Thursday, December 26, 2019

Disney Princesses, Cosplay, and Trademark Infringement

            In 2016, Disney sued Characters for Hire, LLC (“CFH”)[1]. CFH’s primary business was having performers dress up like Disney Princesses, Star Wars characters, or Avengers characters and performing at themed birthday party celebrations. When Disney sued, it claimed CFH infringed upon its trademark and copyrights through advertisements, marketing materials, and the actors performing at parties.
            In August 2018, the court ruled in a summary judgment motion that CFH’s use did not infringe upon Disney’s trademarks. In promoting its services, CFH used generic substitutes such as Big Green Guy, The Dark Lord, Smuggler’s Co-Pilot, etc., thereby avoiding confusion with Disney’s trademarks. Another factor the court found to weigh against trademark infringement was that Disney does not offer the services provided by CFH, namely character appearances at private birthday parties, and would be unlikely to do so in the future. The court also found no evidence of actual consumer confusion. However, the court did not rule on the trademark dilution and copyright infringement claims.  The case was voluntarily dismissed by the parties in December 2018.
            This case is fascinating to me for a couple of reasons. First, it tests the boundaries of trademark law. How close is too close for something to be considered a trademark infringement? CFH was essentially in the business of hiring out performers dressed as Disney characters. Evidence submitted in the case, such as disclaimers, contract language, and character descriptions, make it clear CFH knew it was walking a fine line. Personally, I think this case could have easily gone the other way. However, the court weighed the factors that go into evaluating a trademark infringement claim very favorably toward CFH.[2] Second, since the case was not appealed and no further courts have considered it, it is a case other accused infringers can look to for guidance and hopeful relief. If CFH could prevail against Disney in this case, with some of the unfavorable facts stacked against it, then others could as well.  
Finally, I’m intrigued by its application to the ever-growing field of professional cosplay. Well-known and well-regarded cosplayers are often compensated to make appearances at events dressed as characters. This case seems to give them, and event organizers, a bit more leeway to do so without worrying about a lawsuit based on their appearance as a character owned by another corporation.

[1] Disney Enterprises, Inc. v. Avi Lieberman, 1:16-cv-02340, (S.D.N.Y. 2016).
[2] “[T]he strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant's good faith in adopting its own mark, the quality of defendant's product, and the sophistication of the buyers.” Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir.1961)

Wednesday, November 27, 2019

What is the CASE Act?

The CASE Act is the short name for the Copyright Alternative in Small-Claims Enforcement Act. If passed into law, it would add a new section to the Copyright Act, and it would establish a Copyright Claims Board within the Copyright Office that would be able to hear and resolve copyright disputes outside of court. The current version of the Act passed in the House of Representatives on October 22, and it is now waiting to be heard before the Senate.
Currently, if copyright owners need to enforce their rights, they must litigate their claims in federal court. This can be time-consuming and expensive. The CASE Act was introduced in an effort to make it easier and more affordable for copyright owners to enforce copyright infringement claims, especially those with cases where the damages would be small.
Copyright owners who would like to pursue a claim under the CASE Act can file a claim with the Board and pay the prescribed fee, which is yet to be determined but in no event less than $100 or more than filing in a federal district court. The Board’s attorneys will review the claim. If the attorneys determine the claim meets at least the minimum standards for filling, then the claimant must serve notice on the opposing party. After being served, the defendant has the opportunity to opt-out of the Board proceeding. If the defendant opts-out, then the plaintiff would have to file a claim in federal court to continue pursuing the matter. If the defendant does not affirmatively opt-out of the Board proceeding, then it will continue.
There is no requirement that either party be represented by an attorney in a proceeding before the Board, and the proceeding is supposed to be primarily conducted via written statements or remote conferencing. A decision issued by the Board has limited ability to be appealed to a court. It can only be appealed “[i]f the determination was issued as a result of fraud, corruption, misrepresentation, or other misconduct[,] [i]f the Copyright Claims Board exceeded its authority or failed to render a final determination concerning the subject matter at issue[, or] [i]n the case of a default determination or determination based on a failure to prosecute, if it is established that the default or failure was due to excusable neglect.” The Board can award damages of up to $15,000 per infringed work. However, the maximum amount recoverable by one party in a proceeding under before the Board is $30,000, not counting awards of attorneys’ fees or costs.
I agree with most of the CASE Act supporters that copyright litigation is too expensive for many copyright owners to pursue, and as a result, some of these copyright owners are unable to enforce their rights. The CASE Act is a step in the right direction. However, there are three issues that I find troubling, at least at this stage of my review of the Act.
The first is the opt-out nature of the proceedings. Even though there are provisions in the Act to provide for proper service upon a defendant, it is still very likely the opt-out nature of the proceeding will be overlooked and people will not receive the documents or understand their importance and will have a judgment issued against them without their knowledge. Making it opt-in would be truly voluntary, and would alleviate many of the issues of notice.  
The second issue, and most troubling for me, is the limited review by courts. While I understand that the goal is to make the process cheaper and easier than pursuing a claim in a district court, I also understand that copyright cases are often complicated. Having seen the number of decisions overturned at the appellate levels due to an incorrect application of law, I am concerned about the Board’s decision being final, especially since a decision can still be as high as $30,000. If Board decisions could be appealed to the Court of Appeals, it would make the Board review process more enticing.
The final issue involves the benefits of a Board proceeding. The benefits of the Board proceeding are relatively apparent for the plaintiff: low cost, faster, and, it will likely be easier to obtain damages than it court. The benefits for the defending are lacking. As mentioned, the lack of appellate review is a turn off. Additionally, there is some language in the CASE Act that appears to allow the plaintiff to claim statutory damages they would be otherwise unable to claim in court. The only benefit is the cap on awards. As of today, I don’t think I would advise a client to participate in a Board proceeding as a defendant unless their infringement was so blatant and excessive that the maximum award benefit worked in their favor.
The CASE Act is still not law, but it is getting close. The current version has made it farther than previous attempts, and at some point, I expect we will have an alternative means of copyright enforcement. The question will be whether the process will be an attractive enough alternative to litigation for defendants that they will want to participate.  

Monday, October 21, 2019

Halloween Costumes & Knockoffs - Part III

It’s that time of year again. The leaves are changing color, the days are getting shorter and colder, and ghosts, ghouls and goblins are on the forefront of my mind. So are knock-off Halloween costumes.  
    This is my third year doing this list. If you want to see previous entries, you can find them here and here. Without further delay, here are some of my favorite knock-off superhero costumes I’ve run across this year. (Note: all links affiliate links)

I can't wait to dress up in this Superhero Soldier Costume Deluxe Halloween Cosplay.

This one is called the Punishing One. It's painfully obvious what they're trying to do.

I've watched Miraculous enough times with my daughter to know this is more than just a Men's Cat Cosplay Costume.

Speaking of cats, they might want to be careful about using Catwoman in describing this one.

This one brings to mind a certain Storm-y look.

And we'll close out this year's list with a Sexy Aqua Warrior.

Sunday, September 22, 2019

A Sonic Victory for Archie

In my book Comics Startup 101: Key Legal and Business Issues for Comic Book Creators, I briefly discuss the Ken Penders litigation against Archie Comics. In summary, Penders wrote Sonic the Hedgehog comics for Archie in the 90s, and he never signed a work-made-for-hire agreement. He sued Archie over ownership of the characters, and the case eventually settled. Similarly, artist Scott Fulop filed a lawsuit against Archie Comics in 2016. He claimed ownership to the Sonic the Hedgehog stories he worked on and that Archie’s use of them was infringement. The district court finally issued its decision in the case, Narrative Ark Entertainment LLC v. Archie Comics Publications, Inc., No. 16CV6109 (VB) (S.D.N.Y.), at the end of August.
Fulop worked as a freelance writer and artist for Archie Comics between 1996 and 1998, creating stories and characters for the Sonic the Hedgehog line of books. During his time working on Sonic, he did not sign a work-made-for-hire agreement, and even though Archie Comics claimed he did, no evidence of one was introduced at trial. After learning from Penders that his creations were still being reprinted, Fulop registered copyrights in his works in 2009 and 2010. Archie claimed authorship and ownership of the works, filed for copyright registrations, and transferred its rights in the same over to Sega between 2011 and 2013. Fulop did not file his lawsuit until 2016, claiming he was evaluating his options and waiting to see the outcome of the Penders litigation.
In its decision, the court ruled against Fulop. The court found that at its heart, the case was about copyright ownership. Fulop claimed he owned rights to the stories he worked on, and Archie claimed he didn’t. In a lawsuit concerning ownership of a copyright, a claim must be brought within three years of discovering evidence of disputed ownership. Since Fulop was aware of the Penders litigation, having submitted an affidavit during it, and was aware of the disputed ownership claims over his works, the court dismissed Fulop’s claims as they were brought later than three years after discovering the dispute. Since Fulop’s ownership claim failed, his lawsuit for infringement could not move forward. As a result, the court dismissed Fulop’s claims against Archie.
Creators should pay attention to this case for two reasons. First, it’s important to know your rights and the details of the contracts you sign. And second, if you think you have a claim or dispute against someone, don’t wait too long in evaluating or asserting it.

Sunday, August 18, 2019

Youngblood Lost

            Not too long ago, Rob Liefeld broke the news on social media that he no longer owns the rights to Youngblood, the popular comic book series he launched when helping to found Image Comics. In his statement, he said the rights to his characters had been transferred to someone he would not work with, and he would no longer be associated with the comic book series he created.
            Explaining the situation further, Liefeld detailed how he had transferred the rights to a third-party in the late ’90s, and this person had now transferred the rights to someone else. Even though he worked well with the previous rights-holder over the intervening years, Liefeld called the initial deal in the ’90s a bad deal.
            Liefeld’s calling it a bad deal started me thinking about the nature of deals and transactions. Oftentimes, the ultimate outcome of a deal might not be known for years. The initial deal might seem fair, and each party might be satisfied for a while. However, over time one party’s opinion of the deal might sour and, eventually, said party will regret the transaction.
            As a distant observer, it’s easy to look back on a transaction and criticize what should have been done. Oftentimes, however, deals are a series of compromises and emotional decisions, and the end result can be less than ideal. In order to get a deal done, sometimes you have to agree to or give up something you might not want to. Sometimes, the deal might not turn bad until years later due to something that was negotiated in to or negotiated out of the contract. Ultimately, it comes down to who has the negotiating power, and how eager the parties are to make a deal happen.
            What could Liefeld have done differently in negotiating this deal? Not knowing the particulars, we can only speculate. Assuming the rights were assigned, which is not entirely clear from Liefeld’s post, one option would have been to license the rights instead. If the rights had been licensed, then Liefeld could have included a prohibition against further transfers or assignments and retained some control.
Even though the rights appear to have been assigned without restriction, there are two other options that could have been included. As with a license, the deal could have included a statement prohibiting transfer without Liefeld’s consent. Depending on the nature of the transaction, this might have been difficult to include. If someone is paying good money to acquire rights to something valuable, they do not want their rights to be impaired in any way.
Another possible option would have been to include a right of first refusal. By including a right of first refusal, Liefeld could have matched any future offers for the right to Youngblood. Again, this might not have been possible depending on the negotiations, but it is slightly more palatable to buyers than an outright restriction, even though it might lessen the value of the rights being acquired.
            So, how do you avoid a bad deal? The only sure way to avoid a bad deal is not make a deal in the first place. Otherwise, you should try to understand the deal you are making and all of the likely outcomes.

Monday, July 15, 2019

Plasm v. Plasmer

            I recently ran across an older trademark case that’s worth mentioning. The case is Marvel Comics v. Defiant.[1]
            The case pitted Marvel Comics against a new comic book company founded by former Marvel Editor-in-Chief Jim Shooter. Shooter’s new comic book company, Defiant, was going to launch a new comic book called Plasm. Marvel objected to the title of the new book because they had a Marvel UK comic titled Plasmer. Marvel’s lawyers told Defiant they needed to change the title of the book. They also said that if Defiant provided a list of titles, Marvel would approve one.[2] Defiant provided a list, but they never received a reply from Marvel. So, they went ahead and published the comic with one of the names on the list, Warriors of Plasm.[3]  
            Marvel sued Defiant in an attempt to halt publication of the book by seeking a preliminary injunction. Marvel had filed for a trademark application for Plasmer in the U.K., and its U.S. trademark registration was still pending. Both parties filed arguments in an attempt to have the case dismissed early. Defiant argued the case should be dismissed because Marvel did not have trademark rights in the word Plasmer. The court did an intriguing analysis of what type of pre-sale use can help establish trademark priority, and, using a standard appropriate for evaluating a motion to dismiss, it ultimately concluded Marvel had established enough rights to avoid a motion to dismiss the case.[4] The court also found it inappropriate to grant Marvel’s declaratory judgment due to the pending nature of their trademark application, which would impact Defiant’s liability, and the upcoming trial.[5] Eventually, the court denied Marvel’s preliminary injunction finding there was “little likelihood of confusion between the two.”[6] The case was dismissed shortly thereafter.
The aftermath of the litigation, however, was pronounced. According to Shooter, even though they won, the litigation cost them $300,000.[7] Defiant also lost out on a million dollar toy deal with Mattel because they could not afford to indemnify Mattel against future lawsuits, which Mattel now required because of the Plasmer lawsuit.[8] As a new company, Defiant had limited resources, and the lawsuit took a toll.[9] After only starting publishing in 1992, Defiant closed down in 1995.
Marvel’s U.S. trademark application for Plasmer was never issued.

[1] Marvel Comics Limited v. Defiant, a division of Enlightened Entertainment Ltd., 837 F.Supp. 546 (1993).
[4] Marvel Comics Limited v. Defiant, a division of Enlightened Entertainment Ltd., 837 F.Supp. 546, 549 (1993).
[5] Marvel Comics Limited v. Defiant, a division of Enlightened Entertainment Ltd., 837 F.Supp. 546, 550 (1993).
[6] The Comics Journal, No. 163, Pg. 14(Nov. 1993).
[9]; The Comics Journal, No. 163, Pg. 14(Nov. 1993).

Sunday, June 16, 2019

Book Review: Comic Book Implosion: An Oral History of DC Comics Circa 1978

           Comic Book Implosion: An Oral History of DC Comics Circa 1978 (affiliate link) is a thorough, detailed look at the lead-up to the DC Implosion in 1978, and its aftermath. However, at times it can be a dry read, and its appeal might be limited to die-hard comic book industry junkies or researchers. Nevertheless, I’m glad this book exists.
            The DC Implosion occurred during the summer of 1978. At the time, DC was planning a massive increase of its comic book line, billed as the DC Explosion, including increased issue sizes at an increased price. However, just as it was launching, DC was forced by Warner Bros., its parent company, to slash its lineup of comics being released by at least 40% and trim its staff. As news of the cuts spread, it gained the name the DC Implosion. 
The book compiles quotes from numerous industry journals, such as The Comics Journal, The Comics Reader, and MediaScene, of the major industry players involved in DC Comics at the time. You get article excerpts from Jeanette Kahn, publisher of DC Comics at the time, Paul Levitz, then DC Comics editorial coordinater, Mike Gold, then DC Comics public relations representative, and many others. There are also recollections pulled from articles, blogs, and biographies years later. It is an impressive piece of research and compilation to put all of these disparate quotes into a readable, valuable book. My only quibble is that it’s billed as an oral history, and from my spot check of the index, there only appeared to be 6 or 7 actual email interviews conducted, and most of them were with current industry insiders who were merely fans at the time of the Implosion. So, I don’t know if this book actually qualifies as an “oral history.”
            Particularly interesting to me were the snippets about contract negotiations, personnel moves, and creator-ownership of characters. The years leading up to the DC Implosion were when the creator-rights movement began to gain steam. Changes in the copyright law, the financial straits of Siegel & Shuster leading up to the release of Superman: The Movie, and the short-lived attempt to form a Comics Creators Guild, all contributed to the creator-rights movement gaining steam in the lead-up to the Implosion. In its aftermath, some comic books that would have been published and owned by DC ended up being published elsewhere and owned by the creators, such as Bucky O’Hare. There are also some interesting snippets about contract disputes with some of the creators, and the rights-clearance process for the Superman vs. Muhammad Ali cover.
The story behind the two Cancelled Comics Cavalcade books was also particularly interesting. The quickly produced books, consisting of only 40 copies, were made from the comics cancelled during the Implosion. It was apparently done to preserve the copyrights to these works, which is somewhat questionable reasoning. The books were primarily distributed to those involved in creating the cancelled works with a few held in the DC archives and some sent to the copyright office. 
            Another interesting piece from the book is its look at the causes leading up to the Implosion, including the massive winter blizzard that impacted sales in early ’78, and the issues with the diminishing returns of newsstand distribution. It concludes by looking at how the Implosion impacted the industry, not only in the short-term, but in the long-term evolution of how publishers did business in its aftermath. It partially attributes the rise of mini-series and the direct market as outcomes of the Implosion.
            Overall, Comic Book Implosion: An Oral History of DC Comics Circa 1978 is a fascinating, well-researched book. For those wanting to learn more about the business of comics, it is an essential read.