Bo's bLAWg - Online Licensing Websites (VIDA / ShopVIDA)

 

 MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org. Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

I've known several artists approached by VIDA.  I'm attaching their Artist Contract and am wondering what you think of its terms?  Montana

Thanks for your question, Montana.  I have had occasion to consider a few different online licensing websites.  Some, like VIDA, promote themselves as a “Manufacturer on Demand.”  I doubt that they themselves are manufacturers.  They are more likely, the “intermediary.”

I can see how an online website licensing would be an attractive business model to entrepreneurs who have relationships with manufacturers (or their US tradeshow representatives).  If the website can sign up lots of artists, it is possible that they can make a lot of money from the sales of products with artists’ designs, whether to the public – or even more likely, to the very artists whose artwork has been licensed.  Many artists just want to see their work featured on products, from placemats to scarves.  If the online licensee can entice the artists themselves to purchase enough of a given product – and the manufactured product prospects are unlimited -- current digital imaging allows the manufacturer to easily change out designs.  Small quantity orders of a few hundred units can be profitable with overseas, non-union manufacturing, with a generous mark-up on the re-sale of such inventory to artists -- and possibly to retailers.

As for the licensor artists, I suspect that this not an unduly expensive way to obtain a decent inventory of select products bearing their designs.  However, I doubt that there are many commercial success stories generated from sales from these websites.  If I am in error on this, I would like to be informed of it!

When I dig into VIDA’s, not only do I find some very objectionable terms, I also find an emphasis on asking the artist to invest in the purchase of models promoting their pending product line, and discounts available for purchasing $300+ of the merchandise.  If every artist who signs up agrees to the marketing photos and a minimum purchase of select products with their very own designs, clearly, the business model has income potential to the purveyors if not the artists!

Upon signing up with VIDA and uploading two illustrations, it is my understanding that artists are asked to become “a featured designer on VIDA with a Curated Collection.”  In conjunction with this invitation there is an ask for money summarized as follows:

To claim your curated collection, you can use one of two private codes listed.  With “Code Curated 25,” the artist is invited to receive one professional lifestyle photo of a model wearing an item from your collection.  Check out with $300+ worth of merchandise in your cart and enter the promo code, “Curated25” at checkout, and 25% will then be taken off your order.  You will also get a curated collection page with one professional lifestyle photo of a model wearing an item from your collection, and at least one of your products product featured on the VIDA Shop All page with professional lifestyle photography.

If you select Code Curated40, you receive three professional lifestyle photos of a model wearing items from your collection.  Check out with $900+ worth of merchandise in your cart and enter the promo code, “Curated40” at checkout, and 40% will then be taken off your order, and you will get a curated collection page with three lifestyle photos of a model wearing items from your collection, and at least one of your products featured on the VIDA Shop All page with professional lifestyle photography.

Again, this is an extremely limited offering since we can only offer curated collection upgrades to a small group of artists. Since we have limited space for curated collections, we are limiting the availability to upgrade your collection until just October 30th, only 4 more days.”

This promotional material is said to be “extremely limited,” but as far as I know, it has been posted indefinitely.

Of critical importance, as always for me, are the terms that are imposed by the website licensee on the artist who clicks “Agree.”  As for the VIDA Agreement, http://studio.shopvida.com/terms-and-conditions , I have a number of concerns about its terms, many of which are wholly objectionable.

With reference to my prior Basic Licensing Terms bLAWg, http://annietroe.blogspot.com/2015/02/bos-blawg-what-should-be-in-art.html , note first that the grant of rights to any images uploaded is immediately “exclusive and perpetual.”  This means that whether or not anything is made of the artist’s imagery, (and there is no guarantee that there will be!), the artist has no further right of use to it for licensing purposes!

Furthermore, the artist gives up any right to object to the way in which her imagery may be used on any given product – by itself or in combination with other imagery -- or the quality of the product itself!

While VIDA requires the artist to provide their photograph and biographical material, there is no obligation on VIDA’s part that it will post or use this information in conjunction with its promotional efforts on behalf of such artist. To the contrary, in an accompanying “Plain English Terms” explanation of the Agreement, VIDA makes clear that artist imagery may be used without a copyright notice or artists brand or logo.  This not only deprives the artist of a key reason for licensing her imagery, but suggests to the public that there is no copyright claimed on the imagery used on the products, and the prospect of unlimited “innocent infringement” with minimal damage claims despite artist’s registered copyright.

A Ten Percent is offered on VIDA’s “Net Sales.”  Revealingly, this 10% is offered as a “sales commission” to the artist rather than a royalty.  By calling it a “sales commission,” clearly VIDA expects the artist to be the seller – not VIDA or retailers to which it is ostensibly marketing the products.

The Net Sales definition includes “discounts” and “bad debts,” neither or which would the artist have any control over.  Too bad if it was Uncle Lenny who failed to pay for those 500 units that he bought wholesale for resale to retailers of his acquaintance(!)   And to make matters even worse, the VIDA Agreement expressly rejects any obligation to verify its listed sales information or an audit, both of which are standard provisions in legitimate licensing deals.

If these particular provisions are not bad enough, VIDA then states that it “reserves the right to change these terms at any time.”  Somehow, I doubt such changes will be for VIDA artists’ benefit!

It is my understanding that there are a number of such online businesses including Society6, RedBubble, Art of Where, Minted and Bucketfeet.  If you have questions about their contract terms, I’d be pleased to comment on those as well.

Disclaimer:  The information contained in this website is not intended and should not be relied upon as legal advice. Because the law is not static, and one situation will differ from the next, the results will differ as well, thus we do not assume responsibility for any actions taken based on any information contained herein. Also, be aware that the laws vary from state to state. Therefore, this website cannot replace the advice of an experienced attorney who practices within the jurisdiction involved in your issue or dispute. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold www.bcgattorneys.com
© 2017 mjbogatin

Have a legal question? email it to info@AnnGraphics.com. I will forward it to Bo. It might be a blog post! You can search "Bo's bLAWg" to read more posts. I am looking forward to your comments and thanks for sharing this great information on social media.

 

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Bo's bLAWg - Change in DMCA Designated Agents & Takedown Notices

December 1, 2016 Registration Process change 

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org. Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

If you run a web page that allows posting of any user-generated content (even comments), it is very important that you have a DMCA Agent designated to handle takedown notice requests and disputes so you are protected under the DMCA safe-harbor provisions. Any operator of such a website is deemed a “Service Provider.”  If a Service Provider does not have a registered designated agent and material is posted by one of your Users that infringes a third party’s copyright interest or other rights (i.e. a defamatory statement or violation of a third party’s right to privacy or trademark), then you can be personally liable as the publisher of such material!

However, as long as you as the Service Provider does not actively participate in the illegal posting, or make copies, or determine to whom it is to be shared other than by and through ‘passive’ operation of the website or online bulletin board, then the Digital Millennium Copyright Act (“DMCA”) offers the Service provider legal protection from liability, known as “Safe Harbor,” but only if the Service provider has listed a Designated Agent to receive objections and act in a proper manner with respect to removal of improper postings.
(See: https://www.copyright.gov/title17/92chap5.html#512 )

As you may already be aware, YouTube, Instagram, Twitter, and all the major internet Service Providers have posted Terms of Use that include pages that detail how a person who objects to posted content is to notify them.  Perhaps you have had occasion to pursue such a process yourself when one of your copyrighted works was posted by a third party without your permission.  The removal request process involves sending what is called a “Takedown Notice.”  The specific content of the Takedown Notice is set out in online procedures such as this YouTube page: https://support.google.com/youtube/answer/6005900?hl=en

However, most website operators are not large enough to have fulltime staff to handle takedown notices.  In the absence of specific Takedown Notice procedures, the DMCA sets up a process whereby the website proprietors can register their agent with the US Copyright Office to be contacted for this purpose.  Simply by designating the agent and making sure the agent acts reasonably and responsibly upon receipt of complaints and/or a Takedown Notice, insures that the website owner Service Provider will not be held liable as a publisher of the illegal or offensive content.

Since 1998, Service Providers have submitted paper designations to the Copyright Office, which the Office then scanned and posted on the Office’s website to make them available to the public. Modernizing this practice, the Office has created a new, fully-electronic online system through which Service Providers can more efficiently submit and update, and the public can more easily search for and find, Designated Agent information. The amended rules govern Service Provider use of the new system and update what is required of Service Providers to remain compliant with 17 USC 512(c)(2) for Safe Harbor purposes.

On Dec. 1, 2016, the U.S. Copyright Office launched its new electronic system to designate and search for agents to receive notifications of claimed infringement.  Going forward, all new DMCA takedown notice agent designations must now be made through the online registration system. Additionally, any service provider that has previously designated an agent with the Copyright Office through the old paper-based system will have until December 31, 2017, to submit a new designation electronically through the new system. Until that time, an accurate designation in the old paper-generated directory will continue to satisfy the service provider’s obligations under 17 USC 512(c)(2).

You can access the new system at: https://www.copyright.gov/dmca-directory/

These DMCA filings will expire every three years, so they will need to be renewed.  The Copyright Office’s new system is supposed to send out email reminders.  We’ll see about that(!)
Filing fees are significantly lower than they were previously:  now $6 per entity.  All alternative names that the public would be likely to use to search for the Service Provider’s Designated Agent must be provided.  There is no limit to the number of alternative names, URLs, service names, software names, and other commonly used names that can be listed on a Service Provider’s filing for this fee.  However, separate legal entities must file separately and are not considered alternative names.

The Designated Agent does not have to be a natural (living) person. Service Providers now have the option to designate a specific person (e.g., Jane Doe), specific position or title of an individual (e.g., Copyright Manager), a department within the Service Provider’s organization or even a third-party entity (e.g., ACME Takedown Service) retained to handle Takedown Notices.

The Designated Agent’s physical mail address, telephone number and email address must be provided to the Copyright Office, and a Designated Agent may now provide a post office box to be displayed as its physical address. However, in a nod to technological obsolescence, a fax number is no longer required.

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com
© 2016 MJ Bogatin

Have a legal question? email it to info@AnnGraphics.com. I will forward it to Bo. It might be a blog post! You can search "Bo's bLAWg" to read more posts. I am looking forward to your comments and thanks for sharing this great information on social media.

 

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Bo's bLAWg - Product Liability Insurance: What you should know

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org.  Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

What is product liability insurance and do I need it?  Thanx.  Liz

Thanks for your question, Liz.  Way back in my first Illustrators’ bLAWg, I addressed critical issues in a manufacturing license.  Product Liability Insurance was one of the more esoteric issues that I did not mention in that bLAWg. http://annietroe.blogspot.com/2015/02/bos-blawg-what-should-be-in-art.html

Product liability insurance is protection against claims of injury associated with a manufactured product.  It is usually purchased by the manufacturer to cover claims that someone has suffered damages on account of some dangerous condition or flaw in the product that has caused injury in the course of use of the item.  The short answer to your question, Liz, is “No, you do not need to obtain product liability insurance for yourself unless You are manufacturing products.”
Nowadays, more and more artists are arranging for manufacture of their own product lines and offering them wholesale or retail.  To the extent that an artist is putting herself in the vertical line of sales, it would certainly be prudent to have product liability insurance coverage.  Ideally, however, this is not something the artist should have to purchase for herself, but coverage she could obtain by and through the manufacturer.  Because product liability insurance is a normal business expense of all manufacturers, it is fairly standard for people who make individual contributions to the product being manufactured have the manufacturer make them an “Additional Insured” to the manufacturer’s policy.  However, if the manufacturing has taken place in China or some country where the artist cannot rely on Additional Insured coverage to be provided by such manufacturer,  (or an intermediary “packager” or distributor), then she may do well to obtain her own coverage if the product involved carries any risk of consumer injury.

While it is hard to imagine how an illustrator who licenses an image for use in a given product might ever be personally liable for a product liability claim, it is not unheard of for the illustrator to be named in a product liability complaint.  Since product liability insurance includes legal defense representation, being an Additional Insured on the manufacturer’s coverage is an important consideration.  The manufacturer can most likely have contributors like an artist added without charge, but having the coverage name you are the artist can be invaluable.
Obviously, the artist would not typically be legally responsible for the harm done by the product.  Because a mug with your illustration was poorly made and had a tendency to shatter and cause injury, the artist would not be found liable even if they were sued.  The only situation in which an artist client of mine has had to defend, is when a Chinese-manufactured puzzle had been printed with ink that turned out to be the cause of a child’s illness.  She had nothing to do with the choice of ink used on the puzzle, and was in short order dismissed from the action by the manufacturer’s insurance defense lawyers.  But being named as an Additional Insured gave her a right to rely upon the coverage, without first having to claim against the manufacturer to defend and indemnify her.  Were that tender not accepted, in the absence of the coverage, the artist might be out-of-pocket to defend, even if they were not liable for the claimant’s damages.

But what if it was the artist who had arranged for the Chinese-publication on behalf of the manufacturer?  The product liability coverage could be a financial ‘life-saver.’  The lessons learned were:  have product liability coverage in place just in case, and don’t let your child eat puzzle pieces. 

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com© 2016 mjbogatin

______________

Have a legal question? email it to info@AnnGraphics.com. I will forward it to Bo. It might be a blog post! You can search "Bo's bLAWg" to read more posts. I am looking forward to your comments and thanks for sharing this great information on social media.

 

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Bo's bLAWg - The Copyright Term

 

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org www.calawyersforthearts.org Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

 

Bo, several of your bLAWgs have mentioned that once a copyright term has expired, the works are then in the Public Domain.  Are my mother’s illustrations from the 1940s still subject to copyright so I can license them as copyrighted works, or are they in the Public Domain? 
Thank you!  Janet

Good question, Janet!  It gives me the opportunity to provide more particulars regarding the extension of copyright terms under the 1909 Act – applicable as to artworks published before 1978, as allowed by the 1976 Act.

The Copyright Act has been amended several times since the first was passed by Congress.  I think the original term under the first US Copyright Act from 1790, copied from Great Britain’s,  was for only 14 years, plus a renewable 14-year term!  Then again. people did not live as long in those days, did they?  As of 1900, the Term was extended to 28 years plus an additional 28-year renewal right.

That Term remained in effect until the “new” Copyright Act of 1976 came into effect Jan. 1, 1978.  The Term was extended under the 1976 Act to conform with those of many other countries:  The lifespan of the Author plus 50 years.  The 1976 Act also addressed with particularity how the Terms for works copyrighted under the 1909 Act would be treated under the new Act. 

The question of whether your mother’s 1970 artworks are still copyrighted depends upon whether or not they were ever published.  If they were published with a copyright notice as required under the 1909 Act, the Term became 95 years from date of publication.  (If the copyright had been renewed, 67-year renewal term is deemed added to the initial 28-year term.) 
If the original copyrights were not renewed by your mother or her heirs, her published works from the 1940s would be in the public domain.

So, if my calculations are right, if all of your mother’s works were published for the first time in 1940 with a copyright notice, her copyright on those illustrations will not expire until 2035.

If your mother’s illustrations were never published, those works are entitled to a Term of copyright protection through the 70th calendar year after her death, whenever that may occur.

In 1998, just as the Term of Walt Disney’s copyrights on its Mickey Mouse character were about to expire, Congress passed the Copyright Term Extension Act (CTEA) sponsored by Congressman Sonny Bono, better known as “Cher’s first husband.”  This Act amended the Copyright term to the life of the Author plus 70 years instead of 50.  For Disney and other works created by corporate entities or under “work made for hire” agreements the Term was extended to 120 years after creation or 95 years after publication, whichever endpoint is earlier.  For the time being, Mickey was saved from ignominious treatment in the Public Domain! 

The effect of CTEA was to "freeze" the advancement date of the Public Domain in the US for works covered by the older fixed term copyright rules. Under CTEA, works made in 1923 or afterwards that were still protected by copyright in 1998 will not enter the public domain until 2019 or afterward (depending on the date of the publication).  For works created by authors who died in 1932 or earlier, that day was January 1, 2003. 

However, as mentioned last month, any artwork published before 1923 was deemed to be in the Public Domain.  Anyone can use such works here in the US for any purpose, without any license or permission.

Since I want my bLAWgs to be super helpful, here is a chart that spells out the different operative Copyright terms: 

If you have a special case that needs to be analyzed, let me know.  We’ll see if we can figure out whether or not that work is still subject to copyright protection or in the Public Domain.

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com

Have a legal question? email it to info@AnnGraphics.com. I will forward it to Bo. It might be a blog post! You can search "Bo's bLAWg" to read more posts. I am looking forward to your comments and thanks for sharing this great information on social media.

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Bo's bLAWg - Copyright and Derivative Use Rights

 

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org www.calawyersforthearts.org Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

 

Bo, can I license well known art works that I have morphed kaleidoscopically?

There is a short and long answer to this question.  The short answer is that if the artworks that you are using are in the public domain (“PD”), you can.  If they are not in the PD, you cannot without a license.

The long answer is that the issue raised is one that pertains to the fundamentals of copyright law, but at the same time has become a cutting edge issue. The fundamental right is that the Author of an original work of visual art is presumed to be the copyright holder with exclusive, theoretically inviolate, rights.  The cutting edge issue is the extent to which a second artist can so fundamentally change the original copyrighted work that it is literally and legally “transformed,” and therefore not deemed to infringe!

Exclusive Interest:

The copyright holder has the exclusive interest in the following basic rights:

1.  To reproduce the work in copies or phonorecords;
2.  To prepare derivative works based upon the work;
3.  To distribute copies or phonorecords of the work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
4.  To perform the work publicly, in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works;
5.  To display the copyrighted work publicly, in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work; and
6.  In the case of sound recordings, to perform the work publicly by means of a digital audio transmission.
(See 17 USC 106:   http://www.copyright.gov/title17/92chap1.html#102 )

The two of these that apply particularly to visual Art are numbers 2 and 5.  In addition, Artist/Authors of works of visual fine art have the rights of attribution and integrity as described in section 106A of the Copyright Act.

A “derivative work” is defined in Section 101 as: “A work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a whole, represent an original work of authorship, is a ‘derivative work’.”  (emphasis added)
(See http://www.copyright.gov/title17/92chap1.html#102 )

Clearly, your “kaleidoscopic” treatment of a copyrighted artwork would be derivative as a “transformation” of the original, a right that typically must be obtained from the copyright holder if you intend to license to third parties.

However, there are exceptions to this exclusive right.  The first, referenced above, is that the artwork you are altering is in the PD.  While you can presently adapt or transform any artwork published before 1923 and legally license it for use here in the US, use of the same adapted artwork in other countries will be subject to the copyright laws of that country – which could protect works created and/or published before 1923.

The second exception depends upon whether or not your derivative use “is so transformative” as to constitute a Fair Use.  I discussed Fair Use at length in my bLAWg this past March. 
See:  http://annietroe.blogspot.com/2016/03/bos-blawg-use-of-quotes-and-song-lyrics.html

The essence of Fair Use boils down to whether or not the derivative use is a free speech right under the First Amendment to the US Constitution. If the copyrighted work is being “copied” in conjunction with news and reporting about it or its author, or as part of a critical review, these uses are fundamentally “speech-based” and the copyright work may be used for these purposes as long as the amount of use does not significantly damage the market for the original work.

This is the essence of the first of the four Fair Use factor:  “The purpose and character of the use.”  The US Supreme Court in recent years has begun to expand upon the traditional ‘news and critical comment’ purpose to apply Fair Use due to the extent that the second work is “transformative” of the copyrighted original.  The seminal case was Campbell v. Acuff-Rose Music, Inc. (1994), in which the Court deemed 2 Live Crew’s rap using a few lyrics and some music from the Roy Orbison song, “Pretty Woman” to be parody.  Even under a traditional Free Speech analysis, this makes sense.  Parody is a form of speech.  Since you need to use the original work to make fun of it, the use has been deemed Fair. Obviously, the 2 Live Crew recording did not damage the market for the Orbison original.

Since 2 Live Crew, there have been other cases expanding upon the scope of transformative use so that it can be applied to visual art as well as music.  The purpose of the transformation no longer is limited to “parody.”  The Court now examine whether or not the derivative work  “merely supersedes the objects of the original creation…or instead adds something new, with a further purpose or different character.”  (Campbell)   A work can be deemed transformative “if it adds value to the original; basically uses the original as a raw material which is then transformed “in the creation of new information, new aesthetics, new insights and understandings.”  (Castle Rock)   When considering whether a work is transformative, the courts are now evaluating factors such as changes in aesthetics and meaning.  (Cariou v. Prince).

Clearly, there is a legal argument to be made that your kaleidoscopic treatment of these copyrighted works is sufficiently transformative as to be deemed Fair Use.  However, this in no way prevents you from being sued for copyright infringement.  Fair Use is only a legal defense, not a bar to an infringement action.  And, because each Fair Use case has to be considered upon its own merits, there is a good chance that you will not learn whether or not you are entitled to use the copyrighted work in this fashion or if it will be deemed an illegal infringement  until the case is tried in court.  And then the decision of the trial court is subject to appeal!  Is this a risk you can afford?

I should also mention that a ‘creative’ litigation attorney could also make a Right of Publicity claim against you if you use the name of the artist of the underlying work in the promotion of your own transformative artworks.  As discussed at length in my bLAWg from this past February, the essence of the Right of Publicity is that under these state statutes, a person who knowingly uses the name or image of a person for commercial purposes without their permission is liable to that party. (See http://annietroe.blogspot.com/2016/02/bos-blawg-right-of-publicity.html )

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com

Have a legal question? email it to info@AnnGraphics.com. I will forward it to Bo. It might be a blog post! You can search "Bo's bLAWg" to read more posts. I am looking forward to your comments and thanks for sharing this great information on social media.

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Bo's bLAWg - Licensing Agents

 

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org  Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

 

Recently I was asked to sign a non-compete for an image broker who wanted to help me license my work. Is it standard to ask for this sort of exclusive? In what scenario would a non-compete be necessary? Thank you, in advance, for your guidance!

The short answer is that people in business as ‘image brokers” or professionally as Licensing Agents may reasonably expect to represent the Artist exclusively.  Whether or not the exclusive representation will apply to specific illustrations or specific goods is subject to negotiation.  However, once the scope of exclusivity is mutually agreed upon, it would reasonably be expected that the Artist would not compete with the Agent of licensing opportunities within that scope.

I should mention, there is a legal difference between licensing exclusively through an Agent, and giving an Agent an exclusive right to license your works.  With the former the Agent would expect that the Artist would use the Agent for all licensing deals.  The Artist would be expected to accept a non-compete provision in the Representation Agreement.  The Agent does not want her pursuing licensing opportunities that might interfere with the Agent’s own efforts.

Sometimes, it is possible for an Artist to obtain express permission from her exclusive Agent to pursue a lead or contact a person with a given company whose name has been given to her for possible interest in her work.  However, I would recommend that it is simply good professional manners to get the express permission of the Agent before she does make such a call.  To pursue such a lead without the knowledge of the exclusive Agent could have various negative ramifications.  It may be that the Agent has a planned pitch meeting with the same company, or knows who really has the power to license at that entity.  To pursue such a lead without the intent to pay the Agent her expected commission would be directly adverse to the Agent’s interest in representing the Artist in the first place.

Taking your own initiative to pursue licensing can also ‘muddy the water’ as to whether the Artist is or is not represented by a given Agent, this damaging the reputations of one or both.

However, the main reason I suspect that an Agent would not want her represented Artist to pursue such leads with or without her permission, even if the Artist were prepared to pay her Agent’s commission anyway, is that such initiatives undermine the Artist’s interests as well.  It is the Agent’s job to know what the particular company is looking for by way of new imagery.  S/he should know what trends are hot and which of her clients’ illustrations might best fill the needs of  one or another company given the strengths (and weaknesses) of their existing product lines.  S/he has likely spent years building up a professional relationship with that company that she expects to lead to greater confidence in her recommendations to those clients.  

Were the Artist to pursue her own licensing with such a company, she may very well undercut or destroy the Agent’s business plan to sell that Artist’s line with a more profitable competing company and at better royalty rates than the Artist might be willing to settle for! 

Even where an Agent is the Artist’s exclusive representative only for a particular line of illustrations or for a specific limited line of Licensed Products (i.e. greeting cards and paper products as distinguished from magnets, plastics and fabrics), the Artist can cause an Agent havoc by pursuing the same corporate Licensees for their interest in a different group of her illustrations or for use of her illustrations in ‘other’ product lines also handled by the company. 

Just last week I had a client call who had been ‘balled out’ by her Agent who took exception to her independent efforts to license her imagery for product lines not handled by the Agent.  It was clear to me that per her Agency contract, she had a legal right to pursue personally such licensing opportunities, but I could well understand the Agent’s resentment.  How was he supposed to pitch her illustrations as fresh, new and particularly appropriate to this regular company client of his, if his own Artist has already pitched them for other products.  It was very clear that the Agent would sooner pitch another Artist’s imagery than risk that scenario.

Accordingly, it is simply good business politics to be clear on the front end of an Agency relationship what if any independent marketing the Artist can look to do on her own behalf  -- if any.  One solution is for the parties to give each other a list of prospective licensees they would like to pitch, and for what illustrations and product lines, and determine if it is in the best interest of the Artist to make any such marketing forays on her own account.  If it is, she should not do anything to undercut her Agent’s expectations as to Licensee royalty rates payable, and may offer to pay the Agent a discounted commission on Licenses she obtains – at least from company clients of the Agent if not from others.

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com

Have a legal question? email it to info@AnnGraphics.com. I will forward it to Bo. It might be a blog post! You can search "Bo's bLAWg" to read more posts. I am looking forward to your comments and thanks for sharing this great information on social media.

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Bo's bLAWg - “Flat Fee” and “Royalty” Licensing Fees

 

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org  Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO! 

 

A Reader asks:  What is “flat fee licensing” (for graphic design work or commissions)?

 
I want to use your question to compare and contrast the two common kinds of licensing fees:  Royalties and Flat Fees.  So, hypothetically, let’s assume you have been offered a License that lets you choose between a Royalty and a Flat Fee.  Which are you going to accept?  You need to have a good understanding of both, and the surrounding circumstances, to make the best choice for yourself.
 

“Royalties” are the compensation paid for the Artist illustration use rights based upon the Licensee’s sales of the product on which the licensed illustration is used.  The percentage rate is usually 5-10% of the merchandizer’s gross (or an appropriately-limited “adjusted gross”**).  When considering a Royalty-based License offer, there are a number of factors to weigh.
 

First, what kind of sales might you expect of products with your design under the License? This initial question raises a bunch of others:  Are there many different products on which your illustration will appear, or just one?  Do purchasers of the Licensee’s product have a wide choice of imagery to choose from, or just yours?  Does this manufacturer have lots of competitors with a wide range of competing imagery, or is the product reasonably unique?  Does the Licensee have a dynamic website and generate a large number of retail sales directly, or is it by and large (or entirely) a wholesaler that uses distributors?  If this manufacturer relies on its distributor to generate sales, do its goods (I mean Your goods) get distributed to the largest national chains, Walmart, Costco, Target and/or Sears?  (Greater volume sales at a lower Royalty are better than minimal sales at a higher Royalty rate.  Do the math!)
 

How much of the Licensee’s sales are generated through Amazon and subject to a larger discount on wholesale prices than might otherwise be the case?  What is the quality of this manufacturer’s goods?  Are they well-regarded in the marketplace?  When looking at this merchandizer’s quality and price-lines, how do they compare with those of other manufacturers?  (Are consumers more likely to pay something more for your Licensee’s goods because of the goodwill associated in the brand, or if not, is the price point remarkably less than a better-known brand, but likely to generate a much larger volume of sales due to the lower price?)

I can think of a bunch more such questions, but these are the main ones; the ones you want to do your best to assess to determine whether a Royalty is the best way for you to go on this license, or whether a Flat Rate might be a better prospect.

** “Adjusted Gross” is Gross minus sales tax and delivery costs as applicable instead of the Licensee’s Net proceeds.  Why Gross or Adjusted Gross instead of a high Net percentage?  Because you never know what the Licensee is going to actually spend on production, marketing and distribution.  Terrible business decisions could be made by the Licensee that make the entire undertaking unprofitable.  This need not deprive the Artist of her right to Royalties. 

Of course, if possible, you also want to obtain an Advance on the Royalties you are to earn.  An “Advance” is a pre-payment (made at the time the License is signed) on the Royalties you will be entitled to once the Licensee begins receiving income on sales of products with your imagery.  The amount of the Advance is “recoupable” by the Licensee from the first Royalties you would otherwise be paid.  Even a small Advance is better than none.  Being out-of-pocket on the front end for rights serves as incentive for the Licensee to move forward on the product manufacture so that they can recoup what they have paid out in Advances.  It gives you something for your rights even if for any reason the Licensee decides not to move forward with the product use.

Before I get to Flat Fees, two negotiation strategies to offer on Advances:  1) If a Licensee is unable or unwilling to offer a reasonable Advance on Royalties, use that unwillingness to leverage a higher starting Royalty rate; and/or 2) Obtain Stepped-Up Royalty rates.  Find out as possible what the Licensee thinks would be a successful level of sales, and look to obtain an increased Royalty rate for all sales in excess of that reasonable expectation.  If product sales ‘take off,’ both parties will benefit.  If they do not, the increased Royalty rate will never have triggered and the Licensee will not have paid anything for the additional consideration to you.

(See also my October 2015 bLAWg on Minimum Thre$holds for a Licensee to maintain rights over a term of years.  http://annietroe.blogspot.com/2015/10/bos-blawg-get-back-your-rights-royalty.html )
 

The alternative approach for Artist compensation is a Flat Fee.  A “Flat Fee” is just what it sounds like:  A single fee paid for the Licensed rights regardless of sales.  I remember a call from a prospective client who asked if they could get out of a License that provided for a single Flat Fee for a calendar cover image.  It turns out that image was the best-selling calendar ever sold by that large publisher.  The $1,500 Flat Fee looked good at the time that the time the deal was made.  However, compared with 5% of the $5 adjusted gross received by that publisher on 500,000 calendar sales, ($125,000 in Royalties), it was a lousy deal for the Artist!  Of course, if only 5000 calendars had been sold, the $1,500 was better than the 5% royalty. 

If the License is for a term of years and a Flat Fee offered does not meet your minimum expectations, raise the prospect that a larger overall amount be paid in installments:  An Annual Flat Fee for rights.  On occasions when I have obtained Annual Flat Fees through the License Term, the manufacturer Rep has made the reasonable argument that the Annual Fee should reduce after the first few years as product sales decrease.  This refers to what is known in business as the Product Life Cycle. Historically, new product sales numbers will rise for the first couple years, then will usually fall off as the product become ‘old’ and there are new versions and increased competition.   (A good graphic image and further explanation of this can be found at this link:  http://www.tutor2u.net/business/reference/product-life-cycle )

So, going back to our hypothetical choice of Royalty or Flat Fee, how do you know which deal to take?  By finding out what the projected sales are going to be and what the Licensee’s gross receipts are expected to be.  Just ask!  These are reasonable considerations that the prospective Licensee should answer if they want your Rights!  But also do your own market research as best you can.  There is a more sales data available online than there has ever been before.  Consider asking other Licensor Illustrators what kind of sales there have been on their similar product licenses.  Make an “informed decision” on what kind of deal is in your best interest.  Do not feel compelled to take the first offer without doing this ‘due diligence!’  If despite your best efforts, you are uncertain, I suggest that you look to keep the Term shorter than you might otherwise do.  That way, if you are unhappy with the choice, as the end of the Term approaches, you may be in a position to extend the Term on alternative Royalty rates more beneficial to you.

As for the situation where you have been asked to create new graphics or “commissions” for prospective licensing purposes, I recommend that there be a minimum ”service fee” for the preparation of such new imagery.  The fee can be on a ‘per image’ basis or hourly.  All or part of this fee can be attributed as an Advance, and recoupable by the Licensee from your future Royalties.  That’s an appropriate issue for negotiation.  If you are going to incur significant costs in conjunction with the graphics or commission, by all means, look for a right to recoup such costs from the Licensee.  This is the very least they should pay unless you are guaranteed some minimum for the work involved in preparing imagery for prospective licensing that may not be selected for product use or generate meaningful sales.

Finally, do not fail to make sure that you have Reversion Rights.  Whether there is a set Term that will expire sooner or later and revert rights, or if you have minimum thresholds that must be met for the Licensee to continue to maintain exclusive or non-exclusive rights, you want every License to have an ‘expiration date.’  Get your rights back, and perhaps you can find a better deal with a more successful – and ultimately profitable – Licensee. 

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com
© 2016 mjbogatin

Have a legal question? email it to info@AnnGraphics.com. I will forward it to Bo. It might be a blog post! You can search "Bo's bLAWg" to read more posts. I am looking forward to your comments and thanks for sharing this great information on social media.

Make my day! and Buy me a cup of coffee (PayPal Link in right side bar, you don't need a PayPal acct.), follow this blog, and/or click an ad (you don't need to buy ;-)

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Bo's bLAWg - Indemnification Provisions

 

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org  Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

 

Lisa asks:  Why would a manufacturer to whom I have licensed designs for toys expect me to indemnify it?  Shouldn’t the manufacturer indemnify me?

Thanks for your question, Lisa.  Indemnification is an important legal consideration in every Agreement, and particularly in conjunction with licensing illustrations for use with manufactured goods.  In short, indemnification means that if an “innocent” party to the License is sued by a third party because the other did something wrong, the party who did something wrong should be responsible for any potential liability of the innocent party.  It would be appropriate for each party to a manufactured goods illustration License to indemnify the other in conjunction with their particular contributions to the goods being manufactured.

When you look more closely at your License you will note that the manufacturer has likely asked you to warrant certain things.  Typically, the Illustrator Licensor will be asked to warrant:

1.  That the illustrations you are licensing are yours alone – meaning that there is no one else who will claim a joint copyright interest and claim that the manufacturer must pay them, too;

2.  That the illustrations are original to you – meaning that you have not infringed any copyrights held by someone else;

3.  That you have not violated any other person’s right with respect to your licensing these images – meaning that you have not included any trademark or recognizable face (without a signed Release)  See my February 2016 bLAWg on the Right of Publicity: click here , and,

4.  If the License is exclusive, that you have not otherwise licensed the same illustrations to other manufacturers of competing goods.

If the manufacturer is sued by a third party for a violation of any of these rights, then the manufacturer has a reasonable expectation that the Artist indemnify (be responsible for) the damages for which the manufacturer might be liable for copyright infringement or other warranted use right.

While a comprehensive License will include an Express Indemnification provision, you should know that there is also a legal doctrine called “Equitable Indemnification.”  In short, in the absence of Express Indemnification, most courts will “in fairness” allow an innocent party to invoke indemnification rights anyway.  However, in some states, only Express Indemnification, not Equitable Indemnification, will cover the innocent party’s attorneys’ fees and costs.  Since attorneys’ fees (including mine even though they are so reasonable!) can total even more than actual damages on claims like these, Express Indemnification provisions are favored by manufacturers.

However, I do have pro-active advice to limit the scope of the Artist’s indemnification obligation.  Many of these provisions are drafted so as to make the Artist Licensor responsible for damages and attorneys’ fees and costs arising out of a claim of infringement.  Heck, anyone can claim their illustration has been infringed by you!  However, there are two requirements to prove infringement, both “substantial similarity” and “access” to the copyright holder’s artwork so as to have provided the opportunity for copying.  See Bo’s bLAWg from last June: click here

If your illustration is only substantially similar by coincidence, and there was no access, hence no copying, why should you still have to indemnify the manufacturer?  I don’t think you should have to. As a large corporate entity, the manufacturer is in a much better position to afford to defend a meritless claim than the Artist.

To that end, I recommend looking to edit the standard Express Indemnification provision to make sure that the manufacturer (with its own ample insurance) should be required to defend itself, if not also the Artist, unless there is a “substantiated” breach of warranty on the part of the Artist.  Most manufacturer business reps and/or counsel will recognize the reasonableness of such an edit request.  In addition, I look to limit the attorney’s fees and costs obligation to “reasonable” attorneys’ fees and costs.  It is not only possible that an outside counsel will overcharge for defense services, but that they will assign too many attorneys to a small case.  A judge (or arbitrator) can assess whether or not the fees due are in fact “reasonable” or not.

One issue related to the manufacturer’s handling of unsubstantiated claims is that the manufacturer may try to make the Artist responsible for its insurance deductible, to be paid out of current and future Artist royalties.  That might be a risk that the Artist is willing to take if the manufacturer is not obligated to make any payments on its insurance deductible unless there is a settlement or a Judgment that implicates the Artist.  If your manufacturer offers a compromise on the “claim” indemnification language making you responsible for any part of its deductible, make sure that you have a right to pre-approve unconditionally any settlement into which it might want to enter, and that your share of responsibility for the deductible is reasonably limited.  Some of these policies have deductibles of $50,000 or more!

The flip side to the Indemnification issue is that an Artist can reasonably expect the manufacturer to indemnify them in the event an action (or claim!) is made against the Artist occurring through no fault on the Artist’s part.  Express Indemnification can and often should be reciprocal.  The Artist can be exposed to a legal action on their illustration contribution when the manufacturer requires the Artist to include content it provides in her illustration, like its logo in the packaging that the Artist is illustrating.  If it turns out that the manufacturer’s new logo infringes upon someone else’s trademark the Artist might be sued for trademark infringement along with the manufacturer.  Or, if the toys your illustrations decorate are defectively made and a child ends up getting hurt playing with them, a Plaintiff attorney could name as Defendants both the Artist and the manufacturer!  

While it is not common, it is not unheard of for the Artist to be sued along with the manufacturer.  In which case, you absolutely want to be sure that the manufacturer not only is providing indemnification on any damage claim, but that there is legal defense coverage available to you as the innocent Artist.  Most manufacturers have Product Liability insurance, and will agree to include the Artist as “an Additional Insured” on their policy for these purposes.  Then you should have no worries.  You will have the same coverage the manufacturer has, including legal defense and associated legal defense costs.  However, once again, make sure that the manufacturer is responsible for any deductible that the coverage might otherwise impose on the Artist as an insured under the Policy.

Probably a lot more than you wanted to hear, Lisa, but you asked a good question!

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com

© 2015 mjbogatin

Have a legal question? email it to info@AnnGraphics.com. I will forward it to Bo. It might be a blog post! You can search "Bo's bLAWg" to read more posts. I am looking forward to your comments and thanks for sharing this great information on social media.

Bo's bLAWg - Use of Quotes and Song Lyrics

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org  Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

Could I be sued for using somebody else's quotes?  What about song lyrics?

I knew I was going to get this question sooner or later.  It is a tough one.

There are at least three legal rights that bear on the question of whether or not an illustrator can make commercial use of an existing quote or song lyric.  These are Copyright, Trademark and the Right if Publicity which I wrote about last month.
http://annietroe.blogspot.com/2016/02/bos-blawg-right-of-publicity.html

With respect to Copyright, let’s first clarify that words, phrases and titles are not by themselves copyrightable.  See: http://www.copyright.gov/circs/circ34.pdf

However, when the words or phrases you want to use are contained in a larger, copyrighted work, then they are indeed protected by copyright.  The same rule applies if the phrase you want to use is a quote, whether from a copyrighted speech or a catchy aphorism used by a writer or one of her characters in the course of dialogue.  Use of the same content in your commercial product without the permission of the copyright holder, whether in a greeting card, or other paper product, is an infringement.  The Copyright Office addresses the same question in one of its own FAQs:   http://www.copyright.gov/help/faq/faq-fairuse.html

“If you use a copyrighted work without authorization, the owner may be entitled to bring an infringement action against you. There are circumstances under the fair use doctrine where a quote or a sample may be used without permission. However, in cases of doubt, the Copyright Office recommends that permission be obtained.”

Then the question is whether or not the Illustrator’s particular use is defensible as a “Fair Use.” See my Fair Use bLAWg from last May:
http://annietroe.blogspot.com/2015/05/bos-blawg-fair-use-of-logos.html

Considering the four part Fair Use test: 
1)  The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
2)  The nature of the copyrighted work;
3)  The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
4)  The effect of the use upon the potential market for or value of the copyrighted work.

I believe it is reasonably clear that while the substantiality of the amount used may be minimal, (factor 3), the Illustrator’s commercial use and the fact that her use effectively eliminates the copyright holder’s market to license the same quote for similar use would be sufficient to defeat the Fair Use defense. 

When considering whether or not pithy sayings might be protectable on their own, I ran across a case by Ashleigh Brilliant ( http://www.ashleighbrilliant.com/ ) who has successfully defended his copyright of his collection of original sayings.  I can also vouch for the fact that certain quotable essayists and humorists have sent out ‘cease and desist’ letters to some of my clients for their use of quotes, including the Estate of Erma Bombeck.  However, given how broadly her quotes are now disseminated online, I must wonder if they gave up trying to stop commercial use.

As for trademark, if the quote or lyric you want to use is being utilized as a trade or service mark then your use could cause someone to believe that the trademark holder is the source of goods on which you use it.  That is the gravamen of trademark Law – to avoid just such confusion as to origin -- as noted in my May 2015 bLAWg:  http://annietroe.blogspot.com/2015/05/bos-blawg-fair-use-of-logos.html  So, you want to make sure that you are not using a pre-existing catchy saying associated with another company to attract prospective purchasers of your goods.  Many such phrases, such as “Show Me the Money,” “ET Phone Home,” “Got Milk” and “Just Do It,” are trademarked, and cannot be used by you without likely objections, if not claims, by their owners.
Finally, if you are using a quote, and in conjunction with the quote you use the author’s name, that is a use that can easily been seen as a violation of that person’s Right of Publicity, even if it is just being used to identify the source of her quote!  What if you were to use the quote without the author’s name?  Would that diminish sales of your product?  If so, then clearly there is a commercial advantage to using the name.  At the same time, if you go to the author or her agent or publisher for permission to use the quote, it is very likely that the permission will come with the condition that the quote be attributed.  And that is a large part of the reason a royalty payable on your sales will likely be required in exchange. 

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com

Bo's bLAWg- The Right of Publicity

MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco.  He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org  Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!

 

After I’d turned in my bLAWg to Annie in December, I received another client holiday gift that raised legal issues that she had not considered that is topical.  The set of cards I received contains illustrations of a number of celebrities.  Clearly, she had not obtained their permission to feature their likenesses on gift cards.  As long as the cards were being circulated to friends and families as examples of the Artist’s fine skills, there is no legal risk.  However, if the Artist were to sell a single set of these cards, she would be subject to some very expensive legal claims.

The legal interest that underlies this claim is the Right of Publicity.  While it is celebrity images that are most commonly used by illustrators or photographers on cards or on products from digital picture frames to place mats and t-shirts, everyone has an individual Right of Publicity.  In short, it is a personal right to either allow their name and image to be used for commercial purposes – or not.  With respect to celebrities, this right is directly associated with endorsements.  One cannot turn on the television or flip through a magazine without seeing the image of some celebrity touting the benefits of some product.  They get paid big money for these kinds of endorsements.  Whether their image appears on a towel or product packaging, the celebrity has a reasonable right to object unless they have expressly granted this personal right – and so would you or I; although, our damage claim would no doubt be significantly less than that of a celebrity!

(However, writing that reminded me of the Taster’s Choice claim.  In 1986, a one-time model, Russell Christoff, posed for a Nestle photo shoot pursuant to an agreement that paid him for a couple hundred dollars for shoot but promised him $2,000 if his image was actually used to market Nestle’s Canadian division products.  By 2002, Christoff had become a school teacher.  That year, while shopping in a Rite-Aid store in the US, Christoff saw his image on the label of jars of Taster’s Choice Coffee jars.  Christoff had never been paid the $2,000.  Instead of suing for his contract damages, he made a Right of Publicity claim under California law.  With the help of some good lawyering, a jury returned a verdict in favor of Christoff for $15.3 million dollars(!) based on 5% of Nestle’s profits for the six years that Nestle had been using Christoff’s image on the Taster’s Choice label.)

While the Right of Publicity is a matter governed by State law --  which varies from State to State -- because cards and products are typically sold all across the country,  a person whose right of Publicity has been violated can ‘forum shop’ and potentially bring an action against anyone who has profited by the use of their image without their permission.  This means the shop that sells the offending card and the distributor who provided it to the retailer are also liable, albeit they would have a right of indemnification against the Artist who provided them the cards with an express or implied warranty that they had the right to use the image on the card or product.

Christoff used the California Right of Publicity because it is one of the strongest.  This is due to the fact that a lot of celebrities live in California and the State wants to protect their interests.  California’s Right of Publicity is found in Civil Code Section 3344:               http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=03001-04000&file=3344-3346

Under this statute, a person (or company) who knowingly uses the image of a person without their permission is liable to the injured party for his actual damages (like provable endorsement fees otherwise due a celebrity), “and any profits from the unauthorized use that are attributable to the use…” or a minimum of $750.  In addition, the defendant may be subject to a punitive damages, (often based on their total value or assets(!).  And one of the best parts of the statute is that the prevailing party in such an action is entitled to recover their attorney's fees and costs – like in a post registration Copyright infringement action as noted in my June 2015 bLAWg – which means I take these cases on a Contingent Fee basis. Given the risks of a losing case, the defendant will almost always settle rather than risk fees and costs on top of the claimant Plaintiff’s damages.

And don’t think that just because a celebrity is dead that you are safe to use their image.  To the contrary, many States protect the Right of Publicity of the dead!  California Civil Code Section 3344.1 (same link as 3344 above), provides the same rights and remedies to deceased “personalities” as 3344 provides to the living.  All the Estate or heirs of the personality has to do is register the name of the deceased at the California Secretary of State Office.  If you want to find out if a given personality is registered you can find out at this linked website:
http://www.sos.ca.gov/business/sf/sf_siisearch.htm

However, just because you do not find listed at the California Secretary of State the name of the dead celebrity whose image you want to use on a card, does not mean that you can.  Since the right is State to State, there are other States that protect this right for a term of years without any Registry, and others who may well have case law instead of statutes that provide similar rights.  So, what’s my advice?  Don’t use any illustrations or photos of people on any product for sale unless you have obtained a license that warranty that the underlying rights to the image have been obtained for the intended purpose.

Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com