Manuel Noriega and Lindsay Lohan have No Doubt about their Right of Publicity

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What do Manuel Noriega, Lindsay Lohan and the rock group No Doubt have in common? All of them have sued videogame makers for infringement of their rights of publicity. On July 15, 2014, Manuel Noriega sued videogame maker Activision Blizzard in Los Angeles Superior Court when his name and animated likeness were included in the videogame Call of Duty: Black Ops II. Less than two weeks earlier, Lindsay Lohan filed a Complaint alleging that her likeness was used, under a pseudonym of “Lacey Jonas,” in the Rockstar Games videogame Grand Theft Auto V. No Doubt alleged that Activision exceeded the consent it gave for use of band members’ likenesses as avatars in the videogame Band Hero. These claims seem to be emblematic of a recent upswing in claims of violations of the “right of publicity”.

California and most other states recognize that a person has a right to protect his or her name, likeness, signature, voice and other identifying aspects of personae from commercial exploitation without consent. The right of publicity protects not just photographs but all forms of likenesses, including animated versions of people in videogames. The right of publicity is a type of intellectual property – in some ways analogous to (but not the same as) a trademark. An important point to understand is that the right of publicity is not ordinarily precluded simply by ownership or license of the copyright in the image – even if you took a photo of Lindsay Lohan yourself and you own the copyright in that photograph, that in itself generally does not mean you can use it in an advertisement to sell a product without Lindsay Lohan’s consent.

The right of publicity is distinct from rights protecting against slander or defamation – there is no requirement that a person’s reputation has been harmed in any way, or that he or she ever had a positive reputation. Manuel Noriega is probably best known as a former leader of Panama who was deposed, tried and convicted of drug trafficking, racketeering and money laundering. Nonetheless, Manuel Noriega has the same right to prevent others from commercially exploiting his name and likeness as anyone.

An important and often overlooked aspect of the right of publicity is that it is a right held by everyone – not just celebrities. While celebrities could command more money for the commercial use of their identities, everyone has the same right to protect his or her name from commercial exploitation without consent, regardless of previous anonymity.

This is a particularly important lesson for businesses that might be inclined to scour the Internet and copy a photograph of some unknown model and use it in advertising or packaging. In addition to the risk that unauthorized copying and use might violate a copyright in the photo, such unauthorized use for commercial promotion run a strong risk of violating the model’s right of publicity and giving rise to a claim for damages. Even a business that has ordered a photo of a professional model specifically for use in advertising or packaging would do well to check whether the model signed a release that covers the particular use, because model releases can differ in scope and effect.

Conkle, Kremer & Engel has been involved on both sides of the right of publicity – defending actions by models against companies who thought they had sufficient releases of the models’ rights of publicity, and asserting models’ rights to be compensated for the commercial value of their likenesses. CK&E attorneys stay current on the developing law of the right of publicity, which is a quickly expanding area of law affecting everyone from manufacturers and marketers to models, celebrities and ordinary people.

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You Shook Hands – But Do You Have a Deal?

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Courts have held that, in business negotiations, “Handshakes are significant. When people shake hands, it means something.”  Unfortunately, they have also held that when people shake hands, “several meanings are possible.”

In Rennick v. O.P.T.I.O.N. Care, the Ninth Circuit Court of Appeal considered a party’s contention that a deal was struck when, after months of discussion and a 4-hour negotiating session, the parties “got up and circulated around the room and shook hands with each other on having made the deal.”  The Rennick case observed that a jury could reasonably find that “the handshake was confirmation of a contract, or that it was an expression of friendship and the absence of ill will after a day of hard bargaining.”  So, given the uncertainty of its meaning, should we stop shaking hands when discussing business?  Of course not.  Indeed, the Court noted that, “By custom, it is a rude insult to reject an outstretched hand in most circumstances, and to do so at the end of a long business meeting would likely prevent a future deal.”

The issue of the parties’ intent upon shaking hands is not a small one.  In August 2014, Charles Wang, the owner of the New York Islanders was sued by a hedge fund manager who claimed that the parties had shaken hands on a deal to buy the NHA hockey team for $420 million, and that Wang had breached their agreement by demanding more money.  The frustrated purchaser sued to either enforce an apparently unsigned 70-page agreement to conclude the sale of the team, or recover a $10 million break up fee that he claims was among the terms agreed upon with a handshake.

Courts struggle with this kind of issue, with or without handshakes.  In contract disputes, courts try to enforce the parties’ expressed intentions. For example, where the parties clearly express that they do not intend to be bound until they sign a formal written contract, courts will try to honor that intention by finding that no contract exists unless a written agreement was fully signed.  Indeed, negotiating parties usually can express almost any manner of requirement before an agreement becomes enforceable.  Quentin Tarantino’s civil war era film Django Unchained featured a climactic scene in which the odious character Calvin Candie extorted Dr. King Schultz into signing an outrageous contract, and then insisted that the signed contract was meaningless unless Dr. Schultz also shook his hand.  As a general point of law that was a doubtful proposition even in Mississippi in 1858, but if the parties had been careful to express that intention in their written agreement it probably would have been an enforceable prerequisite to the validity of the contract.

In reality, too often there is no such clear delineation.  If the parties do not eliminate such possibilities by an express statement of their intentions, oral expressions or an exchange of emails or text messages might create an enforceable agreement.  That is because, when the parties aren’t careful about expressing their intentions, courts are left to divine whether the parties intended an agreement with or without signatures on paper.  Courts consider testimony about what was said and evidence of what was written and the activities that took place before, during and after the time of the purported agreement to draw conclusions about what the parties’ intentions really were. Often, the parties’ contemporaneous correspondence is the most important evidence of whether the parties intended to have a binding agreement immediately, or whether the parties intended only to express their good will or intention to negotiate further.

To avoid unnecessary disputes, a cautious businessperson should make a point to express clearly his or her intentions.  The best approach is to plan ahead and be as clear as possible in a written expression as to when the deal is considered enforceable.  The Conkle law firm counsels and represents businesses in negotiations to achieve those ends, or in disputes that can arise when the businesses handled negotiations themselves and come to Conkle, Kremer & Engel attorneys only after things did not turn out as intended.

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Nagoya Protocol: Response to Biopiracy Becomes Effective October 2014

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The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization became effective on July 14, 2014, with its 50th ratification.  The Nagoya Protocol will begin to have a direct impact on the personal care and cosmetics industry on October 12, 2014.

With the increased consumer demand for natural and organic products, a growing number of companies in the beauty industry are drawing on biodiversity for its rich variety of native ingredients and as a way to differentiate their products.  The use of exotic ingredients sourced from countries rich in biodiversity means that companies need to be aware of the Nagoya Protocol and the country-specific “Access and Benefit Sharing” laws and regulations that exist and are being enacted.  The use of indigenous ingredients in hair care, skincare and cosmetics formulations – such as baobab oil extracted from the fruits of the baobab trees found across Africa or katafray bark extract from the katafray trees of Madagascar – may be a violation of the Nagoya Protocol if Access and Benefit Sharing requirements are not met.

The Nagoya Protocol is an international treaty focused on Access and Benefit-Sharing, which was adopted in 2010 by the United Nations’ Nagoya, Japan Convention on Biological Diversity.  The Nagoya Protocol arose from the interest of national governments to conserve and promote sustainable use of their countries’ biodiversity and protect against commercial biopiracy.  The purpose of the Nagoya Protocol is to support fair and equitable sharing of benefits arising from the utilization of genetic resources and associated traditional knowledge.

Generally, the Nagoya Protocol requires that access to a participating country’s genetic resources and associated traditional knowledge be subject to the “prior informed consent” of the party providing such resources.  The Nagoya Protocol also requires the sharing of the benefits arising from the commercialization of genetic resources and associated traditional knowledge with the owners of biodiversity, including the local communities and the indigenous people, on “mutually agreed terms.”

The Nagoya Protocol itself establishes only international norms and a framework for Access and Benefit Sharing measures, and does not impose Access and Benefit Sharing laws itself.  That is left to national legislation, and requires the contracting parties to implement their own Access and Benefit Sharing measures and to designate a competent national authority on ABS.  Many countries, including Brazil, Chile, Colombia, Costa Rica and India, already have national enabling laws and regulations.

Personal care product companies in particular also should be aware that their marketing and advertising of the products as containing native ingredients or drawing on traditional knowledge could subject them to a claim of biopiracy by national governments, local communities, and even non-governmental organizations.

Although the United States is not a contracting party to the Convention on Biological Diversity or the Nagoya Protocol, companies in the United States whose products utilize genetic resources or traditional knowledge from a member state, or are sold in a member state, must comply with the access and benefit sharing requirements.  It is imperative for companies to exercise due diligence to ensure that their raw material or ingredient suppliers have obtained prior informed consent for access to genetic resources or associated traditional knowledge used in their products, and mutually agreed terms for the sharing of benefits.

As a leader in providing legal services to the personal care products industry, CK&E can assist companies in instituting internal policies and procedures to help ensure compliance with the Nagoya Protocol.  CK&E will continue to monitor and provide updates about developments in the Nagoya Protocol.  The first meeting of the Conference of the Parties to the Nagoya Protocol will be held in October 2014 in Pyeongchang, South Korea, concurrently with the Conference of the Parties to the Convention on Biological Diversity.

Full text of the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization.  The countries that have ratified or acceded to the Nagoya Protocol to date are:

  • Albania
  • Belarus
  • Benin
  • Bhutan
  • Botswana
  • Burkina Faso
  • Burundi
  • Comoros
  • Côte d’Ivoire
  • Denmark
  • Egypt
  • Ethiopia
  • European Union
  • Fiji
  • Gabon
  • Gambia
  • Guatemala
  • Guinea-Bissau
  • Guyana
  • Honduras
  • Hungary
  • India
  • Indonesia
  • Jordan
  • Kenya
  • Lao People’s Democratic Republic
  • Madagascar
  • Mauritius
  • Mexico
  • Micronesia (Federated States of)
  • Mongolia
  • Mozambique
  • Myanmar
  • Namibia
  • Niger
  • Norway
  • Panama
  • Peru
  • Rwanda
  • Samoa
  • Seychelles
  • South Africa
  • Spain
  • Sudan
  • Switzerland
  • Syrian Arab Republic
  • Tajikistan
  • Uganda
  • Uruguay
  • Vanuatu
  • Vietnam

 

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Can Containers be Copyrighted?

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There are some containers that have achieved trademark status. Among the most famous are the Coca-Cola bottle and the OPI nail lacquer bottle. Ownership of a trademark in container design requires a solid showing of secondary meaning, which generally takes considerable time, sales volume, and promotional efforts. Ownership of a copyright in a new creative work, on the other hand, is automatic. Copyright registration is usually quick and inexpensive.

So why not protect a container design through copyright? Because a container design that is functional is not copyrightable.

According to the Ninth Circuit Court of Appeals in its recent decision of Inhale, Inc. v. Starbuzz Tobacco, Inc., a case about a copyright claim on a hookah water pipe, copyright protection is not available for functional features of a useful article like a bottle or a chair. As a “useful article,” the shape of a container (including a hookah pipe) is copyrightable “only if, and only to the extent that, [it] incorporates . . . sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the container.” 17 U.S.C. § 101.

Courts have said that the non-functional, sculptural features must be “conceptually” or “physically” separable from the container in order to be protected by copyright. “Physically separable” is an easy concept – a printed label or a fancy emblem that is applied to the container can usually be protected by copyright, because it can exist separately from the container. “Conceptually separate” is more esoteric. The Ninth Circuit held that “the shape of a container is not independent of the container’s utilitarian function – to hold the contents within its shape – because the shape accomplishes the function.” In other words, as long as the shape of the container merely holds the container’s contents, the shape is not subject to copyright.

The Ninth Circuit left unanswered whether a “ring shape” that is molded into the bottle but does not conform to the interior container might be copyrightable as “conceptually separate” from the functional container. In any event, the Court’s lesson seems to be that, for copyright protection for a container, the copyrighted feature should serve no purpose in holding the contents. Conkle, Kremer & Engel attorneys regularly work with clients to most effectively secure and protect their valuable intellectual property, regardless of whether it’s a traditional trademark, artwork, a fragrance or a container.

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China Finds Parallel Imports Constitute Trademark Infringement

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Chinese trademark law has no specific prohibitions against sale of gray market products diverted into the Chinese market, also known as parallel importation.  An important breakthrough occurred recently when the Suzhou Intermediate Court enforced trademark holders’ rights against an unauthorized reseller of gray market goods imported into China.

Pernod Ricard China (Trading) Co., Ltd. is the exclusive trademark licensee of Absolut Vodka (Images II-IV) in China.  Pernod Ricard and the trademark owner, Absolut Company Aktiebolag, brought a lawsuit in China against a local retailer of parallel imports of Absolut Vodka products, asserting trademark infringement and unfair competition.  The key facts were that the imported products had manufacturers’ identification codes removed and had added labels bearing Chinese characters for “Absolut” (Image I) and identifying an unauthorized importer and distributor.  The code removal and label addition infringed consumers’ right to know about the product origin, interfered with the trademark owners’ ability to track products to maintain product quality, and undermined the integrity and beauty of the genuine product.   The removal of the manufacturers’ identification code violated Article 52.5 of China’s Trademark Law, which is a catchall term prohibiting impairment of an exclusive right to use a registered trademark, and constituted unfair competition.  The addition of unauthorized labeling violated Article 52.1 & 52.2, prohibiting use of an identical or similar mark on the same or similar goods without the permission of the owner of the registered trademark, and infringed the exclusive right to use the registered trademark.

Absolut Vodka Images

Absolut Vodka Images

Conkle, Kremer & Engel works to protect its clients’ brands in the United States and abroad.

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Organic products? Really?

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Are your personal care products really organic? There is no federal regulation of cosmetics sold as “organic,” other than a voluntary USDA certification process, but California takes use of the term “organic” seriously.

The California Organic Products Act (COPA), requires that multi-ingredient cosmetics labeled or sold as organic contain at least 70% organically produced ingredients.  The Center for Environmental Health (CEH) sued 40 cosmetics manufacturers in 2011 and 2012 in Alameda County for violating COPA. One of the defendants in CEH’s first lawsuit was Todd Christopher International, dba Vogue International, (Vogue) the manufacturer of Organix brand products.  While the Organix products contained less than 10% organic ingredients, Vogue contended that the “active” ingredients in its products were organic.  Vogue argued that COPA did not apply to its Organix hair care products because hair care products are not “cosmetics” and that “Organix” is not a grammatical variation of the term “organic.”  The court rejected Vogue’s arguments.  In September 2012, Vogue agreed to either change its packaging and stop using “Organix,” or change the ingredients of its products to comply with COPA.

CEH then brought another lawsuit against Vogue.   This time, it was a class action aimed at stopping Vogue’s use of “Organix” nationwide – not just in California.  CEH claimed that Vogue’s labeling is unfair and deceptive under each state’s consumer protection laws because Vogue’s Organix products are not composed of predominately organic ingredients.  In October 2013, the federal court for the Northern District of California preliminarily approved a settlement of the class action in which Vogue would pay $6.5 million and stop using “Organix” for cosmetics that did not contain at least 70% organic ingredients.  The final approval hearing is set for April 3, 2014.  Vogue has already begun to transition its packaging and advertising to the more defensible “Ogx”.

Conkle, Kremer & Engel stays current on federal and state regulatory issues and helps its clients avoid the kind of labeling problem that befell Vogue.

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The Conkle Firm Presents Hot California Regulatory Compliance Issues in New York

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Conkle, Kremer & Engel attorney John A. Conkle was the featured speaker at a special presentation given on February 11, 2014 in New York, New York to business executives and lawyers.

The presentation, entitled “Are Your Products California-Bound?  Dealing With California’s Unique Regulatory Schemes,” provided valuable information about and insight into such California regulatory laws and initiatives as:

  • Proposition 65 (California’s Safe Drinking Water and Toxic Enforcement Act of 1986)
  • California Safe Cosmetics Act
  • California Green Chemistry Initiative (the Safer Consumer Products Regulations)
  • California Volatile Organic Compounds (VOC) Regulations
  • California Organic Products Act (COPA)
  • California Consumer Legal Remedies Act (CLRA)

California’s vast and ever-changing regulations pose a challenge for businesses no matter where they may be located.  Any business manufacturing, distributing or selling products into California needs to comply with California’s regulatory schemes to stay out of difficulty with the California Attorney General, regulatory agencies, non-governmental organizations (NGOs), bounty hunters, putative class action plaintiffs and even competitors.

CK&E was honored to team with the New York-based law firm Gottlieb, Rackman & Reisman, P.C., which specializes in intellectual property, to provide this presentation. CK&E has worked with the Gottlieb firm for nearly 25 years on matters of common intrest to our clients. CK&E’s active regulatory compliance practice has helped clients in numerous industries – including  such diverse areas as personal care products, alcoholic beverages, construction and recreational equipment.

 

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National Article Profiles the Conkle Firm’s $6.2 million Judgment for Unpaid Sales Commissions

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Conkle, Kremer & Engel’s $6.2 million judgment against an electronics manufacturer is the subject of a feature article in the monthly publication of Manufacturers’ Agents National Association (MANA).  The article, Fallout From an Oral Contract, appears in the January 2014 issue of Agency Sales Magazine.

The article profiles Plaintiff Peter Reilly, a sales representative who was denied his commissions.  Author Jack Foster chronicles how CK&E lawyers Eric S. Engel and H. Kim Sim marshaled the facts and developed the law of the California’s Independent Wholesale Sales Representatives Contractual Relations Act to win a treble damages judgment for Mr. Reilly.

The Independent Wholesale Sales Representatives Contractual Relations Act is a little-known statute that requires a signed written contract containing specific terms in some commission agreements between manufacturers and sales representatives.  A willful failure to have a written contract that complies with the Act, or to account for and pay commissions as required by the written contract, can result in an award to the sales rep of three times the amount proved at trial, in addition to attorney fees.  In the Reilly v. Inquest case, the jury awarded the sales representative $2.1 million for unpaid commissions, which was trebled by the Court to more than $6.2 million.

The California Court of Appeal affirmed the award in full.  The Reilly v. Inquest Technology decision was unprecedented, because it is the first published decision to endorse the full scope of remedies available under the Independent Wholesale Sales Representatives Contractual Relations Act.

The Agency Sales Magazine article follows an article about Reilly v Inquest that appeared in the Los Angeles Daily Journal.

CK&E’s lawyers are well versed in issues affecting manufacturers and sales representatives.  CK&E lawyers litigate and resolve disputes over sales commissions and terminations, and use that knowledge to help manufacturers and sales representatives draft more effective contracts.  CK&E is a member of MANA and the Electronics Representatives Association (ERA).

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CK&E Attorneys Speak at ERA Owners Forum

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CK&E attorneys Eric Engel and Kim Sim were pleased to be invited to speak at ERA So Cal’s January 28, 2014 Owners Forum.  ERA is the international association of professional sales representatives and electronics industry manufacturers who use independent sales reps.  ERA’s member rep firms sell more than $40 billion annually in electronics products for thousands of manufacturers.

The ERA roundtable forum included lively and thoughtful questions and comments by business owners and managers, directed toward improving their ability to collect commissions owed for their sales representatives’ work promoting sales for manufacturers.  In addition to outlining important terms that should be included in written contracts, much of the discussion concerned the application of the Independent Wholesale Sales Representatives Contractual Relations Act, California Civil Code §§ 1738.10 et seq.  Under the Act, a manufacturer must have a signed written contract with the sales rep containing particular terms required by the Act, and the manufacturer must provide a written accounting with every payment of commissions.  When a manufacturer willfully fails to comply with the requirements of the Act, the sales rep is entitled to three times his or her unpaid commissions and other damages, plus attorney fees.

Eric Engel and Kim Sim were the trial attorneys in Reilly v. Inquest Technology, the first precedent in California that enforced the full remedy of treble damages under the Act.  In Reilly, application of the Act led to a $2.1 million jury verdict becoming a judgment for $6.2 million, plus attorney fees and interest.  ERA and its partner organization, Manufacturers’ Agents National Association (MANA), were important sponsors of the Act and similar legislation enacted in about 36 other states to protect the rights of independent wholesale sales representatives.  CK&E is proud to be able to help sales representatives create contracts that protect their rights to be paid for their services, and to help them enforce their rights when disputes arise.

 

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California Safe Cosmetics Act of 2005: A Sleeper That May Awake in 2014

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California has a well deserved reputation for extraordinary efforts to protect consumers.  While the goals behind the regulations may be laudable, California’s many requirements impose enormous burdens on companies doing business in the state, often with questionable public benefit.  Proposition 65 is a familiar example of a regulation that requires elaborate warnings, but does not actually regulate the use of any chemicals.

There are many other examples, including a “sleeper” called the Safe Cosmetics Act.  Enacted in 2005, the Safe Cosmetics Act was heralded by its supporters as a landmark law that would protect the health of millions of Californians who use cosmetics.  In reality, the Safe Cosmetics Act is just another glorified reporting statute, requiring manufacturers of cosmetic products sold in California to file with the California Department of Public Health (CDPH) reports of information that is already on product ingredient labels.

But the Safe Cosmetics Act takes the idea of the consumers’ “right to know” to an extreme by imposing a precautionary rather than risk-based approach.  Unlike Prop 65, the Safe Cosmetics Act requires manufacturers to report use of chemicals that are not just “known” to cause cancer or reproductive harm, but also chemicals that are “suspected” to cause cancer or reproductive harm.  In addition, the Safe Cosmetics Act does not recognize any “safe harbor” levels for reporting – any amount of a “suspect” chemical must be reported.  Finally, cosmetic products that contain a reportable chemical must be reported regardless of whether the likely mode of exposure to the chemical by use of the product differs from the route of exposure identified by the authoritative scientific body as a pathway likely to cause cancer or reproductive harm.  For example, a chemical that has only been identified as “suspected” of causing cancer or reproductive harm when ingested must be reported even if it is contained in a skincare product.

In future blog posts, we’ll address why the Safe Cosmetics Act could become much more significant to personal care products manufacturers beginning in 2014, the risks of liability to manufacturers posed by the Safe Cosmetics Act, and how manufacturers can know if their products contain the regulated  chemicals.  At Conkle, Kremer & Engel, we help our clients meet compliance requirements, despite constantly changing state and federal laws.  With proper counseling, clients can avoid potential liability and minimize disruption to their businesses.

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