Character merchandising is using a fictional character or brand to promote a business’ goods or services. Businesses also often use celebrity images to show endorsement for their products. This is called personality merchandising. Both of these advertising methods exploit a character or celebrity’s positive reputation to sell products or services to the public. Using characters in this way is generally very profitable for businesses who use the images on everything from clothes, home wares, toys, kitchenware and stationery. Celebrities are similarly used to endorse anything from sports drinks to financial services.

So, What Are the Risks?

A business can potentially breach a celebrity’s intellectual property rights (or animator/creator’s rights) by using his or her image on a product. This can be in the form of infringing copyright, and can be detrimental to the celebrity/character’s reputation if the advertising was not something they agreed to license.

D’Oh! The South Australian Brewery and ‘Duff Beer’ Litigation

In Twentieth Century Fox Film Corp & Matt Groening Productions Inc v South Australian Brewing Co Ltd & Lion Nathan Australia Pty Ltd (1996), the brewing company adopted the name ‘Duff Beer’ to promote their product. Twentieth Century Fox Film Corp & Matt Groening Productions Inc. (TCF) created and used the fictional ‘Duff Beer’ in popular TV series, ‘The Simpsons’. The S.A brewing company then used ‘Duff Beer’ on their products without TCF’s permission, and without a licence to use their intellectual property.

The court considered whether customers could distinguish ‘Duff Beer’ separately from ‘The Simpsons’. The brewing company would not be in breach of TCF’s intellectual property rights or engaging in misleading or deceptive conduct if customers, first and foremost, would not recognise the association with the show.

The Court’s Decision

The court decided that because the show was repeatedly on TV for several years at peak broadcasting times, and because the beer’s targeted market group was the same as that who watched the show, the brewing company did not take enough steps to disassociate their ‘Duff Beer’ with that of the show.

TCF also engaged in licensing ‘The Simpsons’ characters, including ‘Duff Beer’, to many businesses throughout the world. So, the brewing company’s conduct in using the brand on their products amounted to misrepresentation. Customers would likely associate the S.A brewery with the show.

Further, TCF had a policy that they would not use their merchandising rights to promote alcohol, and so using ‘Duff Beer’ in this way could potentially damage TCF’s reputation.

How to Protect Your Business

As a business seeking to use a character or celebrity to market your product, what steps can you take to protect yourself? It is prudent to first enter into a character merchandising or sponsorship agreement with the company or individual holding the intellectual property rights to use the image.

This agreement is similar to that required to license a trade mark and may include the rights to use a registered trade mark for certain purposes.

If you are unsure of your obligations and responsibilities in using an image for your marketing purposes, LegalVision’s advertising lawyers can assist. We can work with you to create an intellectual property licencing or sponsorship agreement, and can negotiate with the other party to reach a profitable solution for your business.

Questions? Please get in touch on 1300 544 755.

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