This article is written by Priyanka who is pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from Lawsikho.

Introduction

It is often believed that the characters add soul to the story. The characters are the essence of the story, in a sense that the reader (or the ‘viewer’ in case of a film or a web show) gets inspired, adores or is left bewitched by the character. How many times has a character stayed with you after reading a book or watching a movie? Be it the good-hearted Harry Potter, from the Harry Potter series, or even the cartoon character Mickey Mouse or books written about inspiring personalities like Oprah Winfrey and Malala Yousafzai, which are still remembered after decades of their release. In a time when various OTT platforms are gaining popularity and successfully delivering world class movies and shows, there is an ever expanding market which exploits such character traits by creating various merchandise (merchandise in its simplest sense means the goods to be brought or sold). The personality traits of the character such as name, image, appearance, certain way of behaviour etc. are imbibed in goods so as to develop a desire among the consumers to buy the products hence giving rise to Character Merchandising.  

Meaning of Character Merchandising

Character Merchandising can be defined as the following:

The adaptation or secondary exploitation, by the creator of a fictional character or by a real person or by one or several authorized third-parties, of the essential personality features (such as the name, image or appearance) of a character in relation to various goods and/or services with a view to creating in the minds prospective customers a desire to acquire those goods and/or to use such services because of the customers’ affinity with that character.

Thus, when a product is linked with the fictional character or a real person in such a way that it shows an association with the personality features (such as appearance, style, lifestyle, or in some cases even the decisions made by the character) for commercial gains, it can be termed as Character Merchandising. The most popular and successful merchandise that earns revenues in millions of dollars all over the world involves the Minion Toys, Harry Potter merchandise involving his Wands, diaries, robes, Maps etc., James Bond Suits, Cristiano Ronaldo’s sports jerseys, Star War toys etc. 

It is to be noted that the creators of the fictional characters can authorize third-parties by way of a license, assignment or any other understanding as the parties deem fit, enabling them to be the users of such character traits and commercialise the merchandise. 

Sources of characters for character merchandising 

1. Fictional Characters

The main sources of fictional characters are:

1. Literary work
2. Anime/Cartoons
3. Artistic work
4. Cinematographic films

Non-Fictional Characters:

1. Popular sportsmen, businessmen, Actors, Singers, politicians or any other influential people. 

Types of Character Merchandising

From a legal point of view, there are three categories of character merchandising namely:

Merchandising of a fictional character

This type of merchandising, involves the exploiting the character traits of a Fictional character that is a devised character which is made up of the figment of imagination by the author. It can further be sub-divided in following:

• Pure Characters
• Literary Characters
• Cartoon Characters

Personality Merchandising

This type of merchandising involves the usage of essential attributes (appearance, voice, image and other personality features) of a real person. Here the person whose character is being commercialized is a Public figure who is popular, influential and/or has a standing in a society, in the areas, where the merchandise is to be sold. This type of merchandising is often termed as ‘Reputation Merchandising’ as the reputation and/or the public image contributes towards the success of the merchandise. For example Kylie Minogue being a popular Australian-British singer, song-writer and actress has a brand of beauty cream which is being sold in her name giving consumers a preconceived notion about the implied guarantee and worth of the product. Also, other examples include ‘Sauravs’, a restaurant in Kolkata named after Saurav Ganguly, perfume by the name of David Beckham etc.

Image Merchandising

This is the most recent type of merchandising, wherein, the merchandise is sold based on the association between the actor and the character, played by him in the movie or a show which is so strong that it becomes difficult for the viewer to differentiate the real actor from the character played by him in movie. In such cases the attributes of such character are used to advertise or market the merchandise. Examples of such type of merchandising include Captain Jack Sparrow played by Johnny Depp, James Bond played by various actors, Laurel and Hardy played by Laurel Oliver and Hardy Oliver, etc. Here a dual reputation of the character is created which is one of his own and other of the character portrayed by him. 

Legality of character merchandising

As a rapidly growing market, character merchandising has proved to be an essential revenue generating source. One of the most successful story of character merchandising is the ‘Chhota Bheem’ cartoon series, which was originally created by Green Gold Entertainment and released on Pogo TV in the year 2008. Today ‘Chhota Bheem has over 40 million stated viewers. The brand is worth INR 300 crore and has been used to sell biscuits (Parle-G), Fans (Ushsa Fans), and even mosquito repellent cream (Odomos). Hence the question of ownership of the rights relating to the same is of utmost importance. There have been many instances where the character rights were infringed resulting in a legal suit between the parties. 

For example, in Disney Enterprises, Inc. & Anr. v. Pankaj Aggrawal & ors., 2018 SCC OnLine Del 10166, the plaintiff being the producer of the popular children animated movie ‘Cars’, which consisted of a character named ‘Lightning McQueen’ which became very popular and could be distinctly identified by its appearance (a red coloured car with blue eyes and some stickers made on it), accused the defendants for copyright infringement and filed a suit seeking injunction and damages for selling chocolates by the name of ‘Choco Car’ which was a complete imitation of the character the ‘Lightning McQueen’.  

The plaintiff further placed on record the certificate of registration issued by the United States Copyright office in respect of the said character. The Delhi High Court granted injunction and termed this case as a “classic case of character merchandising”. It was noted that some characters can acquire the status of trademarks and can also be protected under copyright law. It was also observed that, the importance of preventing well-known characters from being misused, for commercial products lies in the fact that the creation of fictional characters requires great amount of creativity and innovation.

To determine the legality of character merchandising following two aspects should be taken into consideration:

1. Rights attached to the character.
2. Ownership of such rights.

• Rights attached to the character:

As real persons have personality rights, the fictional characters are vested with Property rights. Every person as well as the creator of a fictional character has a right to gain control over the commercialization of its personality. The rights attached to a fictional character, include the right to use its name, appearance, voice, style, etc., and also the right to receive benefit from it or dispose of it. 

With respect to the real personal, the rights relate to the image of the person in public or any other aspect that have a capacity to be commercialized. 

• Ownership of such rights:

As a principle, the right of character merchandising vests with the person or a legal entity that owns the character rights in a fictional character (personality rights in case of real person). This right can be transferred by such owner to any other party. A person can also be commissioned to create merchandise based on the character.

In case of a personality merchandising, the right vests with the person with respect to whom the merchandise is created.

Legal Issues involved and protection available for character merchandising

Character merchandising majorly deals with the commercialization of famous fictional characters that has gained worldwide recognition and has a potential to make an impact on millions of minds. In case of personality merchandising, the celebrities or famous public figures are the once who have high reputation and a fan following in large number. This makes the market of merchandising one of the most profitable, revenue generating and lucrative market. On the other hand, it also makes the creators of the fictional characters, celebrities and the Producers very vulnerable to the infringing elements. Thus going through the legal issues involved in the character merchandising is very important to understand the legal issues involved and how one can be protected from the unlawful use of their rights by other parties has to be understood in detail before delving into character merchandising.

As of now there is no sui generis legislation for the protection of rights relating to character merchandising. One has to refer majorly the Intellectual Property law for the same i.e. the Acts namely:

1. Copyright protection under Copyright Act, 1957
2. Trademarks Act, 1999
3. Industrial design Act

Right to privacy:

As per the legislation of India, Right to privacy is one of the important right given to the citizen. Thus, the commercialization of the personality traits of the real person by way of personality merchandising, leads to an intrusion in the private life of the celebrity as their personality traits, name, voice as well as the goodwill is commercialized.   In other words, the privacy of an individual should not be invaded under the garb of character merchandising. Also every person has an inherent right to control the commercial use of his or her personality. 

Copyright Act, 1956

As a general principle, the copyright subsists on the works mentioned in section 13(a), (b), (c) of the Copyright Act and such right is vested with the author of the work, unless the work commissioned to other person. Thus when a character is used from a cinematographic film or any other copyrighted work, for the commercialization by way of character merchandising, the copyright of the author or the commissioned owner is infringed. 

Thus, in case of a cartoon character or a fictional character in a cinematographic film, the producer being the owner of the same has the right of merchandising. 

In case of a real person, the person himself has a right to commercialise the personality traits unless commissioned to other party. Personality rights are infringed if these rights are commercialized without authorization from the owner of such rights.

Trademark Act

The registered trademark owner can prevent others from using a deceptively similar or highly identical marks without the permission of owner of trademark (section 29 of Trademark Act, 1999). The authors or the owners safeguard their rights and the goodwill attached to the character by registering their character as a trademark under Trademark Act, 1999. The owner of such trademark has an exclusive right to associate the mark with the goods and services to be merchandised. Unauthorized usage of such trademark results in infringement of statutory rights of the owner. 

In case of an unregistered trademark, the owner can initiate an action for passing off to protect the rights by establishing that the trademark has a reputation/goodwill, misrepresentation by the third party and the loss faced by the owner of rights. 

The celebrities are entitled to protect their names under the trademark act. Celebrities like Beyonce, JayZ, Justin Bieber, Kaylie Monigue etc have trademarked their names. In india Sanjeev Kapoor has ‘Sanjeev Kapoor Khazana’ which is a registered trademark. “KHILADI” has been registered by Akshay Kumar based on his series of movies named the ‘Khiladi series’ as trademark. Not only movie stars but cricketer Sachin Ramesh Tendulkar, has his initials ‘SRT’ trademarked. Other celebrities like  Kajol, Shah Rukh Khan, Sunny Leone, Sanjeev Kapoor and Amitabh Bachchan have also joined the bandwagon in registering their names as trademarks to protect their name and image and commercialize on their popularity.                            

Designs

Designs under the Designs Act, 2000, protects mostly the rights of the owner of the cartoon characters. It safeguards the producers or the commissioned person from the third party representing their characters in the form of 3D articles like toys, mugs, T-shirts, action figures etc. which originate from the cartoons. 

Case laws 

International case laws related to character merchandising

• Nichols v. Universal Pictures, 45 F. 2d 119 (2d Cir. 1930)

This is one of the first cases regarding character merchandising. This case relates to a play named ‘Abie’s Irish Rose’ written by Anne Nichols, where the characters one being a Jewish boy and the other being Irish girl, fall in love and the play revolves around their amusing situations they face due to their varied cultures with their respective fathers. Later, Universal Pictures produced a movie named ‘The Cohens and Kellys’ where the plot of the movie was similar to the abovementioned play. Nichols sued Universal Pictures on the grounds of infringing rights of the characters in the play. In this case, court applied ‘character delineation test’, to determine whether the characters in the play can be protected. The court refused to grant injunction because in this case the characters, that is, the Jewish boy and the Irish girl, did not satisfy character delineation test, which states that a character warrants protection only if it is sufficiently and distinctively delineated

• Robyn Rihanna Fenty v. Arcadia Group Brands Ltd. (T/A Topshop), (2013) All ER 410:

In this case, the defendant is the Topshop, being a British High street fashion retailer, was selling T-shirts with the musician Rihanna’s image on them. Rihanna brought an action of passing off against the Topshop, claiming that the T-shirt gave an impression that she was associated with the T-shirts being sold at the Topshop. The Court ruled in Rihanna’s favour as it was found that she has goodwill attached to her image and her photograph on the T-shirts gave an impression that she has endorses the product. 

• King Features Syndicate Inc. v Kleeman Ltd. (1940)

This case is popularly named as the Popeye case, wherein, the defendants were involved in making dolls and brooches of a cartoon character ‘Popeye’ which is very popular and had a very huge viewership. The plaintiff sued the defendants for such infringement of their character. The court granted injunction on the grounds of copyright infringement. 

Indian case laws

• Malayala Manorma v. V.T. Thomas (1987 SCC Online Ker 138) 

This was the first Indian case in which the cartoon characters ‘Molly and Boban’ were featured in Malayala Manorama. The defendant was the artist of the said cartoon and worked for the company of the show. Further, the defendant left the job and went on to exploit the aforesaid characters independently. The plaintiffs sued him for commercializing on the characters. The Court decided in favour of the defendant, and allowed him to carry on with the drawings as the author of the characters. The Hon’ble High Court opined that Mr. Thomas who had created the character and have a right to exploit the same.  

Conclusion

As of today the revenue from character merchandising is huge and thus because of its commercial nature, it has gained a lot of momentum over the years. Thus it becomes necessary to protect the right owners from the infringers and create a level playing field for every rightful owner to commercialize through character merchandising. The ambit of character merchandising being large, the existing provisions of intellectual property rights may not be sufficient. But, on the other hand, depending on the form of legal protection available in different countries, character merchandising is guided by civil sanctions like injunctions, and compensatory measures. In some countries criminal sanction can also be imposed for infringement of rights. Thus before delving into character merchandising one should be well aware of his rights and the course of action one has to take if his work or name is being commercially exploited without authorization. 

While regulating character merchandising, a balance has to be maintained between the competition in the market on one hand and the protection of individual rights on other hand. 

As rightly pointed out by Steward Goldsmith, the Vice President of Sales for Todson “Good merchandising will always take the consumer from deciding whether that are going to buy which are they going to buy”, 

References

• WIPO (world intellectual property organisation)- Report prepared by International Bereau.
• Journal on International Property Rights by Nishant Kewalramani and Sandeep Hegde M. 
•  https://www.mondaq.com/india/trademark/768282/character-merchandising
• http://lawtimesjournal.in/character-merchandising/
• https://www.oxfordreference.com/view/10.1093/oi/authority.20110803095602882
• https://www.khuranaandkhurana.com/tag/character-merchandising/
• https://indiankanoon.org/
• https://www.casemine.com/

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