Levi Strauss & Co. is monetizing the market for its vintage jeans.

In an unconventional deal for the apparel industry, the San Francisco-based denim company is hitching itself to a start-up called Re/Done, which is agreeing to pay royalties for the secondhand Levi’s-branded garments it reconstructs to fit a modern woman’s body with contemporary styling.

Launched as Re/Dun in July 2014 by fashion veteran Sean Barron and entrepreneur Jamie Mazur, Re/Done retails for between $230 and $270. Thanks to Barron’s past experience as cofounder of Joie and Kateyone Adeli, not to mention Mazur’s longtime relationship with Victoria’s Secret model Alessandra Ambrosio, the Los Angeles-based label has quickly captivated a growing flock of fashionistas, including Gwyneth Paltrow, who featured it last week on her Web site Goop, and also Erin Wasson and Bella Hadid, who sported skinny, boyfriend and high-rise styles in its digital marketing campaign.

To be clear, Re/Done doesn’t buy the well-worn denim directly from Levi’s, which has annual sales of over $4.75 billion. Instead it sources from various companies that pick through heaps of worn clothing. But it uses only Levi’s garments for its business. Therein lies the opportunity for both confusion and collaboration, according to Levi’s.

“There is a dark side of the vintage denim market that someone passes it off as something on their own,” said James Curleigh, president of the Levi’s brand. Specifically, Curleigh worried that customers who bought Re/Done Levi’s would seek assistance or compensation from the original Levi’s if they had an issue with the product. “That enters the consumer confusion that we’re trying to avoid,” he said.

Described by Curleigh as “an original vintage partner,” Re/Done makes a royalty payment for each pair of Levi’s it uses. In turn, Levi’s funnels the royalties back into marketing funds to support “the Levi’s vintage cause,” Curleigh said. The two companies also created a cobranded leather patch that, starting in September, Re/Done will stitch onto the waistbands of all its products.

Levi’s move opens the door to how other heritage brands might handle companies that depend on vintage products found on secondary markets for the basis of their business. The strategy also indicates a shift from what would have been a litigious route for the 162-year-old company.

“In a bygone era, Levi’s would scour the earth for anyone who would potentially take the brand down a route that wasn’t good for the brand or infringe on copyright, trademark and trade rights.” Curleigh said. Rather than solving the problem with lawyers, he said Levi’s opted instead to approach entrepreneurs like Barron and Mazur as partners. “In what could have been a problem, we created an interesting partner solution,” he said. “It’s a very new approach for us, I’ve got to admit.”

It’s also a tactic that could boost Levi’s profile in social media and certain circles that it might not have easily reached, despite a recent attempt to revamp its women’s collection with a fall ad campaign featuring Alicia Keys. Keen on discovering cool new bands, Barron said Re/Done and Levi’s are collaborating on what will be Re/Done’s first event at New York Fashion Week in September. Hinting that the shindig is “more in line with music,” he said, “Being that we’re a brand that will never do a runway show, it’ll be good that we’re at fashion week and something that influencers can come to.”

Levi’s is adapting to its newfound role as a gentle Goliath when it comes to branding issues. “We’re in an era of credibility and collaboration with others,” Curleigh said. “It brings something unique that we otherwise couldn’t or wouldn’t do.”