None but Bob Marley’s heirs can free our minds

Fifty-Six Hope Road Music, Ltd. v. A.V.E.L.A., Inc., — F.3d —-, 2015 WL 728031, No. 12–17502 (9th Cir. Feb. 20, 2015)
Despite being a plaintiff victory, there’s a fair amount in here that might hearten opponents of a generalized merchandising right, suggesting that at least some 9th Circuit judges are willing to rethink trademark expansionism. (Of course, “at least some 9thCircuit judges” might be willing to consider just about anything.)
Bob Marley “transcended celebrity roles from pop idol to muse, championing social change and diffusing his music and message to an ever-growing audience. Even now—more than thirty years after his death—Marley’s influence continues to resonate, and his iconic image to command millions of dollars each year in merchandising revenue.”  Marley’s children own plaintiff Hope Road, formed to exploit Marley’s image; plaintiff Zion is Hope Road’s exclusive licensee for t-shirts and other merchandise.  Defendants sold competing merchandise: the AVELA defendants owned photographs, images, movie posters, and other artwork, and licensed them to defendants Jem and Freeze for the production of Marley t-shirts and other merchandise. These items were sold at Target, Walmart, and other large retailers.
A jury found that defendants used Bob Marley’s image on T-shirts and other merchandise in a manner that was likely to cause confusion as to plaintiffs’ sponsorship or approval of the merchandise.  Defendants waived several defenses by failing to properly raise them; the 9th Circuit noted that it was not ruling on the merits of these defenses: Aesthetic functionality; Dastar; and Rogers v. Grimaldi/the First Amendment, which may be waived.  And on appeal, the record wasn’t sufficiently developed to rule on those issues.  (It’s not clear to me what record would be needed on Dastar and Rogers, but ok!)
Characterizing its holding as “narrow,” the court stated that this was a familiar false endorsement claim.  Defendants argued that the claimed right in “persona” was too “amorphous” to constitute a “name, symbol, or device” under § 1125(a). Case law says otherwise, where a distinctive attribute of the celebrity’s identity is imitated and an implied endorsement results.
Plaintiffs disclaimed any source confusion theory, relying only on sponsorship/approval confusion. Along with the usual factors, “[w]here the plaintiff is not the celebrity himself, an additional factor becomes relevant: the strength of association between the mark and the plaintiff.”  The evidence did not compel a finding contrary to the jury’s verdict.  There was evidence of a high level of recognition of Marley’s image among defendants’ target market, as well as testimony that Marley’s image has long been associated with apparel, both by Marley and by his successors-in-interest.
Defendants objected to plaintiffs’ confusion survey, consisting of 509 face-to-face interviews conducted by professional interviewers with individuals in shopping malls. Interviewers showed the test group an actual AVELA T-shirt bearing Bob Marley’s image and showed the control group a T-shirt bearing the image of an unrenowned African–American man with dreadlocks. To the question “Who do you think gave their permission or approval for this particular T-shirt to be made or put out?” 37% of the test group answered “Bob Marley/the person on the shirt or his heirs, estate, or agents.” With the control group, the answer was 20%.
Many survey respondents subsequently opined that the law required permission from the person whose image appeared on the shirt. We need not entangle ourselves in lay legal opinion. Rather, we look solely at the former set of responses, which indicates actual confusion. The latter responses only answer why some of those surveyed were confused.
Defendants argued that the identity of the putative endorser was indefinite, and that a false endorsement claim should have an identifable endorser.  But there was no precedent that a single entity must be falsely understood at the party that approved the product or that the survey taker must be able to identify the party. “Thus, identifying Marley or whoever holds the rights to his persona in the alternative does not render the survey data useless or irrelevant. Rather, the imprecision of the data merely decreases its probative value.”  A jury could rely on this factor, along with other factors, to find likely confusion.
There was also evidence of shared marketing channels and a low degree of purchaser care for these “impulse” buys.  Given the similarity between a plaintiffs’-licensed shirt and an AVELA-licensed shirt, the jury could have inferred that defendants “sought to associate their product with Plaintiffs by intentionally creating similar merchandise.”
Because Marley himself wasn’t the plaintiff, the court also considered the strength of the association between Marley and the plaintiffs, which was more important where the evidence primarily indicated likely confusion that the celebrity himself sponsored or approved defendants’ products.  Cairns held that Princess Diana’s image was only weakly associated with the plaintiffs claiming to control her publicity rights, “largely because Princess Diana’s image had not served a source-identifying (trademark) function during her life or after her death.” Pervasive unauthorized use “will tend to dull the popular perception that use of that persona signifies an endorsement at all, weakening the initial automatic association between the celebrity and his or her estate.” In Cairns, the defendants and others had been selling products bearing Princess Diana’s image since before her death, and Princess Diana “knew of the vast commercial uses of her image” and “did nothing to prevent others from using her image while she was alive.”
By contrast, Marley sold merchandise bearing his image during his lifetime, and his successors-in-interest continued to do so, “implying that his image served (and continues to serve) a source-identifying function.”  [Right, because consumers are aware of the individualized enforcement practices of celebrities.] True, there’d been significant unauthorized use of Marley’s persona since his death, but that use was not “uncontested,” since plaintiffs sent more than 400 cease and desist letters and filed more than 20 lawsuits. “Thus, the jury was free to infer that the source-identifying function of Marley’s persona had not weakened to the extent that there was no likelihood of confusion.”
In addition, plaintiffs showed that one defendant approached Rohan Marley, one of Bob Marley’s sons and an owner of Hope Road, seeking rights to create Bob Marley merchandise. These actions imply Hope Road “was known to be associated with Bob Marley’s image.”  [By whom?  The passive voice doesn’t tell you, because the defendant wasn’t a relevant consumer.] Another former AVELA licensee testified that it was “common understanding in the licensing industry” that Hope Road owned the rights to Marley (emphasis added). Defendant Freeze’s vice president of licensing also stated that she knew of Zion’s license to Marley’s persona based on “market knowledge.”
Defendants then argued that Marley’s image would have needed to have been used in connection with a separate product or service to constitute an “endorsement.” But defendants used the mark (persona) on “goods.”  “[A] viable false endorsement claim does not require that the mark be used in connection with separate goods to promote the purchase of those separate goods—but may be used directly on the defendant’s goods.” 
Defendants claimed that this interpretation would create a federal right of publicity, but the court of appeals disagreed.  Federal claims “require an additional element—that the use be likely to confuse as to the sponsorship or approval of a defendant’s goods.” Although defendants argued that consumers would always associate a deceased celebrity’s image with his/her estate, “a plaintiff must show more than mere association to succeed in a false endorsement claim…. [T]he outcome of this case is in part a function of defenses expressly waived by Defendants. We are not in the position to assess the Defendants’ litigation strategy.”
Other issues: The district court didn’t abuse its discretion in determining profits, or finding that one defendant, Freeze, willfully infringed, because Freeze’s vice president of licensing testified that she knew that plaintiffs had the right to merchandise Marley’s image before Freeze began selling similar goods. Further, the Seventh Amendment didn’t require that a jury calculate these profits, because juries have not traditionally done so, and a claim for profit disgorgement is equitable in nature. Along with its fact-intensive discussion of profits, the court commented:
The district court ought to tread lightly when deciding whether to award increased profits, because granting an increase could easily transfigure an otherwise-acceptable compensatory award into an impermissible punitive measure. Generally, actual, proven profits will adequately compensate the plaintiff. Because the profit disgorgement remedy is measured by the defendant’s gain, the district court should award actual, proven profits unless the defendant infringer gained more from the infringement than the defendant’s profits reflect.
Here, though plaintiffs claimed that defendants accrued goodwill from their infringement, they didn’t provide evidence of that fact.
Nor did the district court abuse its discretion by ordering certain defendants to pay attorneys’ fees, because the case was exceptional due to defendants’ willful conduct.  Egregious conduct isn’t required, nor is bad faith; the court considers the relief obtained and whether the relevant area of law was unclear at the time of the conduct. The uncertainty of the law weighed in defendants’ favor, but that was only one aspect of willfulness. Along with defendants’ awareness of the conflict between their conduct and plaintiffs’ rights (including previous attempts to seek a license/awareness of the rights discussed above),
Roberto Rabanne, a photographer who took pictures of Bob Marley, testified that Valencia had convinced him to write a false email to help Valencia negotiate with the Marley family for a license. The email falsely stated that Rabanne had used photographs of Marley on merchandise during Marley’s lifetime. Rabanne also testified that he refused Valencia’s request to backdate a 2006 photograph licensing agreement between them to 2003 or 2004. According to Rabanne, Valencia claimed that backdating the agreement would help him in “negotiations.” Valencia also asked Rabanne to delete emails from him and files on his hard drive and said he would flood the market with Marley merchandise so that Plaintiffs could not use the photographs of Marley anymore.
“Thus, even considering the uncertainty of the law, this conduct exhibits a subjective belief that A.V.E.L.A. Defendants’ conduct infringed Plaintiffs’ intellectual property rights.”  Even though there’d already been disgorgement, a fee award served an additional compensatory purpose.
Defendants Freeze and Jem didn’t have to be required to pay attorneys’ fees too, though, because the evidence was not as strong; there was no contradiction in the court’s varying conclusions, and evidence sufficient to allow a jury to find willfulness by a preponderance of the evidence doesn’t require a finding that a case is exceptional. While plaintiffs’ argument that the district court shouldn’t have relied on the profits award against those two defendants to deny fees had some merit—because a monetary award should support an attorneys’ fees award—that wasn’t enough to make its decision an abuse of discretion.  (There’s some tension here with the court’s earlier statement that the fee award represents additional compensation, even though the other defendants had already been required to disgorge their profits—if the question is how much compensation is in order, then I think the fact that plaintiffs have already been compensated could justify denying fees.)
Next: The district court properly granted summary judgment on plaintiffs’ right of publicity claim, because Nevada’s right of publicity statute unambiguously provided that a publicity right successor waived its publicity rights, not just the right to sue a particular person, by failing to timely register its rights.  Under Nevada law, “A successor in interest … of a deceased person may not assert any right against any unauthorized commercial use of the deceased person’s name, voice, signature, photograph or likeness that begins before the filing of an application to register his or her claim.” Further,
A person claiming to be a successor in interest to a deceased person must, within 6 months after the date he or she becomes aware or should reasonably have become aware of an unauthorized commercial use of the deceased person’s name, voice, signature, photograph or likeness, register a claim with the Secretary of State …. Failure to register shall be deemed a waiver of any right of publicity.
Plaintiffs argued that the six-month registration requirement applied with respect to each unauthorized use, and that they registered their rights either before or within six months after learning of defendants’ unauthorized use.  The court of appeals found the statute unambiguous: “[A]ny right of publicity” “indicates that the forfeiture is broad, not limited to the particular unauthorized use a plaintiff became aware of six months or more before.”  Ambiguity aside, context, reason, and public policy supported the district court’s interpretation.
Under Nevada law, registration was permissive absent knowledge of unauthorized use; a successor in interest could only enforce its rights with respect to unauthorized use that occurred after registration.  But registration would become mandatory once the claimant knew of unauthorized use. Read together, the provisions encouraged successors in interest to register sooner rather than later.  The first provision penalized failure to register by not allowing the successor to “assert any right” against unauthorized use that occurred prior to registration. But the later provision penalized failure to register by deeming a “waiver of any right” of publicity. If the legislature meant that the right would have been only partly waived but would still exist, it could have used parallel language for both provisions.
Plaintiffs argued that the purpose of the statute was to give rights, not to forfeit them.  Yes, broadly speaking, but the legislature also intended to limit successors’ rights; they terminated 50 years after the person’s death, and living persons never needed to register to have rights. “Thus, the six-month registration requirement is in line with the qualified nature of rights allowed successors under the statute.”
The jury also had sufficient evidence to find that certain defendants intentionally interfered with plaintiffs’ prospective economic advantage, based on Hope Road’s licensing agent’s testimony that one of Hope Road’s licensees lost an order intended for Walmart, because defendant Jem sold Marley t-shirts there.
Judge Christen concurred in part and dissented in part, noting that “the narrow holding [on false endorsement] is dictated by the standard of review on appeal, and by the defenses actually pursued by defendants.”   She pointed out that the survey asked two questions, (1) “Who do you think made or put out this particular T-shirt?” and (2) “Who do you think gave their permission or approval for this particular T-shirt to be made or put out?” Plaintiffs conceded that their claim wasn’t based on (1), so only (2) provided relevant evidence.  The 37%/20% who said Marley, or “the person on the shirt,” or Marley’s heirs etc., were asked why they thought so.  Representative answers included: “Because I don’t know anyone else that would have those types of rights,”“Because his picture is on the shirt,” and “I’m assuming there’s some kind of copyright.”
Those responses showed two things: “(1) members of the public have no problem recognizing the late Bob Marley, an internationally famous musician; and (2) members of the public share a common lay legal opinion that Marley, or someone connected with Marley, must have sponsored the T-shirt.” But this lay opinion was likely to be held every time merchandise bore a recognizable celebrity image. The T-shirts here didn’t have a recognizable label, logo, or mark; plaintiffs’ self-described interest was “trademark-like.” Their claim was to Marley’s image itself, “arguably the very product being purchased.”  As a result, “rather than being deceived by the mark on the product being purchased, the facts suggest that consumers may have received exactly what they bargained for: a T-shirt with a picture of Bob Marley on the front.”
The purpose of §43(a) is “to prevent consumers from being misled or tricked into making purchases through use of a trademark.”  (You are the best, Judge Christen!)  The survey responses to question two revealed nothing about whether any purchase decision was likely to be influenced by confusion about who gave permission to produce the shirts.  Plaintiffs didn’t claim that Marley’s image suggested a particular quality, or that the shirts were “official” or otherwise had special memorabilia value.  The argument that consumers mistakenly believed that Marley, or someone connected with his estate, must have given permission for the use of Marley’s image on the T-shirt was insufficient to violate §43(a), absent a showing that consumers cared whether permission had been given. This was not enough to show that finding liability here would serve the purpose of the Lanham Act.
In a footnote, Judge Christen identified only three survey responses that might have possibly affected purchasing decisions: “He should get paid when someone uses his picture, even if he’s not with us,”“If he was my family, I would want someone to ask my permission if they were going to sell T-shirts of a dead family member,” and “Because it’s based on a celebrity, and his son will probably get the royalties.” She concluded: “Even when construed in the light most favorable to plaintiffs, three responses are insufficient to establish actual consumer confusion.”
“Confusion,” Judge Christen sagely explained, should be read in light of the Lanham Act’s purpose.  “[W]here a celebrity image is itself the only indication of sponsorship, I would hold that a finding of actual confusion under § 43(a) must be supported by some evidence that the confusion could have had an impact on the consumers’ purchasing decisions.” (Citing Stacey L. Dogan & Mark A. Lemley, The Merchandising Right: Fragile Theory or Fait Accompli, 54 Emory L.J. 461, 488 (2005) (“If individuals don’t care one way or the other whether the trademark holder sponsors or endorses such products or whether the products are officially licensed, then the competitive process certainly does not suffer from their assumption that the use required a license.”).)  Otherwise, actual confusion would become a nullity, “because consumers’ common understanding about who must have authorized the use of a celebrity image may well have nothing to do with the product.” I totally agree.
Because actual confusion was just one factor, Judge Christen continued, and given the record, she couldn’t conclude that the jury verdict had to be invalidated. But “[i]t is difficult to over-state the extent to which this result is the product of the unique way this case was litigated. … [O]ur holding is very narrow, and largely a function of issues and defenses the parties chose not to litigate.”
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