Published in Manufacturing
The Champion sneaker. The Champion sneaker. COURTESY PHOTO

HanesBrands pays Wolverine World Wide $90M for trademarks as part of lawsuit settlement

BY Friday, July 01, 2022 10:16am

ROCKFORD — Footwear and apparel company Wolverine World Wide Inc. is selling the trademarks for the Champion sneaker marketed by its Keds LLC subsidiary to HanesBrands Inc. in a move that settles an ongoing and bitter dispute between the two businesses.

Winston-Salem, N.C.-based HanesBrands (NYSE: HBI) will pay Wolverine (NYSE: WWW) $90 million in cash for the trademark rights to Champion in the U.S. and Canada. 

In the agreement, Wolverine has retained a perpetual license to continue using the Champion trademark on certain footwear, namely the iconic Keds brand Champion sneaker it has marketed and sold since 1916. 

HanesBrands first entered into a licensing agreement with Keds for the Champion trademarks in 1987, according to a federal securities filings. The original deal allowed HanesBrands to use the marks on certain “high-performance athletic shoes” in exchange for royalty payments to Keds. 

Licensing the marks allowed HanesBrands to extend the Champion name that it also uses for a line of lifestyle athletic wear. 

Wolverine acquired Keds in 2012 as part of the $2 billion acquisition of the former Collective Brands Inc., a deal that also brought Sperry, Saucony and Stride Rite into the fold. 

In a statement, Wolverine World Wide said the sale allows the company to realize cash from the royalty payments from HanesBrands. 

“This transaction represents a unique opportunity to simplify our business model while at the same time securing a significant amount of cash at a meaningful multiple of future expected royalty streams,” Wolverine World Wide President and CEO Brendan Hoffman said in a statement. “Also, by retaining a perpetual license our Keds brand will continue to market and sell the iconic Keds Champion sneaker that its consumers have worn and loved for generations.”

The deal comes as part of an agreement to settle a series of contentious lawsuits between the two business partners that have played out in federal court since mid 2020. 

According to court filings in the U.S. District Court for the District of Massachusetts, HanesBrands in July 2020 filed a “meritless” lawsuit against Keds to contest its historic uses of the Champion marks in foreign markets, which HanesBrands had agreed not to do as part of a 2017 amendment to the licensing agreement. 

Keds alleged in court filings that “Hanes had filed its lawsuit with one purpose: as a tactic to force the renegotiation of a contract Hanes disliked.” Under the initial agreement, Keds had the right to approve footwear Hanes sold under the Champion brand, according to court filings.  

“Hanes also expressed its displeasure with the scope of its license and the royalty rates it was required to pay to Keds,” Keds said in court filings. 

The court dismissed HanesBrands’ lawsuit in its entirety, but only after the company’s “false and disparaging allegations” were repeated in coverage of the lawsuit by various trade publications, according to a filing from Keds. 

Keds then terminated the licensing agreement even though it would result in lost revenue “to the tune of millions of dollars in royalties owed to Keds” and filed a lawsuit against HanesBrands in September 2021. In the lawsuit, Keds alleged that HanesBrands had breached the licensing agreement for the Champion marks and sought to recover costs and damage resulting from the breach. 

According to federal securities filings, the sale of the marks to HanesBrands is part of a June 30 settlement agreement to Keds’ lawsuit. 

​​Boston, Mass.-based Greenberg Traurig LLP represented Wolverine in the trademark sale and in the federal lawsuit. HanesBrands was represented by Winston-Salem-based Kilpatrick Townsend & Stockton LLP.

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