Star Wars and Character Merchandising

© Mehmet Nafi Artemel, 2012

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© Mehmet Nafi Artemel, 2012

Franchising

Merchandising

Difference between Franchising and Merchandising

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“Ne kadar köfte, o kadar ekmek!”

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A franchise agreement often involves the franchisor (i.e. Ramiz Köfte) giving the franchisee (e.g. Ramiz Köfte branch at Akmerkez shopping mall – I don’t know the owners’ name or company name!) the right to use the franchisor’s (Ramiz Köfte’s) intellectual property rights (IPRs) such as for example:

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The right to use the name “Ramiz Köfte”, which is registered as a trade mark (UK spelling!)

Other IP rights (e.g. copyright in the menus; the tray covers (i.e. the sheets of paper on the trays) etc.; trade secrets which may be involved in the making and serving of the meatballs)

Industrial design in a meatball?

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In the case of franchising, the franchiser allows another person (the franchisee) to use his way of doing business (including trademarks, know-how, customer service, software, shop decoration, etc.)

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The franchised system is a package comprising intellectual property rights relating to one or more marks, trade names, industrial designs, inventions, and works protected by copyright, together with relevant know-how and trade secrets, to be exploited for the sale of goods or the provision of services to end users.

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The term “merchandising” as used by marketing professionals refers to a whole range of allied activities that improve access to and visibility of products, such as designing of shop layout, proper window displays, product groupings, etc.

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The term as used by lawyers and in the field of IP in particular refers to use of fictional or real characters to promote the sale of various products and/or services.

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Character and personality merchandising is one of the most modern means of increasing the appeal of products or services to potential customers who have an affinity with that character or personality.

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It is generally argued that the main reason for a consumer to buy medium to low-priced mass goods is not because of the product itself but because of the name or image of the celebrity or fictional character that is reproduced on the product.

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Example: Harry Potter

Warner Bros. acquired worldwide merchandising rights for the Harry Potter character in the popular children’s book series by J.K. Rowling.

Warner Bros. has in turn divided up these license rights to various of its business partners / licensees:

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http://www.statisticbrain.com/total-harry-potter-franchise-revenue/

Hasbro has the rights to develop and distribute trading cards and youth electronic games

Mattel (Hasbro’s competitor) makes toys

Electronic Arts (the California software entertainment company) is licensed to make Harry Potter computer and video games

Coca-Cola™ secured other rights relating to marketing of the first Harry Potter film

[“The Harry Potter Phenomenon”, Interview with Nils V Montan, President of International Trademark Association, Managing Intellectual Property, April 2001, p. 18]

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Character merchandising is, strictly speaking, the use of popular fictional characters (commonly from a book or a film) to promote the sale of various products and/or services.

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But, character merchandising is usually used as an umbrella term which refers to: Fictional human beings (e.g. Harry Potter, Tarzan or

James Bond)

Fictional non-human beings (e.g. Donald Duck or Bugs Bunny)

Real persons (e.g. famous personalities in the film or music business, sportsmen)

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The following examples of character merchandising can be given: a toy is the three-dimensional reproduction of the fictional

character Mickey Mouse;

a T-shirt bears the name or image of fictional characters;

the label attached to a perfume bottle bears the name of an actor or actress;

an advertising movie campaign for a drink shows a pop star drinking it.

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As an organized system, character merchandising originated and was initiated in the United States of America in the 1930s in the Walt Disney Studios in Burbank (California).

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When this company created its cartoon characters (Mickey, Minnie, Donald), one of its employees, Kay Kamen, established a department specialized in the secondary commercial exploitation of those characters and, to the surprise of most, succeeded in granting an important number of licenses for the manufacture and distribution of low-priced mass market merchandise (posters, T-shirts, toys, buttons, badges, drinks).

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In the context of copyright, the most relevant aspects of the merchandising of fictional characters (such as Mickey Mouse, Donald Duck, Pluto) are ?

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books, pamphlets cinematographic works works of drawing photographic works sculptures, dolls, puppets or robots (i.e.

three-dimensional works)

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Industrial design protection is granted by the relevant authority (in Turkey: The Turkish Patent Institute) for the protection of the ornamental or aesthetic aspects of articles.

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Industrial design protection is mainly relevant for cartoon characters represented in the form of aesthetic designs for three-dimensional articles which mainly belong to the toy or costume jewelry areas (dolls, robots, puppets, action figures, brooches) which generally originate in cartoons.

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© Mehmet Nafi Artemel, 2012

The ‘Star Wars’ case

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The ‘Star Wars’ case illustrates:

the length to which IP rights holders will go for protecting their intellectual property rights in artifacts made for a film and which are subsequently used for merchandising purposes

the distinction between copyright and industrial designs and

how these are formulated under different legal systems/jurisdictions (i.e. the US and UK) and

the resulting differences of outcome in a dispute

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Lucasfilm, named after its founder, George Lucas, was the production company that made the Star Wars film series

The ‘Star Wars’ films became hugely successful for spinoff merchandising activities based on the characters and paraphernalia

The film’s story-line and characters were

conceived by George Lucas

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This case concerned a dispute over intellectual property rights in certain articles that were created for use in the first Star Wars film which was called:

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“Star Wars Episode IV – A New Hope”

1 Yıldız Savaşları: Bölüm IV – Yeni Bir Umut

(film) (1977) (Star Wars: Episode IV – A New Hope)

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The most important of these articles for the purposes of this case was the ‘Imperial Stormtrooper’ helmet

Lucasfilm owns copyrights in the ‘artistic works’ (sanat eserleri) created for the Star Wars films

Lucasfilm builds up a successful licensing business, including the Imperial Stormtrooper helmet

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Between 1974 and 1976 George Lucas’

concept of the ‘Imperial Stormtroopers’ as threatening characters in “fascist white armoured suits” was given visual expression in drawings and paintings by an artist in the US, Mr. Ralph McQuarrie

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In 1976, Lucasfilm contacts Mr. Ainsworth in

the UK for the production of items for use in the first Star Wars film

Lucasfilm gave Mr. Ainsworth drawings and a model

Mr. Ainsworth keeps the moulds (kalıp) which he had used to create the items

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The Imperial Stormtrooper helmets produced by Mr. Ainsworth were used as costumes in the 1977 film, ‘Star Wars Episode IV’

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In 2004, Mr. Ainsworth sets up a website from which he began to sell replicas which he created from the original moulds that he had kept

Mr. Ainsworth sells between USD 8,000 -30,000 of the goods in the US

Lucasfilm notices the sale of replicas by Mr. Ainsworth and sues him for infringement of copyright in the US

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The claimant (the term in the UK) (or the plaintiff) (i.e. in Turkish: davacı) is ‘Lucas Film’

The defendant (Turkish: davalı) is Andrew Ainsworth

The case is between a company in the US (Lucasfilm owned by George Lucas) and an individual in the UK (Andrew Ainsworth)

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Lucasfilm (claimant/plaintiff) sued Andrew Ainsworth ( defendant) for the first time in the US.

Lucasfilm sued Andrew Ainsworth for infringement (ihlal/tecavüz) of copyright under US law

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Lucasfilm obtained a default judgment (gıyabi karar) for USD 20 million against Adrew Ainsworth since Mr. Ainsworth did not take active part (i.e. did not appear in court) in the proceedings (dava)

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Since Mr. Ainsworth had no assets in the US, Lucasfilm sought to enforce the US judgment in England

Lucasfilm also commenced proceedings in the English High Court for:

Claims (iddia) of infringement (ihlal) of English copyright and claims under US copyright law

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Stages (aşamalar) of proceedings (davalar) in the UK:

2008: The High Court 8/04/2008 – 31/07/2008

2009: The Court of Appeal 3/11/2009 – 16/12/2009

2011: The Supreme Court 7/03/2011 – 27/07/2011

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Hearing dates (duruşma günleri/celse):

8th, 9th, 10th, 11th, 14th, 15th, 16th, 17th, 18th, 21st, 22nd, 24th, 25th, 29th, 30th April and 1st and 2nd May 2008

Judgment (Karar): 31/07/2008

▪ 280-paragraph judgment

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Hearing dates (Duruşma günleri):

3/4/5 November 2009

Judgment (Karar ): 16/12/2009

▪ 209-paragraph judgment

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Hearing dates (Duruşma günleri):

7, 8 and 9 March 2011

Judgment (Karar ): 27 July 2011

115-paragraph judgment

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Lucasfilm sued in the English court for once again for copyright infringement

Lucasfilm sued this time for copyright

infringement under UK copyright law

Lucasfilm also sought to enforce the US judgment

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Lucasfilm claimed that copyright in the helmets had been infringed

The High Court posed itself the following question:

“(i) Are any of the helmets artistic works within the scope of the 1988 Act, so as to attract copyright in themselves? This involves a consideration of whether they are either sculptures or works of artistic craftsmanship.”

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FİKİR VE SANAT ESERLERİ KANUNU Kanun Numarası: 5846

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III - GÜZEL SANAT ESERLERİ: Madde 4 - (Değişik madde: 07/06/1995 - 4110/2 md.) Güzel sanat eserleri, estetik değere sahip olan; 1. Yağlı ve suluboya tablolar; her türlü resimler, desenler, pasteller, gravürler,

güzel yazılar ve tezhipler, kazıma, oyma, kakma veya benzeri usullerle maden, taş, ağaç veya diğer maddelerle çizilen veya tespit edilen eserler, kaligrafi, serigrafi,

2. Heykeller, kabartmalar ve oymalar, 3. Mimarlık eserleri, 4. El işleri ve küçük sanat eserleri, minyatürler ve süsleme sanatı ürünleri ile

tekstil, moda tasarımları, 5. Fotoğrafik eserler ve slaytlar, 6. Grafik eserler, 7. Karikatür eserleri, 8. Her türlü tiplemelerdir. Krokiler, resimler, maketler, tasarımlar ve benzeri eserlerin endüstriyel model

ve resim olarak kullanılması, düşünce ve sanat eserleri olmak sıfatlarını etkilemez.

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Artistic works (sanat eserleri) are defined in English copyright law as follows:

CDPA, 4(1): “In this part ‘artistic work’ means- (a) a graphic work, photograph, sculpture or

collage, irrespective of artistic quality, (b) a work of architecture being a building or a

model for a building, or (c) a work of craftsmanship.”

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“a) artistik niteliği olup olmadığına bakılmaksızın, grafik eser, fotoğraf, heykel veya kolaj,

b) bir bina veya bina modeli olarak mimari eser veya

c) bir zanaat eseri”

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The High Court dismissed the claims (iddiaları yersiz buldu) for infringement of English copyright

It was held (mahkemenin kararı uyarınca) that

helmets were not copyright protected because they were not:

Sculptures or Works of artistic craftsmanship

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The Court of Appeal agreed with the High Court that the helmet was not a sculpture because: a sculpture is a work of the artist’s hand intended to

be appreciated as a work of art.

Example given by the judge: a pile of bricks created by an artist to be displayed in an art gallery is undoubtedly a sculpture; a similar pile made by a builder preparing works across the road is clearly not.

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According to the Court of Appeal the helmets were created for utilitarian purposes within the film as costumes and props.

In other words they were not created to be appreciated as works of art.

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The Supreme Court agreed and affirmed (onadı) the judgments of the High Court and the Court of Appeal, and held that the helmet was not a sculpture

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In English copyright law, copyright subsists (içinde bulunur, var olur) amongst other things, original “artistic works”, which includes a “sculpture”, irrespective or artistic quality.

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In the Star Wars case, it was significant to determine whether a helmet was a “sculpture” for two reasons:

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1) If it had been a sculpture, any copying of the helmets which Mr. Ainsworth had originally produced would have infringed Lucasfilms’ copyright

2) If it was not a sculpture, Mr. Ainsworth had a

defence (müdafaa) which is recognised only in English law:

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Although copyright undoubtedly subsisted in the drawings of the helmet and the technical drawings of the helmet (as graphic works) these drawings were considered “design documents” by the Court.

Therefore, under section 51 of the CDPA it was not an infringement of copyright in those drawings to make articles to those designs.

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It is not an infringement of any copyright in a

design document which records (barındıran) a design for anything other than an artistic work to make an article to the design (tasarıma göre yapmak) or to copy an article made to the design (according to section 51 of the CPDA Act in the UK)

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51 Design documents and models. (1) It is not an infringement of any copyright

in a design document or model recording or embodying a design for anything other than an artistic work or a typeface to make an article to the design or to copy an article made to the design.

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“Tasarımına dayanarak bir ürünün yapılması veya tasarımına dayanarak yapılmış bir ürünün kopyalanması, bu tasarımın bir sanat eseri veya yazı karakteri için [oluşturulmuş] olmaması kaydıyla, kayıt altına alındığı veya tecessüm ettiği tasarım dokümanı veya modeli uzerinde var olan herhangi bir telif hakkının ihlalini oluşturmaz”.

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If the helmet did not qualify as sculpture (which it did not) and was therefore not an artistic work, Mr. Ainsworth had a defence to an English copyright action based on infringement of Mr. McQuarrie’s (the original artist) graphics.

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It was accepted that under US law, copyright subsisted in the articles and that Mr. Ainsworth had according to US law infringed Lucasfilm’s copyright by selling replicas to customers in the US through his website.

But, it was not an infringement of UK copyright law for Mr. Ainsworth to make and distribute three-dimensional copies of the helmet

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“Ainsworth now knows he can continue to make his replica helmets for sale in the UK without fear of infringing copyright in the country. But he is prevented from selling the merchandise into the US.”

Source: James Nurton. Managing Intellectual

Property. London: Jul/Aug 2011 (c) Euromoney Institutional Investor PLC Jul 2011)

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Lucasfilm Ltd. Responds to United Kingdom Supreme Court Ruling on Copyright Infringement

LONDON–(BUSINESS WIRE)–Today, the UK Supreme Court issued a split ruling in the copyright infringement lawsuit brought by Lucasfilm involving the Stormtrooper costumes from Star Wars. The Court agreed that Mr. Ainsworth’s replica costumes infringe Lucasfilm’s US copyrights, and ruled that those rights are enforceable in the UK with respect to activities outside of the UK. This is the first time the Supreme Court has ruled on an issue of great commercial and legal importance, namely the jurisdiction of the courts in the UK over infringements taking place abroad. The judgment is an important step in modernizing UK law and bringing it into line with the EU.

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“The decision unfortunately also maintains an anomaly of British copyright law under which the creative and highly artistic works made for use in films — which are protected by the copyright laws of virtually every other country in the world — may not be entitled to copyright protection in the UK . Lucasfilm remains committed to aggressively protecting its intellectual property rights relating to Star Wars in the UK and around the globe through any and all means available to it, including copyright, trademark, design patents and other protections afforded by law. We encourage the UK government’s recent efforts to modernize its copyright and design laws to afford full protection to three dimensional artistic works.”

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