This article is written by Tuba Ghayas who is pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.

Introduction

From buying school stationaries to T-shirts, keychains, and mobile covers, almost all of us have at some point, after reading comic books or watching a cartoon or a movie had become a fan or a great admirer of some real and fictional characters and spent money on buying products with their image on it or products which the characters endorsed. Be it good old Barbie or Mickey Mouse, adorable Harry Potter, or our widely loved DC & Marvel superheroes and many more, they all have left an impression in our minds and we remember them with fondness even after decades. With the rise of easy access to OTT platforms across the world, the amount of world-class movies and web series watched by the common people is just increasing day by day and it has given a rise to worldwide commercial exploitation of these real and fictional characters in selling goods and services through advertisement. 

According to a report by the Statista Research Department on Annual global retail sales of licensed entertainment and character merchandise from 2014 to 2019, merchandise sales in this product category reached 128.4 billion U.S. dollars in sales in 2019. This was an increase of approximately 5.7 billion dollars from the previous year. 

What is character merchandising?

Character merchandising is a promotion technique using which goods and services resembling famous fictional or non-fiction characters are made for drawing the attention of customers. It is a medium by which a famous personality and the creators of a fictional character or real character commercially exploit or authorize someone else through third-party agreements to exploit the personality features like name, image, appearance, sound, etc. of these characters in relation to some goods or service with a view to creating in prospective customers a desire to acquire those goods and/or to use those services because of customers’ likeness to a character.

The toy industry was the first to recognize the use of popular characters and today is still the largest market. Walt Disney initiated the organized system of character merchandising in the 1930s by selling T-shirts, badges, posters with its famous cartoon characters like Mickey Mouse, Minnie Mouse, and Donald Duck. Character merchandising as a marketing technique has a secure future as it will keep growing. Its commercial potential is immense and its advantages over traditional techniques ensure continuous development. Character merchandising has revolutionized marketing practices.

Different types of character merchandising

Character merchandising can be differentiated based on the source of the character which is being merchandised.

1. Fictional and cartoon character merchandising 

It involves the use of the essential personality features (name, image, etc.) of fictional characters in the marketing and/or advertising of goods or services. The characters are originated from, literary works being adapted to a cartoon such as Pinnochio and Alice in Wonderland, cartoons originally for films such as Mickey Mouse, Minnie Mouse, and Donald Duck or for cartoons for comic strips such as Tintin, Astérix, and Batman. Cinematograph films have also helped character merchandising with popular characters like Mr. Incredibles, Kung-fu Panda, and Nemo. Cartoon characters are the most widely merchandised characters.

2. Personality Merchandising

In this type of merchandising, the essential attributes like name, image, voice, the appearance of Real persons are used. Their true identity is used for the marketing of goods or services. In this case, the real person is widely popular among the masses and influences the minds of people. This type of merchandising is often termed as ‘Reputation Merchandising’ as the reputation and/or the public image contributes towards the salability of the merchandise. Real characters are used more in the fields of marketing for new businesses and sports activities. These famous personalities enter into endorsement deals for allowing the brands to exploit their personality features. E.g. – Shahrukh khan endorsing Fair and Handsome cream, Kylie Jenner starting her brand of Kylie cosmetics.

In D.M. Entertainment Pvt. Ltd. v. Baby Gift House and Ors. 2010, The Delhi High Court validated the transfer of trademark on Daler Mehndi’s name by the singer to his company. In this case, the defendant was selling dolls that looked like Daler Mehndi and danced to his famous songs, the court held that this was an act of passing off. The court observed that the right of publicity is the prerogative of an individual and only he has the autonomy to authorize or not authorize the commercial exploitation of his likeness or some attributes of his personality 

3. Image Merchandising

This type of merchandising is the combination of Fictional character merchandising and Personality merchandising. It involves the use of essential features of fictional film or Television characters, played by real actors, in the marketing and advertising of goods or services. In such cases, distinctive elements of a film or series as played by the real person like Dialogues, their appearance in the scenes are used for marketing and advertising of goods and services.  E.g., Captain America is played by Chris Evans, James Bond 007 played by Sean Connery and Roger Moore, Harry Potter is played by Daniel Radcliffe, etc. These characters enjoy a dual reputation.

In Arbaaz Khan v. Northstar Entertainment Pvt. Ltd., Bombay High Court granted copyright to the character named Chulbul Pandey from the movie Dabangg having the opinion that the character in question is unique and has his style and makes it one of a kind and unique and distinctively recognizable from the entire film.

Legal Rights and Ownership

The rights in the fictional character are called “Property Rights” and includes economic and exploitation rights. So the rights include the right to commercially exploit the features of character like name, voice, appearance, image, sound, etc. The creator of these characters usually has ownership of these fictional characters, unless the creator has transferred his rights, was commissioned to create, created in the course of his professional activity for his employer, or has died and right has transferred to heirs. For a lump sum amount, the creator of such characters transfers the rights through either licensing or assigning exploitation rights to either single or several entities.

In the case of real persons, the rights attached to, inter alia, the name, image, or appearance of a real person may be referred to as “personality rights” or “publicity rights.” The individual himself/herself owns these rights and has a right to commercially exploit it and prevent others from exploiting their rights. These real people who are popular and usually have ‘celebrity statuses’ through endorsement deals authorize others to exploit the features of their personality in the marketing of goods or services.

Legal issues and protection

Character merchandising is a multi-billion dollar revenue generation. Jan Klink, in his book, upheld the vulnerability involved with the practice and highlighted the risk of free riders that ‘cash-in’ and appropriate the celebrity’s identifiers such as personality features and accessories in order to promote their own goods or services involved in character merchandising. Unauthorized cartoon character merchandising is also quite rampant which prevents the rightful owner from enjoying the fruits of his labor. 

There is no specific legislation for the protection and regulating character merchandising in any country. In India, laws on copyrights, trademarks, and industrial designs, together with the protection against unfair competition (including passing-off), may be relevant in the context of the merchandising of fictional characters and image merchandising.

Copyrights Act, 1957

Copyright subsists not in ideas but expressed forms of the idea. Copyright is a bundle of rights given by law to creators of original literary, dramatic, artistic, musical work and producers of cinematographic films and sound recordings When it comes to character merchandising, the relevant copyright subsists in literary work, artistic works, and cinematograph films. Copyright law gives protection to creators and owners of characters. Thus authors of comic strips, books, novels from which character originates and the producers of cinematographic films have the right to do or authorize others to commercially exploit the characters and prevent others from doing the same. The term of copyright protection in the case of fictional characters from literary and artistic work is the author’s lifetime plus 60 years and that of the cinematographic film is 60 years from publication. The criminal remedies, as well as civil remedies of injunction, damages, and passing off, are granted by the Courts. In the USA, to test the copyrightability of characters, the courts have come up with Character Delineation Test and the Story Being Told Test. However, they are not applied very strictly.

In Diamond Comic Pvt. Ltd. and Anr. vs. Raja Pocket Books and Ors (2005), the plaintiff’s company is the leading publishing and printing company of comic books. The defendant agreed with the plaintiff, assigning the rights in publishing the character ‘Shaktiman’ in form of a comic book. When the defendant comic book started gaining a reputation in the market, they started manufacturing and selling their comic book. The plaintiff received the notice from the defendant to terminate the assignment deed. As per Section 19(a) of the Copyright Act, 1957, the assignor of the copyright cannot unilaterally revoke or withdraw the assignment and also cannot reassign the same to any other person. The court, therefore, passed a mandatory injunction against the defendant and restrained the defendants from publishing, printing, or circulating the ‘Shaktiman’ character in the form of comic books.

Trademarks Act, 1999

According to section 29 of the Indian Trademark Act 1999, a registered trademark owner can stop others from using a deceptively similar or an identical mark on goods and services without the permission of the owner of the trademark. The authors or the owners safeguard their rights and the goodwill attached to the character by registering their character as a trademark under the Trademark Act, 1999. They can further license their use of a trademark to a third party and gain commercially. Celebrities can also register their names and appearance as a trademark and prevent others from using it. Actors like, Shahrukh Khan, Amitabh Bachhan has got the trademark of their name registered. Similarly, Akshay Kumar has got “Khiladi” registered on account of his several movies with the same name. The criminal remedies, as well as civil remedies, are granted by the court in suits for infringement. . In case of an unregistered mark, the passing-off remedy can be availed on the establishment of goodwill in the trademark, misappropriation of the defendant, and loss of trade or damage to goodwill faced by the plaintiff as a result.

Designs Act, 2000

The creators and owners of the fictional characters can also get a design registration for specific products. A design is registrable if it fulfills the following criteria -a) New or Original Design (Novelty or Originality), b) No prior publication of design, c) Significantly distinguishable from known designs or combination of known designs (Distinctiveness), d) Does not comprise or contains scandalous or obscene matter, e) Use would not be contrary to public order or morality, f) Does not hamper Security of India

Right to Privacy

In India, there is no statutory law that recognizes the rights of a famous personality or celebrity. But the courts have often recognized and protected Personality and Publicity rights under Article 21 Right to Privacy. Thus unauthorized personality merchandising can be prevented through a suit for infringement of the right to privacy.

In 2012, Titan Industries Ltd. v. M/s Ramkumar Jewellers, where photoshoot images of Amitabh Bacchan and Jaya Bacchan for promotion of Jewelry of Titan Industries were used by the defendant without their permission. Delhi High Court recognized misappropriation of the couple’s personality rights and clarified that a claim for infringement of the right of publicity requires “no proof of falsity, confusion, or deception, especially when the celebrity is identifiable”. 

Conclusion

India is an emerging business market for character merchandising. Though there are several methods to curb character merchandising, there is a growing need for specific legislation on this subject for effective enforceability. 

References

• https://www.statista.com/statistics/777940/global-retail-sales-of-licensed-entertainment-and-character-merchandise/
• http://classic.austlii.edu.au/au/journals/UNSWLawJl/1989/10.pdf
• https://www.khuranaandkhurana.com/2010/06/16/india-refuses-to-nodfor-noddy/
• Character Merchandising, Report by the International Bureau, World Intellectual Property Organisation, Geneva, December 1994, available online at https://www.wipo.int/export/sites/www/copyright/en/activities/pdf/wo_inf_108.pdf
• https://racolblegal.com/character-merchandising-a-legal-perspective/#_ftn16
• https://www.mondaq.com/india/trademark/768282/character-merchandising.
• https://blog.ipleaders.in/character-merchandising-copyright-act-1957/#History_of_character_merchandising

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