Copyright in Characters: What Can I Use? Part III

Trademark in Characters

In the past two posts, I wrote about how copyright law is applied to fictional characters. This post will cover how trademark law applies to fictional characters.

Trademark law can be complicated and I won’t be going into the exceptions to the rules and the exceptions to exceptions (yeah, it’s like that) in this post. Instead, I’m trying to provide a brief overview of trademark law and apply it to fictional characters – it’s a very different look at how characters can be protected compared to copyright.

The Lanham Act is the federal law that governs trademarks, but each state also has its own trademark laws that apply in addition to federal law. This post focuses on the use of characters as trademarks under the Lanham Act since it applies across the U.S.

What is a trademark?

A trademark is anything that acts to identify the source of goods or services. Typically, these are logos, business names, and slogans, but can also include things like colors, product configurations, and trade dress.

For something to be considered a trademark, it must be used in connection with the use or sale of goods or services. Otherwise, it isn’t being used as a trademark and the use won’t be protected by trademark laws. The trademark rights you gain are also specific to those goods or services.

Can a Fictional Character be a Trademark?

Yes, the name of a fictional character or its graphical representation can be registered as a trademark if it is being used as a trademark. A fictional character can be used as a trademark in many ways, such as using the character as a logo for a business or for retail items.

For example, Disney has many federal registrations for its characters that are used as trademarks, including Mickey Mouse and Minnie Mouse. As does Nintendo. Here. Are. A. Few. Recognizable. Examples.

However, note that they are all tied to specific goods or services. Registration No. 5,027,809 (depicting Mickey Mouse) is for “Binders; bookends”, and Registration No. 5,027,915 (depicting Minnie Mouse) is for “Children's multiple activity toys; Toy rockets”.

That’s because trademark rights do not protect the character on its own – that protection is provided by copyright laws, which was covered in the previous posts. A federal trademark registration protects the use of the mark in connection with the listed goods or services. In the examples above, the Mickey Mouse logo will be used on the binders or packaging and the Minnie Mouse logo will be used on the toys or packaging.

This also means that someone would be infringing trademark rights if they start using the registered trademark in connection with the sale of the same or similar goods listed in the trademark registration.

But there are exceptions and other factors that can complicate things, such as fame of a mark, likelihood of confusion, and other rules relating to subject matter such as national symbols.

But generally, the trademark protection a fictional character receives will be limited to the use in connection with goods or services.

What are Trademarks Rights?

Trademark rights give the owner of a trademark the exclusive right to use a trademark in connection with the sale or use of goods or services and to prevent others from using a trademark that could cause confusion with your customers. This is called a “likelihood of confusion”.

Trademark rights are created in two ways – through “common law” use and through registration at the state or federal level.

Common law trademark rights arise in the places where a trademark has been used in connection with goods or services. For instance, if you are using a fictional character in the logo for your business and are selling your goods (let’s say it’s video games) online, then you’re likely building common law trademark rights in the areas that people are downloading your game. Common law rights typically do not extend beyond those territories, though.

Registering that trademark with the US Patent and Trademark Office (“USPTO”) provides you with a handful of significant benefits that you wouldn’t have received otherwise, such as nationwide protection of the trademark (not just in the common law territories) and a presumption that you’re the owner of the trademark in case a dispute arises.

How Aren’t Trademarks Protected?

There are many ways that trademark protection is limited or even not granted, including nominative use, ornamental use, and (importantly for this post) names and designs of characters in creative works. But I’m going to focus on the scope of protection and trademark non-use.

First, the scope of protection for a trademark plays a large role in how much protection it receives. When registering a trademark, you will need to describe the goods or services that are provided under the trademark. Here’s the USPTO’s trademark ID manual it uses for pre-approved descriptions. That trademark registration will then protect the use of the mark in connection with those goods or services and any other goods or services that are close enough to cause a likelihood of confusion.

For example, if you use a fictional character for the logo of your book series and have registered that trademark with the USPTO, someone else could not also start using the same or similar character for their book series. But someone might be able to use the same or similar character for a different type of business such as a clothing line.

Trademark non-use is also an important exception to trademark infringement claims. For someone to have a trademark infringement claim against someone, the claimed infringing use must be a trademark use – use of a mark in connection with goods or services. Just saying the name of a fictional character or showing it in a movie generally isn’t a trademark use, but there could be other issues involved such as copyright infringement.

Relationship to Copyright

While trademarks are protected by different laws than copyright, they often overlap in this context because a fictional character can be protected by both trademark and copyright. Also, even if someone’s use of a character isn’t a trademark use, it could still be copyright infringement if they aren’t the owner of the copyright in the fictional character.

I hope you’ve found this series helpful! If you’re interested in learning more or registering a copyright or trademark, feel free to contact us – we’d be happy to help.

Read the original post, "Copyright in Characters: What Can I Use?"

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.

Signs That You Shouldn't Sign That

ALG attorney Bryan Wasetis will be presenting "Signs That You Shouldn't Sign That", a workshop on contract negotiation, on behalf of the Oregon Volunteer Lawyers for the Arts for this year's Secret Knowledge Conference. The conference is on Saturday, November 19th from 10:00am to 8:00pm at the Jupiter Hotel in Portland, OR. Check it out and buy tickets here!

Form 1023-EZ: The Faster, Easier 501(c)(3) Application for Small Nonprofits

Great news for new small nonprofits – the IRS recently streamlined the process of applying for 501(c)(3) status by introducing Form 1023-EZ. The new form applies to certain small organizations seeking federal tax exemption under Internal Revenue Code (“IRC”) § 501(c)(3), and reduces the application down to three pages instead of the full 31-page Form 1023.

What is 501(c)(3) Status?

When you start a nonprofit organization, regardless of whether you formally incorporate with your state, you are creating a legal entity that is subject to federal tax regulations.

The IRS has determined that certain nonprofit organizations should be exempt from some federal income taxes. Specifically, IRC § 501(c) lists 26 types of exempt organizations. The third category on the list, 501(c)(3), is for nonprofit organizations that are organized and operated exclusively for charitable, scientific, literary, religious, or educational purposes.

These types of organizations are able to accept contributions and donations that are tax-deductible to the donor, and apply for grants and other public or private financial allocations available only to IRS-recognized 501(c)(3) organizations. However, an organization generally must apply for recognition under 501(c)(3). This is where Form 1023 and 1023-EZ come in.

Form 1023-EZ

Up until the summer of 2014, most nonprofit organizations seeking tax exemption under 501(c)(3) had to file Form 1023, which requires a substantial amount of input from the applicant, including a written narrative, financial data, and specific organizational documents. On top of that, applicants typically had to wait six months or more to have the application processed by the IRS.

Form 1023-EZ, however, provides a faster and easier method of obtaining 501(c)(3) status. The form is significantly shorter and does not require a narrative description or other documents, and the cost and approval time are reduced as well.

As of this article, Form 1023-EZ has a filing fee of $400.00 and can be approved in as fast as one month. Compare that to the full Form 1023, which costs up to $850.00 and can take six or more months to be approved.

Requirements

Only certain nonprofit organizations are able to obtain 501(c)(3) recognition through Form 1023-EZ. Before completing Form 1023-EZ, applicants are required to complete an eligibility worksheet that asks 26 “yes or no” questions about the applying organization. Applicants must be able to answer “no” to all questions in order to qualify. Fortunately, the questions are favorable for many small nonprofits.

The first few questions are the most relevant to small nonprofits since they ask about the financial size of the organization. The questions ask whether the organization anticipates its annual gross receipts to be more than $50,000 in any of the next 3 years, had annual gross receipts over $50,000 in any of the past 3 years, or has assets exceeding a fair market value of $250,000. If you can answer “no”, then Form 1023-EZ might be for you.

Other Considerations

While Form 1023-EZ greatly reduces the burden of seeking 501(c)(3) status, there are some possible shortcomings:

First, nonprofit organizations can and should actually attempt to make a profit in order to better fulfill their missions. Consequently, an organization that originally qualified as tax exempt under 501(c)(3) by filing Form 1023-EZ may find itself grossing more than $50,000 in a year. This creates the possibility of being audited by the IRS. While good record keeping should avoid any issues, organizations can preemptively avoid the $50,000 threshold by using the full Form 1023.

Second, Form 1023-EZ’s lack of a requirement for documents may not always be beneficial since some nonprofit organizations have complicated structures and programs that need to be explained to the IRS. Form 1023-EZ does not allow for these explanations but Form 1023 gives an organization space to explain its operations.

Take Away

Form 1023-EZ provides an excellent opportunity for small nonprofits to gain the benefits of tax exemption under IRC § 501(c)(3). With a reduced time and financial burden, many nonprofit organizations will find this form a welcomed addition.

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.

The Consequences of Collaboration

We’re sometimes approached by artists who have undertaken a project with collaborators that have been asked to help the artist achieve their vision. However, the collaborators hadn’t worked out ahead of time who will own the resulting copyright and plunge into the project, or they have only the loosest agreement. By the time we see them, they’re trying to sort out who owns the resulting rights and may even be in the midst of an acrimonious dispute. The good news is that many ownership disputes can easily be avoided by having a written agreement in place prior to the project’s start.

A prime example is a musician who has composed a piece and wants to record a demo for purposes of shopping the demo to a record label or the underlying composition to a publisher. As part of that, the musician has sought out an engineer or perhaps other musicians to assist in the recording process.

Will the collaborators have any copyright ownership interest in the composition or resulting sound recording? In the absence of an employee/employer relationship (which will not be addressed here) or agreement to the contrary, the answer could very well be “yes”.

Copyright Law

Would-be authors, regardless of artistic discipline, should be aware of when and how copyrights come into existence. Copyright automatically attaches when a creative work is fixed in a tangible medium of expression. That is, the work is no longer just an idea in the author’s head and has been committed to a format viewable by the unaided eye or with the aid of a machine. Nothing additional is required of the author.

Ownership of the copyright is fixed with the author at the same time the work is made. If more than one person contributed to creation of the work, ownership will be held jointly amongst all of the co-creators.

Legal Effects of Collaboration

In the absence of an agreement that states otherwise, any artistic contributions made to either the composition or sound recording by the collaborators would make them co-authors and joint owners of any copyrights to which they’ve contributed. This could be as simple as modifications to the melody or lyrics, the addition of a solo, or production choices made during the recording process.

So what does this mean for our musician/composer? As a co-owner of the demo recording, the collaborators would be free to make use of the materials as they see fit, other than to assign or exclusively license the copyright to another party. Further, if our solo musician plays the demo for a record label and the label decides to re-record the composition, collaborators on the composition would have an interest in the resulting royalties.

Obviously, this would be a disaster for a young solo musician as they’ve lost artistic control of what was originally their work or are splitting royalties with collaborators when they didn’t intend to. So what’s the best way to avoid these worst case scenarios?

Avoiding Co-Ownership

To that end, our musician has a couple of options to maintain ownership from the outset of the project: (1) record the demo by themselves or (2) put in place an agreement with collaborators that all of their contributions are owned by the musician.

To avoid any issues, it’s best to have a written agreement in situations where you want to completely own the final product without question or subject to outside claims. Ideally, any artist preparing to undertake a collaborative project should consult put in place an agreement assuring full ownership of the resulting works.

If an artist has already completed a project with collaborators and no agreement was in place, they should immediately try to sort out issues of ownership. In either case, it’s best to consult with an experienced attorney who can guide the process.

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.

Negotiating Contract Terms: Kill Fees

Aspect Law Group is collaborating with Design Week Portland for a column called "Creatives Ask a Lawyer". Head over here to find out more. Q: “What is the recommended kill fee for independent contractors to put in their client contracts?”

You can read the full post and answer to this question on the Design Week Portland tumblr.

This is a great questions because it touches on several topics. In the post, I cover the importance of a contract, contract terms such as kill fees and alternatives, and negotiating contracts.

Thanks for the question!

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.

Logos: to Inc. or not to Inc.

Aspect Law Group is collaborating with Design Week Portland for a column called "Creatives Ask a Lawyer". Head over here to find out more. Q: "Do logos need to display ‘Inc’ or ‘LLC’? I have a client that has been told by his lawyer that his logo has to have ‘Inc’ somewhere in it. I have run into this many times, as well as clients insisting that they have to have the ‘LLC’ in the logo. All the information on the web says that it is not needed on the actual logo, but must be on trademark and corporate filings."

You can read the full post and answer to this question on the Design Week Portland tumblr.

In the post, I cover trademark law basics, business law, and general business practices issues. The short answer is that logos do not need to have the business designation but certainly can, and business should use their full legal name when conducting business.

Thanks for the question!

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.

Creatives Ask a Lawyer

Aspect Law Group is working with Design Week Portland to bring you "Creatives Ask a Lawyer"! From DWP:

Do you know when you need a contract? Or how to register a trademark? Bryan Wasetis from Aspect Law Group works primarily with artists, designers, and makers on issues we face, like licensing and protecting intellectual property.

He's here to answer all of your burning legal questions and will be working a few responses into a column on our blog.

You can send us questions through Twitter or email.

Keep an eye out for our answers!

Copyright in Characters: What Can I Use?

Q&A: “How do [some video games] get away with using so many famous franchise movie characters? We got DMCA'd for making a robot graphic that ‘resembled R2D2’.” Good question! The answer is actually more complicated than it might seem. Let’s dive into this:

Copyright Law:

For a work to qualify for copyright protection under current US copyright law, it must be an original work of authorship, fixed in a tangible medium of expression. “Original work of authorship” means it must be independently created by the author and possess some minimal degree of creativity. The creativity bar is pretty low, and most things will pass as being creative.

“Fixed in a tangible medium of expression” means that it has to exist somewhere somehow, i.e. writing something down, recording a song, or drawing a picture. Consequently, copyright law does not protect ideas; only the original, fixed expression of that idea by the author is protected.

The distinction here is expression of the idea. Actual copying of the expression of the idea is likely copyright infringement, especially in the commercial context, however copying only the basic idea behind the work is copying unprotected ideas and isn't copyright infringement.

Copyright in Characters:

For characters, the character only becomes protected under copyright law once it becomes a unique expression, i.e. drawing your own rendition of something or adding certain attributes. Concepts like robots, men in black, beefy army dudes with guns, samurai, etc., are called “stock” characters, and don't rise to the standard of creative until the author adds something more or expresses that concept.

This line can get pretty blurry, especially in the context of written stories since there often isn’t a visual element and the author must describe the character with sufficient originality. For video games though, the unique expression is the actual visual character created by the artist.

Famous Characters and Copyright Law:

Famous franchise movie characters, like Rambo, Snake Plisskin, and RoboCop, are protected by copyright law because of the copyright in the film and script, but only to the extent of the creative expression by the author. As I said earlier, copyright law does not protect stock characters. Consequently, any use of a gun-toting cyborg won’t be considered copyright infringement of RoboCop until that cyborg looks and acts like RoboCop.

Also, names alone do not have copyright protection. So just mentioning the name of a character won’t be copyright infringement without more.

The creators of some video games use stock characters and scenery that resemble famous movie franchises. This alone likely doesn’t infringe the copyright of someone else’s work if the game’s character art and scenery are original creations developed by the game company.

Do they bring to mind other notable characters in pop culture because of the context? Totally! But copyright law isn't concerned about that here. That's the area of trademark law, and there may certainly be trademark law issues going on there, as well as rights of publicity.

R2-D2:

So how about using a picture of a robot that looks very similar to R2-D2? Like I said earlier, the idea of robots is not protected. But the expression of a robot with three legs, half-sphere for a head, cylindrical, with blue and white ornamentation? Definitely protected - it's Lucas's expression of a robot.

The other thing about Lucasfilm though, is that they have many of their works trademarked as well. Trademarks are source indicators and trademark law is concerned with likelihood of confusion. So even making a robot that brings to mind R2-D2 could be trademark infringement. Lucasfilm also vigilantly polices its trademarks and copyrights, so I recommend steering clear of that territory.

The Take Away:

Characters can be protected by several theories of law, including copyright law, trademark law, and rights of publicity.

You can’t stop someone from suing you (even if you’re right), and using a famous character may not be worth the risk of a lawsuit, so think about getting a license or using your own original character before attempting to use a famous character.

- Bryan and James

Note: this Q&A was modified to remove the name of the video game referenced in the original question.

Read "Copyright in Characters: What Can I Use? Part II"

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.