‘HANGOVER’ IN COURT AGAIN: Much Ado about a Handbag

Enter The Hangover Part 11 movie and there we go again, back in the courtroom: As the rain continues to pour, this comedy movie has literally become the gift that keeps giving. The 2011 sequel has been a hit both at the box office and with trouble makers, and its latest trouble is all about a fancy handbag.

Last December in a New York federal court, the French handbag maker Louis Vuitton sued the movie’s producers Warner Bros. Studios for trademark infringement, claiming that the use of a knockoff Louis Vuitton handbag in the movie created confusion among its customers, weakened the Louis Vuitton brand name and damaged the company’s business. In the movie, Zach Galifianakis’ character carried a handbag marked LVM and warned his sidekick in the movie not to mess with the bag. “Careful, that is,…that is a Louis Vuitton.” The scene that Louis Vuitton is pissed off about lasted only about 25 seconds in the 102-minute movie. As it turns out, the knockoff handbag was made by a Chinese company named Diophy which Louis Vuitton is already suing for trademark infringement in a separate action altogether.

Before Louis Vuitton made its move, three other parties had already sued Warner Bros over the movie: First, Warner Bros. was sued about a ‘tattoo’ used in the movie; then they were sued by an injured stuntman who worked on the set of the movie; and then they were sued by a guy claiming that the producers stole the movie’s entire storyline from him. In its own lawsuit, Louis Vuitton is seeking a court order to force Warner Bros. to cut out the entire handbag scene prior to any further distribution of the movie, say in DVDs and other formats. Louis Vuitton also wants a slice of the profits made so far in the movie’s box office run. On a closer look, one will notice that this case is a few steps removed from the typical trademark case, where the person who gets sued is often the same person who violated the trademark in question. Here, Louis Vuitton is not suing the company (Diophy) which made the offending handbag; rather they are suing the producers of a movie which makes a joke about the fake handbag. So, the movie is really getting knocked for allegedly aiding and abetting the company that had violated Louis Vuitton’s trademark.

So, it turns out there is a little twist here. But can Louis Vuitton still pull things off in this case regardless? Well, maybe. For starters, the whole point of a trademark action is stop somebody else from creating “confusion” in the market place between that person’s products and those of the person bringing the suit. In the marketplace an established or popular brand carries a huge advantage in terms of customer loyalty and repeat business; therefore, for someone else to “pass off” their goods as being the popular brand is kind of like stealing that business. So, the concern about consumer confusion is a very big deal in a trademark action. But sometimes things can get a bit tricky, for example, where the people being sued are not the same people who have put the offending product in the market and therefore may well have had other goals in mind than simply trying to pass off somebody else’s products as their own.

In this case, for example, Warner Bros. has claimed that what they did with the handbag in the movie was a form of “artistic expression” which is protected by the First Amendment, rather than an infringement of Louis Vuitton’s trademark. Since the First Amendment concerns itself with protecting free speech and communication of ideas in a democracy, it follows that any speech whose main goal is to promote somebody’s business interest will not be protected. So, Warner Bros. will lose the free speech debate in this case if its main goal in using the handbag scene was to promote its own commercial interest. And by the way, just because Warner Bros stands to benefit financially from the movie by way of box office receipts does not necessarily mean that its use of the handbag scene in the movie could not be regarded as artistic expression. It all comes down to drawing the line between what is “artistic expression” and what is just an attempt to promote its business interest.

If it turns out that using the handbag scene in the movie was a business move rather than an artistic expression, then Warner Bros. should have obtained the permission of the trademark owner Louis Vuitton prior to adding the handbag scene in the movie. In such a case, Warner Bros’ failure to obtain permission from Louis Vuitton will put it in danger of creating confusion in the minds of consumers that Louis Vuiton in fact had something to do with the use of the handbag scene in the movie. That kind of consumer confusion is the classic situation that the trademark laws have the job of preventing.

So, long story short, if the court finds that the use of scene in the movie was a form of artistic expression and does indicate that Louis Vuitton had anything to do with the use of the handbag in the movie, then Warner Bros. wins. In that case, the court will excuse the fact that Warner Bros. did not obtain permission from Louis Vuitton before it added the handbag scene.

Yet, just because the use of the scene in the movie could be seen as artistic expression doesn’t mean that Warner Bros is home free. Since the concern about confusing consumers in the market place is the meat and bone of a trademark case, if the way the handbag scene appeared in the movie could still leave consumers with the impression that Louis Vuitton was behind its placement in the movie, then Warner Bros. will still have a trademark problem even though what it did can be regarded as a form of artistic expression. Of course, if the likelihood of confusion of consumers is rather small, then the artistic expression will be protected. So, just bringing in the First Amendment in a trademark case won’t necessarily cut it for a filmmaker.

But Warner Bros. is not the only party with the all the heavy lifting: If Warner Bros. can show that the handbag scene in the movie was a form of artistic expression, it may not be so easy for Louis Vuitton to show that a mere 25-second scene in the 102-minute movie was the sort of thing that would likely confuse its consumers and make them think that the company had something to do with the handbag scene in the movie. But then again, that same 25-second spot in the movie could also play into Louis Vuitton’s hands and allow it to claim that because the scene was so fleeting, consumers would not have had the chance to spot the difference.

Thanks to the First Amendment, suing a movie maker for trademark infringement in a place like America is not as easy as suing a manufacturer of a product, which is the typical situation where trademark actions arise. A movie maker can more easily complicate matters with a claim of “artistic expression” than a product manufacturer is able to do. And it is not that unusual for filmmakers to succeed in making that line stick: for example, owing to free speech concerns, a movie about fictional characters whose actions closely resembled those of real-life persons has been upheld by the courts as a form of artistic expression; the court in that case also refused to find that the movie created any confusion that the real life persons who were offended by the movie had anything to do with the movie.

In the end, the Louis Vuitton lawsuit against Warner Bros. is a tricky one that will involve juggling a bunch of balls. But from the look of things, Louis Vuitton may well have a taller mountain to climb than Warner Bros. When the chips are down, we’re talking about a trademark case between two companies who are not serving the same market (one makes movies and the other makes handbags). This is also the kind of case that would have been easier to win against Diophy (the manufacturer of the knockoff handbags) than the producers of a full-length comedy flick which talks about the fake handbag for 25 seconds. Plus, the whole First Amendment talk in an American courtroom doesn’t help matters one bit for Louis Vuitton which would rather just be talking about trademarks.

 

More to come next month….

“GLEE”! SEE YOU IN COURT: Trouble from Across the Pond

As success sometimes brings trouble, so goes the story of the Fox hit comedy GLEE, a big money show that is loved by so many on both sides of the Atlantic. This time the trouble is all in the show’s name itself: Glee. As it happens, not everyone thinks the hit musical show, which is a Golden Globe winner with about 11 sound track albums, plays by fair rules or should even be allowed to continue to run on TV. Across the pond, the British comedy company, Comic Enterprises, which runs a chain of music and comedy venues in Britain called the Glee Club, is suing Twentieth Century Fox for trademark infringement, claiming that the use of the name “Glee” by the American TV show is causing its customers to think there is a link between the British club and the American sitcom and that the confusion is damaging its business. Fox has responded to the British lawsuit with a counterclaim of its own, which is challenging the right of the British comedy company to own the “Glee” name.

In a typical trademark infringement case, the goal is pretty much to collect money from the person causing the offense and to shut down the business operation or practice altogether. And that is what makes this case such a big deal: Although Glee is now listed among the top ten digital US albums of all time, the British market is also a gold mine for the American hit show and its fortunes in Britain run into “tens of millions of pounds.” Last year’s concert tour by the cast of Glee sold more than 165,000 tickets in Britain. A win for the British comedy company will mean they could get paid millions of dollars plus an injunction or court order that would either yank the entire TV show or force its creators to change the show as we know it in the British market. Not a pretty thing!

With the stakes so high, what are the odds of Comic Enterprises winning the case? Not that bad, really! Well, let’s look at the law of trademark infringement. First of all, the whole point of having a “trademark”, whether it’s in the form of a word, a design or something else, is to identify the “source” of goods or services in the marketplace through differentiating one person’s goods or services from those of other suppliers. This is really about branding and avoiding “confusion” of one supplier’s product for those of other suppliers. And, as one might expect, suppliers who have built up a lot of “goodwill” in their product or service over the years would be especially keen to protect their trademark.

So, to win a trademark infringement case, the person bringing the claim has to actually show that they in fact own the “mark” in question, and that the other person or supplier who is getting sued is using that same mark or a mark so similar to it that it would likely cause confusion in the minds of consumers out there in the marketplace, and that the offending supplier is using the mark in carrying on a business and has no permission or valid defense for doing so.

So, for starters, if the people filing the suit cannot, in fact, show that they own the mark, then their claim would go nowhere and all the talk about customers getting confused or the other guy having no permission to use the mark won’t even matter at all. And this is the one factor that could make or break this case because Twentieth-Century Fox seems to have pushed that question to center court by claiming that Comic Enterprises does not own the “Glee” trademark. If Fox can make this claim stick, that would be the end of the road for their opponents. But can it?

To prove that someone owns a trademark, registration of the mark with the appropriate authorities is perhaps the best way to show ownership of the mark against everyone else. Here, Comic Enterprises reportedly registered the Glee name for its clubs since 1999 in the sectors of entertainment services and even merchandise in Britain. And for good measure, the British market is the “marketplace” that really counts in this lawsuit, not the American or any other market for that matter. Yet, registration alone simply doesn’t cut it because an opponent can still challenge the validity of the mark, just as Fox has done. To knock out their opponent’s claim, Fox is bringing the Oxford English Dictionary into court and checking out what it says about the word “Glee,” which is that a glee club is a society for singing part-songs. In layman’s language, Fox is pretty much saying that when the word “glee” is used, it is really more about people singing in a group, rather than something about a comedy club.

Well, the thing is, if somebody is in Fox’s position, registration of a trademark offers a huge advantage to an opponent in any trademark lawsuit and Fox here is merely trying to do its best in a pretty difficult situation. Now, here’s the backdrop to Fox’s argument: Since we are talking about trademarks as things that distinguish goods and services from one another, it then looks like words that merely describe or say what a business does may not be so great, after all, when it comes to distinguishing goods from one another, since technically, any other supplier in that line of business could claim a right to use that same word. With Fox, this means that folks who are “singing” could use the word “Glee” when referring to themselves.

Unless, of course, the other person looking to hang on to such a name can show that such a commonplace word like, say, “glee” or whatever else has, in the course of time, acquired what is called a “secondary meaning,” in that the average consumer in that particular market links or associates that particular word with that particular supplier.

Yet, the bigger odds in this lawsuit are that Fox will probably end up fighting its case on other grounds than just trying to say that the registration is not valid. But the good news for Fox is that they are not the people who have to win that particular argument in this lawsuit. Even if they lose it, the game is still not over just yet. For instance, Comic Enterprises still has to show that its customers are likely to be confused by associating the Fox TV show with the events of its business, the Glee Club. In other words, will the ordinary guy out there on the streets of Britain really think that the events of the Fox TV show and those of the Glee Club are coming to them from the same source? Proving that kind of stuff in the dust and smoke of a courtroom trial can get pretty dicey in the real world.

In the end, this case likely won’t be a walk in the park for either party. Given the high stakes in this case for Fox, such as the big money that its hit TV show is making in the British market, plus the risk of a negative court order, this is no laughing matter for Fox and it will likely do all it can to make this matter go away. Predictions are hard to make in these kinds of cases, but Fox clearly seems to get the memo already, that it may be in some real peril here and that this may not be the kind of case where it would want a foreign judge deciding on matters like the kinds of circumstances which could possibly confuse British consumers in the marketplace and even maybe what possible creative changes should be made to the show.

And there is already a danger signal from the courtroom: A judge in the case has warned that the TV show “at least in its current form would have to be taken off the air” if Fox loses. The way things are looking these days, the odds of an out-of-court settlement of this lawsuit have never been better.