In Fifty-Six Hope Road Music, Ltd. et al. v. A.V.E.L.A., Inc. et al., Case No. 12-17502, Feb. 20, 2015 (9th Cir.) (PDF available here), the Ninth Circuit Court of Appeals found that the district court did not err in denying defendant’s motion for judgment as a matter of law on plaintiff’s Lanham Act Section 43(a) false endorsement claim. Defendants were found to have (a) used Bob Marley’s image (b) on their t-shirts and other merchandise and (c) in a manner likely to cause confusion as to plaintiff’s sponsorship or approval of the t-shirts or merchandise. The Ninth Circuit recognizes a § 1125(a) (Lanham Act § 43(a)) claim for misuse of a celebrity’s persona.
The likelihood of confusion factors considered in celebrity cases include: (1) the level of recognition that the celebrity has among the segment of the society for whom the defendant’s product is intended, (2) the relatedness of the fame or success of the celebrity to the defendant’s product, (3) the similarity of the likeness used by the defendant to the actual celebrity, (4) evidence of actual confusion, (5) marketing channels used, (6) likely degree of purchaser care, (7) defendant’s intent on selecting the celebrity and (8) likelihood of expansion of the product lines. The evidence in this case supported a finding of a likelihood of confusion. The Ninth Circuit stated that the § 43(a) claim did not establish a “federal right of publicity,” rather a false endorsement claim, which requires that the use be likely to confuse as to the sponsorship or approval of defendant’s goods.
The Court further found that defendants waived several defenses to the plaintiffs’ claims by failing to properly raise them in the district court. These defenses included aesthetic functionality (raised in its answer but never developed at trial), Copyright Act defense under Dastar Corp. v. Twentieth Century Fox Film, Corp. (that the Bob Marley image had fallen into the public domain and could not be resurrected under federal unfair competition law) and the First Amendment defense under Rogers v. Grimaldi.
Further, the Ninth Circuit found that the trial court did not err in calculating and awarding to plaintiffs the net profits of defendants. Defendants willfully infringed, because the vice president of licensing knew that plaintiffs had the right to merchandise Marley’s image before defendants began selling similar goods. A claim for profit disgorgement under §1117(a) is equitable in nature and a jury traditionally does not calculate these profits. The trial court correctly awarded to plaintiffs, defendants’ profits ($781,427) from Marley merchandise. AVELA failed to meet its burden to prove deductions from its gross profits, as its claimed royalty fee arrangement was not an arm’s length transaction. Rather the sole shareholder of the licensor was a girlfriend of one of the defendants. The Appeals Court also found that the district court did not err by denying plaintiffs an increased award of profits as generally, actual, proven profits will adequately compensate the plaintiff.
The Ninth Circuit found that the district court did not abuse its discretion in ordering defendants AVELA to pay plaintiffs’ attorneys’ fees ($1.5 M) because (a) plaintiffs were the prevailing party and (2) the case was exceptional as defendants’ conduct was willful. There was significant evidence that AVELA defendants were aware their conduct conflicted with plaintiffs’ rights. The court did not abuse its discretion in denying attorneys’ fees as to defendants Jem and Freeze, because the evidence of their willfulness was too weak to merit an award of attorneys’ fees.
In support of defendants’ positions, the Ninth Circuit affirmed the trial court’s grant of summary judgment to defendants on the right of publicity claim, because the state statute clearly provides that a publicity right successor waives its publicity rights when it fails to timely register its rights.