Archive for the ‘Entertainment Licenses’ Category

A Star is Born: The Licensing of Blue Ivy

Friday, February 24th, 2012

We here at The Licensing Law Blog have a saying: “It’s never too early to teach your kids about licensing.”

Apparently mega-super-celebrities Beyonce and Jay-Z agree. With licensing in mind, they recently filed a trademark application for their newborn baby daughter’s name, Blue Ivy.

Here to explain the how and why, we are honored to have as a guest blogger our friend and former Beanstalk colleague, Oliver Herzfeld:

1.    How does one trademark a child’s name?

Trademarking a child’s name is no different than doing so for any other name or mark.  In many countries, one’s right to use a mark is conditioned on being the first to register it in the relevant jurisdiction (i.e., it is a race to the filing office).  However, in the U.S., one’s right to use a mark is conditioned on being the first to actually use the mark in commerce.  Federal trademark registration is not mandatory.  In general, registering a mark in the U.S. will not help permit one to use it, nor will a failure to register a mark in the U.S., by itself, prohibit one from using it.  In most cases, all registration will do is provide certain procedural advantages.  One exception to the foregoing is a so-called “intent to use” application (ITU).  In the U.S., if one has not yet commenced using a trademark, but plan to do so in the future, one may file an ITU based on a bona fide intention to use the trademark in the future.  Doing so provides the registrant with the benefits of constructive use and priority that “relates back” to the original filing date.  This is precisely the type of registration Blue Ivy’s parents, Jay-Z and Beyonce, have pursued.  In other words, they are not yet using the name “Blue Ivy” in commerce, but they are claiming that they intend to do so in the future and, if/when they do, in terms of priority, they will be deemed to have commenced their use on January 26, 2012, the date of their ITU registration application.

2.    Is this a first or is there precedent for it?

This is certainly not a first.  For example, Ford Motor Company registered “Edsel”, the first name of Edsel B. Ford, son of the company’s founder.  The Edsel was an automobile manufactured by Ford, but the name has become synonymous with failure because the car never gained popularity and Ford lost millions of dollars on it.  Nonetheless, Ford continues to maintain five live trademark registrations for the name Edsel covering a variety of product categories.

3.    What do Jay-Z and Beyonce gain from this?

Owning a federal trademark registration provides a number of advantages.  Most importantly, it provides a legal presumption of their ownership of, and exclusive right to use, the name nationwide on or in connection with the goods/services listed in their registration.  Other benefits include:

  • Public notice of their claim of ownership (to counter any defendant’s claim of innocent infringement);
  • The ability to bring an infringement action in federal court;
  • The use of the U.S. registration as a basis to obtain registration in other countries;
  • The ability to record the U.S. registration with the U.S. Customs and Border Protection (CBP) Service to prevent importation of infringing foreign goods;
  • The right to use the federal registration symbol ®; and
  • Listing in the United States Patent and Trademark Office’s online databases.

4.    What do you think Jay-Z and Beyonce will use the trademark for?

Blue Ivy’s parents were obligated to describe their intended uses in their ITU application.  Here are the products and services they included grouped in accordance with certain international trademark classification numbers: (more…)

Betty Boop Trademark Case Has A Happy Ending

Sunday, January 8th, 2012

Like a hero rescuing a damsel in distress, the federal Ninth Circuit Court of Appeals granted a happy ending to the brand licensing industry in the controversial Betty Boop trademark case.

After its original opinion in Fleischer Studios, Inc. v. A.V.E.L.A., Inc. appeared to not only reverse settled case law, but also undercut the foundations of the brand licensing industry, the Ninth Circuit withdrew the opinion and replaced it with one that omits the controversial ruling.

The court’s original ruling held that under the doctrine of “aesthetic functionality,” there is no trademark infringement if a third party uses a trademark for its consumer appeal, rather than to identify the goods as “official.”

This holding unleashed a firestorm of criticism from the brand licensing industry, and prompted a petition for rehearing by the full Ninth Circuit Appeals Court, supported by briefs from such industry heavyweights as INTA, the MPAA, Major League Baseball, the NFL, and the NBA.

The Ninth Circuit did not give the petitioners what they had asked for, but something better— dispensing with rehearing by the full appeals court, the original three judge panel withdrew its  opinion, and replaced it with a new opinion omitting all mention of aesthetic functionality. In its new ruling, the court stuck to the narrow issues at hand. It upheld the trial court by ruling that Fleischer Studios had not proved that it held a valid trademark in the Betty Boop image mark, but reversed the trial court by ruling that Fleischer Studios might have a valid trademark in the Betty Boop word mark, and sent the case back to the trial court for further hearings on the issue.

Takeaway: the Ninth Circuit Court of Appeals followed both common sense and its own recent case law by withdrawing its arbitrary expansion of the doctrine of aesthetic functionality, saving the brand licensing industry from free riders who could sell branded merchandise as long as they make clear the mark was used for its consumer appeal, and not to identify the goods as made or endorsed by the mark owner.

Boop Oop a Yikes! Did the 9th Circuit Just Torpedo the Brand Licensing Industry?

Sunday, June 19th, 2011

The Ninth Circuit's slip is showing

In a recent case involving the saucer-eyed, short-skirted Betty Boop cartoon character, the federal Ninth Circuit Court of Appeals in Fleischer Studios, Inc. v. A.V.E.L.A., Inc. appears to have torpedoed the legal foundations of the brand licensing industry by ruling that there is no trademark infringement if a trademark is used for its commercial appeal rather than its source-identifying value.

If read broadly, the case would give a free pass to merchandisers to sell unlicensed New York Yankee caps or Mercedes-Benz medallions, as long as buyers were purchasing the goods for their brand appeal, and not under the mistaken belief that they were “official” goods.

The court’s Betty Boop “slip” was doubly surprising, considering that it had torpedoed a similar argument just five years ago.

The case involved both copyright and trademark infringement claims of Fleischer Studios against unlicensed sellers of vintage posters and other merchandise featuring the Betty Boop character.

The main focus of the court’s opinion was whether Fleischer had in fact purchased the copyrights to the Betty Boop character. The court concluded that Fleischer had not, because the party from which Fleischer had purportedly purchased its rights did not have an unbroken chain of title. Accordingly, Fleischer’s copyright infringement claims failed.

The court then focused on Fleischer’s alternate argument, that because it (along with Hearst Publications) owned the registered trademarks in the Betty Boop name and image, even if the defendants had not infringed its copyright, their unlicensed use of Betty Boop infringed Fleischer’s trademarks.

The court did not decide whether Fleischer in fact owned the trademarks, but ruled that in any case there was no trademark infringement because the defendants’ use of Betty Boop was not for the purpose of indicating that Fleischer or any other party was the source or origin of the products, but only for Betty’s commercial appeal to consumers. In other words, since the primary function of a trademark is to identify the source or origin of goods and services, the defendants’ use was not a trademark use, and therefore such use could not infringe Fleischer’s trademark rights, if any. Furthermore, added the court, Fleischer had not submitted evidence that the defendants’ use of Betty Boop had mislead consumers that Fleischer was the source of the goods. (But that was not surprising, given that the court raised the issue for the first time on appeal (below)).

As precedent, the court cited its 1980 opinion in International Order of Job’s Daughters v. Lindeburg & Co., which held that a maker of jewelry incorporating the trademarked insignia of the Job’s Daughters young women’s organization did not infringe because, “Trademark law does not prevent a person from copying so-called ‘functional’ features that constitute the actual benefit that the consumer wishes to purchase, as distinguished from an assurance that a particular entity made, sponsored or endorsed a product.” In a nutshell, this is the doctrine of “aesthetic functionality,” which starts from the long-accepted premise that a functional feature of a product cannot qualify as a trademark, because to do so usurps the domain of patent law, but then extends that an extra layer by holding that features that contribute to consumer appeal, including trademarks themselves, are automatically “functional” in the same way as an attention-grabbing mechanical feature of a product.

There was just one problem. Neither the parties in their briefs nor the trial court in its opinion had cited Job’s Daughters, probably because the Ninth Circuit itself had put the case in a very narrow box in its 2006 opinion in Au-Tomotive Gold Inc. v. Volkswagen of America, Inc. In Auto Gold, a dealer in automobile accessories tried to sell keychains and other paraphernalia featuring Volkswagen and Audi logos, arguing that under Job’s Daughters, it was using the marks for their consumer appeal, not their source-identifying function, and had attached disclaimers stating that the goods were not produced or endorsed by Volkswagen or Audi.

The Auto Gold court flatly rejected that argument on the grounds that in Job’s Daughters and similar cases, the “aesthetic functionality” doctrine had only exempted aesthetic or ornamental features, like product color or shape, and only when they had some function “wholly independent of any source-identifying function.” The court contrasted those cases with the Volkswagen and Audi branded goods sold by Auto Gold, for which the “alleged aesthetic function is indistinguishable from and identical to the marks’ source identifying nature… The demand for Auto Gold’s products is inextricably tied to the trademarks themselves,” and not to independent economic or performance benefits of the designs. In other words, it is nonsensical to say that because a source-identifying symbol that is designed to have consumer appeal in fact has such appeal, that makes it per se “functional,” and therefore ineligible to receive trademark protection.

And in a footnote, the Auto Gold court marginalized Job’s Daughters directly by saying that the case only applied to “collective marks,” that is, a category of trademarks used by members of a collective group or organization, which typically have less of a source-identifying function than commercial trademarks, according to the court.

But the Fleischer opinion did not even mention Auto Gold, much less attempt to distinguish it from the Betty Boop facts. Making it extremely likely that another merchandiser will try to free-ride another famous brand, and the Ninth Circuit will have to hide its Betty Boop slip all over again.

Takeaway: brand owners selling products in the federal Ninth Circuit (California, Oregon, Washington, Nevada, Arizona, Idaho, Montana, Alaska, Hawaii, and Guam) should be vigilant to stop companies from selling unlicensed merchandise featuring their trademarks which claim that the marks are not used for their source identifying purposes, but rather for their consumer appeal. It will be especially helpful to gather evidence that consumers believe the unlicensed goods are “official” goods manufactured, sponsored, or endorsed by the brand owner.

There Are 8 Million Lawsuits in the Naked Cowboy

Wednesday, February 23rd, 2011

This blog post is not authored by, endorsed by, or affiliated with the Naked Cowboy(R), and other stuff our lawyer made us say.

Photo Courtesy Ryan McGinnis

A New York New Year’s tradition is the dropping of the ball in Times Square.

Another is fast becoming the serving of the New Year’s lawsuit by Times Square’s scantily clad troubadour, the Naked Cowboy.

Robert John Burck, aka the Naked Cowboy, recently sued CBS and the producers of the soap opera “The Bold and The Beautiful” for an episode showcasing a character in “Naked Cowboy signature garb” of cowboy hat, cowboy boots, tighty whitey briefs, and strategically placed guitar. The suit seeks $15 million damages for a casebook worth of intellectual property-related legal injuries, including trademark infringement, trademark dilution, false advertising, misappropriation of right of publicity, and unfair business practices.

But guys, you missed the most obvious claim of all– infringement of trade dress.

The complaint claims that the suit was filed only after the defendants ignored multiple requests to take a $150,000 license, in order that the “integrity and propriety of the brand be kept in tact [sic].”

Would that have been a naked license?

In 2008, Burck sued candy maker Mars, Inc. on the grounds that Times Square billboards and a mural featuring a guitar-strumming, underwear-clad blue M&M infringed his Naked Cowboy trademark and rights of publicity. The judge dismissed the right of publicity claim on the grounds that Burck could not claim it for a fictional character; the parties later reached a confidential settlement regarding the trademark infringement claims.

In 2009, Los Angeles videogame maker Gameloft filed a preemptive lawsuit against Burck seeking a ruling that the appearance of a scantily clad, guitar strumming character in its videogame, New York Nights, was not an infringement of the Naked Cowboy trademark.

Also in 2009, Burck sued Clear Channel Communications, claiming that its Tampa radio station created and promoted a Naked Cowboy imposter.

In 2010, Burck sued Sandra Brodsky, a bikini-clad, guitar strumming ex-stripper who strolled Times Square as the Naked Cowgirl, after she refused to sign a Naked Cowboy franchise agreement (going price: $5,000 per year or $500 per month) and ignored a cease-and-desist letter to halt all Times Square performances. Burck’s complaint alleged that the Naked Cowgirl would cause confusion among potential consumers of Naked Cowboy services, and tarnish his wholesome image, by her frequent use of obscene language and gestures towards uncooperative tourists.

Oh Man: Dora the Explorer Discovers She’s Been Swiped

Tuesday, November 2nd, 2010

David vs. Goliath, Dora the Explorer vs. Swiper the Fox, Caitlin Sanchez vs. Nickelodeon.

Since our passion is the drafting and negotiation of intellectual property-related contracts, when 14-year-old Caitlin Sanchez, the voice of the popular Dora the Explorer cartoon character, filed a lawsuit against the Nickelodeon cable network claiming that Nickelodeon and its affiliates have duped her out of millions of dollars in royalties and residuals by pressuring her to sign a “bizarre, impenetrable, unconscionable contract,” it tweaked our curiosity.

But was it really a bad contract, or rather bad negotiation that resulted in Caitlin getting a lot less money than she and her family expected?

To answer that question, we tracked down a copy of the agreement (“Agreement”) between Caitlin and Uptown Productions, Inc. (“Uptown”), the production company for the Dora program, and compared it to the allegations in the lawsuit complaint, filed by the law firm of Balestriere Fariello. (Agreement is here, complaint is here.)

And the comparison showed that the contract IS bad, but not confusingly bad, just transparently bad— extremely but obviously one-sided in Uptown’s favor. Despite that, Caitlin and her family signed the Agreement and several subsequent documents literally within minutes of receiving them, without negotiating or asking an attorney to assist them. That was akin to Dora the Explorer not chanting, “Swiper, no swiping!” when the larcenous fox was in plain sight.

In doing so, they made the same mistake that many artists, actors, musicians, designers, and other creative people make when they are approached by television, music, or theatrical producers—they silence their questions and sign, for fear of being ditched and missing their big break.

The framework for the Agreement between Uptown and Caitlin is that Uptown would pay for Caitlin’s exclusive services for seven episodes of the Fifth Cycle of the Dora series and would retain options for 10 episodes for each of the Sixth through Tenth Cycles of the show. Caitlin was to receive: a salary of $5,115 per episode (increasing 5% per cycle); plus residuals based on the number of re-broadcasts of the original episodes; plus merchandise license fees. She was also required to do a “reasonable” amount of promotional appearances and interviews.

(1) The complaint alleges: Nickelodeon “fail[ed] to fully compensate Caitlin for products she voiced, for which she is due a percentage of the products [sic].” Uptown has only paid Caitlin $9,636.39 in merchandising royalties to date, according to the complaint. Caitlin’s attorney claims that that is an absurdly low and definitely incorrect figure in light of the fact that Nickelodeon claims gross retail sales of $11 billion in Dora merchandise since 2002.

The contract states: Uptown “shall pay you 5% of 100% of the ‘net receipts’ actually received by [Uptown] from merchandising, should your name, voice or likeness be used alone in connection therewith, reducible to 2-1/2% of 100% if other artists are used…; ‘Net receipts’ shall mean the amount remaining after deduction of a distribution fee of 50% of the gross receipts actually received from agents and distributors; and all costs related to such merchandising use.”

Our take: Caitlin would get royalties based on only the subset of Dora merchandise that featured Caitlin’s voice or her actual (not Dora’s) image, and that the revenue stream on which the royalties would be calculated could be easily manipulated by Uptown’s “creative accounting.”


How do you say, “Swiper, no swiping!” in Swedish?

(more…)

Licenses 2, Sales 0 in Eminem and Autodesk 9th Circuit Rulings

Wednesday, September 22nd, 2010

The growing popularity of licensing as a strategic business and legal tool is likely to grow even greater as a result of a pair of cases decided one week apart in the federal Ninth Circuit Court of Appeals that broadened the scope of and increased the powers of licenses.

The first Ninth Circuit decision, F.B.T. Productions vs. Aftermath Records, involved a dispute between rap artist Eminem and his record label Aftermath about whether Aftermath’s provision of Eminem’s songs to iTunes was a “sale” or “license” for purposes of a contract drafted in the pre-digital age. The difference was significant, because the agreement provided that the label would pay Eminem royalties of between 12% and 20% of the adjusted retail price of all “full price records sold in the United States… through normal retail channels,” but would pay 50% of its net receipts “[o]n Masters licensed by us… to others for the manufacture and sale of records or for any other uses.” The agreement was signed in 1998, before iTunes was established, and did not further define either “sale” or “license.”

The record label argued among other things that the custom in the recording industry was that the “masters licensed” provision applied only to “compilation records and incorporation into movies, TV shows, and commercials,” and furthermore, that the iTunes download was functionally no different than a purchase of a vinyl record or CD at a record store.

The court rejected that argument, and held that under copyright law, a license is, “an authorization by the copyright owner to enable another party to engage in behavior that would otherwise be the exclusive right of the copyright owner, but without transferring title in those rights.” Because the record label retained ownership of the copyrights for the Eminem songs as well as title to the digital music files that it made available to iTunes in exchange for periodic payments based on the volume of downloads, the transaction was a license, and the higher 50% royalty rate applied.

One week later, in the case of Vernor vs. Autodesk, Inc., the court ruled that most written license agreements will preserve the licensor’s right to prohibit resales not only under the license agreement, but also under the Copyright Act. There the issue was whether Timothy Vernor could sell on eBay outdated copies of Autodesk’s AutoCAD software for a few hundred dollars that normally sell for several thousand dollars per copy when new.

Copyright law confers several exclusive rights on copyright owners, including the exclusive right to reproduce their works and to distribute their works by sale or rental. An important exception to this exclusive right is the so-called “first sale doctrine” codified at Section 109 of the Copyright Act, which says that the, “owner of a particular copy or phonorecord… is entitled without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” So for example if a publisher sells a book to a bookstore, the bookstore is free to resell it to anyone, and the purchaser is in turn free to sell the same book to anyone on eBay.

Vernor had purchased the AutoCAD software from an architectural firm that had licensed it from Autodesk. The AutoCAD license agreement contained standard provisions prohibiting transfer to or use by any party other than the original licensee, however, it did not require the licensee to return old installation disks. Vernor argued that under prior case law in the Ninth Circuit, since the license did not require the architectural firm to return its copies of the install discs, the firm was an “owner of a particular copy,” which kicked in the first sale doctrine which exempted the firm and any of its purchasers from a copyright infringement claim arising out of resale of the discs. Although the architectural firm had violated its license agreement by reselling the discs, Vernor argued that he had not, because he had neither installed the software nor agreed to any online license agreement before the eBay sales.

After an extensive review of prior case law the appeals court disagreed with Vernor, and held that a software user is a licensee rather than an “owner of a copy” where the copyright owner: 1) specifies that the user is granted a license; 2) significantly restricts the user’s ability to transfer software; and 3) imposes notable use restrictions. Like most well-drafted software license agreements, the Autodesk agreement passed with flying colors, despite the absence of a requirement to return old install discs. Thus, because the architectural firm was a licensee, not an “owner,” then the first sale doctrine did not apply, and Vernor had infringed Autodesk’s exclusive distribution rights in violation of copyright law.

Takeaway: the Eminem case is not expected to have much of a practical impact on the recording industry, because since the time of that agreement, almost all record label agreements deem that provision of songs to iTunes will be treated as a “sale” at a 12% to 25% royalty rate. But when the nature of a copyright transaction is unclear, the Ninth Circuit will presume it is a license rather than a sale where the copyright owner retains control of the copyright, retains title to the media on which the content is delivered (CD, mp3 file, etc.), and receives periodic payments after the original transaction. Vernor says that when a standard license agreement is in place during the original transaction, the copyright owner can use both the license agreement and copyright law to prohibit later resale or disposition of the content. This will encourage copyright owners to cast transactions as licenses rather than sales, and with the proliferation of digital content that can be made easily subject to clickwrap license agreements even after the original point of sale, they will likely succeed in their efforts. So the purchaser of a hard copy of The Girl With the Dragon Tattoo will be able to resell it, because she (and the bookstore before her) took title to the media (book) on which the content was delivered. But she might not be able to resell her e-book version, if she purchases it subject to a standard license agreement at the time of download. One practical effect is that copyright owners will now be able to easily assert that resale of software, digital games, and many other kinds of digital content is a copyright infringement. Please note that these rulings only apply in the Ninth Circuit (California, Oregon, Washington, Nevada, Arizona, Idaho, Montana, Alaska, Hawaii, and Guam), and that other circuits may not follow them.

Entertainment Licensing Corner: Darth Laser

Thursday, July 8th, 2010

Don't call this bad boy a "lightsaber": Wicked Lasers' Spyder III

It is one of those fun stories that gets widely published by the mass media and the tech-oriented blogosphere: the maker of the Star Wars movies threatening to sue the maker of “the world’s most powerful portable laser” because of its supposed resemblance to a Star Wars lightsaber. (For officially licensed Star Wars candy lightsabers, see here. For non-Star Wars candy Lifesavers, see here.)

But not only Star Wars geeks, but also we IP geeks like this kind of story because: 1) Lucasfilm, Ltd. is one of the most successful licensors of all time, earning an estimated $24 billion in revenues from Star Wars licensed merchandise; and 2) there are lots of neat IP angles to the story.

So is Lucasfilm the righteous Luke Skywalker here, just trying to protect what belongs to it, or an evil Darth Vader, trying to intimidate a brave entrepreneur with its legal storm troopers?

First, some background. Hong Kong-based Wicked Lasers recently began selling its $197.97 Pro Arctic Spyder III laser, which it describes as “the most dangerous laser ever created.” With a tubular white grip, it inevitably prompted excited coverage in the blogosphere as, “your own personal lightsaber.” But nowhere on Wicked Lasers’ website or advertising are either Star Wars or lightsabers mentioned.

That was quickly followed by both a Lucasfilm press release and a Lucasfilm attorney cease-and-desist letter to Wicked Lasers, demanding that they stop selling, “a highly dangerous product… that is designed to look like a lightsaber from Star Wars.”

Unfortunately, only portions of Lucasfilm’s cease-and-desist letter were published, so it is impossible to say precisely what legal claims Lucasfilm is making against the Spyder III. But that won’t stop us from speculating:

1) Trademark infringement, for giving the impression that the Spyder III is an official Star Wars lightsaber endorsed by or affiliated with Lucasfilm. The problem with that claim is that all of the lightsaber comparisons are being made by third parties. As mentioned above, Wicked Lasers nowhere mentions Star Wars or light sabers in connection with the Spyder III.

2) Trade dress infringement. Trade dress is elements of product packaging or promotion that the public perceives as a product identifier– think of the appearance of the striated, green glass Coca-Cola bottle or the contour of a Corvette Stingray. The problem with that claim is it is difficult to argue that the handle of the lightsaber is actually part of its packaging, and not a functional part of the product itself. In fact, in Kellogg Co. vs. National Biscuit Co., the US Supreme Court ruled that the pillow shape of shredded wheat cereal was functionally dictated by cost and quality considerations, and therefore, not eligible for trade dress protection.

3) Copyright infringement. Lucasfilm has registered the handle of various lightsaber models as a form of “sculpture” with the US Copyright Office. So if another sculpture were substantially similar to the Star Wars lightsaber handle, it could be copyright infringement. The problem with that claim is that Wicked Lasers could reply that the handle of its laser is not an ornamental “sculpture,” but a functional, utilitarian device not subject to copyright. In fact, a British seller of Star Wars stormtrooper armor prevailed against Lucasfilm in an English court with a similar defense under UK law (below).

So Lucasfilm does not have a slam dunk case here.

But Star Wars is one of the world’s most lucrative licensing franchises, and Lucasfilm has aggressively defended its franchise with legal action.

In 2006, Lucasfilm sued Maryland-based High-Tech Magic for selling light sabers, and obtained a $250,000 settlement. High-Tech Magic had prominently advertised its lightsaber as, “a Star Wars Lightsaber that looks as good as those in the movies.”

Lucasfilm was not so fortunate when it sued the original designer of the Star Wars glossy white storm trooper armor helmets, who had begun selling helmets and body armor from his own website. Lucasfilm won a $20 million default judgment for copyright and trademark infringement against industrial designer Andrew Ainsworth in a Northern California court, but when it attempted to enforce the judgment in the UK, an appellate court ruled in December, 2009 that there was no copyright infringement because the storm trooper armor was not an ornamental, expressive work of art, but rather intended to be a functional, utilitarian object, and therefore not copyrightable as a sculpture. (This ruling surely pleased Star Wars fans, for whom this stuff is REAL.) Under UK law, Ainsworth is eligible to request that Lucasfilm pay his £2.5 million in attorneys fees.

Update, 8/5/10: Wookies of the universe, rejoice! Peace reigns once again in the Star Wars Empire, as Lucasfilm General Counsel David J. Anderman has sent a letter to Wicked Lasers CEO Steve Liu, offering to withdraw his prior cease and desist demand if Wicked posts a disclaimer on all web pages or advertisements related to the Spyder III: “THIS PRODUCT IS NEITHER LICENSED NOR ENDORSED BY LUCASFILM LTD.” Meanwhile, CEO Liu claims that sales of the Spyder III have tripled as a result of the publicity.

The Uncertain Law of Dead Celebrity Goods, Sexy Einstein Edition

Thursday, May 27th, 2010

E = mc squared, baby

Thank you, Albert Einstein, for making our point.

Great minds think alike.

Unknown to The Licensing Law Blog, one day before we posted “The Uncertain Law of Dead Celebrity Goods,” representatives of the estate of Albert Einstein sued General Motors Company for an advertisement featuring the head of the Father of Relativity Theory photoshopped onto the ripped, tattooed naked torso of an underwear model, with the caption, “IDEAS ARE SEXY TOO.”

The ad ran in the November 30, 2009 “Sexiest Man Alive” issue of People Magazine to promote the GMC Terrain SUV, explaining, “THAT’S WHY WE GAVE IT MORE IDEAS PER SQUARE INCH.”

GMC was sued in federal court in Los Angeles by The Hebrew University of Jerusalem (HUJ), which was the beneficiary of all of Einstein’s intellectual property rights in his will, for trademark infringement and misappropriation of Einstein’s rights of publicity. (HUJ also claimed a subsidiary cause of action for unfair competition.) Einstein is the fourth highest grossing deceased celebrity property, earning about $18 million annually, according to Forbes magazine.

What makes this case interesting from a legal point of view is the rights of publicity issue as applied to dead celebrities. HUJ sued GMC under both New Jersey common law rights of publicity and California common law and statutory law rights of publicity.

New Jersey case law is clear that rights of publicity are property, and survive the death of the owner, as mentioned in the previous blog post. What is not clear is how long after death the rights survive. Einstein died in 1955 in Princeton, New Jersey. Did his rights of publicity survive 55 years after his death? The judge in the 1981 case Estate of Presley v. Russen said he had no idea what the survival period was without further guidance from the New Jersey State Legislature (which has not addressed the issue to date), although he suggested in a footnote that a good reference point might be postmortem survival periods under copyright law, which would be at least 70 years after death.

Also, there is the question whether California or New Jersey law controls. Usually (but not always) choice of law principles dictate that the law in rights of publicity cases is controlled by the state of the celebrity’s domicile at the time of death. But after cases involving Marilyn Monroe’s postmortem rights of publicity, in which courts in both New York and Los Angeles ruled in 2007 that the law of New York (Marilyn’s domicile) not California (Marilyn’s place of death) applied, California revised its rights of publicity law in an attempt to preserve postmortem rights of publicity for “personalities” regardless of date or domicile at death. In the unlikely event that this case ever reaches the decision stage, it will be interesting to see whether the court applies New Jersey or California law on rights of publicity.

By the way, no one will accuse GM of being Einsteins in the licensing field. A GM spokesperson said she believed GM had paid a “reputable organization” for rights to run the Einstein ad, but our guess is that they only paid for a copyright license for the Einstein photo, and not for rights of publicity or trademark licenses. In 2005, New England Patriots quarterback Tom Brady also sued GM for using his image in an advertisement without a license.

P.S. In case you are wondering about the impact of GM’s bankruptcy on the Einstein lawsuit, there is none. GM filed for Chapter 11 bankruptcy on June 1, 2009, and sold its assets to a new entity on July 10, 2009, which then took the General Motors Company name, and left the “old GM” to settle its debts with the proceeds it received from selling its assets to the “new GM.” So the entity that published the ad at issue on November 30, 2009 was never involved in bankruptcy, therefore the HUJ lawsuit will in no way be restricted or impeded by bankruptcy law.

‘Scuse Me While I Sue This Guy: The Uncertain Law of Dead Celebrity Goods

Thursday, May 20th, 2010

Jimi sez: "Businessmen they drink my...vodka?!?"

What do Jimi Hendrix, Elvis Presley, Marilyn Monroe, and Princess Diana all have in common?

If you guessed that all of them are dead celebrities, you are only half right.

More importantly, all of them were subjects of messy postmortem lawsuits against sellers of celebrity-branded goods.

Because of great variations in the laws, as well as “favorite son/daughter” influence on local courts, using the name or image of a dead celebrity to sell products without a license is risky business.

Doing so may put a businessperson in violation of two categories of legal rights, rights of publicity laws and trademark laws.

The more direct threat is the law of rights of publicity. Generally speaking, rights of publicity laws prohibit the commercial use of the name (and usually image and signature) of another person without his permission. But that is about all one can say with certainty — the laws are state-based, not federal, and beyond the basics, there are great variations in the laws of the states that recognize rights of publicity. In fact, it is not even certain how many states do recognize rights of publicity, with estimates ranging from the mid-20’s to close to 50.

One of the biggest variables among state laws is whether the right of publicity survives the celebrity’s death, and if so, for how long. States that characterize the right of publicity as a personal right naturally conclude that it is extinguished on the person’s death. New York is one such state. States that characterize the right of publicity as a property right, like New Jersey, naturally conclude that it survives the person’s death, and is descendible to her survivors.

That seems simple enough. So where is the problem?

1) Which state law decides the survivability of a dead celebrity’s right of publicity, a personal right state or a property right state? The estate of Marilyn Monroe has claimed for years that property right based rights of publicity laws in both California and Indiana gave them the right to charge royalties to would be users of Marilyn’s name or image, but they were dealt a severe surprise in 2007 when judges in both Los Angeles and New York ruled that since Marilyn was a New York domiciliary at the time of her death in California in 1962, then New York’s personal right based law controlled, and her right of publicity did not survive her death. Similarly, a Washington court ruled that the heirs of Jimi Hendrix did not inherit his rights of publicity, because Jimi was a New York domiciliary at the time of his death in England in 1970. A broad rule of thumb is that survivability is decided by the state of the celebrity’s domicile (generally the state of legal residence) at the time of the celebrity’s death. But there are many exceptions to this rule, making it risky for a celebrity-oriented business to try to guess without legal assistance. Big band singer Louis Prima died in 1978 after two years in a nursing home in Louisiana, which is a personal rights state, but nevertheless, a New Jersey federal court held that the issue of the survivability of his right of publicity was controlled by the law of New Jersey, where Prima had never lived, and allowed his widow to sue the Olive Garden restaurant chain and its advertisers for use of a Prima sound-alike singer in a television commercial.

2) Even in a property right state, it is not always clear how long after death the right survives. In a case decided four years after Elvis Presley’s 1977 death, a New Jersey court ruled that the state’s case law supported a property right based right of publicity, and ruled that a local Elvis impersonator had misappropriated the King’s right of publicity. However, the court admitted that it had no idea how long the right survived Elvis, and that the state legislature would need to clarify the issue. (It has not to date.)

In addition to rights of publicity law, trademark law may also require a seller of celebrity paraphernalia to take a license from a dead celebrity’s representatives. Here, the issue is usually not survivability after death (because trademark rights normally do survive death), but whether the celebrity’s name has in fact become a trademark — an identifier of the source or origin of goods or services — and if so, for which specific categories of goods or services.

A company called Electric Hendrix LLC (“EH”) decided that it could sell Jimi-Hendrix-branded vodka without a license from Hendrix’s estate, because courts had already decided that Jimi’s rights of publicity did not survive his death (above), and his estate had not filed trademark registrations in any category remotely related to alcoholic beverages, and in fact had vowed it would never license alcohol-related products, so there was no likelihood of consumer confusion as to the source of the vodka, or so EH thought. Nevertheless, a Washington court found that EH was liable for trademark infringement, after performing an eight factor infringement analysis, emphasizing that: (a) consumers would be likely to assume that any Hendrix-branded products came from or were authorized by the Hendrix estate; and (b) evidence of the intent of EH to free-ride on Jimi’s fame was overwhelming. The court ordered the defendants to halt all sales of EH vodka, and to remove all product from store shelves. It is possible that Jimi’s celebrity status in his hometown of Seattle was a factor in the decision.

A Bad Idea: Disclosing Ideas Without an NDA

Friday, April 16th, 2010

Potential clients often ask: “I have this million dollar idea I want to pitch to Company A, but if I ask them sign an NDA, they won’t have the meeting. Could they steal my idea?”

The answer is frequently “yes,” if the company does not sign a nondisclosure or other written agreement acknowledging the confidentiality of the idea.

That unfortunate fact was demonstrated in a case in which entertainment broker Bonnie Vent cold-called Mars Snackfoods and pitched an idea for a cross-promotion featuring characters from the Addams Family television show on M&Ms candies. According to Vent, Mars subsequently declined to use her idea, but eight months later, Mars ran advertisements featuring M&Ms candies altered to resemble the cast of the program:

In its decision, the federal Second Circuit Court of Appeals rejected her claim for compensation, and in doing so, set forth a nice primer on property-based misappropriation of ideas under New Jersey law. (Property-based misappropriation of idea claims share many elements with trade secret claims. Many states also allow contract-based misappropriation of ideas claims.)

According to the court, in the absence of a contract, an idea is protected against misappropriation only if: 1) it is novel; 2) it is made in confidence to the recipient; and 3) it is utilized by the recipient.

The court ruled that Vent’s claim failed the second requirement, because there was no confidentiality between Vent and Mars.

Vent did not claim that she offered an NDA or even discussed confidentiality during her pitch call with the Mars representative, but argued that: 1) confidentiality was implied because Mars, as the more powerful party in the relationship, had a fiduciary duty (obligation to take care of her interests); and 2) confidentiality was implied by custom in the entertainment industry.

A confidential relationship may be implied between parties if there is a fiduciary relationship between them, for example if the parties are in a relationship where one is vulnerable to or relies on special skills or knowledge of the other. This was not such a case, because Vent cold-called the Mars representative, and volunteered the information. Normally, a fiduciary relationship cannot be formed without the consent of both parties, ruled the court.

A confidential relationship may also be implied if customary in an industry, but assuming such a custom exists in the entertainment industry, the court ruled that it did not apply to Mars, which is not in the entertainment industry. (The decision referred to a case in which it was held that confidentiality is customary for idea pitches in the toy industry.)

One caveat — the law of misappropriation of ideas is state-based, with a wide variation in law among states. However, many (not all) states use some variation of the New Jersey three-part test of novelty, confidentiality, and utilization to decide when the idea originator must be compensated for property-based claims, and sometimes even for contract-based claims.

Takeaway:  granted, it is often tough to get an audience before a large company or venture capitalist to pitch your million dollar idea, but before you do so, carefully balance the benefit of requesting a nondisclosure agreement against the risk of losing the idea, or worse yet, getting ensnared in endless, Kafkaesque litigation: