When growing your business or brand entering into a joint venture via an affiliate arrangement or licensing your product or service can be an attractive and relatively easy way to expand your customer base. You may work with coaches or digital entrepreneurs, for example, who will partner with another individual, entity, or influencer within a specific niche to get your products in front of more people on social media or blasted to a bigger email list.
This type of arraignment has the prospect to work well for both parties—the larger company gets the benefit of having a new product or service offering without doing additional work, while the original creator gets to share in the profits when their work is sold to a larger client base. On the flip side, a joint venture or affiliate arrangement can be catastrophic if clear communication and proper agreements are not in place from the start. In worst case scenarios, a botched joint venture could result in the theft or misuse of intellectual property (“IP”), stolen trade secrets, expensive litigation and the tarnishing of one’s brand.
If you are considering entering into a joint venture or affiliate agreement with your product or service as the basis of your collaboration, we recommend working with an attorney from the very start of the process. Your attorney will not only help you work through contracts and the legal details behind the launch, but also help you ensure that your IP is secure and handled appropriately by all parties.
Some issues your attorney may help you work through include:
- Each party’s responsibilities (marketing, sales, customer service, etc.)
- Is the IP exclusive?
- What happens if the product is improved under the joint venture? – Who then owns the new IP?
- Tracking of sales and reporting
- Who collects the revenue?
- How revenue or royalties are shared
- How to determine which party will enforce any IP rights
- What happens when you terminate the agreement?
- Compliance with CANSPAM in email marketing campaigns
- Confidentiality and non-disclosure terms
- Non-compete and non-solicitation of employee or clients
We recognize that when entering into a joint venture agreement that business owners are excited to get started on the collaboration and figure that once they are on the same page synergistically, the rest of the details will fall into place. But it’s dangerous to place your intellectual property and business assets in the care of someone else without the right safeguards. Comingling your assets, whether physical or digital, may not be so simple and could result in you battling in court down the road for rights that should have been protected from the start.
With that said, if you are considering entering into a joint venture agreement, please take the time to get the answers to the questions that you need on the legal side. We are happy to meet with you if you need assistance. Simply call our law firm at 888-666-0062 to schedule a consultation.
DISCLAIMER: The information contained in this article is for informational purposes only and is not legal advice or a substitute for obtaining legal advice from an attorney.