Corporate

There was a surprise announcement in the press recently when Google and Nestle revealed that they were coming together in a joint venture: Google’s new android version 4.4 will be branded Kitkat and 50 million Kitkat wrappers will feature the Android Mascot in 19 markets across the world.

The deal apparently came about when Google’s development team were discussing the merits of the version’s previously proposed codename “Key Lime Pie” (in line with its Hurricane style naming convention for Android release versions). KitKat was suggested as an alternative, and Google then cold called Nestle to ask if they would mind Google using the name.

There are two points which mark this news out as unusual:

  • Secrecy was maintained throughout the process
  • Neither is paying the other, so this is not a traditional sponsorship or brand licence agreement

This makes it a rather interesting partnership. Given Kitkat’s established markets and brand recognition, Kitkat would usually be considered the “sponsor” in a deal like this, paying a substantial premium for the brand exposure. That scenario turns on its head, however, when one then goes to less established markets for Kitkat.

Similarly, use of a third party’s brand would usually attract a premium (licence fee) for the privilege of benefiting from the attached reputation and goodwill.

The arrangement could therefore be viewed as an inspired marketing union with incremental benefits for both parties. It may well set a precedent for further similar ventures on varying scales.

What gave the announcement additional impact and coverage was the surprise element. It emphasises the importance of tightly drafted confidentiality agreements, limited disclosure within an organisation and careful management of staff. Indeed, Google helped to maintain the surprise element by rumours that the release would indeed be called Key Lime Pie.

Managing the brand risk

However, companies looking to embark on this type of joint branding, should be aware, that even a match seemingly made in heaven can melt away all too quickly. Like a marriage, it can be for better or for worse: a problem with one partner (in this case, for example, buggy software or a major security issue) will inevitably damage the branding of the other.

A process of pre-contract risk assessment and a well drafted contract (including detailed termination rights) helps to ensure that an innocent party can take appropriate steps when things go wrong (or start to impact upon its reputation). The time and effort spent on that will be a worthwhile investment for companies embarking on such a venture.

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Martin Sloan

Partner at Brodies LLP
Martin is a partner in Brodies Technology, Information and Outsourcing group and has wide experience of advising clients on technology procurement and IT and business process outsourcing projects. Martin also advises on data protection (including the GDPR), and general technology and intellectual property law, and has a particular interest in the laws applying to social media and new technology such as mobile apps, contactless/mobile payments, and smart metering.
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