Strategic Plan to Protect and Profit from Fictional Characters in Audiovisual Works

Fictional and graphic characters move effortlessly from one medium to another. Such liquidity means that they also move from one channel of commerce to another with similar ease, often creating a snowball effect through cross-marketing. This broadly expands the commercial value of the character and providing the character with legal protection in a variety of different settings and characterizations other than those in which the creator originally depicted the character becomes paramount.

Fictional and graphic characters move effortlessly from one medium to another, frequently assuming new dimensions, and often take on a life of their own in the mind of their audience. Characters’ moving from one medium to another with such liquidity means that they also move from one channel of commerce to another with similar ease, often creating a snowball effect through cross-marketing. As a result, the exploitation of characters has become a highly profitable industry through the licensing of characters' images and names for seemingly endless types of products and services. This broadly expands the commercial value of the character and providing the character with legal protection in a variety of different settings and characterizations other than those in which the creator originally depicted the character becomes paramount.

As the character merchandising industry has become a global revenue driving force, the law has made the necessary advancements to enable owners to protect their property from being exploited by others. Copyright, trademark, unfair competition, and contract law can provide varying degrees of legal protection to owners of fictional and graphic characters. The degree of protection depends on the legal strategy taken to protect the owner’s character, including: acquiring intellectual property rights on the state, federal, and international levels, monitoring the marketplace for possible infringements of these rights, enforcement of the rights acquired, and using various forms of contracts to protect ownership rights when dealing with various individuals and companies. The primary goal for an owner of a particular character should be that of providing legal protection that places their character in a protective environment that combines the benefits of copyright, trademark and unfair competition law protection.

Protection Provided by Copyright Law

Under the Copyright Act 1976, as amended, characters are not mentioned as such, but case law establishes that some characters may be protected by copyright independently, to the extent that the character is original, creative and possesses characteristics that are clearly delineated. This will be easier to determine where the specific features of a character are described in visual images rather than in the case of literary characters only described in writing. Copyright law does not protect ideas from infringement, it only protects the expression of those ideas and courts will not protect character types. The best way to protect a graphic character under copyright law is to ensure that the character's appearance and personality are specific and unique.

The copyrightable expression of a character is more than just the character's physical appearance. Copyright protection includes the character’s name, physical appearance, and character traits as well. One of the more difficult problems of applying copyright law analysis and protection to graphic characters is ascertaining how such protection will be extended to protect a particular character once that character is no longer existing in the original context in which it first appeared. Copyright law will find that copyright infringement has occurred when someone other than the rightful copyright owner of the character uses that character without permission, especially if such use copies the appearance and unique character traits that distinguishes the particular character. The unauthorized adaptation (to the novel form, or serialization in books or magazines) of a protected work (often the of a film or of a television program) will generally constitute an infringement of the original work if the situations and characters of the can easily be recognized in the adapted work. Furthermore, the use of stills or frames showing a character from a film or television series in other media (such as posters, postcards, calendars, badges, stickers, postcards, etc.) is considered an infringement of the copyright in the cinematographic film or in the photograph.

There have been a number of cases where cartoon characters were reproduced as three-dimensional dolls or figures, and copyright infringement was found without any regard to the infringer also copying the plot or personality of the character. In those instances where copyright infringement was based solely on the appearance of the character, the similarity was "virtually exact."

Protection Provided by Trademark Law

In addition to protecting a character under copyright law, a character can also be protected under trademark and unfair competition law as well. Characters as entertainment products function as marks that are recognized under federal, state, and common law trademark law because they "suggest, if not clearly indicate, origin" of the products or services on which the character is used. Trademark law will not permit a graphic character to be trademarked solely for its own protection. It does permit the character's name and likeness to be trademarked when the function of that trademark is to indicate the source of the products and services bearing that mark.
This protection could prevent the exact duplication of the trademark owner's character or the imitation of that character where the likely result is to cause public confusion, mistake or deception with regard to source of the products or services that carry the indicia of the character.

Trademark and unfair competition protection in addition to copyright protection provides the owner with several distinct advantages. Unlike copyright protection, which generally lasts for the life of the creator plus 50 years, trademark law can provide the trademark owner with a perpetual monopoly in the use of the trademarked character. A perpetual monopoly could exist because the term of protection might last indefinitely if the use of trademarked character is properly protected and maintained. Copyright law also has several limitations to the protection that it provides. These limitations include the inability of the owner to prevent activities such as fair use. Further, in order to prove trademark infringement the trademark owner does not need to prove that the infringer had access to the character as is required under copyright law, but only that the mark was used by a party other than the owner of the mark without permission.

Federal Trademark Registration

The federal Lanham Act governs the federal registration of trademarks that are registered with the Patent and Trademark Office ("PTO") on either the Principal Register or Supplemental Register. There are important advantages the trademark owner obtains from the federal registration of a trademark that are not available if the trademark owner only relies upon common law or state law for protection.

There are many advantages to registering a mark on the Principal Register. First, once a mark is registered on the Principal Register, there is a presumption of trademark ownership and validity in any subsequent litigation involving the trademark. Trademark registration acts as prima facie evidence of (1) the validity of the mark and its registration, (2) the registrant's ownership of the mark, and (3) the registrant's exclusive right to use the mark in commerce under specified circumstances. Trademark registration also creates what is called "actual notice" or "constructive notice" and therefore informs all parties that the trademark is the exclusive property of the trademark owner. This is important because such notice permits the trademark owner to recover profits or damages for trademark infringement.

Second, registration on the Principal Register usually provides the trademark owner with rights in the mark for a larger geographical area than is possible under common law and state law. If the mark is registered on the Principal Register, the trademark owner will enjoy nationwide protection from potential infringement. Under common law the mark will only be protected in the specific geographical area in which the mark is used in commerce and under state law the mark it is only protected in the state in which it is registered.

Third, the scope of protection under both common and state law is usually restricted to the specific products or services for which the mark has been used while a the scope of protection for a federally registered mark is usually much broader in that it encompasses related products or services.

Fourth, the Lanham Act provides judicial remedies that are more far-reaching and costly to an infringer than those available at common law. For example, a trademark owner could be awarded treble damages against an infringer whose infringement was deemed to be "willful". In addition, there is the possibility that the court would award attorney fees in exceptional cases where the infringement was deemed malicious.

Since the latest amendment of the Lanham Act in 1988, a trademark application in the United States of America should either be based on actual use in commerce (which does not include mere token use) or on a bona fide intention to use the trademark in respect of the goods or services applied for. In the latter case, the trademark will not be registered until it is effectively used in the United States of America (unless the application was filed based upon a registration in a Paris Convention member country, or in a country granting reciprocal rights to applicants from the United States of America, for the same trademark and same goods or services). To prevent trafficking in trademarks, the mark for which an application with a declaration of intention to use was filed cannot be assigned prior to the filing of the required statement of use, unless the assignment of the application is part of an assignment of the business to which the mark pertains.

Registering a Trademark Under Multiple Classes of Goods

One of the down sides to trademark protection of a character is that federal trademark protection for a character can be costly. This will be amplified if the character is extensively used or licensed for use in multiple media formats and in merchandising programs for many different categories of products and/or services.
In this event protection may require that the character be registered as a mark in multiple trademark classes since each class represents a different category of goods or services. Registration in each specific trademark class requires an additional fee to be paid. To provide the maximum degree of protection as possible, the mark may need to be registered in countries other than just the United States because trademark protection is territorial (meaning governed by the laws of the specific country in question). Furthermore, any changes in the appearance of the graphic character could destroy the original trademark protection and would thus require additional trademark registrations to ensure that the current appearance of the graphic character remains protected.

Trademark Protection Through Use of the Mark in Commerce

Trademarks do not need to be federally registered in order to be protected. Without federal registration a trademark may be protected under the common law or state law when registration occurs in a particular state. With common law, the ownership and protection of a trademark is automatic once the mark is used in commerce. State law will protect a mark once it is used in commerce and registered in a particular state. Trademark rights usually belong to the first user in a geographical area for a particular product or service. Common law or state law protection is probably satisfactory, and may be the only type of protection that is available for a mark that is only used in a single geographic market such as a city or state. Ownership and protection of a trademark will continue for as long as the owner uses the mark in commerce.

Preventing Dilution of Trademark Protection

The Lanham Act does not include a provision allowing a dilution action. However, almost half of the individual states (including major commercial states like New York, California and Florida) have enacted “dilution” statutes, which protect trademark owners against the likelihood of injury to business reputation or of dilution of the distinctive quality of the trademark. In that respect, paragraph 12 of the Model State Trademark Bill provides that “Likelihood of injury to business reputation or of dilution of the distinctive quality of a mark registered under this Act, or a mark valid at common law or a trade name valid at common law, shall be a ground for injunctive relief notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services.”

Protection Provided by Unfair Competition Law

There is no one federal law in the US specifically devoted to unfair competition. However, the concept of unfair competition resides both in federal antitrust laws and in other federal statutes, most notably those relating to works protected by copyright, trademarks, patents and designs. With respect to character merchandising, Section 43(a) of the Trademark Act of 1946, as amended in 1988 (Lanham Act), provides significant remedies for acts of unfair competition outside the federal antitrust laws. Many States also have their own unfair competition laws. However, Section 43(a) of the Lanham Act creates a federal remedy for making a false designation of origin, or any false description or representation.

Section 43(a) is not to be confused with Section 32, which provides a cause of action based on infringement of a registered trademark. Section 43(a) is broader in scope, contemplating causes of action not necessarily being based on a trademark registration in For example, the Supreme Court recently made clear, in the Two Pesos, Inc. v. Taco Cabana, Inc. case, that infringement of either unregistered trademarks or trade dress creates a cause of action under Section 43(a) and that such marks or trade dress should receive essentially the same protection as those that are registered.

Unfair competition laws involve a variety of different causes of action that primarily fall into three overlapping categories:
(1) misrepresentation, (2) sponsorship, and (3) misappropriation.

(1) Misrepresentation: occurs when a party represents that a particular character is associated with their product or service, when it is not.

(2) Sponsorship: occurs when a party indicates that a particular character has endorsed its product or service when it has not.

(3) Misappropriation: occurs when a party in essence steals another's character in order to associate it with their product or service, which may be most relevant with the protection of characters.

Therefore, when one brings an unfair competition action, the injured party is claiming that their character has been wrongly associated with another party's product, service, person, company, or idea. If such misuse of a graphic character occurs and it is determined under the "reasonable person standard" that the graphic character had been misrepresented, used falsely as a sponsor, or misappropriated then the party engaged in such misuse could be found liable for trademark infringement.

Most courts have recognized trademark protection for graphic characters and have found trademark infringement liability under both trademark and unfair competition law. In Fisher v. Star Co. the cartoon characters Mutt and Jeff were protected by the court under trademark and unfair competition principles, which found the Star Company liable for their unauthorized use of the characters.

Regardless of the particular cause of action the critical issue in proving trademark infringement is the "likelihood of confusion" and whether consumers are likely to be misled or confused as to the source of the products or services bearing the indicia of the trademarked character.

Protection Provided by Contract Law

• Non-disclosure and Non-compete Agreements
• Work-for-hire Agreements
• License Agreements

It is not unusual today to find a character that makes its first appearance in a television show or in a film to be immediately, if not simultaneously, licensed for toys, other products and services, and being exploited in other media formats. Graphic characters, including their names and images are commercialized through licensing agreements for children's toys and games, adult and children's clothing, posters, software, video games, and fast food restaurants. It is important to decide whether the licensing agreements will be exclusive or non-exclusive in terms of the particular party that is licensing the character.

International Copyright Protection

With respect to the use of the character in another dimension (for example, character originally created in two dimensions (drawing) used in three dimensions (doll, key ring, toys, etc.) and vice versa)), most countries consider that the use constitutes a copyright infringement. In some countries this question is dealt with in a more general provision according to which unauthorized copying in a different form (Japan) or, in any form recognizably derived from that of the original work (Nigeria), is prohibited. In another country (India), the law does not provide for such an extension of protection. It is however provided that the copyright in a work is not infringed by the making of an object of any description in three dimensions “if the object would not appear to persons who are not experts in relation to objects of that description to be a reproduction of the artistic work.” If the public can recognize the characters depicted in a work presented in another form, there is infringement.

International Trademark Protection

• International Registration and the Madrid Protocol

• Trademark Registration in Individual Foreign Countries

An owner of a graphic or fictional character should implement a legal strategy that overlaps the protections provided by various areas of law because courts are still inconsistent with regard to the specific body of intellectual property or unfair competition law that provides a character protection. This legal strategy should cover trademark, unfair competition, copyright, and contract law, both domestically and internationally as well. Once in place, this strategy should be monitored to ensure that rights do not lapse due to failure to renew at the proper time. The content that you protect should also be monitored for possible infringement or dilution, and the rights that have been acquired must be enforced.

ABOUT THE AUTHOR: Jamie N. Pitts, Attorney at Law
My firm’s focus is on intellectual property, entertainment, and corporate law. I work with each client to develop strategic plans to help them reach their individual short-term and long-term goals. I help small businesses protect and profit from the name and goodwill that they have established for themselves. I work with artists and authors to protect their works and maximize their revenue. I assist producers of television and film with the legal issues within their industry. On January 27, 2010, I started a practice in Sarasota that offers these services to the area.

Copyright The Law Office of Jamie N. Pitts, Esq., PA
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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