Character Merchandising & Its Tryst with IPR



Introduction

Character merchandising is a go-to move of companies and local shops to increase their sales. Take a stroll in your local Fashion Streets, and you will find apparel featuring your favourite sportspersons, superheroes and Disney princesses. Walk into your local stationery shop, and you will overhear the shopkeeper asking a kid if they would prefer Hulk or Chhota Bheem on their pencil pouch. Additionally, the online world is filled with collectables from various movies and TV shows, right from Star Wars to Stranger Things. Be it a child or an adult, everyone likes to own items associated with their favourite characters or sports teams. It is no wonder that character merchandising is considered to be a brilliant marketing method.

However, a pertinent question arises from a legal perspective: What kind of legal protection is available for these types of merchandise? Although there is a growing demand for these products and services, it has brought relevant issues like counterfeiting and piracy to the fore.


The Concept of Character Merchandising

According to the World Intellectual Property Organisation (WIPO), character merchandising pertains to using elements like name, picture, voice, statements of a real or fictitious personality to promote the sale and use of certain products or services.[1] Thus, it is evident that both fictional creations and real persons fall within the ambit of ‘character’. Fictional characters are commonly used for their mass appeal and ability to be quickly recognized by fans and consumers alike. There is no dearth of sources for these fictional creations, which include:

  • Literary Works – Comic books, comic strips and children’s books are common sources of fictional works. For instance, popular characters like Shikhari Shambu and Suppandi from Tinkle, the beloved children’s magazine, have been featured on clothes and fridge magnets. Similarly, characters from ‘Archie Comics’ and ‘Asterix’, superheroes of Marvel and DC Comics are increasingly becoming favourite choices for making products more appealing. Acclaimed writer and illustrator Beatrix Potter, known for ‘The Tales of Peter Rabbit’, channelised the power of character merchandising in the early 1900s by making a Peter Rabbit Doll. In 1903, she registered the design of the doll at the Patent Office.[2] Later, she launched products like board games, wallpapers and chinaware featuring characters from her works.

Beatrix Potter's Application for registering the Peter Rabbit Doll


  • Films and Television Shows: The origin of character merchandising in the USA can be traced back to 1930 when Walt Disney Studios established a different department specifically for it.[3] Since then, their products featuring old-time favourites like Mickey Mouse and Donald Duck as well as new characters like Elsa and Nemo have made a name for themselves in the online and offline markets.

  • Advertisements: The immense popularity of ‘Michelin Man’ featured in the advertisements of Michelin Tyre led the company to start an online Collectors Store that sells figurines, screen prints and plaques. Similarly, Vodafone India partnered with Shoppers Stop in 2009 to sell clothes, mugs and furnishings featuring the adorable ZooZoos.[4]

‘Real’ characters include using the face, voice and other personality features of sportspersons, celebrities and other famous persons. This marketing tactic is also known as ‘personality merchandising’. For example, sportspersons and teams feature in advertisements related to sportswear and energy drinks.

Advantages of Character Merchandising

Character merchandising brings a host of benefits to the parties involved. First and foremost, the added appeal helps to boost the sales of products and services. It aids companies to venture into new markets and earn additional income. It is an efficient way for brands to enhance their image. With the variety of products featuring their favourite characters, the consumers are spoilt for choice.

Associated Legal Rights & their Protection

The nature of rights attached to ‘fictional’ and ‘real’ characters are different from each other. When it comes to fictional personalities, these rights are commonly called ‘property rights’.[5] They include the right to commercially exploit the name, drawing, image and other features of the character that make it appealing to consumers. Though these rights are retained by the creator of the characters, they can be transferred. In instances where the said creator is dead, their legal heirs are entitled to the rights to the creations. On the other hand, the rights associated with ‘real’ personalities are called ‘personality rights’ or ‘publicity rights’. They refer to the right to exploit the personality traits of the said person. They also include the person’s right to privacy. In these cases, the rights are with the person themselves.[6] A real person does not ‘transfer’ his name, voice or image. Instead, they authorize the other party to use these elements. If someone uses Amitabh Bachchan’s distinctive voice to promote their product or service without obtaining prior permission, the actor has the right to take legal action.

Since characters are creations of the mind, they are protected by the existing laws governing intellectual property. Works such as drawings, cartoons, comic strips and audio-visual works like background scores can avail copyright protection. Three-dimensional works such as dolls and figurines can be registered as designs if they meet the required criteria. The characters are also accorded trademark protection. Consider the scenario where a popular rock-and-roll band has decided to partner with a clothing brand to launch T-shirts featuring their name and logo. Here, trademark licensing will occur between the band and the clothing brand.

Transfer agreements, merchandise or endorsement agreements are the most common way to provide authorization for character merchandising. The rights-holder can enter into different agreements with different parties involved in various activities if they wish to expand the range of merchandise. Typically, the merchandise agreement must contain provisions like the exclusive or non-exclusive nature of the license, the extent and duration of the rights being licensed, the description and nature of the features of the characters sought to be merchandised, the line of products and services which will feature the characters, territorial limitations, the terms of payment and whether or not the licensee has the right to sub-license.[7]


Prevalent Issues

Counterfeit Goods & Piracy

Blinded by the need to buy products featuring their favourite characters, consumers rarely check the legitimacy of the source. These days, there is a proliferation of counterfeit merchandise in the market. This is a growing cause of concern for licensors and creators. To tackle this issue, companies have set up in-house anti-piracy teams to keep a check on the online and offline marketplaces. As a precautionary measure, they also have independent investigation agencies to help them.[8]


Infringement of personality rights

The right to privacy as a common-law right is well-recognized in the USA. In Norris v. Moskin Store Inc[9], it was established that the tort of invasion of privacy consists of the following acts:

a) the intrusion upon the plaintiff’s physical solitude or seclusion;

b) publicity which violates the ordinary decencies;

c) putting the plaintiff in a false, but not necessarily defamatory position in the public eye; and

d) the appropriation of some element of the plaintiff’s personality for commercial use.


The US has statutory protection for publicity/personality rights. Unfortunately, the jurisprudence of personality rights is comparatively not as well-developed in India. Therefore, one is compelled to resort to the remedy of passing-off. An instance of right of publicity can be found in the case of D.M. Entertainment Pvt. Ltd. V. Baby Gift House And Ors[10]. DM Entertainment was incorporated to manage the career of singer Daler Mehndi. He had assigned all his rights, interest and title in his personality to the company. The Defendant Company was a toy store that sold dolls resembling the singer that could sing a few lines of his songs. Consequently, the Plaintiff filed an action alleging false endorsement leading to passing-off and infringement of the right to publicity. The Delhi High Court found the defendants to be guilty and granted a permanent injunction.

Conclusion

Although character merchandising is a profitable idea, there exists no legislation which entirely governs it. Therefore, it is wise for companies to seek refuge in the remedies provided by legislation governing intellectual property rights. Secondly, they should have a robust merchandising strategy in place. Choosing an appropriate line of products and identifying the most suitable type of IP to protect should form crucial parts of this strategy. They must evaluate the popularity of the fictional characters before setting out to produce the merchandise. Further, the merchandising agreement must embody clear provisions relating to the nature of the license. Lastly, the companies must keep a close eye on the market to spot and take action against counterfeit products and acts of passing off.

References:


[1] The 1992/1993 Program and Budget of the World Intellectual Property Organization (document AB/XXII/2)

[2] Joy Lanzendorfer, How Beatrix Potter Invented Character Merchandising, SMITHSONIAN MAGAZINE, (Jan 31, 2017),

https://www.smithsonianmag.com/arts-culture/how-beatrix-potter-invented-character-merchandising-180961979/

[3] Character Merchandising, WO/INF/108, Report presented by the International Bureau of WIPO, December 1994, https://www.wipo.int/export/sites/www/copyright/en/activities/pdf/wo_inf_108.pdf

[4] Vodafone to sell Zoozoo merchandise, THE HINDU, (Oct. 26, 2009),

https://www.thehindu.com/business/companies/Vodafone-to-sell-Zoozoo-merchandise/article16888616.ece

[5] Supra at 3

[6] Supra at 3

[7] Supra at 3

[8] Tanya Krishna, Decoding the multi-million-dollar character licensing industry in India, APPAREL RESOURCES, (Sept 11, 2020),

https://in.apparelresources.com/business-news/retail/decoding-multi-million-dollar-character-licensing-industry-india/

[9] Norris v. Moskin Stores, Inc., 272 Ala. 174 (Ala. 1961).

[10] D.M. Entertainment Pvt. Ltd. V. Baby Gift House And Ors., CS(OS) 893/2002.



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