The business relationship between Kanye West and Adidas has come to an end, but that change doesn’t reflect on the sports apparel giant and its ownership. Adidas owns the trademark designs of the Yeezy shoes, including the beloved Yeezy Boost 350.
Under his company, Mascotte Holdings, Inc., Kanye West has more than 160 trademark applications and registrations for his Yeezy brand. Adidas, however, owns the rights to most of those Yeezy designs, according to Fortune.
Who Owns Yeezy
In its statement about the partnership dissolution, Adidas said, “Adidas is the sole owner of all design rights to existing products as well as previous and new colorways under the partnership.”
“The industry standard is that Adidas would be the one that would own all of it, even though Kanye is the owner of the trademark of his brand,” New York City fashion lawyer Shahrina Ankhi-Krol told CNN. Ankhi-Krol hadn’t read the Adidas/Ye contract, which isn’t publicly available.
The wording “sole owner of all design rights to existing products” has left questions as to who can move ahead with new Yeezy designs. Some legal experts say Adidas can rebrand the existing Yeezy designs without Ye.
As reported by CNN, “Yeezy might be owned by Ye, but the Yeezy shoe designs are Adidas’ intellectual property.”
“They won’t be able to use his individual trademarks, but the designs themselves they can reuse because they own them,” said Nicole Haff, litigation and entertainment partner at Romano Law. Haff pointed out that Adidas’ patent filings indicate that the company has ownership over all Yeezy/Adidas designs with one exception: Yeezy Slides, which Kanye owns.
“He’s been saying a lot of things to the press, like that his designs have been stolen from him, and that money is owed to him,” she said. “What I think is happening is that Adidas has been laying out their [legal] position.”
The question remains as to whether his contract with Adidas includes a morals clause.
It all Comes Down to the Contract
It is not clear what is exactly in the 2016 agreement between West and Adidas, who parted ways with West over anti-Semitic remarks. Trademark attorney Josh Gerben of the Gerben Law Firm PLLC told Fortune he believes their contract may have termination clauses that enable one member to take the intellectual property, or the contract included “morals” clause that excuses early termination.
“Because we don’t know what’s in the contract between Adidas and Kanye, we don’t know how smooth or how ugly the separation will end up being,” Gerben said, as reported by Fortune.
The fall of the multi-billion-dollar partnership between Adidas and Ye could result in one party taking legal action against the other or an attempt to settle an IP dispute, but “branding agreements typically include a detailed dispute resolution mechanism,” said attorney David Martinez, partner at Robins Kaplan LLP.
Could West Go It Alone?
In West’s favor, he could freely make his Yeezy-branded shoes and clothing without the involvement of Adidas, Gap or Balenciaga.
Former Wall Street Journal fashion reporter Teri Agins, the author of “Hijacking the Runway: How Celebrities are Stealing the Spotlight from Fashion Designers,” said that Ye might face challenges in re-branding his shoe designs on his own.
Sneaker designs are closely tied to technology and patents, which shoe giants, like Adidas, hang on to, Agins told CNN. “All the properties that make a shoe special, all that stuff is trademarked,” said Agins. “He doesn’t have the infrastructure…you can’t just do that on your own.”
West, in a Bloomberg interview, expressed wanting to do fashion without Gap and Adidas.
As Finurah previously reported, West complained Gap, his ex-partner and the distributor of the Yeezy x Balenciaga crossover brand, was “holding [my clothes] hostage in the office and in the wash houses.”
His sudden comments regarding the Jewish faith and its people, a widely costly business move, could have been his last resort to getting terminated – or from what his standpoint seems to be, being free.
“If he really wanted, he could probably sell other clothing or possibly footwear,” attorney Zak Kurtz, founder of the law firm Sneaker & Streetwear Legal Services, said. “But when I say ‘other,’ that will have to be brand new silhouettes and brand new everything that would have his trademarks on it.”
Kanye’s Losses
The artist, who lost his billionaire status as a result of all these developments, doesn’t seem fazed–at least not on social media.
He dropped an Instagram post on Wednesday, Oct. 26 that read in part, “I lost 2 billion dollars in one day and I’m still alive/This is love speech/ I still love you/The money is not not who I am/The people is who I am.”
Adidas’ Losses
Adidas is a big loser in this situation, as the company expects to lose nearly a quarter of a billion dollars in its net income from the split. Some analysts say the company will experience a loss of eight percent of its revenue, Fortune reported.
Heidi Howard Tandy of the Berger Singerman LLP in Miami said Adidas owes West royalties for everything sold since his last payment.
“Because of the long tail for shipping and sales, and revenue collection, that process could go into 2023,” Tandy said.
