strength of the mark
a. its history as a coined or arbitrary word
b. advertising and sales figures for products bearing the mark
c. unsolicited publicity/consumer correspondence referencing

the mark
d. absence of third party use (shown through trademark or

Nexis search)
2. Similarities between the marks
a. physical samples/photographs
b. promotion of marks apart from their packaging (radio/tv,

etc.)
3. Proximity and marketing of the products
a. displays in same stores/sections of stores
b. advertising in same media
4. Likelihood of bridging the gap
a. plaintiffs previous activities in defendants line of business
b. whether the product fields are related
c. existence of companies that make both plaintiffs and

defendants products
d. example: apparel has been identified as related to

cosmetics in cases involving a well-known mark or
involving identical marks.
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(i) In re Barbizon Intl, Inc., 217 U.S.P.Q. 735, 737,
1983 WL 51785 (T.T.A.B. 1983) (noting a
substantial body of case precedent holding, . . . by
virtue of a perceived intimate relationship between
cosmetics and clothing in the womens fashion
arena . . . that such goods are highly related and
would, when sold under identical or highly similar
marks, evoke impressions of common origin (or at
least confusion with respect thereto).
(ii) There is, however, no per se rule that there is a

likelihood of confusion when the same or a similar
mark is applied to clothing and to toiletry or
cosmetic products; each case must be resolved on
its own facts. Fruit of the Loom, Inc. v. Fruit of
the Earth, Inc., 846 F.2d 78, 1988 WL 26058, at *1
(Fed. Cir. 1988).
5. Defendants bad faith adoption
a. knowledge of plaintiffs mark (through searches or

marketplace)
b. copying of package design or type style
c. ad agency memoranda/instructions to designer to imitate

plaintiffs packaging
d. defendants use even after plaintiffs objection
e. other intent evidence
6. Quality of defendants products
a. expert analysis of parties products (inferiority as to

performance, materials, and the like)
b. customer complaints concerning defendants products
c. initial interest or get in the door confusion for

sophisticated or costly products
7. Consumer sophistication and care
a. characteristics of typical buyer (education level,

professional expertise)
b. expert testimony of professionals in field as to care

exercised by average consumer
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c. There does not appear to be any general consensus whether
apparel consumers are sophisticated. Compare Kookai,
S.A. v. Shabo, 950 F. Supp. 605, 609 (S.D.N.Y 1997)
(fashion consumers are sophisticated but are not
professional clothing purchasers and cannot be expected to
have the same level of knowledge as professionals) with
Phillips-Van Heusen Corp. v. Calvin Clothing Corp., 444
F. Supp. 2d 250, 257 (S.D.N.Y. 2006) ([T]he average
clothing customer is not particularly sophisticated . . . .).
8. Actual confusion
a. testimony by consumers who were confused
b. misdirected mail, purchase orders or inquiries
c. defendants vast sales increase after use of the infringing

mark
C. Actual confusion evidence and the hearsay rule
1. Do rules of evidence even apply in a preliminary injunction

hearing?
2. Admissible
a. plaintiffs testimony concerning telephone calls, letters, and

inquiries expressing questions as to plaintiffs relationship
to defendants products
b. telephone calls and letters from consumers inquiring

whether plaintiff manufactured defendants goods
c. affidavits recounting employee discussions with confused

people (admissible under state of mind exception to hearsay
rule)
3. Inadmissible:
a. testimony by plaintiffs employee recounting conversation

between employee and consumer that consumer thought
plaintiff and defendant were same company
b. affidavits stating that plaintiffs sales managers are aware

of customer or store manager confusion
D. Where actual confusion evidence is lacking, plaintiff should consider

proving likely confusion by survey evidence
1. standards for persuasive survey
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a. design must be by independent expert, not by
attorneys/client
b. relevant universe (buyers and potential buyers)
c. representative sample, selected by an unbiased procedure
d. non-leading questions
e. reflective of consumer environment/marketplace
f. conducted by trained interviewers who have no knowledge

of the litigation/purpose of survey
g. data must be accurately reported and analyzed in

accordance with accepted statistical principles
2. What are persuasive survey results?
a. on secondary meaning: ranges of association with a single

source of 30.5% and above have been considered sufficient
b. on likelihood of confusion as to source: ranges from 7.7%

to 25% have been held sufficient
E. Proactive steps keep good records
1. Examples of use over time
2. Clearance materials
3. Evidence of good faith adoption
4. Sales records (by year/product)
5. Advertising records (copies/specimens)
6. Publicity files (customer correspondence, etc.)
F. Special defenses
1. Fair use i.e. cereal manufacturer may refer to contents of its

cereal as all-bran without infringing on Kellogs All Bran brand
cereal
2. Parody (may be permissible if not too directly tied to commercial

use) i.e. artistic and editorial parodies of trademarks serve a
valuable critical function, protected to some degree by the First
Amendment
G. Remedies for trademark infringement
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1. Injunction (15 U.S.C. 1116(a)) likely no longer a presumption
of irreparable harm
2. Monetary relief (15 U.S.C. 1117(a))
a. damages sustained by plaintiff
b. defendants profits
c. costs of the action
3. Recall
4. Treble damages in exceptional cases
5. Attorneys fees in exceptional cases
H. Other claims for relief
1. Federal -- Trademark Dilution
a. only if the mark is famous
b. famous factors under 15 U.S.C. 1125(c):
(i) degree of inherent or acquired distinctiveness
(ii) duration and extent of use
(iii) amount of advertising and publicity
(iv) geographic extent of the market
(v) channels of trade
(vi) degree of recognition
(vii) any use of similar marks by third parties
(viii) whether the mark is registered
c. State law dilution claims do not need to involve famous

marks. Only requirements are
(i) the mark has selling power (distinctive quality);

and
(ii) the two marks are substantially similar. See Mead

Data Central, Inc. v. Toyota Motor Sales, U.S.A.,
Inc., 875 F.2d 1026 (2d Cir. 1989).
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2. State -- unfair competition claims (passing off, contributory
passing off, reverse passing off, misappropriation).
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V. Unique trademark issues in the fashion industry: Christian Louboutin v. Yves St.
Laurent
A. trends in fashion - created in part by copying
B. Louboutin sued YSL for trademark infringement and sought preliminary

injunction to enjoin YSL from marketing any shoes using the same or
confusingly similar shade of red as Louboutins red sole mark.
C. Louboutin shoe features a lacquered red sole for use in connection with
womens high fashion designer footwear
D. YSL shoes at issue consisted of a monochromatic red body and red sole
E. District Court denied preliminary injunction motion, holding that color is

per se not entitled to trademark protection. 778 F. Supp. 2d 445 (S.D.N.Y.
2011)
1. The narrow question presented here is whether the Lanham Act

extends protection to a trademark composed of a single color used
as an expressive and defining quality of an article of wear
produced in the fashion industry.
2. The Court holds that colors are per se aesthetically functional in

the realm of fashion design because in the fashion industry color
serves ornamental and aesthetic functions vital to robust
competition . . . . There is something unique about the fashion
world that militates against extending trademark protection to a
single color.
3. Louboutin is unlikely to be able to prove that its red outsole brand

is entitled to trademark protection even if it has gained enough
public recognition in the market and has acquired secondary
meaning.
4. In fashion markets color serves not solely to identify sponsorship

or source, but is used in design primarily to advance expressive,
ornamental aesthetic purposes: Color performs a creative
function; it aims to please or be useful, not to identify and
advertise a commercial source.
5. The law should not countenance restraints that would interfere

with creativity and stifle competition by one designer, while
granting another a monopoly invested with the right to exclude use
of an ornamental or functional medium necessary for the freest and
most productive artistic expression by all engaged in this same
enterprise.
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6. The functionality doctrine forbids the use of a products features as
a trademark where doing so would put a competitor at a significant
disadvantage because the feature is essential to the use or purpose
of the article or affects [its] cost or quality.
F. Court of Appeals affirms in part and reverses in part. 696 F.3d 206 (2d
Cir. 2012)
1. Issue: Whether a style color may serve as a legally protected

trademark in the fashion industry and, in particular, as the mark for
a particular style of high fashion womens footwear.
2. Court rejects the per-se, industry specific rule announced by the

District Court, instead opting for an individualized, fact-based
inquiry into the nature of the trademark.
3. If a design feature would, from a utilitarian perspective, be

considered essential to the use or purpose of the article or to
affect its cost or quality, then the design feature is functional and
not entitled to protection.
4. If a mark passes the functionality test, it still must be shown not to

have a significant effect on competition in order to receive
trademark protection.
5. Monochromatic red shoe does not violate Louboutins trademark

rights.
6. Louboutin is entitled to protection only when red lacquered outsole

contrasts in color with the upper part of the shoe.
7. Standard requires an individualized, fact-based inquiry into the

nature of the trademark and cannot be read to sanction an industry-
based per se rule.
8. Single color in fashion industry could acquire secondary meaning

if it is used so consistently and prominently by a particular
designer that it becomes a symbol, the primary significance of
which is to identify the source of the product rather than the
product itself.
9. Evidence showed the red-soled shoe had acquired secondary

meaning, but only when color contrasted with the upper part of the
shoe
G. Other recent functionality cases: Fleischer Studios v. A.V.E.L.A.
1. First decision, 636 F.3d 1115 (9th Cir. 2011) held that Betty
Boop as used in apparel was not entitled to trademark protection
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KL3 2878743.3
a. no evidence of consumer confusion
b. no evidence that image was used to indicate sponsorship
c. Betty Boop name and image were functional aesthetic

components of the product, not trademarks
d. ruling in [plaintiffs] favor would prevent the Betty Boop

character from entering the public domain
2. Opinion is withdrawn six months later, affirming trial courts

decision on procedural grounds: failure to submit sufficient
evidence to support assertion of trademark right to Betty Boops
image. See 654 F.3d 958 (9th Cir. 2011)
H. Louis Vuitton Malletier S.A. v. Sunny Merchandise Corp. d/b/a Sunny

Sunglasses, No. 13 Civ. 5242, 2015 WL 1499449 (S.D.N.Y. Mar. 31,
2015).
1. Louis Vuitton sued company and its president that made

sunglasses with Louis Valentin and Louis V marks with the
words Paris and Est. 1941 for trademark infringement and
counterfeiting. Defendant admitted that the sunglasses were
inspired by Louis Vuitton.
2. Parties filed cross-motions for partial summary judgment. Court

held that the defendant company was liable for trademark
infringement, but denied motion with respect to counterfeiting
claim and dismissed claims against defendants president.
3. Defendant argued that Louis Vuitton had not shown any evidence
that its mark was strong with regard to sunglasses specifically.
Court rejected this argument and found the Louis Vuitton
trademark was famous and the strength of the mark increased
consumer confusion.
4. Bad faith: Of particular importance to the Court in reaching this

conclusion is the strength of Louis Vuitton's mark, the likelihood
of confusion due to the apparent similarity between the two marks,
and, underlying all this, Sunny's apparent bad faith in adopting the
LOUIS VALENTIN and LOUISV marks. Summary judgment in
favor of Louis Vuitton is appropriate on the strength of these
factors alone. Louis Vuitton Malletier S.A. 2015 WL 1499449 at
*3.
5. Defendant argued that there was no competitive proximity between

its marks and plaintiffs because their products were obviously
cheap distinguishing them from Louis Vuittons high-end
merchandise. Court found for plaintiff on proximity factor
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KL3 2878743.3
regardless because of the close similarity between marks increased
the likelihood of consumer confusion. Id. at *6.
6. Even if the Court were inclined to give greater weight to the cases
supporting Sunny's different price points argument, the close
similarity between Louis Vuitton's marks and Sunny's tilts the
balance in favor of Louis Vuitton. The ubiquity of Louis Vuitton
coupled with the striking similarity with Sunny's products
increases the likelihood of confusion and the corresponding charge
that the two products could be in competition. Although the third
factor analysis tends to favor Louis Vuitton, and especially so
when considered in conjunction with the first two factors, the
Court need not rely heavily on this factor in its overall Polaroid
analysis.
I. Legends are Forever, Inc. v. Nike, Inc., No. 12 CV 1495, 2014 WL

4886558 (N.D.N.Y. Sept. 30, 2014)
1. Owner of small retail store in Cooperstown, NY, home of the

baseball Hall of Fame, brought suit against Nike for use of the
phrase Legends are forever in movie starring Kobe Bryant and
clothing line featuring the phrase: Legends Live Forever.
2. Polaroid Factors
a. Even though phrase was trademarked, court found that the

mark was weak and had acquired no secondary meaning in
the market.
b. Similarity: The Accused Shirt is therefore only similar to

Plaintiff's products in a superficial sense . . . . The only
similarities between Plaintiff's baseball shirts and the
sample shirt produced by Defendant are: (1) they are both t-
shirts, and (2) they both incorporate the phrase legends are
forever. The style of the graphics on the shirts are entirely
different in terms of design, color, typeface, and theme. See
SMF. Additionally, the NIKE swoosh is prominently
displayed on the allegedly infringing shirt, clearly
identifying it with Defendant's business, not Plaintiff's.
c. Proximity: Companies do not compete against one another.

Nike is a multi-national company that sells a range of
products worldwide, while Plaintiff is a baseball
memorabilia shop that sells its goods out of storefront in
Cooperstown, NY.
d. No evidence that Plaintiff will expand its business to

include celebrity-themed basketball shoes or apparel.
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e. Actual confusion: Plaintiff offers only the anecdote that
one customer entered its store wearing a shirt that said
either legends are forever or legends live forever, and
informed Matt Foster that it was a Kobe Bryant shirt. SMF
70. If anything, the exchange demonstrates the customer's
lack of confusion.
f. Good faith: No evidence that Nike intended to capitalize on

plaintiffs reputation. Indeed, it is inconceivable that a
rational factfinder could conclude that NIKE designed a
Kobe Bryant-sponsored t-shirt in order to sow confusion
between its product and that of a baseball memorabilia
store in Cooperstown, NY.
g. Sophistication: No evidence that consumers are so

unsophisticated that they would confuse the two brands.
h. Weighing the factors: Nearly all weigh heavily in favor of

Defendant and none weigh heavily in favor of Plaintiff.
J. United States Polo Assoc., Inc. v. PRL USA Holdings, Inc., No. 13-1038,
2015 WL 2214893 (2d Cir. May 13, 2015).
1. In previous bench trial, court held that Polo Associations mark on

fragrance violated Polo Ralph Laurens trademark and entered
permanent injunction; however, court found that mark on
marketing apparel, leather goods and watches was not confusingly
similar. Polo Association then placed mark on sunglasses and
Ralph Lauren moved for contempt.
2. Trial record lacked application of market-specific factors to the

eyeglass and fragrance/cosmetic markets. The fragrance injunction
was limited to fragrance products and markets, not all markets.
3. Therefore, the fact that the Apparel Litigation does not preclude
the Fragrance Litigation does not imply that the Double Horsemen
Mark infringes PRL's marks in every market except apparel. It
simply means that a finding of confusing similarity must be made
on a market-by-market analysis.
4. In a nutshell, court found it was not fair to hold USPA in contempt

because it had no notice that the mark would apply to sunglasses.
To hold USPA in contempt, two additional findings must be
made: (i) a reasonable firm in USPA's position, knowing the
context of the Fragrance Injunctionin particular, the verdict in
the Apparel Litigation and our order affirming the Fragrance
Injunction that adopted PRL's arguments described abovewould
have been on clear notice that use of the Double Horsemen Mark
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on eyewear violated the injunction; and (ii) the finding of
confusing similarity is supported by clear and convincing
evidence. The present record does not support either such finding.
K. Patent law
1. requires that a design or invention be novel and non-obvious
2. novelty sufficient to warrant patent protection requires that the

invention is not known in the United States or any other country
prior to filing
3. fashion designs are generally not considered new under patent

requirements and therefore unlikely to be granted protection
4. patent protection is limited in time
L. Fashion designers likewise find no comfort in the federal copyright

statute, which protects authors and creators but does not extend to useful
articles like apparel and shoes
Q. Copyright protection is available only if there is an expressive component

separable from its useful function. As such, most clothing and shoes are
unlikely to satisfy this test due to the function performed by the wearer
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VI. Pending Legislation
A. Under current copyright law, fashion is treated as utilitarian rather than a

form of creative expression, thus exempting the fashion industry from
copyright protection
B. Under Section 101 of the Copyright Act, the design of a useful article is
considered copy-rightable only if, and only to the extent, such design
incorporates pictorial, graphic or sculptural features that can be identified
separately from and are capable of existing independently of the utilitarian
aspect of the article
C. Copyright protection is denied to articles of clothing because such goods

are not considered to be distinguishable from the useful article, namely the
clothing itself
D. The law is different in other countries for example, France and Italy
recognize fashion as an art form, and thus provide copyright protection to
fashion designers
E. Legislation has been proposed to fill the gap between trademark and
copyright law: The Innovative Design Protection Act
F. The Act is designed to increase the scope of copyright protection available

to fashion designers
G. Would amend the Copyright Act to provide for three years of protection to
fashion design that meets defined standards of originality and novelty
H. Fashion design is defined under the bill as the appearance as a whole of

an article of apparel including its ornamentation.
I. Infringement occurs if a copy is found to be substantially identical in

overall visual appearance to the protected design, so long as it can be
reasonably inferred that the copier saw or otherwise had knowledge of the
protected design
J. The legislation is supported by the Council of Fashion Designers of

America and the American Apparel and Footwear Association
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VII. False Advertising Litigation General Framework
A. In general
1. provides a civil remedy to competitors for materially false or

misleading statements in anothers advertising
2. importance of false advertising litigation as a remedy against

unfair competition
B. Elements of a false advertising claim under the Lanham Act
1. false or misleading statement about ones own or a competitors

product -- only false or misleading statements are actionable;
truthful but negative statements are not, nor are puffing and
opinion
2. in commercial advertising or promotion
3. a substantial portion of the target audience has been or is likely to

be deceived
4. the misstatement is likely to influence consumers purchasing

decisions (materiality)
5. a connection to interstate commerce
6. plaintiff has been or is likely to be damaged
7. no requirement of intent to mislead or deceive
C. Types of Claims
1. Literal falsity: when an advertisement is literally false, the Court

may grant injunctive relief without reference to the advertisements
impact on the buying public
2. Implied falsity
a. when an advertisement, though literally true, tends to

confuse or deceive consumers -- an implied falsity claim
-- plaintiff must demonstrate that consumers are misled -- a
showing usually satisfied through consumer surveys. See,
e.g., American Home Products v. Procter & Gamble, 871
Supp. 739 (D.N.J. 1994); L&F Products v. Procter &
Gamble, 845 F. Supp. 984 (S.D.N.Y. 1994), affd, 45 F.3d
709 (2d Cir. 1995).
b. may not need survey if plaintiff shows defendant intended

to communicate the implied message or intended to deceive
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consumers, at least where the conduct is egregious. See,
e.g., Resource Developers v. Statue of Liberty--Ellis
Found., 926 F. 2d 134 (2d Cir. 1991); J&J Merck v. Rhone-
Poulence-Rorer Pharmaceuticals, 19 F.3d 125 (3d Cir.
1994).
3. Literally false by necessary implication: under an emerging line of

cases, courts have dispensed with the requirement of a consumer
survey when they conclude that an advertisement is by necessary
implication literally false. See, e.g., Time Warner Cable v.
DIRECTV, 492 F.3d 144 (2d Cir. 2007); Castrol v. Pennzoil, 987
F.2d 939 (3d Cir. 1993).
D. Equitable defenses
1. Laches
2. Unclean hands
E. Remedies
1. Injunction does presumption still apply in comparative

advertising cases?
2. Damages
3. Corrective advertising
4. Treble damages and attorneys fees in exceptional cases
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VIII. Questions (jwagner@kramerlevin.com; 212-715-9393)
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6/1/2015
INTRO TO
FASHION MODELING
LAW
ALI GRACE MARQUART
PARTNER
MARQUART & SMALL LLP
NEW YORK CITY BAR
LAWYERING IN THE
FASHION INDUSTRY
JUNE 19, 2015
RIGHT OF PUBLICITY IN THE

AGE OF SOCIAL MEDIA
135
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RIGHT OF PUBLICITY
Developed from the right of privacy
The
The Right to Privacy
Privacy 4 Harv.L.Rev.
Harv L Rev 193
Haelan Laboratories, Inc. v. Topps Chewing Gum, Inc., 202 F.2d 866
(2d Cir.)
Right to control commercial use of ones identity
No federal right of publicity, varies state to state

Based on common law, statute, or both
STATES WITH A STATUTORY

RIGHT OF PUBLICITY/PRIVACY
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STATES WITH A POSTMORTEM/DESCENDIBLE

RIGHT OF PUBLICITY/PRIVACY
RIGHT OF PUBLICITY: NEW YORK
New York Civil Rights Law Section 50:

A person, firm or corporation that uses for advertising purposes, or for
the purposes of trade, the name, portrait or picture of any living person
without having first obtained the written consent of such person, or if a
minor of his or her parent or guardian, is guilty of a misdemeanor.
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RIGHT OF PUBLICITY: CALIFORNIA
California Civil Code Section 3344:

Any person who knowingly uses another's name, voice, signature,
photograph, or likeness, in any manner, on or in products,
merchandise, or goods, or for purposes of advertising or selling, or
soliciting purchases of, products, merchandise, goods or services,
without such person's prior consent, or, in the case of a minor, the prior
consent of his parent or legal guardian, shall be liable for any damages
sustained by the person or persons injured as a result thereof
EDITORIAL OR ADVERTISEMENT?
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140
6
6/1/2015
AS SEEN IN
I REALLY LOVE MY
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I REALLY LOVE MY
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SOCIAL COMMERCE
143
9
6/1/2015
SOCIAL COMMERCE
SOCIAL COMMERCE
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SOCIAL COMMERCE
SOCIAL COMMERCE
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SOCIAL COMMERCE
SOCIAL COMMERCE
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SOCIAL COMMERCE
INTERNATIONAL DEVELOPMENTS
IN FASHION MODELING
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www.marquartsmall.com
/marquartsmall @marquartsmall /company/marquart-&-small-llp/
@model_esq
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CURRENT TOPICS IN THE

CURRENTTOPICSINTHE
IMPORTING/SOURCINGAREA
NewYorkCityBar
June19,2015
ArthurW.Bodek,Esq.
Grunfeld,Desiderio,Lebowitz,Silverman&KlestadtLLP
399ParkAvenue,NewYork,NY10022
2129737704;abodek@gdlsk.com
Topics
1. Importance of Fashion Industry to Customs
Enforcement
2. Customs 101
3. Customs Penalties Individual Liability Trek
case
4. False Claims Act
5 IPR Protection
5. P i
6. Made in USA
7. Other Import Concerns
CURRENT TOPICS IN THE IMPORTING/SOURCING AREA 2

New York City Bar June 19, 2015
149 1
6/5/2015
Importance of Fashion Industry to

Customs Enforcement
Textile
e e industry
dus y represents
ep ese s more
o e than $9
$94 bbillion
o in
annual imports.
47% of all Customs duties collected yet apparel
represents only 5% of import value!
68,000 importers of textile products.
Textile industry is a key component of the U.S.
manufacturingg base.
Average duty rate for textiles is 16%.
Average total cross the board duty rate = 1.3%
Example: Acrylic sweater has a duty rate of 32%!

Importance of Fashion Industry to

Customs Enforcement
More than $17 billion of entered textiles and wearing
apparel claim preferential tariff treatment. Coupled
with disproportionately high duty rates, industry
considered at high risk for non-compliance.
The number of IPR seizures increased nearly 7% from
22,848 in FY 2012 to 24,361 in FY 2013. The MSRP
of seized goods increased from $1.26 billion in FY
2012 to $1
$1.74
74 billion in FY 2013.
2013 DHS averaged
slightly over 66 seizures per day, with an average
MSRP of each seizure being slightly more than
$71,500.

150 2
6/5/2015
Customs 101
Tariff Classification
99 Chapter tariff schedule dictates duty rate and other Customs
consequences.
Otter Products, LLC, v. United States, Slip Op. 15-49 (U.S.
Court of International Trade, May 26, 2015)
Cell phone protective cases considered articles of plastics dutiable @
5.3% (as claimed by the importer), not as a handbag/wallet type item
dutiable @ 20% (as claimed by Customs).

Customs 101
Tariff Classification
Opportunities for tariff
tariff engineering
engineering
Knit vs. Woven, selection of fiber, design characteristics, etc.
Example: Handbags with Braided Straps Heading 4202

Certain textile handbags dutiable @ 17.6%
Same handbag with braided shoulder strap dutiable @ 7.4% under special
provision for Wholly or in part of braid. Customs Ruling HQ 962357
(April 16,
16 1999)

151 3
6/5/2015
Customs 101
Value
Duty rate is applied to import value to determine
duties due.
Certain statutory additions to the invoice value are
mandated if not already included in such price.
Strategies available to suppress dutiable value
e.g., first sale.

Customs 101
Fi S
First Sale
l DDoctrine
i
Nissho Iwai American Corp. v. United States,
982 F.2d 505 (Fed. Cir. 1992)

152 4
6/5/2015
Customs 101
$8 TRADING $10
FACTORY U.S. BUYER
COMPANY

Customs 101
Free Trade Agreements
Israel
Israel, NAFTA (Mexico & Canada),
Canada) Jordan,
Jordan Chile
Chile,
Singapore, Australia, Morocco, Bahrain, Oman, Peru,
CAFTA-DR (El Salvador, Costa Rica, Guatemala,
Honduras, Nicaragua, Dominican Republic), Korea,
Colombia, Panama
In the works
European Union
Trans Pacific Partnership (Australia, Brunei
Darussalam, Chile, Canada, Japan, Malaysia, Mexico,
New Zealand, Peru, Singapore, Vietnam, and the
United States)

153 5
6/5/2015
Customs 101
Unilateral Duty Free Programs
African Growth and Opportunity Act
Andean Duty Free Program
Qualifying Industrial Zone Program
Caribbean Basin Initiative
Generalized System of Preferences

Customs 101
Duty Free Programs
Rules Often Counterintuitive

Example: Denim Jeans made in Africa with foreign
pocket material (fabric vs. components)
Example: Comforter set largely made in Pakistan held
to be a duty-free product of Mexico. CBP Ruling NY
N028256 of June 4, 2008

154 6
6/5/2015
Customs Penalties
19 USC 1592: without regard to whether United States may be
deprived
p of duty,
y, no pperson by
y fraud,, ggross negligence
g g or
negligence, may enter merchandise by means of material false
statement or omission; or aid or abet such violation.
Maximum penalties without prior disclosure:

Fraud: lesser of 8 times loss of revenue or domestic value
Gross negligence: 4 times loss of revenue
Negligence: 2 times loss of revenue
Maximum penalties with prior disclosure

fraud:one times loss of revenue
gross negligence, negligence: interest on under paid revenue

Customs Penalties
Who can be held Liable for Customs Civil
Penalties?
Importing Company?
Owners?
Officers?
Import Managers?
Customs Brokers?
Other Personnel?

155 7
6/5/2015
Customs Penalties
United States v. Trek Leather, 2014 U.S. App. LEXIS 17746

(Sept. 16, 2014). Highlighted Facts:
Defendant was President / sole shareholder of Trek Leather.

Defendant provided undeclared fabric assists.
He furnished the customs broker with commercial invoices
that materially understated the value of the merchandise
(resulting in underpaid duties).
In a prior investigation involving a different company he
owned, he was informed of the dutiability of assists.
He transferred ownership of merchandise, while it was in
transit to the United States, to a company he chose to be the
importer of record.

Customs Penalties
United States v. Trek Leather - After a somewhat tortuous

history, the Court of Appeals for the Federal Circuit held:
Under the penalty statute, person is not limited to
importer of record.
The prohibitions under the statute are not limited to
entry but also to introduction of merchandise.
Under the facts at issue, the Court of Appeals held that
th ddefendant
the f d t and d hi
his actions
ti satisfied
ti fi d bboth
th tterms,
supporting direct liability under the penalty statute.
Petition for certiorari denied by U.S. Supreme Court on
May 26, 2015
156 8
6/5/2015
Customs Penalties
Reactions / Concerns raised by industry:

Parties who are not the importer of record can
now be held liable.
Customs can now proceed against officers /
employees without having to pierce the corporate
veil or demonstrating that the defendant aided or
abetted the importer.
Efficient
Effi i t internal
i t l communication
i ti and d bbusiness
i
processes would be stifled.
Compliance employees concerned over need for
E&O insurance.
Customs Penalties
In short, parties were concerned that this was a

wholly
h ll unprecedented
d t d development.
d l t
My view: the decision in Trek Leather is just
the latest in a string of cases already
supporting the same proposition.

157 9
6/5/2015
Customs Penalties
United States v. Tip Top Pants, Inc., 2010 Ct. Intl

Trade LEXIS 5 (Jan
(Jan. 12
12, 2010)
NAFTA penalty case brought against importer and
its Principal.
Late in the proceedings the government added the
Chairman and CEO of the company but there was
no prohibited act
act of such individual alleged.
alleged
Held: Being an officer of a company alone does
not give rise to 592 liability (in the absence of
other well plead facts).
Customs Penalties
United States v. Appendagez, Inc., 5 C.I.T. 74 (1983)

Customs brought an action for civil penalties against
Appendagez, Inc. and its president alleging that false invoices
were used in the entry of merchandise. The president
maintained that he was shielded from personal liability
because he was acting in his capacity as corporate officer.
The Court disagreed, holding that although corporate officers
are not liable for the illegal actions of others in the corporation
merely by virtue of their positions or offices, they may become
liable . . . if they knowingly participate in such actions.

158 10
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Customs Penalties
United States v. KAB Trade Co., 21 C.I.T. 297 (1997)

In an action
i brought
b h by
b Customs alleging
ll i the h
undervaluation of merchandise, the U.S. Court of
International Trade rejected the argument that
liability for customs penalties is limited to the
importer of record, instead holding that an
i di id l is
individual i not shielded
hi ld d from
f li bili for
liability f civil
i il
penalties as a matter of law.

Customs Penalties
United States v. Golden Ship Trading, 22 C.I.T. 950 (1998)

In an action for civil penalties,
penalties the CIT held
that the Government was entitled to its
opportunity to prove the allegations contained
in the complaint that [the individual officer] is
liable.
Interestingly,
Interestingly the fact that the level of
culpability was only negligence did not
prevent the case from going forward.

159 11
6/5/2015
Customs Penalties
United States v. Matthews, 31 C.I.T. 2075 (2007)
Action for penalties and underpaid duties due to falsification
of origin of goods subject to ADD. Case brought against
importer, exporter, officers & directors.
The Court found that: Matthews continuously handled communications with
the Chinese exporters and Korean "straw men" throughout all 96 importations;
McGuire continuously caused McGuire Steel to act as the place and means for
fostering the fraudulent importations.
Held: Consideringg this evidence on the record of the jjoint
involvement of Mr. McGuire, Ms. Matthews, McGuire Steel,
and North Star, the Defendants are held jointly and severally
liable for all 96 entries in question.

False Claims Act

Reverse False Claims Act Claims
United States v. Intertex Apparel (S.D.N.Y. June 2008) Relator alleged
mislabeling as to country of origin and undervaluation. Settled for $2.8
million.
million
United States v. Noble Jewelry (S.D.N.Y. Aug. 2011) Importer
acknowledged a double invoicing scheme to undervalue imported jewelry.
Settled for $3.85 million.
Japan-based Toyo Ink agreed to pay $45 million to settle allegations that
they violated the False Claims Act by knowingly failing to pay
antidumping and countervailing duties (due to misdeclaration of origin).
(December 2012)
OtterBox (seller of protective cases for smartphones and tablets) paid $4.3
million
illi to
t resolve
l allegations
ll ti that
th t it violated
i l t d the
th False
F l Claims
Cl i AActt by
b
knowingly underpaying customs duties. (April 2014)
Dana Kay, Inc. and Siouni & Zar Corporation (d/b/a Danny & Nicole)
agreed to pay $10 million to the United States as damages and penalties
under the False Claims Act for undervaluing clothing imports. (April 2014)

160 12
6/5/2015
Intellectual Property Rights Protection
Registration of marks with PTO / Recordation of

marks with Customs can be done online.
online

Lever rule protection

New function permits importers to provide
Product Identification Guides for upload to
CBPs Intellectual Property Rights internal
Search system (IPRiS).
Penalties
Seizure
Monetary penalties based on the value the
merchandise would have had if it were genuine.
161 13
6/5/2015
337 Actions (19 U.S.C. 1337)

Declares unlawful the importation, sale for
importation, or the U.S. sale after importation
by the owner, importer, or consignee, of
articles that infringe a valid and enforceable
U.S. patent, copyright, trademark, etc.

337 Investigations
Administrative Investigations / Publication in
Federal Register / Formal Evidentiary
Hearings
May result in 337 Exclusion Order
Cease
C andd Desist
D i t Orders
Od
Penalties up to $100,000 per day (or 2X domestic
value)

162 14
6/5/2015
Once a 337 Exclusion Order is issued, it is enforced

by Customs

Converse 337 Case
Converse Inc. filed a trademark infringement complaint with the ITC on

October 14, 2014, seeking a general exclusion order to direct CBP to stop
all of the allegedly infringing imports from entering the U.S. and limited
exclusion cease and desist orders against 32 retailers and manufacturers on
certain footwear products.
Also on October 14, 2014, Converse filed trademark infringement lawsuits
against 19 retailers,
retailers importers and exporters in Eastern District Court of
New York alleging trademark infringement and dilution.
EDNY granted a request from Defendant Wal-Mart to stay the case pending
the final resolution of the proceeding before the International Trade
Commission.

163 15
6/5/2015
Made in USA
FTC Made in USA Standard
Applies to express or implied claims of U.S. origin.
Certain more specific rules apply to articles covered by
the:
Textile Fiber Products Identification Act (TFPIA) and Wool
Products Labeling Act (WPLA)
Fur Products Labeling Act
American Automobile Labeling Act
Buy
B American
A i A t
Act
Some articles potentially covered by more than one
agency jurisdiction (FTC, FDA, USDA, etc.).
Buy America issues

Made in USA
Requirements under Made in USA Standard
Product must be all or virtuallyy all made in the United States to be
eligible for an unqualified Made in USA designation.
All or virtually all = all significant parts and processing must be of U.S.
origin - the product should contain no, or negligible, foreign content.
Final assembly or processing must take place in the U.S. FTC also
considers such factors as:
The extent of the products total manufacturing costs attributable to
U.S. parts and processing;
How far removed any foreign content is from the finished product.
Case-by-case analysis.

164 16
6/5/2015
Made in USA
All or Virtually All Examples
Clock radio - If the plastic case was made from
imported petroleum, a Made in USA claim is likely
appropriate as the petroleum is far enough removed
from the finished product, and is an insignificant part.
Gold ringg - If the ggold material is imported,

p , an
unqualified Made in USA claim for the ring is deceptive
due to the significant value the gold and because it is an
integral component that is only one step removed from
the finished article.

Made in USA
Qualified Made in USA Claims Generally

Acceptable but may not Overstate U.S. Content
Couch assembled in USA from Italian Leather
and Mexican Frame acceptable if accurate.
Made in USA of U.S. and Imported Parts
deceptive for a treadmill assembled in USA where
only a small number of incidental parts are of
U S origin
U.S. origin.

165 17
6/5/2015
Made in USA
Textile Fiber Products Identification Act /

Wool Product Labeling Act
U.S. manufacturing must be disclosed (optional
for most other commodities)
Articles completely made in the United States of
U.S. materials must be labeled Made in U.S.A. (or
its equivalent term).
Articles
A ti l made d ini the
th United
U it d States
St t iin whole
h l or in
i
part of imported materials must be labelled to
disclose these facts (e.g., Made in USA of
imported fabric)

Made in USA

Articles partially manufactured in a foreign
country and partially manufactured in the United
States must be labelled to reflect the
manufacturing process in the foreign country and
in the USA. Numerous examples p are ggiven,,
including:
Sewn in USA of imported components
Made in [foreign country], finished in USA.

166 18
6/5/2015
Made in USA

How far back in the manufacturing process must
one consider?
a manufacturer needs to consider the origin of only
those materials that are covered under the Act
only those materials that are one step removed from
that manufacturingg pprocess. For example:
p
a yarn manufacturer must identify imported fiber;
a cloth (fabric) manufacturer must identify imported yarn;
Garments and other manufactured products must identify
imported fabric or yarn, etc.

Made in USA
Recent Conflict with California Law
It is unlawful for any person, firm, corporation or

association to sell or offer for sale in this State any
merchandise on which merchandise or on its
container there appears the words "Made in U.S.A."
"Made in America," "U.S.A.," or similar words
when the merchandise or any article
article, unit,
unit or part
thereof, has been entirely or substantially made,
manufactured, or produced outside of the United
States. (Ca. Bus. & Prof. Code 17533.7)

167 19
6/5/2015
Made in USA
Paz v. AG Adriano Goldschmeid, Inc., No. 14-cv-01372 (S.D. Cal.)
Plaintiff initiated a putative class action against a manufacturer and retailer alleging
that a pair of jeans he purchased that were labelled Made
Made in the U.S.A
U.S.A were in
violation of California law in that they allegedly contained various component parts
made outside of the U.S. The claims were based upon two subclasses:
All persons in the U.S. who purchased the jeans bearing a Made in the U.S.A. label, when the
products contained foreign-made parts.
All California customers who purchased the jeans bearing a Made in the U.S.A. of Imported
Fabric label, when the products contained foreign-made parts other than the fabric (e.g., rivets,
thread, buttons, and/or subcomponents of the zipper assembly).
The defendants filed a motion to dismiss on the ground that the claims are
preempted by the Federal Trade Commission Act (FTCA) and the Textile Fiber
Products Identification Act (TFPIA).
On October 27, 2014, the District Court for the Southern District of California
denied the defendants motion to dismiss holding that conflict preemption did not
apply even though the California law and federal laws establish different standards
for the use of the Made in the U.S.A. label. The Court based its decision on the
fact that it would not be impossible . . . to comply with both laws.
Case is still ongoing.

Made in USA
Clark v. Citizens of Humanity, No. 14-cv-01404 (S.D.

Cal.)
Plaintiff initiated a putative class action in the District

Court for the Southern District of California after
purchasing a pair of jeans that were marked with a
Made in the U.S.A, alleging that the jeans contained
various component parts made outside of the U U.S.
S in
violation of California law.
As of June 5, 2015, the Court has not issued a decision
regarding the defendants motion to dismiss.

168 20
6/5/2015
Made in USA
How will the Conflict with California Law

b R
be Resolved?
l d?
Pending court cases resolution remains
uncertain.
Legislation - On February 13, 2015, California
Assemblyman Brian Jones introduced Assembly
Bill 312, seeking to amend the California Made
in the U.S.A. law to conform [it] to the federal
Made in America standard.

Other Import Concerns
Supply Chain Security and Social Compliance

169 21
6/5/2015
Product Safety

Other Government Agency Concerns

170 22
6/5/2015
Thank you!
Questions?
ArthurW.Bodek(abodek@gdlsk.com;2129737704)
9237810

171 23
50. Right of privacy, NY CIV RTS 50
McKinneys Consolidated Laws of New York Annotated

Civil Rights Law (Refs & Annos)
Chapter 6. Of the Consolidated Laws
Article 5. Right of Privacy (Refs & Annos)
McKinneys Civil Rights Law 50
50. Right of privacy
Currentness
A person, firm or corporation that uses for advertising purposes, or for the purposes of trade, the name, portrait or picture of
any living person without having first obtained the written consent of such person, or if a minor of his or her parent or
guardian, is guilty of a misdemeanor.
Credits
(L.1909, c. 14.)
Notes of Decisions (142)
McKinneys Civil Rights Law 50, NY CIV RTS 50

Current through L.2014, chapters 1 to 22, 50 to 60.
End of Document 2014 Thomson Reuters. No claim to original U.S. Government Works.
2014 Thomson Reuters. No claim to original U.S. Government Works. 1
172
51. Action for injunction and for damages, NY CIV RTS 51
McKinneys Consolidated Laws of New York Annotated

Civil Rights Law (Refs & Annos)
Chapter 6. Of the Consolidated Laws
Article 5. Right of Privacy (Refs & Annos)
McKinneys Civil Rights Law 51
51. Action for injunction and for damages
Currentness
Any person whose name, portrait, picture or voice is used within this state for advertising purposes or for the purposes of
trade without the written consent first obtained as above provided1 may maintain an equitable action in the supreme court of
this state against the person, firm or corporation so using his name, portrait, picture or voice, to prevent and restrain the use
thereof; and may also sue and recover damages for any injuries sustained by reason of such use and if the defendant shall
have knowingly used such persons name, portrait, picture or voice in such manner as is forbidden or declared to be unlawful
by section fifty of this article, the jury, in its discretion, may award exemplary damages. But nothing contained in this article
shall be so construed as to prevent any person, firm or corporation from selling or otherwise transferring any material
containing such name, portrait, picture or voice in whatever medium to any user of such name, portrait, picture or voice, or to
any third party for sale or transfer directly or indirectly to such a user, for use in a manner lawful under this article; nothing
contained in this article shall be so construed as to prevent any person, firm or corporation, practicing the profession of
photography, from exhibiting in or about his or its establishment specimens of the work of such establishment, unless the
same is continued by such person, firm or corporation after written notice objecting thereto has been given by the person
portrayed; and nothing contained in this article shall be so construed as to prevent any person, firm or corporation from using
the name, portrait, picture or voice of any manufacturer or dealer in connection with the goods, wares and merchandise
manufactured, produced or dealt in by him which he has sold or disposed of with such name, portrait, picture or voice used in
connection therewith; or from using the name, portrait, picture or voice of any author, composer or artist in connection with
his literary, musical or artistic productions which he has sold or disposed of with such name, portrait, picture or voice used in
connection therewith. Nothing contained in this section shall be construed to prohibit the copyright owner of a sound
recording from disposing of, dealing in, licensing or selling that sound recording to any party, if the right to dispose of, deal
in, license or sell such sound recording has been conferred by contract or other written document by such living person or the
holder of such right. Nothing contained in the foregoing sentence shall be deemed to abrogate or otherwise limit any rights or
remedies otherwise conferred by federal law or state law.
Credits
(L.1909, c. 14. Amended L.1911, c. 226; L.1921, c. 501; L.1979, c. 656, 2; L.1983, c. 280, 1; L.1995, c. 674, 1.)
Footnotes
1
See 50.
173
51. Action for injunction and for damages, NY CIV RTS 51
McKinneys Civil Rights Law 51, NY CIV RTS 51

Current through L.2014, chapters 1 to 22, 50 to 60.
174
3344. Use of anothers name, voice, signature, photograph, or..., CA CIVIL 3344
Wests Annotated California Codes

Civil Code (Refs & Annos)
Division 4. General Provisions (Refs & Annos)
Part 1. Relief
Title 2. Compensatory Relief
Chapter 2. Measure of Damages
Article 3. Penal Damages (Refs & Annos)
Wests Ann.Cal.Civ.Code 3344
3344. Use of anothers name, voice, signature, photograph, or likeness for advertising or selling or soliciting
purposes
Currentness
(a) Any person who knowingly uses anothers name, voice, signature, photograph, or likeness, in any manner, on or in
products, merchandise, or goods, or for purposes of advertising or selling, or soliciting purchases of, products, merchandise,
goods or services, without such persons prior consent, or, in the case of a minor, the prior consent of his parent or legal
guardian, shall be liable for any damages sustained by the person or persons injured as a result thereof. In addition, in any
action brought under this section, the person who violated the section shall be liable to the injured party or parties in an
amount equal to the greater of seven hundred fifty dollars ($750) or the actual damages suffered by him or her as a result of
the unauthorized use, and any profits from the unauthorized use that are attributable to the use and are not taken into account
in computing the actual damages. In establishing such profits, the injured party or parties are required to present proof only of
the gross revenue attributable to such use, and the person who violated this section is required to prove his or her deductible
expenses. Punitive damages may also be awarded to the injured party or parties. The prevailing party in any action under this
section shall also be entitled to attorneys fees and costs.
(b) As used in this section, photograph means any photograph or photographic reproduction, still or moving, or any
videotape or live television transmission, of any person, such that the person is readily identifiable.
(1) A person shall be deemed to be readily identifiable from a photograph when one who views the photograph with the
naked eye can reasonably determine that the person depicted in the photograph is the same person who is complaining of its
unauthorized use.
(2) If the photograph includes more than one person so identifiable, then the person or persons complaining of the use shall
be represented as individuals rather than solely as members of a definable group represented in the photograph. A definable
group includes, but is not limited to, the following examples: a crowd at any sporting event, a crowd in any street or public
building, the audience at any theatrical or stage production, a glee club, or a baseball team.
(3) A person or persons shall be considered to be represented as members of a definable group if they are represented in the
photograph solely as a result of being present at the time the photograph was taken and have not been singled out as
individuals in any manner.
175
3344. Use of anothers name, voice, signature, photograph, or..., CA CIVIL 3344
(c) Where a photograph or likeness of an employee of the person using the photograph or likeness appearing in the
advertisement or other publication prepared by or in behalf of the user is only incidental, and not essential, to the purpose of
the publication in which it appears, there shall arise a rebuttable presumption affecting the burden of producing evidence that
the failure to obtain the consent of the employee was not a knowing use of the employees photograph or likeness.
(d) For purposes of this section, a use of a name, voice, signature, photograph, or likeness in connection with any news,
public affairs, or sports broadcast or account, or any political campaign, shall not constitute a use for which consent is
required under subdivision (a).
(e) The use of a name, voice, signature, photograph, or likeness in a commercial medium shall not constitute a use for which
consent is required under subdivision (a) solely because the material containing such use is commercially sponsored or
contains paid advertising. Rather it shall be a question of fact whether or not the use of the persons name, voice, signature,
photograph, or likeness was so directly connected with the commercial sponsorship or with the paid advertising as to
constitute a use for which consent is required under subdivision (a).
(f) Nothing in this section shall apply to the owners or employees of any medium used for advertising, including, but not
limited to, newspapers, magazines, radio and television networks and stations, cable television systems, billboards, and
transit ads, by whom any advertisement or solicitation in violation of this section is published or disseminated, unless it is
established that such owners or employees had knowledge of the unauthorized use of the persons name, voice, signature,
photograph, or likeness as prohibited by this section.
(g) The remedies provided for in this section are cumulative and shall be in addition to any others provided for by law.
Credits
(Added by Stats.1971, c. 1595, p. 3426, 1. Amended by Stats.1984, c. 1704, 2.)
Editors Notes
VALIDITY
In the of case of Laws v. Sony Music Entertainment, Inc., C.A.9 (Cal.)2006, 448 F.3d 1134, 78 U.S.P.Q.2d 1910, certiorari
denied 127 S.Ct. 1371, 549 U.S. 1252, 167 L.Ed.2d 159., federal copyright law preempted the plaintiffs claim under this
section.
Wests Ann. Cal. Civ. Code 3344, CA CIVIL 3344

Current with urgency legislation through Ch. 16 of 2014 Reg.Sess. and all propositions on the 6/3/2014 ballot.
176
Terms and conditions for booking models
Issued by the Association of Model Agents
1. Terms and conditions
As required by Department of Employment regulations, the Agencys booking confirmation

form, containing the specific terms of the booking, must be signed and returned by the client.
The failure to sign and/or return the booking confirmation form whilst proceeding with the
booking will be deemed to be an acceptance by the client of these terms and conditions and
they shall apply to and govern the booking between the Agency and the client.
Any amendment and/or variations made to the booking confirmation form by the client shall
not be valid and binding unless the Agency has agreed to such amendment and/or variation
in advance and confirmed such agreement by signing the booking confirmation form after the
amendment and/or variation has been included on the booking confirmation form.
2. Booking fees
a) Permitted use
Unless agreed otherwise and included on the booking confirmation form, booking
fees provide an entitlement and right for the client to use one image via a single
published medium for one year from the date of the booking, in the United Kingdom
only, for the initial permitted use. Please note that such permitted use and entitlement
is strictly subject to payment in full of all fees owed to the Agency.
b) Daily/hourly rate
A day is an 8-hour period including one hour for lunch, between 09.00 and 18.00
(usually 9am to 5pm or 10am to 6pm) An extra hour between 9am and 6pm is
charged at the normal rate the appropriate overtime rate is charged only before
9am or after 6pm. Any booking which is over 5 hours will be charged at the day rate.
Booking fees are charged by the day or by the hour, or on an alternative basis, for
example, a set fee for a catwalk show. Details will be set out in the booking
confirmation form.
c) Overtime
Overtime rates apply at any time in excess of any 8 hour period including any time
outside 09:00 and 17:00 or 10:00 and 18:00. Monday to Friday and on all bookings
lasting longer than 8 hours. Overtime rates will be charged as follows:
I) Work on Saturdays between 09:00 and 24:00 and between 18:00
hours and 24:00 hours on Mondays to Fridays (excluding bank and
public holidays) is charged to the client at one and a half times the
standard hourly rate.
II) A special rate is negotiated for night work between 2400 hours and
0900 hours.
III) Work on Sundays and bank and public holidays is charged to the client
at double the standard hourly rate.
d) Travel
Any time spent by the model travelling to or from a clients venue will be charged at
half the hourly rate: this applies to any travel outside a five mile radius of Hyde Park
Corner (i.e. Chiswick in the west, Golders Green and Highgate Village in the north,
Mile End in the east, Streatham Hill and Tooting Bec in the south).
e) Fitting fees
Any time spent by the model for fittings is charged at half the appropriate hourly rate
with a minimum charge to the client of 50 per hour.
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f) Additional expenses
All expenses incurred by the Agency on the clients behalf will be charged to the client
and will include a percentage uplift on the total amount of the expenses.
g) Location bookings
When a location booking is made, a client must provide transport for the model both
to the booking location and back again unless agreed otherwise. If the client fails to
provide such transport then the Agency shall be entitled to re-charge the cost of the
transport procured for the model in accordance with section 2f). If a model on location
is prevented from returning to London to work, half the daily fee will be charged to
and payable by the client.
3. Additional fees
To be agreed at the time of the booking or before any additional usage
a) Usage
Additional fees are payable for the right to use the model's image or reproductions, or
adaptations of, or drawings derived from that image, or any other representation of it,
either complete or in part whether alone or in conjunction with any wording or other
images, photographs, drawings or anticipated purposes other than the initial
permitted use, details of which will be set out in the booking confirmation form, e.g.
packs, posters, showcards, record covers, swing tickets etc. Unless otherwise
agreed, the additional fees cover the right to use one image for one year from the
date of booking, in the United Kingdom only, for the permitted use or uses or
purposes agreed between the Agency and the client. Under no circumstances will
each additional usage fee be less than the model's advertising day rate as
determined by the Agency unless determined otherwise by the Agency in its absolute
discretion.
b) Territory
Additional fees are also payable for the right to use the model's image or
reproductions etc, as set out in section 3a) above for all known or anticipated
territories other than the United Kingdom. Unless otherwise agreed the additional fees
cover the right to use one image for one year or one season (as determined by the
Agency at the date of booking) from the date of booking, in the territory or territories
agreed and stipulated on the booking form. Under no circumstances will each usage
fee be less than the model's advertising day rate as determined by the Agency unless
determined otherwise by the Agency in its absolute discretion.
c) Other services
Additional fees are also payable for other services to be supplied by the model, for
example, personal appearances for PR purposes. Fees for such services will be
negotiated on a case by case basis.
4. Agency Fees
a) All bookings apart from equity contract TV commercials
The agency charges a supplement of 20% on all fees including without limitation
hourly, daily and overtime fees and all fees for the right to use and all fees negotiated
for any other service to be supplied by the model. Both agency fees and model fees
will be invoiced by the Agency. Unless otherwise agreed at the time of booking the
model disbursement is included at 66.7% and the agent's fee at 33.3% of the invoice
total.
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b) Equity contract TV commercials in the United Kingdom
The fee negotiated by the Agency is the models fee from which an agency
commission will be deducted at 20% of the invoice total.
c) Non equity contract TV commercials worldwide
The model disbursement and agency fees will be charged in accordance with 4a) and
applies to all commercials shot for use outside the UK irrespective of where the fee is
paid.
d) Value added tax
All sums payable under these terms and conditions are exclusive of VAT and any
other similar or equivalent taxes or duties which shall be payable in full without set off
by the client.
5. Invoicing
On all invoices payment is required to be made by the client within 30 days of the date of the
invoice. In all cases, the person booking the model is the client, who will be invoiced and
solely responsible for payment, unless otherwise agreed in writing at the time of booking. the
Agency reserves the right in its discretion to invoice the 'ultimate client', (eg. designer/
manufacturer/owner of the product in question). For example, this may be done if the client is
booking on behalf of the ultimate client, in which case the client and the ultimate client are
jointly and severally liable to pay all of the fees and settle the invoice accordingly. All fees for
usage are for the right to use the model's image and, once agreed, are payable whether or
not the right is exercised. Unless the Agency specifically agrees otherwise, in writing, no
usage for the model's image is permitted until payment is made in full. The agency reserves
the right to alter payment terms if it deems appropriate, prior to booking.
If the client fails to pay in full on the due date any amount which is payable to the Agency,
without prejudice to any other right or remedy of the Agency, the amount outstanding shall
bear interest both before and after any judgment at five per cent per annum over Barclays
Bank plc base rate from time to time from the due date until up to and including the date that
payment is made in full and such interest shall be compounded and accrued on a daily basis.
6. Exclusivity fees
Unless agreed otherwise the model is supplied to the client by the Agency on a non-exclusive
basis and the model shall be free to provide similar and/or competing services to any third
party and/or competing product or brand of the client. An additional fee will need to be agreed
when the use of the model's image or the service to be supplied by a model in relation to a
product is required on an exclusive or semi-exclusive (for example sector specific exclusivity)
basis which precludes supplying services or allowing the use of the model's image for
competing and/or particular sector of products or within a particular territory. A model can
supply services to and allow use of the model's image by any competitor unless such an
exclusivity fee is negotiated and paid by the client. It is the client's responsibility to carry
out any research and check whether the model supplied has undertaken or is booked to
undertake any conflicting work.
7. Provisional bookings
Provisional bookings will be automatically cancelled if they are not confirmed by the client (by
signing the booking confirmation form) within 24 hours of the proposed booking.
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8. Cancellations
Cancellation of booking by the Client
Within 24 hours of the booking call time the full booking fee will be charged and payable by
the client unless the same model is booked within 24 hours of the cancellation in which case
half the booking fee will be charged and payable by the client.
Outside 24 hours of the booking call time but within 48 hours of the booking call time of the
booking date then half the booking fee will be charged and payable by the client.
The full booking fee will be charged and payable by the client for bookings of more than three
days duration: within a period equal to or less than the length of the booking, then Saturdays,
Sundays and bank and public holidays are excluded for the purpose of determining the
cancellation notice period.
Cancellation of booking by the Agency

Should the Agency want to cancel a booking then it shall use reasonable endeavours to
provide the client with reasonable notice, take steps to offer to the client a suitable
replacement and/or substitute and take such other reasonable steps as are reasonably
practicable to mitigate against such cancellation.
In any event the Agency shall be entitled to cancel a booking at any time and for any reason
prior to the booking date without liability to the client and the client will procure the necessary
insurance cover to protect against such cancellation and any associated liability.
9. Weather related cancellations

On the first occasion of cancellation half the booking fee is charged and payable by the client
unless the client fails to cancel in time to prevent the model's attendance in which case the
full booking fee is charged and payable by the client. On the occasion of the second
cancellation and any subsequent cancellations the full booking fee is charged and payable by
the client.
10. Meals
Clients are responsible for the provision of all meals and beverage requirements of the
models (taking into account dietary requirements) whilst the models are providing services to
the client on all bookings (see section 2d)).
11. Model care and safety

The clients shall ensure that the model is treated with respect and professionalism and that
the client takes all steps necessary to ensure that the safety, health and well being of the
model is protected and maintained at all times whilst providing services to the client. Such
steps shall include without limitation:
a) ensuring that the venue for the provision of the services and the working
conditions are safe and secure and allow the model to provide the services in
compliance with all health and safety standards, regulations, codes and laws;
b) allowing the model to take suitable and regular rest periods, to ensure the
model is able to maintain suitable amounts of rest and refreshment whilst
delivering the services;
c) providing adequate levels of insurance cover to safeguard the health and
safety and future earnings of the model whilst the model is delivering the
services and travelling to and from the clients venue as if he/she were an
employee of the client;
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d) ensuring that all of the people and organisations which are engaged by the
client in relation to the delivery of the services are suitably qualified,
experienced and professional;
e) ensuring that no one imposes upon the model any action or activity which is
either dangerous, degrading, unprofessional or demeaning to the model;
f) ensuring that the services are delivered and the model is treated in
accordance with The Association of Model Agents Code of Practice; and
g) providing the model with an appropriate changing and dressing area to
ensure that the model can prepare for the provision of the services and also
maintains his/her privacy.
Always include a credit as models name @ the Agency, wherever a credit is
applied.
12. Warranties
a) The client warrants and represents to the Agency that:

I) it has full capacity to enter into these terms and conditions and perform
its obligations under these terms and conditions;
II) the booking form is executed by a duly authorised representative of the
client;
III) it will take all steps necessary to ensure that the model is protected and
treated in accordance with all applicable laws, good industry practice
and section 11 above;
IV) it has all necessary permits, licences and consents to enter into and to
perform its obligations under these terms and conditions and such
obligations shall be performed in compliance with all applicable laws,
enactments, orders, regulations, and other similar instruments; and
V) it will promptly disclose to the Agency in writing all necessary

information (including without limitation the location and length of the
shoot and requirements for any foreign travel) and details relating to
the provision of the services to enable the Agency to ensure that the
model is suitably prepared and able to perform the services.
13. Fashion shows
Catwalk bookings provide the client with the right to make use of a model's services on the
catwalk for the specified show and the right to allow photographers to be present to take
photographs and videos of the show on the basis that all such material (or reproductions etc.
as set out in section 3b above) is exploited for reporting purposes only. The client is
responsible for ensuring that all photographers present are aware of this condition and the
client will procure that they abide by these conditions. If any other usage is required it must
be negotiated and agreed with the Agency at the time of the booking.
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14. Music videos, Promotional films
All fees will be negotiated, structured and paid by the client for on a case by case basis. In
normal circumstances there will be a fee for the shoot plus an additional buyout fee payable
by the client. If not booking direct, the client (usually the music company) will be invoiced by
the Agency as the ultimate client (see section 5).
15. Test and experimental photography
When the Agency agrees to allow a photographer to take test or experimental photography
the photographer is not entitled to use, or allow others to use, test and/or experimental
photographs or test commercials for commercial purposes unless specific arrangements have
been made before the photographic session.
16. Intellectual property rights
The photographer and/or the client and anyone obtaining rights from or through the
photographer/client is not entitled to use any images for any usage beyond that agreed or
permitted under sections 2a), 3, 12, 13 and 14 above. The client will procure that the
photographer/client agrees to restrict the use and exploitation of the copyright content of the
photograph or any other intellectual property rights. If the client is not the photographer, the
client is to draw all these terms and conditions (1-22) to the attention of the photographer and
procure his agreement to them before the shoot commences.
All rights not expressly granted to the client under these terms and conditions are hereby
reserved to the Agency and/or the model as appropriate. In particular, the client
acknowledges and agrees that the Agency is the owner or licence holder of all commercial
rights and intellectual property rights relating to the model and the Agency and the client shall
not be entitled to exploit or enter into any commercial or other agreement to exploit any rights
relating to the model or the Agency other than the rights specifically granted to the client
under these terms and conditions.
17. Liability and insurance

a) No party excludes or limits its liability under these terms and conditions for:
I) death or personal injury caused by its negligence;

II) fraudulent misrepresentation; or
II) any other type of liability which cannot by law be excluded or limited.
b) Subject to section 17a, the Agency limits its liability under these terms and
conditions, whether such liability arises in contract, tort (including without
limitation negligence) or otherwise, so that the maximum liability of the
Agency for all claims under these terms and conditions shall be limited to and
shall not in aggregate exceed the total amount of the fees paid or payable to
the Agency;
c) the Agency shall not be liable for:

I) loss of business, use, profit, anticipated profit, contracts, revenues,
goodwill or anticipated savings;
II) product recall costs;
III) failure by the model to attend a booking for whatever reason;
IV) damage to the clients reputation; or
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V) consequential, special or indirect loss or damage;
even if the Agency has been advised of the possibility of such loss or
damage
d) The client shall effect and maintain (and shall require its ultimate client, if any,
to maintain) throughout the continuance of this terms and condition insurance
policies which provide appropriate coverage adequate enough to cover all
liabilities and risks of the client that may arise under these terms and
conditions. Such insurance policies shall include without limitation:
I) cancellation insurance to protect against the potential liabilities which
the Agency and the client may incur as a consequence of the
provisions of sections 8 and 9;
II) insurance to protect the model and the Agency should any damage,
injury or loss be caused whilst the model is providing services to the
client; and
III) travel insurance to cover the activities of the models whilst travelling to
and from the location of the services.
18. Contract and authority
All matters relating to the use of the model's image, any other services supplied by the model
and all fees must be negotiated and agreed only with the Agency. The client shall not attempt
to negotiate, nor allow others to negotiate, with the models directly. If the client or the
photographer or any other person on their behalf or connected with them obtains the model's
signature on any document or the model's purported verbal agreement to anything, that is not
binding on the model or the Agency unless and until it is agreed in writing by the Agency
(such agreement to be determined in the Agencys absolute discretion).
19. Complaints and disclaimer

Any cause for complaint must be reported to the Agency by the client as soon as it arises.
Complaints cannot be considered and/or dealt with effectively after the services have been
delivered. Whilst the Agency will use reasonable endeavours to ensure that the models
provide a satisfactory and efficient service to clients, as the agent, the Agency cannot be held
responsible for a model's conduct or behaviour whilst delivering the services and in this
regard the Agency shall not be held liable for any costs, expenses or losses suffered as a
consequence of the behaviour or conduct of any model.
20 Force Majeure
The Agencys shall not be liable to the client for any delay in performing or failure to perform
any of its obligations under these terms and conditions which is due to any cause beyond its
control and which is unknown to, and cannot reasonably be anticipated by the Agency
including without limitation fire, floor or catastrophe, acts of God, insurrection, workforce
action, war or riots, (an "Event of Force Majeure") and the Agencys obligations under these
terms and conditions shall be suspended for so long as the Event of Force Majeure continues
and to the extent that it is so delayed.
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21 Interpretation of terms and conditions
a) For the purpose of the relationship between the client and the Agency the
client acknowledges, accepts and agrees that the Agency is the supplier of
services which shall be strictly and exclusively governed by these terms and
conditions. These terms and conditions apply to every offer, quotation,
acceptance, purchase order, confirmation order, specification and/or contract
for the sale and supply of services or goods (including services ancillary
thereto) by the Agency and supersede any other terms of the client and take
precedence over and override and exclude any other terms stipulated or
incorporated or referred to by the client whether in the booking confirmation
form or in any negotiations and any course of dealing established between
the Agency and the client. The client acknowledges that there are no
representations, statements or promises made or given by or on behalf of the
Agency outside these terms and conditions which have induced the client to
enter into these terms and conditions (which expression shall include any
contract of which these terms and conditions form part).
b) If there is any conflict between any of these terms and conditions and the
booking confirmation form then the terms of these terms and conditions shall
prevail without detriment to the remaining unaffected terms of booking
confirmation form.
c) The booking confirmation forms part of these terms and conditions and shall
have effect as if set out in full in the body of these terms and conditions. Any
reference to these terms and conditions includes the booking confirmation
form.
d) For the purpose of these terms and conditions the words "agreed", subject to
section 1, means agreed in writing in the booking confirmation form and
signed by duly authorised representatives of both the Agency and the client.
22 General
a) If any of the terms, conditions or provisions of these terms and conditions or
the booking confirmation are determined by any competent authority to be
invalid, unlawful or unenforceable to any extent, such term, condition or
provision will to that extent, be severed from the remaining terms, conditions
and provisions which will continue to be valid to the fullest extent permitted by
law.
b) Any termination of all or part of these terms and conditions shall not affect the
coming into force or the continuance in force of any provision of these terms
and conditions which is expressly or by implication intended to come into
force or continue in force on or after such termination.
c) Except as otherwise expressly provided in these terms and conditions, all
representations, warranties, undertakings, agreements, covenants,
indemnities and obligations made or given or entered into by the client and
the ultimate client under these terms and conditions are assumed by them
jointly and severally.
d) Nothing in these terms and conditions shall render any party a partner or
agent of the other. Except as expressly permitted by these terms and
conditions, nothing shall allow a party to purport to undertake any obligation
on behalf of the other nor expose the other party to any liability nor pledge or
purport to pledge the other's credit.
e) No failure to exercise and no delay in exercising on the part of either party of
any right, power or privileged under these terms and conditions shall operate
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as a waiver of it. Nor shall any single or partial exercise of any right, power or
privilege preclude the enforcement of any other right, power or privilege. Nor
shall the waiver of any breach of a provision be taken or held to be a waiver
of the provision itself. For a waiver to be effective it must be made in writing.
f) Except as and to the extent expressly otherwise specified in these terms and
conditions, the rights and remedies contained in these terms and conditions
are cumulative and are not exclusive of any rights or remedies provided by
law or elsewhere in these terms and conditions.
g) The parties agree to keep, and to instruct its agents, employees, advisers and
sub-contractors with knowledge hereof to keep these terms and conditions
strictly private and confidential and not to disclose any details relating to the
same, subject to disclosure in the following circumstances;
(i) to enable enforcement of the partys rights under these terms and
conditions;
(ii) with the prior written consent of the other party; and
(iii) as required by any applicable law.
h) These terms and conditions and the booking form constitute the entire
agreement between the parties and supersede any previous agreement or
arrangement between the parties relating to the subject matter of these terms
and conditions.
i) No variation or amendment to the terms of these terms and conditions shall
be valid and binding unless in writing and signed by an authorised
representative of each party.
j) Except where these terms and conditions expressly provides otherwise, a
person who is not a party to these terms and conditions has no right under
the Contracts (Rights of Third Parties) Act 1999 to enforce any term of these
terms and conditions but this does not affect any right or remedy of a third
party which exists or is available apart from under that Act. The client
acknowledges, accepts and agrees that the Agency has entered into these
terms and conditions for the benefit of itself and the model and accordingly
the model shall be entitled to enforce these terms and conditions as if he/she
were a party to these terms and conditions.
k) The parties agree that these terms and conditions and its provisions will be
governed by and construed in accordance with English law and the parties
hereby submit to the exclusive jurisdiction of the English Courts.
July 2009
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DANISH FASHION ETHICAL CHARTER
March 2015
186
DANISH FASHION ETHICAL CHARTER
PURPOSE
Danish Fashion Ethical Charter seeks to ensure the well-being of Danish models and to contribute to the
creation of relevant and appropriate information about eating disorders and about the beauty and body
ideals the fashion industry is a part of creating.
Danish Fashion Ethical Charter will also help raise awareness and influence attitudes in the fashion industry
as well as in the media and in society in general, which is why the charter contains a number of measures
and rules signatories must adhere to.
BACKGROUND ON EATING DISORDERS

Many people, especially the young, struggle to achieve unrealistically thin body ideals and the occurrence of
serious eating disorders is on the rise. Approximately 75,000 Danes suffer from an eating disorder, and the
same number exhibit at-risk behaviour that can easily develop into an eating disorder. Out of the 75,000 who
suffer from an eating disorder, 5,000 suffer from anorexia, 30,000 from bulimia and 40,000 from overeating.
To that can be added an unknown number of people suffering from orthorexia and megarexia.
Anorexia is often in focus when discussing the connection between the fashion industry and eating
disorders. A serious societal issue, anorexia is a very dangerous condition and represents one of the most
deadly diseases for young people. Many more people, however, suffer from bulimia, which often is not as
physically apparent. As a result the charter addresses all forms of eating disorders.
VALUES
Danish Fashion Ethical Charter focuses on three core values involving accountability, compassionate respect
and health:
1. We respect and protect industry employees (including models) and the colleagues we work with. We
wish to ensure their health and safety, and we appreciate diversity.
2. We are aware of and take responsibility for the impact the fashion industry has on body ideals, especially
on young people.
3. We wish to promote and work towards healthy lifestyles as well as a healthy body ideal that reflects a
healthy relationship to food, body and exercise.
RULES
Danish Fashion Ethical Charter consists of four general rules:
Health check
Model agencies that commit to the Danish Fashion Ethical Charter have agreed that all their models under
the age of 25 will get an annual compulsory health check.
The health check contains an introductory consultation and, if necessary, screening for risk behaviour or an
actual eating disorder.
If models are deemed to not have any problems or to be sick, a certificate is issued indicating that they
have completed a health check
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If models exhibit risk behaviour, they are referred to other types of support services e.g. The Danish
Association against Eating Disorders and Self-harm
If models are sick, they must contact their own doctor, who will refer them to a psychiatrist. In both
cases the agency will follow up to ensure that this has happened.
The agency is informed if a model does not pass the health check.
Standardised national health checks are currently not available, which is why the following schedule is to
be put forward in the expectation that health authorities will assist in ensuring the implementation of an
annual health check:
By the end of 2015 for all models under the age of 18

Age limit
Models must be at least 16 years of age in order to work.
Models who are 15 years of age can be given dispensation to work if accompanied by an adult. Models under
15 can only work with childrens and teenage clothing and likewise must be accompanied by an adult (which
the agency arranges). The charter also refers to the Danish Working Environment Act.
Healthy diet
Clients (fashion companies, photographers, magazines, ad agencies and others) commit to serving models
nutritious and healthy food at jobs that last more than two hours.
Wages
Models must receive monetary payment for their work. Dispensation from the obligation to pay wages is
only possible in agreement with the model for work done for educational institutions, student projects,
charities and non-commercial publications (i.e. publications without advertising revenues or sales).
Note on wages: Agreements concerning specific wages and conditions are made between the model agency/the
model and the client and between the model agency and the model. Greater transparency and assurance of the
individual models rights are required in this connection.
RECOMMENDATIONS
Danish Fashion Ethical Charter recommends that a formal framework agreement be entered into
concerning wages and working conditions between the associations for model agencies and models.
When such an agreement has been entered into, Danish Fashion Ethical Charter will refer to it in terms
of, for example wages.
Danish Fashion Ethical Charter recommends that, based on the model agency 2PMs experience with
teaching, a short educational course for models working with agencies be designed to teach models
about, for example diet, nutrition and mental health. The format must allow implementation at any
model agency and agencies are recommended to conduct at least one educational course yearly. The
purpose is to support and strengthen models to cope with the realities of being a model and the world
they are thrown into, often at a very young age.
Danish Fashion Ethical Charter recommends greater transparency and awareness concerning retouched
photos in e.g. fashion magazines.
188 March 2015 page 3

COMMITMENT - SIGNATORIES
Anyone can commit to Danish Fashion Ethical Charter by signing it. The aim is to establish broad backing
from the fashion industrys relevant stakeholders and companies (such as model agencies, fashion
companies, magazines, industry organisations, associations, photographers, ad agencies, PR agencies and
trade fairs).
Danish Fashion Institute receives and files signed agreements. Signatories receive the Danish Fashion
Ethical Charter logo pack for use on, for instance the signatories own website, materials and campaigns, as
long as the charters rules are adhered to.
The names of signatories are listed on the Danish Fashion Institute, Dansk Fashion & Textile, and WEAR
websites, as well as on danishfashionethicalcharter.com.
In addition fashion companies and other players (magazines, PR agencies, stores, agencies) who wish to
participate with a show, an event or as a supplier during Copenhagen Fashion Week are required to sign the
Danish Fashion Ethical Charter to be part of the official fashion week programme..
STEERING COMMITEE, EVALUATION AND SANCTIONS

The following organisations will establish a Danish Fashion Ethical Charter steering committee and appoint
one member each:
Dansk Fashion & Textile
Danish Fashion Institute/Copenhagen Fashion Week
The Model Agency Association (currently being formed)
The Danish Association against Eating Disorders and Self-harm (LMS)
Model Union Denmark (DAMO)
There will also be one designer from a fashion company* and one editor from a Danish fashion
magazine*
*) Appointed by Dansk Fashion & Textile and Danish Fashion Institute
The steering committee meets twice a year to evaluate the charter but must be able to assemble at other
times when necessary.
The steering committee has the authority to penalise signatories who do not adhere to the charters rules.
The options the steering committee has to enact sanctions are adjusted according to the nature and extent of the
breach:
1. Reprimand and admonition
2. Warning of exclusion and statement of critique
3. Exclusion from Danish Fashion Ethical Charter, cf. below
When excluded the following consequences can take effect:

Publication of violator on a black list on the Dansk Fashion & Textile, WEAR and Danish Fashion
Institute websites, as well as in a press release
Forfeiture of the right to use the Danish Fashion Ethical Charter logo
Forfeiture of the right to visibility in the official programmes for Copenhagen Fashion Week, including
shows, events, sampling and advertising
Forfeiture of the right to participate in Copenhagen Fashion Week casting days
The steering committee shall determine its own rules of procedure.

Follow signatories, black lists, warnings and the steering committees work on
danishfashionethicalcharter.com.
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IMPLEMENTING & ADMINISTERING A

SUCCESSFUL SOCIAL COMPLIANCE
PROGRAM
2015 Kate Spade & Company. All Rights Reserved.
SOCIAL COMPLIANCE
What Drives Corporate Social Responsibility (CSR):
Business partners
p
Shareholders / Investors
Non-governmental, non-for-profit groups (NGOs) (e.g. National
Labor Committee; Clean Clothes Campaign; Students Against
Sweatshops, People for Ethical Treatment of Animals)
Customers
Employees (related to morale,
morale retention and motivation)
The Competition
Regulators (proactivity helps; U.S. Sentencing Guidelines
considerations for compliance programs)
2015 Kate Spade & Company. All Rights Reserved. 2
190 1
6/5/2015
WORKERS RIGHTS PROGRAMS

Background
Rise of globalization and move of manufacturing overseas to third parties
Concern grew for how workers in foreign countries were being treated
1991: Levi Straus adopts the first Code of Conduct, or working conditions
and standards with which third party factories were charged to comply
WORKERS RIGHTS PROGRAMS (CONTINUED)
Many followed and added monitoring and auditing programs
Many NGOs did not believe that there was real teeth in the code and
monitoring programs
1995: the National Labor Committee, an NGO, targeted Kathie Lee Gifford
brand sold at Wal-Mart for sweatshop issues
Clinton administration formed the Apparel Industry Partnership task force to

analyze the issues and make recommendations. This effort resulted in the
formation of the Fair Labor Association (FLA)
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6/5/2015
WORKERS RIGHTS PROGRAMS (CONTINUED)
ISSUES FACED:
No direct obligation on the part of the brands. Compliance to

local laws and to companys standards are the responsibility
of the third-party supplier / factory
Lack of enforcement at the local government level
Pressure from stakeholders: Labor activists; unions; students,

customers
EXAMPLE OF ACTIVISTS PRESSURE TO MAKE

IMPROVEMENTS TO LABOR CONDITIONS
Foxconn and Suicides at China Factories
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6/5/2015
LEGAL ISSUES
LAWS:
Hot Goods: provision of the Fair Labor Standards Act that makes it
unlawful to transfer or sell products produced in violation of the
FLSA. Provides ability for goods to be seized
State Laws: states have hot goods laws. Also California Law
makes brand owner a guarantor for minimum wage and overtime
payments for factory workers
LEGAL ISSUES (CONTINUED)
LITIGATIONS:
Activist groups have used legal system to promote agenda. Even though
a final verdict may be favorable for a company, it is usually after
significant legal fees and bad publicity
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6/5/2015
SETTING UP A SOCIAL COMPLIANCE PROGRAM

Adopt a Code of Conduct / Standards of Engagement
Monitoring and Auditing Plan
Develop protocols and monitoring standards
Conduct a risk analysis: What countries do you do business in: and
what are the issues in those countries (e.g., Bangladesh health &
safety issues)
How often should you audit factories?
Decision to use internal monitors v. external monitors v. independent
monitors
How to deal with factories used by licensees and other business
partners
SETTING UP A SOCIAL COMPLIANCE PROGRAM (CONTD)

Staffing / Budget
Need appropriate staff
In U U.S S and overseas
Communication
Need to communicate program internally (to employees and those
with responsibility for executing) and externally (to suppliers,
business partners and stakeholders)
Training Plan
Training for internal group and suppliers
Worker training and education consider using NGOs
Remediation and Enforcement
Continuing Dialogue and Collaboration
With stakeholders, factories and workers
194 5
6/5/2015
COLLABORATIVE MONITORING INITIATIVES
U.S.-Based Programs
Social Accountability International (SAI)
Worldwide Responsible Accredited Production (WRAP)
Fair Labor Association (F.L.A.)
European-Based Programs
Ethical Trade Initiative (E.T.I.)
Fair Wear Foundation
Business Social Compliance Initiative (BSCI)
COLLABORATIVE AUDITING INITIATIVES
Shared Audit Findings and Remediation

U.S.
Fair Factories Clearinghouse F.F.C.
Europe
Supplies Ethical Data Exchange Sedex
Regional
Better Work Program provides training and assessments for factories
and buyers in Cambodia; Jordan; Vietnam; Haiti; Nicaragua;
Lesotho, Indonesia
195 6
6/5/2015
STANDARDS OF ENGAGEMENT
Standards posted at factories
Translated into local language
Training for factory managers and workers
Made part of terms and conditions with our suppliers and licensees
SOCIAL RESPONSIBILTY
COMPLIANCE PLAN - ONE COMPANYS APPROACH
Internal audits of existing factories & all new factories
Both scheduled and unannounced
Formal training for accountable executives
Remediation within a reasonable time period
Engaging with non-governmental organizations
T i i workers
Training k on their
h i rights
i h
Training management on grievance systems and other concepts for
sustainability
Disclosure (combination of mandatory and voluntary)
196 7
6/5/2015
SOURCING DEPARTMENT INVOLVEMENT
BEFORE
SOURCING DEPARTMENT INVOLVEMENT

AFTER
197 8
6/5/2015
SOURCING DEPARTMENT INVOLVEMENT - CHECKLIST
INDEPENDENT MONITORING
Conducting unbiased factory audits where company has a business

interest
Not just a Snapshot In Time audit
Local groups provide a Secure Channel Of Communication with

workers and have a better understanding of working conditions and
what is important to the workers.
198 9
6/5/2015
EXPERIENCES IN GUATEMALA
Posting Of Standards Is Not Enough (problems of language and
literacy)
Local Law Compliance vs. Workers Desires (limit on hours v. workers

desire to work and earn more)
Better Understanding Of Workers

Workers Lives
Factory-Sponsored Education Program For Of-Age Minor Workers
Health Seminars
Cancer Screening
CURRENT ISSUES FOR KATE SPADE & COMPANY
Informed Workplace / Workers Training: Because factories can not be

monitored 24/7
Sustainability: Move away from auditing, making factories more
responsible to improve and maintain compliance
Mandatory Disclosures:
CA Transparency in Supply Chains Act of 2010
SEC Reporting Sourcing of Conflict Minerals
Accountability for purchases of commodity materials
199 10
6/5/2015
UZBEK COTTON
Uzbek Government admits to using children to harvest cotton crops.
NGOss pressure companies to uphold their child labor standard.
NGO standard
Challenges:
Drilling further down the supply chain
Traceability of commodity purchases
Large collaborative effort with NGOs
NGO s and major companies
campaigning to end child labor
Involving government
Boycotting
CONFLICT MINERALS ACTION PLAN
Create a risk assessment for product lines.
Create a Conflict Mineral policy.

Communicate internally ( Sourcing, Product Development), to
agents and suppliers
Provide supplier training
Distribute questionnaire to suppliers

200 11
6/5/2015
OTHER SOCIAL RESPONSIBILITY CONCERNS
People for Ethical Treatment of Animals and Other Animal Rights

Activists
Fur
Skins sourced from China and India
Mulesed Australian Merino Wool
Exotic skins
Environmental Issues
Companys impact on the environment - direct and indirect
Products impact on the environment
201 12
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
cle.nycbar.org
Mandatory CLE information
The City Bar Center for CLE is an accredited CLE provider in the States of New York, California, New Jersey and
Pennsylvania. For live programs, Illinois & Pennsylvania credits differ slightly as they are based on a 60 minute hour.
California New Jersey New York Pennsylvania
*Sign-In
NY sign-in sheet NY sign-in sheet NY sign-in sheet NY sign-in sheet
Sheet
Include Bar
Number on Yes **Yes No Yes
sign-in sheet
Evaluation CA Activity Evaluation
NY evaluation form NY evaluation form NY evaluation form
Form Form
CLE NY CLE Certificate with ***CLE certificate not

CA Bar Number
NJ CLE certificate NY CLE certificate
Certificate provided
Website www.calbar.ca.gov www.judiciary.state.nj.us/cle www.nycourts.gov/admin/oca https://www.pacle.org/
Email or 212.428.2105 (CLE)

888.800.3400 609.984.2111 717.231.3230
Phone Number 212.428.2700 (General)
*You are required to sign in & out on the sign in sheet, indicating the times you arrive and leave.
** If you dont know your New Jersey Bar number you can call 609.984.2111 or go to http://tiny.cc/NJBarNo
***As Pennsylvania is a paperless State we will not provide you with a CLE certificate. You can get proof of attendance by logging onto the
website www.asapnexus.org, at least 30 days after the program you attended.
I
cle.nycbar.org
Mandatory CLE Information
The City Bar Center for CLE is an accredited CLE provider in the States of New York, California,
New Jersey and Pennsylvania. Pennsylvania credits differ slightly as they are based on a 60 minute
hour.
California: Sign-in and out on the New York sign-in sheet at the registration desk. Include your
California Bar number in the appropriate column on the sign-in sheet and we will include it on
your New York CLE certificate. Your CLE certificate will be available at the end of the
program. You are also required to hand-in a completed California Activity Evaluation form,
which will be available at the registration desk. For more information call 888.800.3400 or visit
their website, http://mcle.calbar.ca.gov.
New Jersey: Sign-in and out on the New York sign-in sheet at the registration desk and include
your New Jersey Bar number in the appropriate column. When you sign out at the end of the
program your New Jersey CLE certificate will be available. When you sign-out, please make
sure to hand-in your completed evaluation form. If you do not have your New Jersey Bar
Number, you can obtain it by calling (609) 984-2111. For more information visit their website,
http://www.judiciary.state.nj.us/cle/index.htm.
New York: Sign-in and out on the New York sign-in sheet at the registration desk. Your CLE
certificate will be available when you sign-out at the end of the program. When you sign-out,
please make sure to hand-in your completed evaluation form. For more information call the New
York Office of Court Administration at: 212.428.2105 (CLE information), 212.428.2700
(general information) or visit their website,
http://www.courts.state.ny.us/attorneys/cle/index.shtml.
Pennsylvania: Sign-in and out on the New York sign-in sheet at the registration desk and
include your Pennsylvania Bar number in the appropriate column. When you sign-out, please
make sure to hand-in your completed evaluation form. As Pennsylvania is a paperless State we
will not provide you with a CLE certificate. You can get proof of attendance by logging onto
http://www.asapnexus.org at least 30 days after the date of the program. For more information
call 717.231.3230 or visit their website, www.pacle.org .
II

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City Bar Center for Continuing Legal Education

THE NEW YORK CITY BAR

10th Annual Lawyering in the Fashion Industry:

June 19, 2015

Sponsoring Association Committee

June 19, 2015

Ali Grace Marquart

9:00 a.m.-9:05 a.m. Introduction

9:05 a.m.-9:55 a.m. An Insiders Look at Fashion Trademark License Agreements

9:55 a.m. -10:45 a.m. Successful Approaches to Trademark Protection

10:45 a.m. -10:55 a.m. Break

10:55 a.m. -11:35 a.m. Introduction to the Law of Fashion Modeling

11:35 a.m. -12:10 p.m. Current Topics in the Importing/Sourcing Area

12:10 p.m. -12:45 p.m. Implementing & Administering a Successful Social

12:45 p.m.-1:00 p.m. Questions & Answers

New York Credit: 4.0 Professional Practice

California Credit: 4.0 General

Friday, June 19, 2015

Notes on Faculty .............................................................................................................................. i

Form of Fashion Trademark License Agreement ..........................................................................11

Successful Approaches to Trademark Protection (PPT)................................................................91

Successful Approaches to Trademark Protection (Outline).........................................................111

Right of Publicity in the Age of Social Media (PPT) ..................................................................135

Current Topics in the Importing/Sourcing Area (PPT) ...............................................................149

Danish Fashion Ethical Charter (March 2015) ............................................................................186

Implementing & Administering a Successful Social Compliance Program (PPT) .....................190

Implementing & Administering a Successful Social Compliance Program (Outline) ................202

Lawyering in the Fashion Industry:

2015 Kramer Levin Naftalis & Frankel LLP

I. Fashion Licensing Rationale

1. Licensing permits a company that has developed/established a mark/brand

2. This is especially so since different product lines/territories within the

3. Licensing can be efficient because it allows each party to specialize in

2. A high performing licensee may be able to establish a business around the

1. Licensees may be able to more efficiently produce or sell products in

2. Licensees may be able to leverage existing relationships with specialized

3. Licensees may be more familiar with local consumer preferences, as well

D. Potential Benefits to Licensor

1. Expand operations into new product categories.

2. Expand distribution channels.

3. Increase marketing opportunities, brand awareness and customer base.

E. Potential Benefits to Licensee

2. Ability to leverage its existing retail relationships and back-end

3. Create long-term relationships with larger, well-funded licensors.

F. Potential Overarching Issues/Pitfalls

1. Licensor needs to make sure licensee is in synch with its philosophy/

3. Licensor should want the licensee to be financially successful, thereby

G. The License Agreement itself

1. One size does NOT fit all!

II. Form of Fashion Trademark License Agreement (see attached)

1. Roadmap for a constructive, interactive working relationship/

2. Minefield where Licensor tries to collect as many options as possible to

1. Provide the context of the transaction perhaps not enforceable, but

2. Definitions: Licensed Mark; Products; Licensed Products

i. What happens if Licensor repositions Licensed Mark into

c. Licensor Retail Stores and Licensor Outlets

d. Restrictions: diversion; direct sales; Internet sales; give-aways

1. Initial period consider start-up period, timing with respect to Seasonal

a. Number and Length; Considerations

i. For Licensor: state of the business/bargaining position;

ii. For Licensee: value of trademark; transaction costs of

b. Criteria for renewal

i. Sales thresholds, as well as adjustments via ratchet and/or