Speaker 1: This is Bloombird Law with June Brusso from Bloomberg Radio.
Speaker 1: I could say anti semitic things and Adidas can't drop me.
Speaker 1: Now what? Now what? But Adidas did just that, dropping Yea,
Speaker 1: the volatile rapper formerly known as Kanye West, in the
Speaker 1: wake of his barrage of anti Semitic remarks. The breakup
Speaker 1: of the almost decade long collaboration will cost Adidas a
Speaker 1: nearly two d fifty million dollar hit to its earnings
Speaker 1: this year, but it will cost Yea even more, reportedly
Speaker 1: one and a half billion dollars and his status as
Speaker 1: a billionaire. It's also created a morass of intellectual property
Speaker 1: rights from their multibillion dollar collaboration. My guest is attorney
Speaker 1: Zach Kurtz, who founded the law firm Sneakers and Streetwear
Speaker 1: Legal Services Zach So. About two weeks ago, Yea said
Speaker 1: that Adidas can't drop him. Do you think there's something
Speaker 1: in his contract that he thought would protect him. I mean,
Speaker 1: I think that's just Kanye being Kanye, thinking that he
Speaker 1: was invincible. I think it was almost the opposite that
Speaker 1: there was something in the contract that a statement like
Speaker 1: that could hurt him. Whether it's morals non disparagement. But
Speaker 1: I think it was also a challenge to Adidas when
Speaker 1: he said that, as well as his additional comments. We
Speaker 1: don't see the contracts, so we don't know the specific language,
Speaker 1: but I'm pretty sure there's a morals clause in it, and
Speaker 1: and I'm sure you just had the right to do
Speaker 1: that based on the situation here. When we're talking about sneakers,
Speaker 1: are we talking about patents or trademarks? All types of
Speaker 1: intellectual property, and a lot of people interchange all three
Speaker 1: of them, whether it's patents, trademarks, copyright. But usually what
Speaker 1: happens is you have a sneaker design and design will
Speaker 1: typically have a design patent and you could get several
Speaker 1: design patents for it. And as you know, the companies
Speaker 1: will also have their trademarks, whether it's a Smooze or
Speaker 1: Adidas sign, and they'll put those on the shoes as well.
Speaker 1: So and when she was a combination of design, patent, trademarks.
Speaker 1: Some companies even have trade dress. When the design patents
Speaker 1: expire or at the same time, they'll get different aspects
Speaker 1: or features of the shoe to be trademarked. So it's
Speaker 1: really a combination of all the above. And in the contract,
Speaker 1: the IP ownership and licensing and transferring and how the
Speaker 1: IP will be used and shared is fuss In the contract.
Speaker 1: Adida said in the statement that it is the sole
Speaker 1: owner of all design rights to existing products as well
Speaker 1: as previous and new color ways under the partnership. Is
Speaker 1: this firing a warning shot at Kanye because he's claimed
Speaker 1: that Adida stole his designs and took creative liberties with
Speaker 1: his brand. Yeah, I think you had the nail on
Speaker 1: the head of it there. I think that's exactly what
Speaker 1: sort of a warning sign letting us know a little
Speaker 1: bit of the contract terms that it probably says that
Speaker 1: Adidas is going to own all those designs, Kanye will
Speaker 1: not get them upon termination, and that any new iteration
Speaker 1: will be controlled by Adida. I think it was a
Speaker 1: warning sign to the public. It was also the Kanye saying,
Speaker 1: you know, get out of here. Who don't think you're
Speaker 1: going to take your designs with you. Kanye has the
Speaker 1: trademarks for yeasy wi z e y yees Us, among others.
Speaker 1: His company has more than a hundred and sixty trademark
Speaker 1: applications and registrations for his easy brand. So Kanye has
Speaker 1: the trademarks in this deal. What does Adidas have? So
Speaker 1: Kanye owned his I P that he brought to the table,
Speaker 1: which is, as you stated, easy and y z Y
Speaker 1: and all the logos and trademarks associated with his brand
Speaker 1: in this deal, all the new designs for the Adidas shoes,
Speaker 1: the three fifties, the seven fifties, literally almost every shoe
Speaker 1: that Adidas has made with Kanye, the design patents for
Speaker 1: those appear to be owned by Adidas. What we see
Speaker 1: from the facts and everything on the table, with the
Speaker 1: design patents and the trademarks and such, it looks like
Speaker 1: Adidas owns almost all of the designs of the shoes
Speaker 1: and Kanye owns and was licensing his y z Y
Speaker 1: and Easy brand to be put on those shoes. So
Speaker 1: just to get to the you know, the basics here,
Speaker 1: people who think they are buying a sneaker designed by
Speaker 1: Kanye West or yea, they're buying a sneaker designed by
Speaker 1: someone else. Yeah, I mean technically putting it. Kanye definitely
Speaker 1: has his damp on it. And then that's sort of
Speaker 1: one of his arguments and why he wanted to leave
Speaker 1: Addis and a lot of the companies because control Ultimately
Speaker 1: kanyell work with the designers and the contract will talk
Speaker 1: about how much control he had, how much approval he
Speaker 1: has when he can do this, when he can say that,
Speaker 1: but ultimately it's it's gas or you know, the companies
Speaker 1: who make a lot of the major decisions. What does
Speaker 1: Kande have the right to do owning the trademarks? When
Speaker 1: this deals terminate, he's going to have the ability to
Speaker 1: use his own trademarks what he owns on other shoes.
Speaker 1: Depending on the contract, it might have a wind down period,
Speaker 1: might have some restrictions in it that say for X
Speaker 1: amount of time you can't enter this sneaker market or
Speaker 1: you know, running shoes or shoes something like that. But
Speaker 1: I think upon termination like we have now, it's up
Speaker 1: to Kanye to take his trademarks with him and to
Speaker 1: have new designs or use his trademarks for other purposes.
Speaker 1: Is on clothing, and he does own several other design patents.
Speaker 1: One was for the easy Slide, and I think to
Speaker 1: me that's the most interesting one because although his name
Speaker 1: is on the design patent as an owner and the inventor,
Speaker 1: it's still associated with Adidas. When everyone thinks of the slide,
Speaker 1: which is one of the top selling Easy shoes. Adidas
Speaker 1: Easy Shoes they associated with Easy Adidas Kanye Easy Slide.
Speaker 1: So I think that if Kanye wants to bring it
Speaker 1: with him, or if Adidas wants to use that same side,
Speaker 1: you know, without the branding, there'll be a good legal argument,
Speaker 1: or it'll be tricky to say, hey, there's that there's
Speaker 1: not confusion, or that consumers don't associate whatever that is
Speaker 1: with Kanye or with Adidas. So he also owns a
Speaker 1: high heeled shoe, and I would usually say he'd be
Speaker 1: able to take those with him and use it, But
Speaker 1: I'm not sure about the Easy Slide. I think if
Speaker 1: he couldestingly makes some arguments. So essentially as Kanye just
Speaker 1: working with new designers and creating his new designs and
Speaker 1: new sneakers, brand new. So now as far as Adidas
Speaker 1: they on these signs, can they just put out the
Speaker 1: same shoes without the Easy trademarks. There's been talking about that,
Speaker 1: you know, and that has happened before. Other companies have
Speaker 1: done such a thing. You know, it's an athlete leaves
Speaker 1: or the contract expires, they'll take off his branding and
Speaker 1: his trademarks, and people have in the sneaker community. Some
Speaker 1: don't like that when that occurs. And I think in
Speaker 1: this situation, if Adidas to drift the easy branding and
Speaker 1: started selling easy, there'll be a lot of outrage just
Speaker 1: that Adidas for doing that after they terminated with Kanye,
Speaker 1: But I think there would be all sneaker heads and
Speaker 1: seas in the community who purposely wouldn't buy the shoes
Speaker 1: for that reason. At the same time, there probably would
Speaker 1: be the opposite, though. The sneaker world is crazy, to
Speaker 1: be honest. Sketcher said that Ye showed up unannounced and
Speaker 1: uninvited at its corporate headquarters in Los Angeles on Wednesday
Speaker 1: for what reason they didn't say. So if he wants
Speaker 1: to make his own sneakers, that's not going to be
Speaker 1: so easy, is it. It's a lot harder than it look,
Speaker 1: you know, And only a couple of companies have the
Speaker 1: ability to do what Adidas is doing, you know, to
Speaker 1: produce sneakers at such back turn around times at the
Speaker 1: same time that amount of stocks, the three fifty, they
Speaker 1: had made so many of those, and it's very rare
Speaker 1: that companies could manufacture the amount that Kanye want. I
Speaker 1: think that was a big part of the deal to
Speaker 1: Kanye when he was shopping and trying to get out
Speaker 1: of Adidas before this all occurred, and he was reaching
Speaker 1: out to other companies and he just couldn't find another companies.
Speaker 1: But it sounded like to actually do this, and that's
Speaker 1: just a big thing. If you want to do something
Speaker 1: by yourself, like Kanye wants to do, he's gonna have
Speaker 1: a hard time finding a manufacturer, especially now after everything
Speaker 1: has gone down. Do these celebrity endorsements or celebrity co
Speaker 1: branding do they bring the sales to these sneakers? I mean,
Speaker 1: can Adidas just put out the same kind of sneaker
Speaker 1: but it won't get as many sales because it doesn't
Speaker 1: have that celebrity factor. Yeah, definitely. I think what we
Speaker 1: see in the sea industry is is exactly that celebrities influenced.
Speaker 1: There's collaborations. They've been going through the roof lately, and
Speaker 1: because of the collaborators, these companies are able to sell
Speaker 1: out shoes quicker and Nike's insect will tell out no
Speaker 1: matter what, to be honest, but when you add the
Speaker 1: Travis Scott to it, it's just turned the fact that
Speaker 1: the wow factor and the price of penfold. So I
Speaker 1: think you're right. That's why all these companies are reaching
Speaker 1: out the celebrities and doing collaboration shoes because people want
Speaker 1: to see that now. They don't just want to regular
Speaker 1: you know too, or a different color way. They want
Speaker 1: someone that they know and someone they connects with. So
Speaker 1: there's an artist and entertainer, someone they like on that shoe.
Speaker 1: And when the companies do that, it definitely helps their
Speaker 1: bottom line. So do they have to be careful though?
Speaker 1: Because the celebrity has pinash is one thing, but a
Speaker 1: lot of celebrities like Kanye come with, you know, different problems,
Speaker 1: so there is this explosive element added. You're exactly right.
Speaker 1: I think that's the most important thing that we should
Speaker 1: take out of the situation. Influencers are great and they
Speaker 1: could help your bottom line with sales, and you know
Speaker 1: they could. If you pick the right one, you can
Speaker 1: make a company, you know, explode and do great, especially
Speaker 1: for these small startups. But picking the right one and
Speaker 1: doing your due diligence is super important. I remember reading
Speaker 1: something recently where they said in two was the first
Speaker 1: time that the stock market when they're analyzing companies for
Speaker 1: their I p O that they had the risk of
Speaker 1: influencers listed, and I think that says a lot that
Speaker 1: influencers in society now have. You know, they're they're good,
Speaker 1: but they're also so risky that people must analyze that
Speaker 1: in every aspect of you know, a company, and I
Speaker 1: think these brands should be doing that for sure every
Speaker 1: single time with the contract your firm does sneaker and
Speaker 1: streetwear legal services, how much litigation is there or legal
Speaker 1: work is associated with sneakers and shoes. It's a lot,
Speaker 1: it's a lot. It's just enough that I could have
Speaker 1: my own practice strictly doing sneakers in streetwear and I
Speaker 1: love it, and it's more just than just litigation. But
Speaker 1: we're touching on a lot of the main areas that
Speaker 1: are covered in here, sneaker design and contracts, and it's
Speaker 1: a lot of I P. You know, it's heavy i
Speaker 1: P and heavy contracts and it's really fun. But you
Speaker 1: get in these situations with influencers or you know, designers
Speaker 1: and shoes and such, and there tends to be litigations.
Speaker 1: So it's been taken off a lot. As you see
Speaker 1: in the past four years has been a lot of
Speaker 1: litigation relating to UH independent designers and trademark. So how
Speaker 1: many sneakers do you own? A? Probably? But I'm like that,
Speaker 1: how about you? No, No, I don't own any sneakers,
Speaker 1: And you can tell I don't have much knowledge of
Speaker 1: this area of designers sneakers, but maybe after this I'll start.
Speaker 1: Thanks so much, Zack that Zack Orts, founder of the
Speaker 1: law firm Sneakers and Streetwear Legal Services. Next Tuesday, New
Speaker 1: York City's wage transparency law goes into effect. It will
Speaker 1: make it mandatory for employers to share the salary or
Speaker 1: hourly wage and postings joining me is and Dana, a
Speaker 1: partner at King and Spalding, tell us about New York
Speaker 1: City's new law. So I think it's important in understanding
Speaker 1: the New York City pay transparency law to place it
Speaker 1: into the broader US context of pay disclosure laws that
Speaker 1: are getting past right now. In the past few years,
Speaker 1: we've seen a real proliferation of these types of laws,
Speaker 1: and that trend is expected to continue, and I think
Speaker 1: it's important to understand that context in order to see
Speaker 1: how New York City is kind of at the forefront
Speaker 1: of some of the changes in these laws. So one
Speaker 1: of the key differences that we've really been seeing in
Speaker 1: the passage of these laws is that originally the laws
Speaker 1: were really focused on being reactive, and they were only
Speaker 1: requiring pay disclosure when somebody asked for salary information, whether
Speaker 1: it was an applicant or when they were given a
Speaker 1: conditional offer. And now what we're seeing is a shift
Speaker 1: in the laws, and the laws are becoming more proactive,
Speaker 1: with states and cities amending these pay disclosure laws requiring
Speaker 1: employers to provide proactively salary ranges upfront with posting of
Speaker 1: job advertisements. And that's exactly what the New York City
Speaker 1: law is doing. So all in employers in New York
Speaker 1: City are going to be required to include the minimum
Speaker 1: and the maximum annual salary or hourly wage in any
Speaker 1: advertisement for a job or an advertisement for a promotion
Speaker 1: or transfer opportunity internally at the company, and that range
Speaker 1: may be extended from the lowest to the highest salary
Speaker 1: or wage the employer in good faith believes at the
Speaker 1: time of the posting it would pay for the advertised job,
Speaker 1: promotion or transfer opportunity. And this is going to be
Speaker 1: a big change for a lot of employers who haven't
Speaker 1: necessarily been disclosing that information publicly. Why don't employers want
Speaker 1: to disclose that information? Because as a job seeker, you
Speaker 1: look at an AD and should I apply for this ad? Well?
Speaker 1: How much does it pay? A lot of times that
Speaker 1: must stop people from applying for the job. Well, I
Speaker 1: think there's a variety of reasons that businesses may not
Speaker 1: want to actively disclose in a job posting what they're
Speaker 1: willing to pay. So, but that might be they don't
Speaker 1: want their competitors to know what they're willing to pay.
Speaker 1: Part of it, maybe you know that they want to
Speaker 1: be able to look at the candidates and assess, you know,
Speaker 1: I'd be willing to pay more for candidate A who
Speaker 1: has fifteen years of experience versus candidate B, who maybe
Speaker 1: only has two years of experience. Is setting that range
Speaker 1: upfront in a job posting may not be the place
Speaker 1: where they want to originally open that discussion. However, they're
Speaker 1: not going to have an option anymore. When it comes
Speaker 1: to New York City and other similar jurisdictions, does law
Speaker 1: apply to all employers whoever puts out a job application?
Speaker 1: Or are there limits? So it's going to apply to
Speaker 1: all employers with four or more employees as long as
Speaker 1: there's at least one employee in New York City, and
Speaker 1: it's going to apply to all positions that can or
Speaker 1: will be performed at least in part in New York City.
Speaker 1: So that is going to be a little bit complicated
Speaker 1: for some employers to figure out, particularly for multi jurisdictional employers. Obviously,
Speaker 1: with the COVID pandemic, we've seen the rise of remote workers,
Speaker 1: whether that is kind of a fully remote position versus
Speaker 1: a partially remote position where a worker maybe in New
Speaker 1: York City two days a week, but in Connecticut three
Speaker 1: days a week. In that situation, the New York City
Speaker 1: law would apply to that job posting. For large, multi
Speaker 1: jurisdictional employers who are possibly looking for employees in any
Speaker 1: state um to fill a job position that's fully remote,
Speaker 1: they're going to need to look at New York City's
Speaker 1: law as well. I take it the point of this
Speaker 1: is not just to make life easier for job seekers,
Speaker 1: that there is also a hope that it will promote
Speaker 1: pay equity. Yes, I think proponents of pay disclosure laws
Speaker 1: do argue that these types of laws will help close
Speaker 1: the wage gap for women and minorities. You know, while
Speaker 1: it remains to be seen if this becomes a reality
Speaker 1: as these laws get past, I think there's no doubt
Speaker 1: that these laws provide more pay information to applicants and
Speaker 1: to employees, and I think that we do anticipate that
Speaker 1: we're going to see that impact in the workplace, particularly,
Speaker 1: you know, I think some commentators are predicting that companies
Speaker 1: are going to be able to see what salary ranges
Speaker 1: their competitors are offering and therefore kind of match what
Speaker 1: competitors are paying, which could actually alter some of the
Speaker 1: recruiting methods that are going on right now. I think
Speaker 1: other people are also anticipating that this may give rise
Speaker 1: to more pay equity litigation. So explain what kind of
Speaker 1: pay equity litigation you're talking about. So one of the
Speaker 1: recommendations we are making two employers is to carefully take
Speaker 1: a look and assess whether or not they need to
Speaker 1: do an internal pay equity audit and look at how
Speaker 1: their salary ranges are being paid for current employees. So obviously,
Speaker 1: once you're posting job salary ranges for a position that
Speaker 1: is being advertised, current employees are going to be able
Speaker 1: to look at that job posting and determine whether or
Speaker 1: not they are currently making an amount within that salary range,
Speaker 1: and as more employees are having access to information about
Speaker 1: pay ranges, some commentators do expect that workers will become
Speaker 1: more disgruntled and may start asking more difficult questions about
Speaker 1: why they're making less money than somebody else of a
Speaker 1: different gender or a different race, giving rise to more
Speaker 1: pay equity litigation. I suppose that answers my earlier question
Speaker 1: about why employers wouldn't necessarily want these kinds of laws.
Speaker 1: Have you found more companies focusing, you know, without being
Speaker 1: pushed by outside agencies, focusing on E s G? Definitely.
Speaker 1: I think more companies are becoming focused on E s
Speaker 1: G as more customers, consumers employees are asking questions related
Speaker 1: to their E s G. So tell me that the
Speaker 1: penalties associated with these laws. So this is one of
Speaker 1: the key differences in how different states and jurisdictions are
Speaker 1: looking at what the penalties will be for favor to
Speaker 1: comply with these types of laws. Here in New York City,
Speaker 1: the Commission on Human Rights is entitled to investigate complaints
Speaker 1: by employees or applicants, and the Commission can actually issue penalties.
Speaker 1: So the Commission came out with guidance that effectively said
Speaker 1: that there will be no money for the first violation
Speaker 1: if an employer can cure the violation within thirty days
Speaker 1: of service of the complaints. Um, however, you know second penalty.
Speaker 1: You know a second violation, the Commission can end up
Speaker 1: issuing a penalty of up to two dollars, and it
Speaker 1: really remains to be seen what these penalties will look
Speaker 1: like for a second or third violation. Also important is
Speaker 1: to understand that there's a private rate of action under
Speaker 1: the New York City law, but it's limited to current
Speaker 1: employees who are bringing a claim against their current employer.
Speaker 1: Applicants for a new position who are not employed by
Speaker 1: the employer do not have a private right of action,
Speaker 1: so they can't bring civil litigation against the employer in court.
Speaker 1: Will this be a heavy lift, you know, complying with
Speaker 1: these laws? Would it be a heavy lift for big employers?
Speaker 1: Will they all be calling their attorneys to ask what
Speaker 1: to do? I think it really depends how much thought
Speaker 1: employers have put into what they're paying their employees. For
Speaker 1: those employers who have seen this legislation coming, a lot
Speaker 1: of them have been preparing and thinking through how to
Speaker 1: make these pay disclosures. Once the laws are in place.
Speaker 1: For other employers who are caught a little bit flat footed,
Speaker 1: they may not be as prepaired and they may be
Speaker 1: scrambling come November one. You said earlier that you see
Speaker 1: this as a trend that's going to spread, these pay
Speaker 1: transparent see laws. Do you think it depends on how
Speaker 1: well they work out in the states where they are
Speaker 1: currently on the books, or that it's just a trend
Speaker 1: that's going to continue no matter what. I think it's
Speaker 1: a trend that's going to continue no matter what. I
Speaker 1: think that there's a real hunger right now from employees
Speaker 1: for access to more information about pay, and I think
Speaker 1: that there's a trend with employers really looking to ensure
Speaker 1: they have employee trust and pay disclosure is one of
Speaker 1: the ways to do that. I also think that, you know,
Speaker 1: how these laws work out, it will take a while
Speaker 1: for any sort of real data to come out, and
Speaker 1: so I think in the meantime, we're going to see
Speaker 1: a continuation of these laws being passed. Well, thanks so much. Ann.
Speaker 1: That's and Dana a partner at King and Spalding. And
Speaker 1: that's it for this edition of The Bloomberg Law Show.
Speaker 1: Remember you can always get the latest legal news on
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Speaker 1: Show every week night at ten pm Wall Street Time.
Speaker 1: I'm June Grosso and you're listening to Bloomberg