Intellectual Property Protection of Animation Derivative Products in the U.S.

Issue 32,By Josh Lawler and Olivier A. Taillieu,[Copyright]

Mickey Mouse, Superman, Bugs Bunny – more than globally recognized images, these cartoon characters have become highly profitable industries unto themselves. Millions of dollars are made off the commercialization of these and similar characters that appear on toys, clothing, lunch boxes, and literally hundreds of other consumer products.

Due to the enormous monetary value in the successful promotion and exploitation of popular cartoon characters, the people and companies who own those characters protect the use of the characters vigorously. Certainly in the United States, cartoon character owners quickly take action to stop all unauthorized commercial uses of the characters and claim damages from any use that has already occurred.

This article analyzes the different legal property rights that apply to ownership of cartoon characters in the United States, and explains how an unauthorized use may infringe those rights. This article presumptively references only widely recognized, popular graphic cartoon characters like Mickey Mouse and Superman.

U.S. property rights in cartoon characters

In the United States, creation and/or ownership of a cartoon character creates a property interest in that character. If an employee created the character under a work-for-hire employment contract, for example, the employer owns the property rights in the character and has the exclusive ability to control its use.

The profitability of commercial exploitation of popular cartoon characters, especially in the last couple of decades, has made character owners quite vigilant about protecting the use of these characters. As a result, the laws have become increasingly well-defined in the area of protecting cartoon and graphic characters in particular. In general, the more popular and well-defined the character (and thus, the more valuable the merchandising), the easier it is for the court to find infringement.

Essentially three categories of law protect cartoon characters against infringement – copyright law, trademark law, and unfair competition laws. Each of these will be addressed in turn.

Copyright law: effective protection

ⅠProtecting against substantial similarity

Of the legal vehicles used to protect cartoon characters, copyright law has proven most successful.

A copyright is a form of protection provided by Title 17 of the United States Code to authors of “original works of authorship,” .Copyright protection attaches to the work the moment the work is fixed in some tangible form. Section 106 of the 1976 Copyright Act gives copyright owners the exclusive right to do and authorize others to do the following:
- Reproduce the work in copies;
- Prepare derivative works based upon the copyrighted work;
- Distribute copies of the work to the public by sale or other transfer of ownership interest;
- Perform the work publicly;
- Display the work publicly

Under the copyright laws, a copyright owner can prevent others from using the work, or, in the case of cartoon characters in particular, a “substantially similar” work. Boisson v. Banion Ltd., 273 F.3d 262, 268 (2nd Cir. 2001); Aaron Basha Corp. v. Felix B. Vollman Inc., 88 F. Supp. 2d 226, 228-229 (S.D.N.Y. 2000).

Courts have interpreted “substantial similarity” to mean that the copy incorporates so many of the specific elements or traits belonging the original protected character that it is virtually a “true copy.” Changing the pose or medium of the character does not avoid copyright infringement. For example, in some very early cases on this issue, federal courts determined that creating a three-dimensional doll based almost exactly on a two-dimensional cartoon figure constituted copyright infringement, even though the medium differed. See King Features Syndicate v. Fleischer, 299 F. 533 (2d Cir.1924) (finding copying where defendant created a three-dimensional “Sparky” figure based on a copyrighted two-dimensional cartoon); Geisel v. Poynter Prods. Inc., 295 F.Supp. 331 (S.D.N.Y.1968) (giving copyright protection to three-dimensional Dr. Seuss dolls that were based upon two-dimensional cartoon characters); Fleischer Studios, Inc. v. Ralph A. Freundlich, Inc., 5 F.Supp. 808 (S.D.N.Y.1934) (giving copyright protection to a three-dimensional Betty Boop doll based upon the two-dimensional cartoon character).

In finding copyright infringement in Fleischer Studios, the court explained that the copy does not need to be precisely identical for copyright infringement to exist. The court there found that the cartoon character in question – Betty Boop – had very distinctive features, and that defendants “did not make an exact copy of the embodiment of the plaintiffs’ character as depicted by Fleischer, but what they did make gives precisely the same impression because there is really no essential difference between the plaintiffs’ drawing and the defendants’ doll except that the hair is somewhat differently arranged. What Mr. Freundlich did … was to make enough differences to create an argument but not enough to create an alibi… Of course, an exact copy is not the only thing against which copyright protects.” 5 F. Supp. at 809.

In order to determine whether a cartoon character is entitled to copyright protection, courts usually apply a “character delineation” test, which determines whether the character is sufficiently and distinctively delineated so that it warrants protection. Metro-Goldwyn-Mayer Inc. v. American Honda Motor Co. Inc., 900 F. Supp. 1287, 1302 (C.D. Cal. 1995). The more specific and unique the character’s appearance and personality, the better the chance of copyright protection. Titan Sports Inc. v. Turner Broadcasting Systems Inc., 981 F. Supp. 65, 68 (D. Conn. 1997). For example, no one can copyright the notion of a character with general superpower traits, but Superman in particular – including his specific appearance and costume, his alter ego, his weakness to kryptonite, etc. – can be copyrighted because he is a highly delineated character.

Reproducing a popular or well-delineated cartoon character – or its nearly identical likeness – on commercial merchandise without the copyright owner’s authorization will almost certainly constitute copyright infringement. Infringement is found where the plaintiff claims ownership of a valid copyright; and copying by defendant of the constituent elements of the work that are original.

The U.S. copyright laws apply to any entity – foreign or domestic – that intends to sell products or services in the United States. For example, a Chinese company that manufactures t-shirts emblazoned with Bugs Bunny, without the authorization of Warner Brothers, cannot sell those t-shirts in the U.S., directly or indirectly, without infringing Warner Brother’s copyright. Moreover, Warner Brothers’ U.S. copyright is automatically protected in China through the U.S. and China’s membership in various bilateral agreements and international copyright conventions such as the Berne Convention for the Protection of Literary and Artistic Works – by virtue of these agreements and treaties, no Chinese company can even sell those Bugs Bunny t-shirts in China without violating Warner Brothers’ copyright.

ⅡHow to protect  and compensate

In pursuing an infringement claim, a copyright owner will invariably seek an injunction to prevent further infringement and monetary compensation. For monetary compensation, copyright owners can elect either an award of statutory damages or actual damages and profits. 17 U.S.C. section 504(c)(1). The basic range of statutory damages is USD750 - USD 30,000 per work, determined in the discretion of the court. Statutory damages for willful infringement, however, can be up to USD150,000 per work. If the defendant can show that it was “not aware and had no reason to believe” that it was infringing on a copyright, the statutory damages can be reduced to USD200 per work. Statutory damages are only available for works that were registered with the U.S. Copyright Office prior to infringement, or within three months of publication. 17 U.S.C. section 412.

Plaintiffs often choose to request statutory damages because actual damages for copyright infringement are often difficult to measure. The primary measure of actual damages is based upon the extent to which the market value of the plaintiff’s copyrighted work was injured or destroyed by the infringement, often measured in terms of the profits the copyright holder lost due to the infringement. Fitzgerald Pub. Co., Inc. v. Baylor Pub. Co., Inc., 670 F. Supp. 1133 (E.D.N.Y. 1987). Lacking this type of proof, plaintiffs may show and recover the defendant’s profits from sales of the infringing work. Under federal law, a prevailing plaintiff can recover both his actual damages and the defendant’s profits if those are separate damages and he can prove both. 17 U.S.C. Section 504(b) and Notes of Committee on the Judiciary thereto (House Report No. 94-1475). A court can also order the defendant to pay the plaintiff’s attorney’s fees and court costs.

Note that damages for copyright infringement are assessed based on the number of works infringed, not on the number of infringements. 17 U.S.C. section 504(c)(1, 2). In other words, if a defendant infringes on Disney’s Mickey Mouse character copyright by printing it on t-shirts (without authorization) in six different poses, that constitutes only one instance of copyright infringement, not six. Walt Disney Co. v. Powell, 897 F.2d 565, 569 (D.C. Cir. 1990).

Trademark law: protecting source identification

A trademark is basically a brand -- any word, name, symbol, or device used in commerce to identify and distinguish the goods or services of one manufacturer or provider from another and identify the source of the goods or services. In the U.S., the Lanham Act, 15 U.S.C. sections 1051-1127, defines the federal protection and registration for trademarks.

Trademark law protects cartoon characters in relationship to the use of those characters in commerce to identify the source of a particular product. Brown v. It’s Entertainment Inc., 34 F. Supp. 2d 854 (E.D.N.Y. 1999). It is only a right affiliated with commercial use because the primary goal is to prevent consumer confusion. For example, a consumer would assume that a product that incorporates the image of Mickey Mouse originated from or was authorized and/or endorsed by the Disney Company. If an unauthorized entity uses the image of Mickey Mouse on a product, consumers may be confused as to the source of that product, likely thinking (wrongfully) that the product was affiliated with Disney – that would constitute trademark infringement. As in copyright law, the more well-defined the cartoon character, the stronger the chance of trademark protection. 

However, unlike copyright law, which protects against use of a substantially similar copy of a protected work, trademark law requires less precision. Trademark infringement can occur when the defendant’s imitation, though not identical or nearly identical, is likely to result in public confusion, mistake, or deception regarding the source of the goods. Also unlike copyright law, trademark protection can last forever, so long as the trademark owner properly protects and maintains his mark.

In recent years, some courts have commingled some of the concepts of copyright and trademark law, using trademark law criteria to find copyright infringement of characters. For example, in Walt Disney Productions v. Air Pirates, supra, the court found that the Disney characters used by the defendants had “achieved a high degree of ‘recognition’ and ‘identification’” – trademark law considerations -- which enhanced the protectability of the characters under copyright law.

Mark owners should endeavor to register the mark in every class of goods and services in which the mark is used – failure to do so could open the door for an entity to use that mark on a product for which the mark is not registered. However, if the mark is “famous,” courts will likely find infringement on any unauthorized use of that mark, whether the mark is registered for the particular product or service or not, under the trademark dilution theory. A court would easily determine that a popular, widely-recognized cartoon character like Mickey Mouse or Bugs Bunny is “famous.”

Unlike international copyright law, which automatically extends copyright protection between countries that have signed bilateral agreements and conventions, there is no automatic extension of trademark law. Instead, many countries -- including both the U.S. and China – are signatories of international treaties that give special treatment to foreign-registered trademarks so long as certain protocols are followed. For example, under the Madrid Protocol, the owner of a registered trademark in one member country can apply for an “International Registration” that designates other treaty member countries as locations where the trademark will be recognized. Absent this type of application or foreign registration, however, there is no promise of protection for U.S. trademarks used in other countries.

Unfair competition: preventing the appearance of false endorsement

Unfair competition claims – typically brought under state unfair competition laws -- regarding cartoon characters generally encompass the notions of misappropriation and/or misrepresentation. In an unfair competition claim, a plaintiff alleges that it uses a certain character to identify its business, and that the defendant – a competitor to plaintiff -- is using an identical or substantially similar character in connection with its business for the purpose of falsely associating plaintiff’s character with defendant’s business.

Like trademark claims, the primary question courts ask when presented with an unfair competition claim is: Is there a likelihood of confusion? Felix Cat Productions Inc. v. New Line Cinema, 2000 WL 770481, *2, No.  99-9339 (C.D. Cal., April 28, 2000). Accordingly, claims of unfair competition invariably accompany trademark infringement claims. If the plaintiff’s mark would not qualify for trademark protection, another person’s use of a similar mark may still constitute unfair competition.


About the author:

Josh Lawler is a partner of Zuber & Taillieu LLP, focusing on corporate law, securities and finance law, and entertainment law.

Olivier A. Taillieu is a partner of Zuber & Taillieu LLP, focusing on intellectual property litigation and arbitration.  Their full biographies may be viewed at www.zuberlaw.com.

 

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