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skittles1
May. 20, 2012 // by Matthew Mann

Ambush Advertising: We Must Protect this House!

Most of us have been to professional sporting events. The exclamations of food vendors, the crack of the bat, and the beautiful green grass are all familiar to sports fans during spring. Spring is a major sports season when baseball is in full swing and golf, basketball, and hockey all feature major tournaments or playoffs. While sitting at a game, how many of us think about the business and legal agreements that make the product we watch on the field possible?

Sports started out as a purely amateur form of recreation but have over the years become a lucrative business. With any successful business comes the opportunity to market the event. Many names and logos for various events are created and, if original, are also protected by trademark against unauthorized use. Organizers of such large sporting events like the World Cup and premier golf tournaments, usually have five revenue streams generated by these events. The first stream is sponsorship fees, the second is gate revenue, the third is exclusive supply of products, fourth is recording and broadcast rights and fifth is merchandising rights. Sponsorship fees have became very profitable and includes the right to display the sponsor’s trademark inside the venue/stadium, the naming of the stadium, the right to use the event identifiers on articles manufactured by the sponsors or the right to use the event identifier in association with a service.

The most lucrative deal in sports history involved soccer giant Manchester City partnering with Etihad Airways for sponsorship of the stadium, shirt/jersey sponsorship, and redevelopment of the ground around the stadium to be known as Etihad Campus. The deal was worth £400 million which equates to roughly $652 million U.S. dollars. Sponsorship deals are becoming more prevalent as companies see sponsorship as a way to improve their brand image by associating themselves with successful sports franchises.

One of the most successful examples of this trend is the American Airlines Arena in Dallas. While American is struggling to fill seats on its planes, it certainly is not having the same problem in its Arena. Approximately 1.6 million fans entered the American Airlines Center over the past year, with the average ticket going for more than $50. American pays $6.5 million annually in corporate naming rights. The Arena earns some $40 million from 144 luxury suites and various signage and sponsorships around the arena, and American Airlines Center rakes in about $8,800 a year from each of its 18,186 seats and luxury boxes.

Sports is such a successful business today that according to a Forbes study of top 10 lucrative arenas “no arena on our top 10 list derived more than 4% of its revenue over the past year from corporate naming rights.” However, the most lucrative stadiums tend to be multipurpose facilities that usually feature hockey, basketball, and music performances. The year-round use of these arenas and the high prices for limited seats make them the most financially successful. Baseball and football naming rights deals are much higher as these stadiums have a greater capacity and the sports have greater nationwide appeal. For example, the New York Mets signed a deal with Citi Group in 2006 worth $400 million for 20 years. This trend is likely not going away as companies believe there is benefit to brand recognition among key demographics as a result of arena sponsorships.

Given the cost prohibitive nature of sponsorships, some companies have resorted to ambush advertising. Ambush advertising occurs when companies try to associate their products with an event without the consent of the organizers. In order to combat instances of this form of advertising, countries that host big-time sporting events sometimes have to pass legislation. For example, in preparation for the upcoming London Olympics, Britain passed the London Olympic Games and Paralympic Games Act in 2006. Section 32 of the Act states in part that it is illegal to add a symbol, model, or word “so similar to a protected word as to be likely to create in the public mind an association with the Olympic Games or the Olympic movement.” The Act goes on to define the concept of association as “an association between a person, product or service and the Olympic Games or the Olympic movement includes, in particular, (i) any kind of contractual relationship, (ii) any kind of commercial relationship, (iii) any kind of corporate or structural connection, and (iv) the provision by a person of financial or other support for or in connection with the Olympic Games or the Olympic movement.” More countries will continue to pass similar legislation in order to protect their brands and trademarks.

The desire to profit from sales due to visibility in front of millions of viewers worldwide is not limited to companies however. Athletes long famous for product endorsement have taken sponsorships to the next level in recent years. Athletes over the years have endorsed everything from shavers to soda. More recently, athletes can be seen in commercials for sports performance beverages, video games, and automobiles. One of the most creative potential sponsorships occurred when Marshawn Lynch, a Pro Bowl running back for the Seattle Seahawks NFL football team attempted to profit from his love of a popular candy.

Television and newspapers have reported that Lynch enjoys eating the Skittles brand candy and has often enjoyed them as a celebratory snack after games throughout high school and college. This tradition continued in his professional career as his mother is known to give him a bag before every game. After scoring a touchdown, Lynch can be seen chomping on all the flavors of the rainbow. His most famous Skittles craving occurred during a game on December 1, 2011 against the Philadelphia Eagles. After his 15-yard touchdown run with 9:19 remaining in the first quarter, Lynch was shown on national television eating Skittles on the sidelines. Executives at Mars Inc., the company that owns the Skittles brand, were so happy with the free national publicity that they offered Lynch a two-year supply of the candy and a custom dispenser for his locker as a gesture of gratitude for the product placement. Lynch later sported a Skittles candy pattern on his cleats during a game on December 24th. The National Football League, however, was not amused.

The League Office fined Lynch $10,000 for wearing the cleats. They were deemed to be in violation of the League’s uniform policy. The Official NFL Handbook Policy states that “logos, names, or other commercial identification on shoes are not permitted to be visible unless advance approval is granted by the League office. Size and location of logos and names on shoes must be approved by the League office.” This policy leaves open the possibility that with League approval athletes could endorse products on shoes and possibly other equipment. Given the notoriously strict uniform guidelines in professional football and other sports, this seems unlikely however. Marshawn Lynch, however, has shown that athletes will continue to find innovative ways to endorse brands and attempt to gain a bigger piece of merchandise and sponsor revenue.

0 Comments // Sports, Trademark
pg2_g_ttebow1_576
May. 06, 2012 // by Brian Roe

“Tebow-Mania” Already Rocking New York’s IP Scene

Critics, linebackers, and Mark Sanchez are not Tim Tebow’s only competition.

Tim Tebow has already found his name at the center of several hotly contested intellectual property disputes.  Before Tebow even received his new playbook from the New York Jets, a controversy erupted in federal court in Lower Manhattan between sports merchandise moguls Nike and Reebok over the right to sell Tebow Jets jerseys.  Not long after, three New Yorkers battled over the trademark rights to the phrase “Timsanity,” a play on the viral phrase “Linsanity” inspired by Knicks sensation Jeremy Lin.  Most recently, Tebow has sent his own lawyer into the fray to challenge two of his fans for trademark rights to the term “Tebowing,” a pop-culture craze named after Tebow’s on-field, one-knee prayer stance.

Deserved or not, the Jets’ newly acquired backup quarterback is a media darling, an international sensation, and one of the biggest names in professional sports.  During the 2012 season, the only jersey that sold more than Tebow’s Denver Broncos shirt was that of league MVP Aaron Rodgers, marking the second straight season that sales of Tebow jerseys ranked in the top three.  Reebok International Ltd., who has been the exclusive licensor of NFL merchandise for the past ten seasons, was a big beneficiary of Tebow’s popularity.

Reebok’s deal, a 10-year, $300 million contract signed back in 2000, expired on March 31, 2012.  Nike immediately succeeded with a five-year contract, figured to be worth upwards of $150 million, for the exclusive supplying rights to uniforms, base layers, sideline gear, and fan apparel.  But when Tebow was traded to the Jets on March 21, Reebok attempted to swoop in for one last push by selling 6,000 Tebow-Jets jerseys and 25,000 T-shirts.

Nike immediately sued to enjoin Reebok from selling the merchandise, alleging that Reebok “misappropriated publicity rights, interfered with business relationships and unjustly enriched itself” by failing to get the quarterback’s permission for the product launch.  Further, Nike claimed that Reebok’s tactics were an impermissible attempt to capitalize on a “”unique and short-lived opportunity” that should belong to Nike.  Judge Kevin Castel of the S.D.N.Y. granted the injunction, criticizing Reebok’s midnight effort to sell apparel for players changing teams (he also cited the sale of jerseys of Tebow’s Denver replacement, Peyton Manning), and finding that Nike had shown a “probability of success” in its pursuit to permanently stop Reebok from selling Tebow-Jets jerseys.  The two sides eventually reached a “mutually agreeable resolution”, as Reebok removed all of its Tebow-Jets merchandise from stores.

The battle for Tebow is not confined to the corporate arena.  Three New Yorkers (all of whom, incidentally, are Giants fans) are vying for the trademark rights to the phrase “Timsanity.”  Daniel and Christian Perez, a pair of brothers from Brooklyn, filed their applications with the US Patent and Trademark Office one day after Frank DeGrim, a hedge fund manager from Manhattan.  The men all see an opportunity to make and sell Tebow merchandise in a very lucrative New York sports market.  Noting that the “typical test is sight, sound, and meaning,” trademark lawyer Kurt Anderson says that neither application may stand a chance due to the phrase’s obvious similarity to “Linsanity.”  Anderson notes that should Tebow challenge the trademarks, the one saving grace for the opportunistic New Yorkers may be the generic nature of the name “Tim.”

Earlier this month, Tebow finally sent his lawyer into the fray in an effort to preserve his own brand.  Jared Kleinstein, a 24-year-old Broncos fan from Manhattan and creator of “tebowing.com,” claims that he came up with the phrase. (Yeah,okay.)  Kleinman’s application to the US Patent and Trademark Office has been met by a letter of protest from Tebow’s attorney, Anthony Keats, who claims that the trademark should be awarded to nobody other than Tebow because of the confusion that would be created concerning Tebow’s connection to the products sold.  Another application, submitted to the USPTO by Jason Vollmer of Jacksonville Beach, Florida, has been denied due to a “false connection to a living individual.”

Even though Kleinstein filed his application on October 27, 2012, nearly two months before Tebow’s attorney submitted his application, intellectual property experts feel this fact is of little significance to the USPTO.  Even if his dubious claim that he came up with the expression is true, trademark attorney Keith Weltsch explains, “he’s still playing off the name and fame of Tim Tebow…he’s going to have a difficult time trying to establish there is not a false association.”

All of this for a backup quarterback.

0 Comments // New York, Sports
ebook
Apr. 28, 2012 // by Malhar Naik

Government Seeks to Throw The Book at Apple and Major Publishers

Ipad or Kindle?  This is a question many avid readers debate as they enter the modern world of reading.  My memory of reading as a kid was sensory and tangible: flipping dog-eared, yellowing pages at the library; savoring the smell of a new hardcover book as I attempted to earn my free “Book It” pizza.  The advent of tablets and e-readers has created a market of gadgets to read more.

Today, how we read transforming.  E-readers and e-books are a fast booming industry with the assurance of making reading more convenient, and, more importantly, cheaper.  But it seems like the promise of affordable prices has not been kept.  While sales of iPads, Kindles and other e-readers have risen, so have prices of e-books for those devices.   Also, as the marketplace for e-books has evolved so have the conflicts between competitors, specifically accusations of collusion.

The results of the U.S Justice Department’s recent civil suit against Apple and five of the nations biggest publishers may settle these tensions, if it makes a decisive verdict regarding charges of colluding to raise e-book prices.  The justice department alleges that the CEOs of publishing companies had “secret meetings” in Manhattan’s high life restaurants to plot to work with Apple to raise the “wretched $9.99” price point set up by e-book pioneer Amazon.com.  While Hachette, HarperCollins, and Simon & Schuster have decided to settle their cases, Apple, Macmillian, and Pearson PLC’ Penguin Group have decided to charge on to trial.

Are e-books really overpriced?  The government claims e-books went up an average of $2 to $3 in a three-day period in 2010.  Is this part of Apple’s plan to join forces with publishers to sabotage Amazon?  The answer requires a bit of history in the evolution of e-books.  When books moved from hard book cover to an online medium the natural perception among consumers was that prices should be much cheaper considering there is no cost for warehousing, shipping, printing and binding e-books.  CNET writer Nathan Bransford, however, astutely points out an overlooked fact in the debate, “Paper doesn’t cost very much.”  E-books actually do not save publishers from their biggest expenses, namely compensating authors, designing and marketing the book, and other necessary overhead.

In fact, publishers are not saving much money.  Consumers, however, were paying less than half for books on average ($24.99 vs. $9.99).  When e-books first arrived on the market publishers sold the books on a “wholesale” model.  Publishers would sell for half of a “list price” they sell to vendors such as Amazon.  In exchange, vendors were allowed to sell to the market at their own price.  Amazon’s strategy at the time was to pay $12.50 per copy and then sell the e-book on the market for a loss at a discounted rate of $9.99.  This loss leader pricing strategy was instituted in hopes of selling more kindles and to establish a strong foothold early in the e-book marketplace.  Publishers, however, were troubled by the discounted pricing and preferred for more competition to increase prices and break Amazon’s tremendous leverage over the market.  Bransford also points out publishers became concerned that Amazon was devaluing consumers notion of what a book really should cost.  

In 2010 Steve Jobs and Apple came to the playing field with the iPad.  He sought to break down the barriers of entry into the marketplace by changing the rules of the game.  Apple approached book publishers with an “agency model.”  Under that model the publishers set the final consumer price and retailer and vendors get a commission for the sale, around 70%.  They even went as for as to impose the model on Amazon as well.  Even by raising the consumer price $12.99 publishers, however, were actually making less per book than they would by charging 50% of their list price under the “wholesale model.”  Nonetheless, publishers were willing to shoulder this loss in order to allow competitors to enter the e-book marketplace, thereby solving the “Amazon $9.99 problem.”  This competition has allowed prices on e-books to rise, in some cases even higher than a print version.  Coincidently Mike Shatzkin, seems to implicate that the market for e-books has slowed for major publishers while the market for print books has stabilized.  While Shatzkin has not identified a cause, Bransford implies it could be due to agency pricing.  This would be a big win for publishers since they make a bigger margin on print books.

The question is, was this a natural evolution of the e-books marketplace or did Apple and the major book publishers orchestrate this master plot?  Steve Jobs explained to writer Walter Isaacson in his biography,  “[w]e told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30 percent.  And yes, the customer pays a little more, but that’s what you want anyway.’”  The government alleges that the key to forging this plan work was constant communication and pacts of solidarity between the major publishing companies to make assurances to destroy Amazon’s $9.99 pricing problem together.  Only one publisher attempting to force the agency model would risk losing massive sales if Amazon dropped them.  The government alleges, “publishing executives knew what they were doing was wrong and took steps to conceal their communications with one another, including instructions to ‘double delete’ email.” Led by Macmillion CEO John Sargent the publishers forced the agency model together on Amazon or threated to take away their titles.

Hachette, HarperCollins, and Simon & Schuster’s settlement to the suit seems like an initial victory for consumers and Amazon.  The settlement required the publishers to agree that “to stop “placing constraints” on retailers’ ability to offer discounts to consumers for two years; to stop sharing “competitively sensitive information” with competitors for five years; and to implement an “antitrust compliance program.”  This signals a temporary return to the $9.99 discounted pricing model.  Publishers argue the agency model is crucial to protecting the publishing industry by preserving competition.  The results of the lawsuits, however, could present even greater ramifications.  Apple, Amazon, and the publishers will eventually have to play nice and find a model that works.  Most importantly, however, they must insure that consumers are not victims of pricing controversy and reading remains an affordable hobby.

0 Comments // Apple, Books, Technology
tupac-hologram
Apr. 27, 2012 // by Kimberly Lehmann

Tupac 2.0

Earlier this month, at the annual Coachella Music Festival, concertgoers were stunned to witness the performance of a lifetime, or should we say, an afterlife-time.  At the festival, nearly 100,000 fans witnessed a holographic Tupac Shakur, who died in 1996, performing alongside Dr. Dre and Snoop Dogg.  Shakur appeared on stage, performing two songs and even gave a shout out to the Coachella concertgoers.  The hologram was created by Digital Domain Media Group, which also produced the Oscar-winning virtual versions of Brad Pitt in The Curious Case of Benjamin Button.  While the exact techniques utilized have not been disclosed, the technology allowed for the creation of new moves and new audio for the Tupac performance.

Now that the technology is available and unveiled, this performance will likely not be the only one of its kind.  Dr. Dre and Snoop are reportedly considering taking the Tupac hologram out on tour.  There is also speculation about what other stars we will see in posthumous holographic performances.  According to AV Concepts President Nick Smith “You can take [celebrities’] likenesses and voice and . . . take people that haven’t done concerts before or perform music they haven’t sung and digitally recreate it.”  Raju Mudhar of The Toronto Star speculates that reanimating dead celebrities could be a real trend as it would likely result in a real “windfall for the estates of the deceased performers.”  Such possibilities raises questions about the protections against misuse of performers’ images for holographic performances.

Of course, any public performance of music, by living musicians or by holograms, requires permission of the copyright owner for the composition.  Typically, the American Society of Composers, Authors, and Publishers license out songs performed in concert.  For the Tupac performance, it is likely that the performance of “Hail Mary” and “2 of Amerikaz Most Wanted” was permitted by the copyright owner.

The holographic performance also implicates the Right of Publicity.  The Right of Publicity is the “inherent right of every human being to control the commercial use of his or her identity.” (McCarthy, The Rights of Publicity and Privacy 2d § 1:3.)  A state common law right, the Right of Publicity provides people with the right to control the commercial use of her name, image, likeness, or any other unquestionable aspects of her identity.  The right protects against the loss of the ability to control one’s persona, even if there is not necessarily any commercial harm.  (31 COA2d 121.) Most states recognize that the right is descendible though it varies as to the length of time one’s estate maintains the Right to Publicity, ranging from 20 to 100 years. (31 COA2d 121.)   In order to use the image of Tupac, Dr. Dre had to get consent from the executors of Tupac’s estate which is controlled by Afeni Shakur, who gave permission for the performance.

With the potential rise of holographic performances, stars should take care to protect themselves from appearing as holograms in ways not in their own interest.  The Right to Publicity, like many rights, is one which can be transferred.  (Haelan Laboratories, Inc. v. Topps Chewing Gum, Inc., 202 F.2d 866, 868 (2d Cir. 1953); McCarthy, The Rights of Publicity and Privacy 2d § 10:8). The Miami Entertainment Law Group warns that signing away this right “could potentially cut off your right to share in a very lucrative stream of income AND your ability to determine how you will be remembered.”

It is unclear whether Tupac would have wanted to be remembered for this holographic performance.  However, at least his mother, who carefully controls the use of Tupac’s image, was pleased with the performance.

 

0 Comments // Celebrity, Entertainment, General, Music, Technology
brad-pitt-angelina-jolie-article-2
Apr. 25, 2012 // by Andrew Eisenberg

If The Ring Fits…Sue

Recently, pictures of the wedding ring that Brad Pitt has designed for wife-to-be Angelina Jolie have been released.  Undoubtedly, replicas of such rings are soon to follow.  Kate Middleton’s sapphire ring has yielded many imitations and there is no reason to believe that Angelina’s ring will be any different.  Some have speculated that Brad may seek legal protection to maintain the exclusivity of the ring.  One of the requirements for attaining copyright protection for such is that the design contains originality.  Arguably that requirement is easily satisfied and Brad should have no problem as it took the jeweler over a year to obtain certain emerald-cut diamonds to use in the ring.  Yet it seems unlikely that lawsuits will be brought since for an infringement suit to be successful the knockoff must be exact.  Practically all of these future duplicates are likely to just be “inspired” by Angelina’s ring or close imitations.

It is important to note that Mr. Pitt has previously tried covering his basis by filing a similar lawsuit.  In 2000, Brad Pitt presented his own custom design to an Italian jeweler named Silvia Damiani.  Damiani who created the famous Jennifer Aniston/Brad Pitt wedding rings, both engraved with the names Jen 2000 and Brad 2000.  Jennifer’s 18k white gold band featured twenty inset diamonds encircling each side of the ring.  Brad’s ring was simpler and featured a simple broader space of ten inset white diamonds.  The couple reportedly paid the jeweler £36 million for the wedding and engagement rings.  According to reports, soon thereafter, Brad Pitt and Jennifer Anniston filed a multi-million dollar lawsuit against Damiani for replicating Pitt’s custom design, alleging that Damiani “embarked upon an outrageous, fraudulent scheme to manufacture copies of Aniston’s engagement ring and the couple’s wedding rings.” The new Damiani rings were being sold online and featured the same 10/20 diamond design as Pitt’s prototype with diamonds costing $1000.00 a piece.  Eventually, the lawsuit was later settled in favor of Pitt and Aniston and Damiani was barred from using the design.

With this is mind, potential replicators should beware that Brad may come after them.  If exact copies of the rings do hit the market we won’t be surprised if, resurfacing like his role in Sleepers, Pitt brings the wrongdoer to court.

 

0 Comments // Celebrity, Counterfeit, Design
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