An Intellectual Property Attorney On The Phanatic Lawsuit, Expiring Disney Copyrights

Intellectual property is one of the most important aspects of entertainment. Pop-culture is after all, art. Copyright law protects the artists who create the media millions of people enjoy. The entertainment industry is set to experience a migration of significant work into the public domain. To help fans understand what this means for their favorite art, intellectual property attorney Anthony M. Verna III answered a few questions on the upcoming public domain issues and the lawsuit over the Phillie Phanatic.

Anthony M. Verna III is an attorney, blogger, and host of The Law & Business Podcast. He specializes in trademark, domain name, entertainment, advertising, and copyright law. Anthony is a member of the New York and New Jersey Bars, as well as the U.S. District Court for the Southern District of New York.

 

Flat Circle: There is a trickle of landmark 20th Century pop-culture work on track to enter the public domain over the next two decades. Disney and Warner Brothers are just two companies who will lose valuable intellectual property. One such entity is Mickey Mouse, who is going to become a part of the public domain in 2024. Have we ever seen intellectual property like Mickey Mouse lose its copyright?

Anthony Verna: On January 1, 2024, society will see the expiration of the copyright for the short film, Steamboat Willie — and with the expiration of the copyright of the short film means there are new questions about the film’s star, Mickey Mouse. The copyrights to works featuring the characters of Superman, Batman, Disney’s Snow White, and early Looney Tunes characters will all fall into the public domain between 2031 and 2035.

The expiration of copyrights for works featuring characters like Mickey Mouse and Batman will raise tricky new legal questions.

For example, if someone wants to sell a CD or DVD or Blu-Ray or stream a copy of Steamboat Willie, it will be in the public domain and there is nothing that Disney will be able to do in 2024 in order to stop anyone who wants to do that.

disney-2692578_640.jpg

However, Mickey Mouse as a character, as a logo, as a symbol for sales, is a registered trademark of Disney. There are also later versions of the character, also. This means that there will be a variety of ways to sell a product, such as in a brown, paper wrapper to something more fancy, with screenshots of the short film.

There has never been an intersection of copyright and trademark law before so that characters who are featured in works that fall into the public domain are still registered in future works and are still registered as trademarks. 

Remember, there’s a separation that your question ignores.  The copyright in the work will expire, but the trademark rights in the character and design will remain intact.

 

FC: How will this effect corporations that are losing long-term bankable intellectual property?

AV: I don’t really expect there to be as much interruption as many other people tend to think.  Sherlock Holmes is in the public domain, yet new works are being made. Tarzan is in the public domain.  So I’d suspect that not many corporations are really going to lose something bankable.

 

FC: As intellectual property becomes available, how can this effect the contemporary creative marketplace?

AV: There will be some items that fall into the public domain.  But with the fact that new stories with those characters still fall under copyright law, I don’t see much truly being affected.  

For example, nobody is crying about Superman and Batman falling into the public domain.  Their original stories may, but because new works are continuously being made, there will always be something that falls under copyright law.  So I don’t see much changing, if anything. The original stories can be more easily resold. That seems to be about it.

 

FC: One ongoing intellectual property news story is the expiring agreement over the Phillie Phanatic. In 1978 the Phillies decided against owning the copyright, a $1,300 decision that might cost millions in 2020. How can a court determine fair value of a mascot that has been around for decades?

AV: Copyright law is tricky, as works can be retrieved by the original creators 35 years after the creation of the work.  (Also note how many rock bands have been doing that with their albums and songs.)

Unlike most countries, the United States copyright law provides musicians and songwriters an opportunity to regain ownership of works that they transferred to outside entities, such as record labels and music publishers. Congress established this “second bite at the apple” for authors of creative works after a period of 35 years. “Termination of transfer” is not automatic, however, and there are certain steps creators must take to regain the rights to their works. This guide aims to shed more light on the process for the benefit of musicians and songwriters who are eligible to reclaim ownership of their creations.

Section 203 of the Copyright Act permits authors (creators of works) to terminate deals that they made transferring or licensing their copyrights after 35 years. Meaning, if you transferred your copyrightable work to a company at the beginning of your career or licensed certain rights, you may be eligible to regain ownership or terminate the licenses after this period. Artists may have more leverage than they did at the time that they signed away their copyright(s), and using this leverage, artists could re-grant their copyrights in a better deal or recapture ownership for the purpose of licensing directly.

New Phanatic

Termination is all about notice. At the start of the process, you must let those to whom you granted your copyrights know that you are planning to reclaim them. This is accomplished by sending a letter or form to the grantee providing them with the relevant info. What should be in the letter and to whom it needs to be sent can be complicated. We will go into both areas – the what and the who – below.

The notice must be in writing and include:

  • The date that termination will be effective.
  • Signatures of all authors, or those who have the right to terminate (and their relationships to the authors).
  • A statement that termination is being made under § 203 of the Copyright Act.
  • The name of each person/entity whose rights are being terminated (this includes people who have been granted an interest after the original deal took place). The addresses where these individuals are being sent notice.
  • The date of execution of the original grant (or the date of publication if the right that was granted was the publication right).
  • The title of the work and the name of the author(s) who executed the original grant (if you want to be really fancy you should include the original copyright registration number).
  • A brief statement that reasonably identifies the grant to which the notice of termination applies.           
  • A statement that certifies all the necessary people have signed the notice to the best knowledge and belief of all the people who signed the notice

Generally, notice must be served no less than two, nor more than ten, years before the date of termination specified in the notice. Meaning, the earliest you can serve notice of termination is 25 years after you granted the use of your copyright to someone and the latest is 38 years, so you have a 13-year window to serve your notice.

In this particular case, the Phillies continue to argue that the company is the one behind the creative control and input, which actually creates the character, meaning that the artists who made the first drawings of the Phanatic were not creating the work, just following instructions.  This would mean that there is nothing to terminate, because the Phillies owned the character from the beginning, not the original artists.

However, if a court were to find for the artists, damages could be done by a calculation of lost sales, which is typical in a copyright infringement lawsuit.  

Sometimes known as compensatory damages, “actual damages” consists of the dollar amount of any demonstrable loss the copyright owner suffered as a result of the infringing activity. This loss may be from lost sales, lost licensing revenue, or any other provable financial loss directly attributable to the infringement.

17 U.S.C. § 504(b) provides: “The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages. In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.”

Usually, plaintiffs in infringement actions would offer expert testimony to establish their actual financial damages to the court.

 

FC: The Phillies gave the “new” Phanatic a few cosmetic tweaks to strengthen their control over the mascot. Do new hands and gills give the team a reasonable chance at giving the team a shot at maintaining future ownership or do the artists ultimately have the upper hand? 

AV: I’d doubt that the changes really show that the team has creative control over what the original artists did, making something new.  The changes are small. The real issue is what is considered a part of copyright law since the creation of the character.

 

FC: Besides money, what is the biggest factor in deciding the mascot’s future?

AV: The issue is creative control.  The Phillies will argue the company has created the character, put the work and effort into creating the character, not the original artists.

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