Business of Fashion, Fashion Law

Nike sells Cole Haan for $570 Mill

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Have you tried any Cole Haan flats featuring Nike Air technology?

Cole Haan women's career fashion loafer shoes   Cole Haan Nike Air technology heels   Cole Haan boots with Nike Air comfort technology

If you haven’t, you might be running out of time!

Apax Partners, a private equity firm, is purchasing Nike Inc.’s Cole Haan Brand for $570 million. The change is expected to be finalized in early 2013. The Nike technology will continue on through a transitional period but will not necessarily be a feature in future Cole Haan shoes.

What this sale means for your feet
If you are a fan of Nike Air technology’s cushioning and support in Cole Haan’s shoes, you should stock up on those shoes now. 

Nike Air’s technology is Nike Inc.’s intellectual property (IP), so a sale of the Cole Haan brand does not automatically transfer into the right to use Nike’s IP. While the right to use the technology is something that can be negotiated, it is unlikely that Nike would let go of their technology so easily. 

Cole Haan could get a license to use Nike’s technology but the information given so far has just been that the use will be allowed during the transition. 

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What to take note of if you are a party involved in the sale of brand

Let’s say you were on Apax Partners’ side. You should consider what makes the brand you are buying attractive. If Nike Air technology is the driving force behind sales of the Cole Haan brand, you should want to keep that technology. If you could not get the technology you want an agreement that the technology would not be shared with or sold to another footwear maker. 

Since Nike is an athletic footwear brand and you’d be taking on a brand that focuses on dressier boots and casual shoes, you could ask for the sole and exclusive right* to use the technology in non-athletic footwear. If you could not get the sole and exclusive right you should still try to get the exclusive right for as long as possible or exclusivity for a certain category of goods.

Let’s say you were in a situation like Nike’s. You may want an agreement keeping as many of your original IP rights as possible. So you’d want an agreement that gives a limited, nonexclusive, nontransferable license to use your IP. Giving another party the sole use or right to build on your technology is bad if you later want to expand on that technology. Giving up the exclusive use of your technology should not come cheap. If someone wants exclusivity it means they think others will want in on your IP and that such use would cause loss of profits to them. As such they’d likely be willing to pay extra for that right.

Want to read more fashion law concerning shoes? Learn about Gap’s new legal trouble on my facebook!

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*Agreements that give the exclusive right to something should be written contracts, not verbal ones.

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