In recent years, brand collaborations have become a dominant feature of modern commerce. From high fashion to fast food, unlikely partnerships are no longer the exception but the strategy. Yet behind every successful collaboration lies a less visible question: when two brands come together, who actually owns the product that emerges?
The collaboration between Audemars Piguet and Swatch is a striking example. On its face, it appears to be a simple fusion of luxury watchmaking and accessible design. But legally, it raises far more complex issues. Does the resulting product belong to one brand, both, or neither? How can two companies share their most valuable assets, their trademarks, without risking loss of control, dilution, or consumer confusion?
Trademarks are not merely decorative logos; they are indicators of origin, reputation, and quality. Allowing another entity to use them, even in a collaborative context, is not a casual decision but a carefully structured legal arrangement, a ‘Trademark Cross License Agreement’
WHAT IS A TRADEMARK CROSS-LICENSE?
A trademark cross-license is a mutual, temporary contractual agreement. It allows IP owners to collaborate and share their respective IP rights. Think of it as a strict, reciprocal “hall pass.” Brand A gives Brand B a highly restricted right to use its protected commercial identity, and in return, Brand B does the exact same for Brand A.
However, it doesn’t allow the other to have full access to their trademarks. The agreement will typically list every single logo, front, colour and design elements that are allowed. If the brand steps outside these clearly drawn lines, the contract would be breached, and they would be guilty of trademark infringement
The Real-World Example : Swatch x Audemars Piguet (AP)
AP licensed its Trade Dress : The distinct design geometry of the Royal Oak, specifically the octagonal bezel, the eight exposed hexagonal screws, and the textured “Petite Tapisserie” watch dial.
Swatch licensed its Proprietary Tech and Formats : Its modular POP line architecture, its patented Bioceramic material, and its automated SISTEM51 mechanical watch movement.
Because of this agreement, Swatch could legally manufacture and retail a pocket watch mimicking AP’s high-end design codes without AP’s legal team suing it for trade dress infringement.
WHY IS QUALITY CONTROL MANDATED BY LAW
In a standard commercial contract, you can usually hand over an asset and walk away. Trademark licensing does not work that way. Under intellectual property law, if a brand licenses its logo but fails to actively police how it is used, it commits what is known as a “naked license.”
The Legal Consequence: The law views a trademark as a guarantee of consistent quality to the consumer. If a brand fails to maintain quality control over its licensees, a court can rule that the trademark has lost its meaning, potentially causing the brand to forfeit its trademark rights entirely.
To prevent this corporate nightmare, collab agreements feature intense quality control provisions:
- Multi-Stage Approvals: Every single prototype, material sample, and marketing asset must be explicitly greenlit by both brand equity teams.
- Manufacturing Vetoes: AP’s luxury teams retain final veto power to ensure that Swatch’s Bioceramic cases maintain the precise vertical satin-brush finish and exact alignment of those eight hexagonal screws. If a batch feels cheap, production is legally halted.
The Malaysian Equivalent of ‘Naked Licensing’
While the phrase “naked licensing” is a common-law concept popularised in US and UK jurisprudence, its direct statutory equivalent in Malaysia is found in the grounds for judicial revocation.
Under Section 46(1)(d) of the Trademarks Act 2019, an aggrieved competitor can apply to the High Court to completely revoke a registered trademark if:
As a consequence of the use of the trademark by the proprietor or with his consent (the licensee), the mark is liable to mislead the public, particularly as to the nature, quality, or geographical origin of the goods or service
THE POST-COLLAB BREAKUP : WHAT HAPPENS TO A MASHUP LOGO?
This leaves a fascinating hypothetical question:
What happens if the two design teams invent a brand-new hybrid mashup logo or a unique Pop Art dial pattern during their brainstorming sessions, and then the collaboration ends? Who keeps the invention/product?
If the brands do not address this upfront, the law steps in with a dangerous default setting. Under Section 3 and Section 27 of the Malaysian Copyright Act 1987, any new artwork co-created where the individual contributions cannot be separated is legally deemed a “work of joint authorship.”
By default, joint authors are treated as co-owners. In many international jurisdictions, this creates a total commercial deadlock. But under Malaysian law, the risk is even wilder: Section 27(4) allows a co-owner to grant a license or assign the copyright to a third party without the consent or knowledge of the other creator.
This is strictly governed by the contract’s Post-Termination IP Provisions. When the clock runs out on a high-profile partnership, three legal rules apply to newly created hybrid assets:
- The Freeze Rule: Any hybrid or mashup logo created jointly during the collaboration is officially retired. Neither brand can legally use, manufacture, or profit from that hybrid logo independently once the contract expires. It enters a legal deep-freeze.
- Asset Reversion: All pre-existing intellectual property immediately uncouples.
- The Sell-Through Clean-up: The contract dictates a strict, brief “sell-through” window (e.g., 3 to 6 months) to clear out remaining physical stock. Once that window shuts, any leftover joint inventory must either be safely archived or physically destroyed to protect brand scarcity and ensure a clean legal break.
THE BOTTOM LINE
At the end of the day, high-profile brand collaborations are far more than just a creative handshake or a viral marketing stunt, they are high-stakes legal tightropes.
Whether it is a luxury titan like Audemars Piguet leasing its crown jewels to Swatch, or a local Malaysian business launching a limited-run drop, a bulletproof cross-licence agreement is the only thing keeping the hype profitable and the brand identities safe. Without rigorous quality control and crystal-clear post-termination rules, today’s trending internet sensation can easily become tomorrow’s High Court cautionary tale.
Hence, if you’re looking to protect your unique designs globally via the Madrid Protocol, our dedicated team at Quality Oracle ensures your intellectual property stays robustly defended.
Don’t let your co-created assets turn into a legal deadlock. Contact us at Quality Oracle to let us help you structure your next big move safely.
Disclaimer : The information provided in this publication is for educational and informational purposes only and does not constitute formal legal advice.
