Co-Branding/Internet Distribution Agreements
By Eric Goldman, Esq.
Cooley Godward LLP, Palo Alto, CA
1. What Are Co-Branding Agreements?
o Website A ("provider") creates a version of its standard website co-branded with Website B ("portal"). Website B promotes the co-branded pages to drive traffic there.
o Can range from a glorified trademark license to full-blown outsourcing
2. Why Do Co-Branding?
o The portal wants to provide extra branded/integrated services to its users
o The portal may want to outsource the operation of certain services
o The provider wants increased visibility
o The provider may want to co-brand instead of providing a software/content license
o The parties may want to generate revenues which may be shared
3. Tracking Referrals.
o Custom URL. Watch out for combination marks!
o Cookies. Note that cookies are not infallible.
o Referring URL (one step)
o Keywords into URL (tracking referral URL through multiple steps)
4. Promotion by the Portal.
o Navigation bars
o Check-the-box during user registration
o Editorial content as promotion
o Email newsletters
o Sponsorships (of areas or of contests/sweepstakes)
o Banner ads/buttons/text links
o Minimum standards for performance?
o Exclusivity based on identified competitors
o Exclusivity based on positioning
o "Category" exclusivity (by industry or by functionality)
o Portal needs to carefully define exclusivity across a network. What happens when the portal makes acquisitions?
o Watch out for exclusivity triggered by third party content (user content, banner ads placed by ad networks, third party editorial content)
6. Data Integration/Exchange.
o What user data is the portal passing to the provider? Will the data be put into the providerís database, or will it just prepopulate forms?
o What user data is the provider passing back to the portal?
o What technology is being used to make these data exchanges?
o Dealing with privacy policies
o Database synchronization
o Negotiating user data rights clauses
o Fees for placement, development, exclusivity and clickthroughs
o Advertising split
o Who controls the inventory? Are there proper financial incentives?
o Who serves? What if the other party doesnít like the ads?
o If there are multiple ad spots on a page, are all of them subject to a split?
o Deductions before the split.
o Split of product/service sales
8. "Portals Are Pigs."
o Portals want providers to pay for the privilege of being their outsourcer
o Portals donít promise placement or a minimum level of promotion (or guarantee only banner ads)
o Portals donít promise minimum clickthroughs or registered users
o Triple dipping: promotion fee + revenue share + warrants
o Portals require co-branding and other custom development work for free
o Portals restrict use of user data to effectively prevent customer acquisition
o Portals want to terminate for bogus breaches with no refund of prepaid fees
o Examples of other egregious clauses:
o Exclusivity in favor of the portal
o Providerís promotion of the portal outside of the co-branded site for free
o Requirement that the promoted site spend part of its ad budget with the portal
o Conclusion: when doing a portal deal, try to limit how much money youíll lose.
9. Other Fun Issues.
o Does the co-brand site automatically get all new functionality?
o Indemnity for third party claims. How much of this is covered by the CDA?
o Compliance with laws provisions.
o Interplay between termination for default and trademark quality control provision
About the Speaker: Eric Goldman (formerly Eric Schlachter) is an attorney practicing cyberspace law with Cooley Godward LLP, Palo Alto, CA. He also is an adjunct professor of Cyberspace Law at Santa Clara University School of Law. Cooley Godwardís web page is located at http://www.cooley.com, and Ericís personal home page is located at http://eric_goldman.tripod.com/. Eric can be reached at firstname.lastname@example.org.