Character Collaboration Contracts: You Must Know These Clauses

A character collaboration contract is not simply a document containing permission to 'use this character.'

It contains standards for the entire collaboration process, such as the scope of character utilization, how products should be produced, what matters require prior approval, and the extent of permissible sales.

Therefore, if you start collaborating without fully understanding the contract, unexpected schedule delays or communication issues may arise.

Conversely, if you understand the key details of the contract in advance, you can proceed with character collaborations much more smoothly.

In this article, we will look at the key clauses that brand partners frequently encounter in practice after signing a character collaboration contract.

We plan to examine everything step-by-step, from the scope of designated goods to the obligations of brand partners and IP holders, so I hope you read today's post and proceed with a safe contract!

1️⃣ Obligation to Launch Designated Products: What kind of products can be made?

Character collaboration contracts usually include a section called 'designated products'.

Simply put, it involves deciding which products to launch in this collaboration and which product categories to proceed with licensing agreements for.

For example, the contract might be written as follows.

• Skincare products, makeup tools

• Pop-up store space

• Acrylic mood light, body pillow

The products designated in this way do not simply mean that they "can be made," but are products agreed upon with the premise of actual launch.

So, if the product is not launched after the contract is signed or the schedule is significantly delayed, it could become a problem.

In particular, designated products often come with a set release deadline.

For example, conditions such as 'launch within 6 months from the contract date' are sometimes attached.

If you fail to launch within the designated period, the rights to the product category may be forfeited, or separate negotiations may be required.

2️⃣ Obligations of Brand Partners

Once the contract is signed, the brand partner does not stop at simply using the character.

There are several obligations that must be observed while using the character.

The obligations of the brand partner must also be specified in the contract and adhered to.

✔️You may only use it within the scope specified in the contract.

Just because you can use a character doesn't mean you can use it freely everywhere.

It can only be used within the products, period, and sales channels specified in the contract.

If you wish to create new products or use the product for other purposes outside the scope of the contract, separate consultation is required.

✔️You cannot transfer collaboration authority to another company.

A character collaboration contract is a contract made with a specific brand.

Therefore, if you want to transfer the rights obtained through the contract to another company or have them use it on their behalf, prior consent from the IP holder is required.

You should not transfer collaboration authority to just anyone, as delegating authority without permission can lead to legal issues.

✔️ You must mark it as genuine.

Licensed products must have copyright markings or authenticity holograms attached.

This mark serves to inform consumers that it is an officially licensed product.

Since the authenticity mark may vary depending on the printing method or sticker application method, you must consult with the IP holder and display the copyright in the designated manner.

✔️You must not change the character without permission.

While design directions may differ by brand, the core image of the character must be maintained.

Significantly altering colors, distorting proportions, or using it in a way that does not align with the worldview may result in restricted usage.

Therefore, most IP holders provide style guides and request that designs be made accordingly.

3️⃣ Obligations of IP Holders

A contract is not a document that imposes obligations only on the brand partner.

IP holders also assume various roles and responsibilities according to the contract.

Just like brand partners, the obligations of the IP holder must also be specified in the contract.

✔️ You must provide the necessary materials.

Once the contract is signed, the IP holder provides materials necessary for product production, such as original character files and style guides.

This is because the brand needs this material to start the design work.

✔️ You must cooperate with the product development process.

You need to provide necessary feedback during the design review or approval process and cooperate to ensure smooth collaboration.

If the approval schedule is excessively delayed, it could also affect the product launch schedule.

✔️ You must notify us if there is a change in your rights.

You must notify the brand partner if the IP rights change or if any issues arise that affect contract performance.

That way, the brand can also minimize unexpected damage.

✔️ You must participate diligently in the collaboration process.

A contract is ultimately a promise to make a project a success together.

Therefore, if a brand partner requests reasonable cooperation, the IP holder must respond in good faith.

A contract is a document that establishes the standards for collaboration.

When you first look at the contract, it may seem like there are many restrictions.

However, the purpose of a contract is not to restrict anyone, but to reduce confusion that may arise during the collaboration process and to clearly define each other's rights and responsibilities.

Brand partners can know the extent to which they can utilize characters, and IP holders can manage how their IP is used.

So, simply reading the contract carefully can make the subsequent collaboration process much smoother.

Innerbooth is here to support brand partners and IP holders in collaborating smoothly, from partner matching to contracting, collaboration, and settlement.

If you are preparing for a character collaboration, we hope you will start step-by-step with Inner Booth, from finding a partner to the key clauses of the contract.

In the next part, we will learn about advertising, promotional activities, and confidentiality clauses!