This article is written by Poonam Nahar, pursuing a Diploma in Intellectual Property, Media, and Entertainment Laws from Lawsikho.com.

Introduction

In the last few decades, character merchandising has seen rampant growth due to the evolution of technology which has resulted in the electronic medium becoming accessible to a large mass, including television, films as well as usage of social media platforms. These days, people are so into fashion that they are ready to pay a heavy amount on fashionable products, character clothing etc. be it either a real or fictional character’s costume. The costume industry as a whole is considered a multi-billion dollar industry. 

The concept of character merchandising may be said to be a secondary source through which exploitation of the characters can be done which in turn generates huge revenue. The characters come under the purview of intellectual property rights and any issue regarding it arises whenever any unauthorized use or infringement of the same is made by a person. A character may be primarily protected under copyright law and when such characters are commercially exploited in the form of character merchandising then the law of trademark comes into play along with the constitution of personality rights and contract law for contractual agreements. 

In this article we will learn about character merchandising, its origin, meaning, types of character merchandising, legal IP protection with case laws, case laws on character merchandising and references.

Character merchandising: Origin and meaning

In 1930s, the concept of character merchandising came into the picture when Walt Disney Studios started licensing their very famous characters, such as Mickey, Minnie and Donald, and later on, a departmental store was established by one of its employees which specialized in the exploitation of such characters and astonishingly succeeded in granting a number of licenses for the manufacture and distribution of low priced merchandise to the mass market in the form of posters, clothing, toys, badges as well as drinks, to today’s cinematic product placements like ‘Toy Story,’ where movies are made around the characters to serve as a medium for toy character marketing. The evolution of the advertising business throughout time has demonstrated how the celebrity of well-known personalities may increase awareness and greatly increase the appreciation for certain items and services. Literary, theatrical, and cinematographic work are the primary sources of characters for character marketing.

The adaptation or secondary exploitation of a fictional character by the creator of one or more authorized third parties is known as character merchandising. This exploitation is in relation to the character’s essential personality traits, such as name, image, or appearance, and is done to create a link between the products and such personality traits in order to elicit a desire in the minds of customers to buy the product or use the service as a result of the customer’s attachment to the character. When it comes to commercial exploitation, fictitious characters may have main or secondary promotional, advertising, and recognition roles. However, in the case of a genuine person, both the real person’s financial worth as a celebrity and the role played by him might be utilized.

In recent times, the industrialists are with a view to popularize goods and services, hence they decided to create real and fictional characters in the form of clothing such as costumes, prints of characters on clothes such as t-shirts, famous dialogues of any movie/series/cartoons, etc. and this generates a ton of revenues. Hence, character merchandising has seen exponential growth which can be accredited to several factors.

Types of character merchandising

Mainly there are 3 types of Character Merchandising. They are as follows;

1. Fictional character merchandising

The merchandising of fictional characters is considered to be the oldest form of merchandising. The whole concept of merchandising was started because of the cartoon characters of Mickey and Minnie mouse which became so famous cartoons that a whole array of merchandise was formed after them. Some of the Indian examples of such merchandise are Chota Bheem character, Motu-Patlu character on children school bags, Mighty Raju character, Chacha Chaudhary character, Hello Kitty character on pencil boxes, images of Santa Claus character, and Mickey Mouse character on Dairy milk chocolates. Cartoon characters are the most marketable characters ever produced due to their widespread popularity.

A fictional character’s rights can be classified as property rights, which include commercial and exploitation rights. This means that the fictitious character’s owner has both the right to profit from its usage and the right to dispose of it.

The main sources of literary works of fictional characters are from the following:

• Literary works

The characters in the books or novels or scripts come to life in the form of merchandising. Let’s take an example, most literary arts are accompanied by their visual art expressions, and Marvel literature characters are described in such depth that the reader reading it may practically visualize the figure.

• Artistic works

The paintings of Mona Lisa by Da Vinci as well as the paintings of Raja Ram Rohan Roy became famous and were sold in the form of paintings, posters etc. Let us take an example of the character of Zuzu made popular for the advertisement of Vodafone, the character of Fido-Dido made popular through the SevenUp.

• Cinematography films

As there is greater reach to the audience through Cinematography films, this is the best and popular means of merchandising character costumes. Let us take an example of popular cinematography film i.e. Star Wars, Lion King, Frozen, Kung Fu Panda etc., The Force awakens have sold over $243 million worth of merchandise and this excludes the books which sold more than $2 million books only. According to research, Disney’s merchandise and license revenue in 2010 were over US$ 28.6 billion, nearly 20 times higher than their theatre revenue. This is the power of character merchandising.

2. Personality merchandising

Usage of the identity of any famous persons like Sportsperson, Actors, etc. for merchandising of goods and services is known as personality merchandising.  The use of key qualities like name, picture, voice, and other personality features of actual people in the selling or promotion of goods or services is referred to as this type of merchandising. This involves a term called ‘reputation merchandising’ in which the real person attributes are commercialized who are well-known to the public at large.

Associating a well-known/ famous personality has its benefits, as customers immediately relate to the product and tend to buy such products which give the connection of his/her favourite personality. For instance, association with famous and respected actor Amitabh Bachchan will benefit the product and increase its sales and profits.

3. Image merchandising

The most current type of merchandising is image merchandising. It entails the marketing and advertising of products and services using fictional film or television characters performed by real actors. For instance, the character of Hannah Montana depicted by Miley Cyrus, Harry Potter played by Daniel Radcliffe, Sherlock Holmes and Iron Man played by Robert Downy Junior etc., attracts customers and they tend to buy costumes or any product due to fascination. 

Legal protection provided to character merchandise 

There appears to be no country that has implemented unique legislation to safeguard character merchandise. Furthermore, there is no international convention expressly dealing with the subject. As a result, every individual or business must rely on a variety of safeguards.

Intellectual property law (IP Law) is one of the most significant areas of law engaged in the legal protection of character commerce. Character merchandising is covered in almost every area/aspect of intellectual property. To be more precise, a character that makes its birth from literary works are directly protected under the copyright law, when an artist makes a drawing of the character again its protection is governed by the copyright law, when such character is industrially applied then the design law comes into play and finally when the character acts as a brand its protection gets shifted to the trademark law. Here, the copyright and design function as a means for selling more products and making profits, whereas trademark functions as a means for advertising directed at a mass audience through a character’s image. 

• Copyright protection of characters

Copyright protection is provided to the owners and the creators of the characters under copyright law. In order to get copyright protection for fictional characters. They should be unique and distinct. For example, in the case of cartoons or animated images and photographs, the artist who develops them becomes the owner and can offer others the right to exploit it in a way that allows for merchandising of the characters or any part of his or her work.

The Indian Copyright Act of 1957 provides strict protections for copyright holders and creators’ rights. The Copyright Act’s Section 2 (d)(v) defines the producer of a cinematographic film to be the author of that film and grants him the exclusive right to make copies of the film or any photograph from any image from that film within the meaning of Section 14 (d). If we look at Section 38(4) of the Act, it indicates that once a performer consents to his performance being used in a cinematographic film, his rights to the performance are no longer valid. To put it another way, once any sort of performance has been included in a cinematographic picture with proper authorization, the producer owns all rights.

The Indian Copyright Act, 1957, gives a reasonable level of protection for sketches, drawings, and other kinds of artistic work that constitute the character. The owner has the sole right to reproduce the work in any form, including converting a two-dimensional work to a three-dimensional work and vice versa, under Section 14 of the act.

In the case of Arbaaz Khan v. North Star Entertainment Pvt. Ltd. (2016) by the Hon’ble Bombay High Court, the copyrightability of the character was proved when the Court examined that copyright subsists in the character “Chulbul Pandey” from the Dabangg franchise. Hence, the opinion of the court was that ‘As to the general principle that the character is unique and the portrayal of that character, as also the ‘writing up’ of that character in an underlying literary work is capable of protection.’ Therefore, the Court granted the plaintiffs, under copyright law, the right over the character. This proves that the character’s copyright ability depends upon the distinctiveness and uniqueness of the character.

• Trademark protection of characters

The owner of a trademark has the exclusive right to use the mark, and any illegal use of the mark is considered trademark infringement. In the event that a trademark is not registered, the owner of the trademark may pursue a claim under the common law of passing off. Typically, the owners of a character register a trademark or seek a remedy under passing off to prevent others from exploiting the character or utilizing any indicator that indicates buyers any type of relationship between the goods and the character. A celebrity’s affiliation with a product brings the celebrity’s renown to the product and helps others to quickly identify with it.

For adjudicating matters relating to character merchandising in India, the Trademark law is the most commonly employed statute. The Trademarks Act’s provisions are broad in scope, making them easy to apply to character merchandising issues. According to Sections 102 and 103 of the Trademark Act of 1999, “fraudulently utilizing any trademark or falsely putting any brand on any products or services without the authorization of the owner of the relevant trademark” is a crime punishable by imprisonment and a fine. If a person wants to use a registered trademark on any products or services, he must first get authorization from the trademark owner and register as the mark’s user.

The owner can file for the registration of their character or any feature, with the Trademark office and thereafter can promote its character by way of an assignment agreement or a licensing agreement to explore the commercial markets by making goods or services merchandised.

• Designs protection of characters

A design can be registered by the creators and the owners of the fictional for specific products. A design is registrable if it fulfils the following criteria; new or original design (novelty or originality),  no prior publication of design, significantly distinguishable from known designs or combination of known designs (distinctiveness), does not comprise or contains scandalous or obscene matter, use would not be contrary to public order or morality, does not hamper the security of the nation.

• Moral rights

If any distortion, mutilation, modification, or other act in connection to the work is detrimental to his honour or reputation, the author of the work has the right to claim authorship of the work and to restrict or seek damages in respect of such distortion, mutilation, modification, or other act. Even after the economic rights have been assigned away, the writers retain moral rights. The right of attribution and the right to integrity are the two most important components of moral rights.

• Personality rights

Related to personality, every individual has two rights; they are ‘right to privacy’ and ‘right to publicity’. There is no statutory legislation in India that acknowledges a famous person’s or celebrity’s rights. The courts have frequently recognized and defended Personality and Publicity rights under Article 21, i.e. the Right to Privacy. The right to privacy is a common law right that prohibits anybody from interfering with another person’s private and personal life. Under common law, any intrusion into an individual’s privacy is considered a tort. Unauthorized personality marketing can thus be avoided by filing a lawsuit for invasion of privacy.

In the case of, Titan Industries Ltd. v. M/s Ramkumar Jewellers, in 2012, the defendant utilised photoshoot photographs of Amitabh Bacchan and Jaya Bacchan for the advertising of Titan Industries’ True Diamonds jewellery without their consent. As a result of the misappropriation of the couple’s personality rights, the Delhi High Court stated that a claim for violation of the right of publicity requires “no proof of untruth, confusion, or deceit, especially where the celebrity is identifiable.” Plaintiff is the initial owner of the copyright in the aforementioned advertisement under Section 17(b) of the Copyright Act of 1957. As a result, the case was decided in the plaintiff’s favour.

Ownership of rights for character merchandising

The creator of a character is typically the one who owns the rights to that character. Unless the character’s originator has leased or transferred his or her rights to another person, in which case that person becomes the owner. If the character is formed during the course of employment, the employer is the one who owns the work.

If there is image merchandising, that is, marketing based on the image of a renowned actor known for playing a specific character on film, the rights are connected to and held by that real person (the actor).

Case laws on character merchandising

Diamond Comic Ltd. & anr. v. Raja Pocket Books & Ors.

In this case, the defendant, the proprietor of a well-known figure known as “Shakitman,” had assigned the rights to the plaintiff to transform his persona into comics. After a period of time in which the character had grown in popularity as a result of the plaintiff’s marketing and had established a name in the comics business, the defendants began producing their own comics. The Honourable Delhi High Court ruled that because the defendant had given his character to the plaintiff, he was not allowed to exploit it by creating his own comics, as this would be considered copyright infringement.

Star India Pvt. Ltd v. Leo Burnett

This case concerns the TV show “kyunki saas bhi kabhi bahu thi,” in which the Defendants created a commercial for the consumer product “Tide Detergent,” which was telecast with the title “kyonki bahu bhi kabhi saas banegi” and characters of a grandmother, mother-in-law, and daughter-in-law, which are similar to the characters of J.D.

The plaintiffs claimed that copyright was violated because an ordinary viewer would believe that the plaintiffs are supporting the defendant’s goods and that there is a link between the plaintiffs in the series and the defendants and their product.

“The characters to be merchandised must have obtained some public recognition, that is, developed a form of autonomous existence and public awareness for itself independently of the original product or the milieu/area in which it appears,” the court said. The substantial similarity test was applied to the instance at hand, leading to the conclusion that the two works are quantitatively and qualitatively distinct, and there is no considerable copying or likeness between them.

As a result, the case was decided in favour of the defendants, who claimed that no infringement had happened and that no cause of action had arisen. The Plaintiffs’ pleadings of passing off and character merchandising were of a future possibility, according to the Court, and no real or significant injury was proven.

King Features Syndicate Inc. v. O And M Kleeman Ltd.

This is a case from the United Kingdom involving the cartoon character “Popeye.” The owners of the copyright of Popeye’s drawings had granted a licence to selected firms to create 3D replicas of the paintings. Another firm, to whom the licence had not been granted, was importing and selling 3D models of this figure. The plaintiff filed a lawsuit against the defendant, alleging that it had infringed on their copyright. The plaintiffs had not copyrighted their designs under the Copyright Act of 1911, according to the defendant.

The court ruled that copyright infringement had occurred. This is due to the fact that ideas and concepts are not protected by copyright, but everything that is conveyed is. Popeye, the renowned figure, was in the form of a sketch in this case, and so was entitled to protection.

Conclusion

“Good merchandising will always take the consumer from deciding whether they are going to buy or not,” said Steward Goldsmith. Today’s age has a thriving merchandising business, with character marketing for children achieving unparalleled success. As a result, character marketing of goods and services has a lot of commercial potentials.

References

• WIPO, Report on Character Merchandising (World Intellectual Property Organization., Geneva, 1994)
• https://www.mondaq.com/
• https://www.academia.edu/24841199/character_merchandising_under_copyright_law

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