The world of wearable health technology has exploded in the last decade, driven by consumer demand for tools to monitor health, track fitness and provide personalized insights into overall wellness. This increased demand has resulted in the commercial availability of a bevy of wearable products with ever improving functionality to meet those needs. With the global wearable market reaching $218.27 billion in 2024, companies in this space are exploring strategic collaborations in order to stay competitive.

Examples of such collaborations include: co-marketing arrangements between wearable suppliers and health clubs; incentives to utilize wearables from insurers; cross discounts with fitness brands; and resale arrangements with health and wellness providers. 

For lawyers supporting wearable manufacturers or their potential partners, these collaborations may present opportunity by unlocking new customer segments, enhancing brand visibility and creating bundled offerings to drive sales. But with these opportunities come potential risks.

When advising on collaboration agreements involving wearable technology, here are some key areas where lawyers can add strategic value to business stakeholders for these transactions: 

• Branding and Boundaries: Brand usage is often central to a wearable partnership. The branding terms should ensure that the collaboration agreement:

  • Clearly defines where and how a company’s trademarks and related marketing assets may be used by the collaboration partner (e.g., digital campaigns, in-app experiences, distribution of print materials)

  • Grants appropriate approval rights over such permitted usage

  • Includes express brand and marketing guidelines that must be followed 

  • Aligns with the parties’ marketing plans, budgets and KPIs

  Early coordination with the marketing and business teams is critical to avoid misalignment and to set the stage for measuring success. 

• Data—Ownership, Use and Protection: Wearables generate rich data, a valuable asset in a collaboration arrangement. The underlying agreement should address the following: 

  • Ownership of data generated by the wearable and through activities related to the collaboration

  • Data usage rights for the non-owning party, including use of analytics and derivative data

  • Compliance with privacy and data security laws (e.g., HIPAA, GDPR, CCPA) and each parties’ internal data governance policies

  • Specific security standards and data breach notification protocols

  In-house counsel should work closely with privacy, security and product teams to ensure the agreement properly addresses data flows and related risks. 

• Risk Allocation and Liability: Collaborations can expose both parties to a variety of risks, including legal, commercial and reputational risks. A clear allocation of responsibility for these risks should be addressed in the contract, including: 

  • Defining each party’s responsibility and liability arising out of a product’s failure, data breaches, IP disputes or advertising claims

  • Tailored indemnification provisions, limitations of liability and insurance requirements to mitigate risks

  A well-drafted liability structure provides for clear allocation of risks, helps prevent one party from inheriting issues it did not create and supports internal risk management efforts.

As wearable technology continues to evolve, strategic partnerships can offer a valuable path to growth and provide a competitive edge for both legacy players looking to diversify and new entrants to the industry aiming to build traction for their brand. For lawyers supporting wearable-related collaborations, thoughtful legal input can shape business strategy, mitigate risk and protect the company’s brand, data and reputation—helping ensure these arrangements are both innovative and successful.