Entertainment Licensing Corner: Licensing and the Music Business

Chili #1: "We shoulda licensed..." Chili #2: "Now you tell me?!"

The music business has been hard hit.

Total revenue for US music sales in all formats has decreased from a high of $14.6 billion in 1999 to $10.4 billion in 2008 to a forecasted $9.2 billion in 2013.

The most profitable part of the music industry is no longer the sale of music, but what were once considered ancillary parts of it—concerts and music publishing.

But the music industry has largely overlooked another important revenue-generating tool—licensing.  Not just licensing the band name, which is common, but for smart bands, licensing album and song names as well.

The extent to which this is not done is shocking.  UK law firm Pinsent Masons has found that none of the album titles in Rolling Stone’s Top 10 Greatest Albums of All Time have been registered as trademarks in either the US or the UK by the artists or their record companies.

But there are registrations galore from third parties capitalizing on famous album and song names, from the silly (“Sgt. Peppers Only Hot Dog Stand”) to the enormously lucrative (“Ruby Tuesdays”).

To explain how and why this matters, a little brush-up on IP law is in order.

Trademarks are symbols that communicate the source and quality of goods and services.  So in the usual case, a band’s name and associated logo serve as a trademark for its music and live performances.  It is highly advisable for the band to formally protect its trademark with a trademark registration, but some degree of legal protection exists even without a registration via the doctrine of common law trademark.

So far, so good.  So what’s the problem?

1) Even a registered trademark on a band name won’t prevent someone else from using the same mark for goods other than music or for services other than live performances, because you only get trademark rights for the goods or services that you sell or license.

2) Even a registered trademark on a band name won’t protect others from using album or song names that have enormous public recognition and good will, because you only get trademark rights in symbols that represent source indicators for goods or services that you sell or license.

Are you beginning to notice a trend here?

The Red Hot Chili Peppers learned both lessons the hard way when Showtime broadcast the popular series “Californication,” which also happened to be the name of the Chilis’ most popular album, but the show didn’t take a license from the band.  (The series also contained several other references to Chilis’ song titles and lyrics to remove any doubt that they were drawing on the album’s name for the series name.)  The Chilis sued Showtime for trademark infringement in November, 2007, but the network replied that there was no infringement because (among other reasons) Californication the show was a different category of product than the musical recordings on Californication the album, and that the Chilis had never used Californication in a trademark sense, to indicate the source and quality of goods or services.  At this writing, the case is still pending, but most experts don’t give the Chilis good odds of winning the whole enchilada, errr, winning anything more than a token settlement.

What the Chilis and other bands should do is a bit of brand extension.  First, license not only the band name, but also popular album and song names to manufacturers in fields like apparel, eyewear, jewelry, leather goods, and food products, who will pay the band for the right.  Second, follow up by applying for trademark registrations covering these categories.  (Or this could be the first step if the band files an intent to use application.)  Third, if the band skipped the first two steps, and someone has started cashing in on its band’s album or song names, then it should file a trademark registration application before the interloper.  The Chilis didn’t, but the Sex Pistols did when an ice cream company started marketing “God Save the Cream,” a conscious play on the Pistols’ notorious song, “God Save the Queen” (“God save the Queen/ She ain’t no human bein’.”)

Takeaway: with the music industry hurting and bands starving, licensing is a smart strategy.

© 2010, Richard R. Bergovoy. All rights reserved.

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