Who owns Yeezy? Ye-Adidas could face a messy divorce

“If he really wanted, he could probably sell other clothing or possibly footwear,” he 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.”

Adidas’ announcement on Tuesday ending the years-long partnership comes after Gap and Kering’s Balenciaga separated from the rapper, who has made a string of anti-Semetic remarks on social media and caused controversy by wearing a “White Lives Matter” shirt at a Paris fashion show. Gap announced on Tuesday that it would pull Yeezy-Gap apparel from its stores.

The German sportswear giant said it would end production of Yeezy-branded products and stop all payments to Ye immediately. Ending the partnership will be costly: Adidas said it was expecting a $US247 million ($380 million) hit to net income this year due to the breakup, and outside estimates peg the collaboration as responsible for as much as 8 per cent of the company’s revenue.

“At the very least, Adidas will owe Ye royalties for everything that’s been sold since the last royalty payment they made to him,” said Heidi Howard Tandy a partner with Berger Singerman in Miami who specialises in intellectual property law. “Because of the long tail for shipping and sales, and revenue collection, that process could go into 2023.”

Adidas said it owned the “design rights to existing products” and past and future colour combinations of the shoes. Filings with the US Patent and Trademark Office show that Adidas obtained a series of design patents for the Yeezy Boost 350 shoe in 2017 and 2018.

The shoes were created by Nic Galway, Adidas’ vice-president of global design, according to the filings.

“The more controversial the figure, the bigger the splash – and maybe the bigger the payoff – but there’s also this exact type of risk.”

trademark attorney Kazuyo Morita, who is a partner at Holland & Hart

The partnership between Ye and Adidas appears to be a “standard licensing deal” that was labelled as a collaboration, according to Kurtz.

“That means that Kanye is licensing to Adidas his trademarks and intellectual property, Yeezy and YZY, to put on shoes and apparel,” he said. “Adidas looks to be the one who’s doing the manufacturing and the designing, and that’s why they’re the ones on all the design patents.”

The Yeezy business earned more than $US500 million in total royalty payments and marketing fees through 2020, the first four years of the Adidas deal. Ye’s pact with Adidas gave him a 15 per cent royalty on wholesale Yeezy products, Forbes reported in 2019, but Ye said in September that he wanted to renegotiate to a 20 per cent lifetime agreement.

Filings with the patent office show that his company, Mascotte, has registered or applied to register 164 trademarks related to the Yeezy brand, including “Yeezy”, “Donda”, and “Yeezus”.

The trademarks cover products in a variety of industries from shoes, sportswear, food, and beverages, to cosmetics and products in the metaverse. The Gerben Law Firm, based in Washington, DC, compiled the filings.

Unlike the other Yeezy footwear, Ye did obtain a design patent for the Yeezy Slide in 2020. In a since deleted Instagram post from June, Ye accused Adidas of creating knock-off Yeezy Slides.

The fallout may also serve as a warning for companies to complete their due diligence when jumping into co-branding deals, which have risen in popularity in the past few years, said trademark attorney Kazuyo Morita, who is a partner at Holland & Hart.

Celebrity co-branding can often provide increased sales, consumer hype, and can distribute economic risk, she said. “And really, the more controversial the figure, the bigger the splash – and maybe the bigger the payoff – but there’s also this exact type of risk.”

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In theory, Adidas could continue selling shoes that look identical to Yeezy shoes as long as they don’t use the trademarks owned by Ye. But Gerben said the controversy around the partnership has already diminished the value of Adidas’ designs.

“If Adidas is going to move forward with any use of a product that resembles something they did with Kanye, I don’t think that’s going to go over well,” he said.

“It is essentially just a complete loss for them.”