Tuesday, July 29, 2014

After Two Disasters, Malaysia Airlines Considers Its "Re-Branding" Options

Malaysia Airlines has experienced two unbelievable tragedies in less than four months.  First, Flight MH370 completely vanished without a trace en route from Kuala Lumpur to Beijing with 239 passengers on board.  All passengers and crew are still missing and are now presumed dead.  The disappearance remains unsolved, and is widely considered one of the most bizarre modern aviation mysteries.

Then, unbelievably, two weeks ago, Malaysia Airlines Flight MH17 was shot down by a sophisticated surface-to-air missile over the Ukraine, with many blaming pro-Russian separatist rebels for the carnage.

Malaysia Airlines was apparently considering a brand overhaul after the first tragedy.  Now, some are asking whether consumers would see through a superficial name and brand change, and wondering whether the airline can even continue to exist as an ongoing concern.

The airline has reportedly lost $1.3B in the last three years.

Such a situation facing a major airline is not unprecedented.  In 1983, after Korean Airlines suffered a similar tragedy when a plane was shot down, it was rebranded as "Korean Air."  Perhaps more significantly, its planes were repainted from white to light blue, and the logo was replaced.

Thursday, July 17, 2014

Have California's Likeness Laws Gone Off the Deep End?

An alleged misappropriation of Lohan's likeness
As recently noted by Professor Marc Edelman on Forbes, the civil lawsuit filed by Lindsay Lohan against RockStar games for alleged misappropriation of likeness in Grand Theft Auto V is being watched closely for its impact on the ability of video game makers to utilize public figures' images without offering them compensation.  

NFL players and their financial planners are certainly watching that lawsuit closely, as EA and other video game makers routinely distribute sports-themed games that utilize players' attributes.

Now, the latest lawsuit against Activision for its alleged unauthorized use of Manuel Noriega's likeness in Call of Duty: Black Ops reveals just how warped California's right of publicity laws are becoming, unless they are reined in.

In the 2006 case of Kirby v. Sega, the California Court of Appeals had held that the First Amendment protected Sega's incorporation of certain elements of singer Kierin Kirby into the character Ulala.

According to that court, Sega's use was transformative and thus protected. In contrast, as noted by Professor Edelman, is the same California Appeals Court's 2011 decision in No Doubt v. Activision, because that game supposedly involved "computer-generated recreations of real band members."

The distinction between the cases is not clear.

However, what is clear from the Lohan and Noriega cases is that, unless seriously circumscribed, such lawsuits will proliferate and threaten one of the fastest growing areas of cultural expression: video games.

Without a bright line rule that celebrities and video game makers can understand and apply evenly across cases, every aggrieved "celebrity" such as Noriega and Lohan can (and undoubtedly will) flock to California, and find an aggressive lawyer looking to cash in big on the developing legal theory by filing such complaints against software developers and video game makers.

Such cases are easy to file and difficult to dismiss.  Both the prior Sega and Activision cases involved years of litigation and hundreds of thousands of dollars in legal fees.

Noriega Sues in L.A., Demanding "Lost Profits" from Likeness in Game

Noriega's Mugshot
In a newly-filed case in Los Angeles that is likely to even further tarnish the reputation of plaintiffs' lawyers (and possibly intellectual property lawyers generally), ousted Panamanian dictator Manuel Noriega has filed a civil lawsuit against Activision, alleging that his likeness was used without his permission in the recent video game Call of Duty II: Black Ops.

Time magazine reports that Noriega formally accuses the videogame's makers of "wrongly depict[ing]" him as a "kidnapper, murderer and enemy of the state."

In the 1989 invasion of Panama by the United States, Noriega was removed from power, captured, detained as a prisoner of war, and flown to the United States. Noriega was later tried on eight counts of drug trafficking, racketeering, and money laundering in violation of U.S. federal law in April 1992.

Noriega's U.S. prison sentence ended in September 2007; pending the outcome of extradition requests by both Panama and France, for convictions in absentia for murder in 1995 and money laundering in 1999.

France granted the extradition request in April 2010. He arrived in Paris on April 27, 2010, and after a re-trial as a condition of the extradition, he was found guilty again and sentenced to seven years in jail in July 2010.   

A conditional release was granted on September 23, 2011, for Noriega to be extradited to serve 20 years in Panama.  He arrived in Panama on December 11, 2011 where he is currently in prison.

Therefore, even assuming, for argument's sake, that Activision used Noriega's likeness in the game without offering him compensation, it is difficult to understand how Noriega could ever have lawfully received a penny.

Under both state and U.S. federal law (18 U.S.C. §§ 3681 and 3682), convicted criminals have difficulty keeping assets attributable to their crimes. While the U.S. Supreme Court has limited that principle in Simon and Schuster, Inc. v. Members of New York State Crime Victims Board, 502 U.S. 105 (1991), victim restitution and forfeiture orders are still permissible.

Further, it borders on the absurd to ponder how a dictator who was repeatedly convicted and sentenced under several different nations' laws can have a "reputation" that could be further harmed by a video game.

Wednesday, July 16, 2014

What Can Be Learned from the Meteoric Rise of the Kardashian Brand?

© Glenn Francis, www.PacificProDigital.com
The story of how a 33-year old Los Angeles socialite with no discernible talents went from relative obscurity to a several hundred million dollar branding empire in the space of less than seven years sounds like fiction.  And it would be hard to believe, if it weren't entirely true.

In 2007, a pornographic amateur sex tape featuring Kimberly (Kim) Kardashian with her then-boyfriend Ray J was "leaked." 

At the time, Kim Kardashian was an unknown socialite in Los Angeles whose sole claim to fame was that her late father Robert Kardashian had helped successfully defend O.J. Simpson against murder charges.

Kim used the newfound spotlight to sign up a "reality show" called "Keeping Up with the Kardashians" commissioned by E! Entertainment network.  The show demonstrated solid ratings, and led to several successful spin-offs.

Within three years of the sex tape's circulation, Kim Kardashian had already begun creating a personal branding success story, venturing into endorsement deals with Carls, Jr. and others.

Additionally, she and her sisters penned an autobiography titled Kardashian Konfidential. The book appeared on the New York Times bestseller's list.  By July 2010, Madame Tussaud's had revealed a wax statute of Kardashian in its New York branch.

In 2011, she was married to basketball player Kris Humphries.  After only 72 days of marriage, the couple announced their divorce.  Kim subsequently married rapper Kanye West.  Both marriages and the divorce received unprecedented media coverage.

By 2014, Kardashian's primary retail product lines included a variety of fragrances.  However, Forbes reports that expectations are that a digital software application is likely to rake in over $200M by the end of this year.  Kim, currently estimated to have a net worth of $45M, is likely to collect at least another $85M in royalties from the application, this year alone.

Kim's younger sisters have followed in their elder sister's footsteps in various ways, and have begun their own claims to fame.

So what can be learned from the meteoric rise and stunning success of the Kardashian branding empire?

First, actually accomplishing something tangible is not necessary to become a household name.  Unlike in the past, where a celebrity was typically an accomplished movie star, artist, athlete, astronaut or politician, Kim Kardashian's greatest claim to fame is just being herself. She holds no advanced degrees, doesn't participate in any professional sports and has no particular artistic talents. The lesson is that American mass market culture values glamour, not performance.

Second, Kardashian is a true master of using the media.  Most people, upon discovering that a sex tape had been leaked, would have cowered in a corner. Instead, Kardashian exploited the opportunity to promote her own self-image, rather than allow it to be tarnished.  Ironically, she ended up settling with Vivid Entertainment, which had commercialized the sex tape, for $5M and ended up posing in Playboy the same year.

Finally, there simply is no shame in blatant celebrity self-promotion. In the past, the prevailing wisdom held that those celebrities who promoted themselves heavily were viewed as greedy and insecure, whereas the truly talented would become famous, in spite of their own humility.

If that was ever sage advice, the Kardashians have certainly taught us that it no longer true.

At last count, Kim had over 22M followers on Twitter, and the same number of followers on Facebook.  Pope Francis has 4M.

Tuesday, July 15, 2014

The Profound Ways that Wal-Mart Affects the Brands That It Sells

There is certainly no shortage of commentary on how the unprecedented expansion of Wal-Mart has affected American society, both for good and ill.

There are those who lament Wal-Mart's treatment of its own workers which the New York Times describes as "authoritarian," and those critics who decry Wal-Mart's (and similar large retailers') policies as tantamount to encouraging modern slavery.

But the chain also has its supporters, who argue that Wal-Mart can offer community support, as well as low prices on staple commodities for consumers on public assistance.

But the proliferation of Wal-Mart's ubiquitous retail stores has affected the very brands that it sells, often in ways that are subtle but profound.  Here are just a few:
  • Potential for Quality Deterioration:  For certain basic products, Wal-Mart has a "clear policy" that its prices must go down from year to year, rather than up.  If a particular vendor does not keep its wholesale prices competitive with other suppliers, they risk having their brand removed from Wal-Mart's shelves in favor of a lower-priced competitor.  Critics say that this eventually pressures all vendors to shift manufacturing jobs to China and other developing nations, where the cost of labor is less expensive.  Over time, they argue, the quality of Wal-Mart's products must inevitably decline, rather than improve.
  • Decreasing Brand Diversity:  Any retailer only possesses a limited amount of visible shelf-space to display products in a category, such as baby diapers.  Because of their packaging and size, baby diapers occupy a fair amount of the retailers' valuable "real estate."  Therefore, a retailer must carefully choose which brands to carry.  Wal-Mart, one of the nation's savviest retailers, chooses among the competing brands to determine shelf-space return on investment. Consequently, Wal-Mart chooses to devote 95% (or more) of its shelf space to Luvs, Pampers and Huggies, the three top sellers in that category. Per square foot, across all its stores, it simply may not make economic sense for Wal-Mart to even consider carrying any smaller, "alternative" brands such as Seventh Generation diapers which appeal to shoppers who want diapers free of bleach, latex or fragrances.  Wal-Mart's customers therefore benefit from lower prices for Luvs, Huggies and Pampers, but are not presented with a diverse selection of alternatives.  Over time, this trend can harm brand diversity, as Seventh Generation must rely upon niche market health food stores and online retailers to compete, thus creating a significant entry barrier for smaller brands.
  • Weaker Intellectual Property protections:  Perhaps desiring to sell cheaper, lower quality mass-market versions of popular designs, Wal-Mart has also advocated and lobbied very effectively for limiting intellectual property protections for budding designers.  For example, in 1997, children's clothing maker Samara Brothers had sued Wal-Mart for "knocking off" its entire clothing line of high-end clothes.  Wal-Mart didn't dispute the copying, but took the case all the way to the U.S. Supreme Court to challenge the designer's claims, a process which took years and cost hundreds of thousands of dollars in legal fees.  The Supreme Court ultimately ruled that Samara's clothing line was unprotectable as a matter of law because it couldn't satisfy stringent legal "distinctiveness" criteria. Wal-Mart won not only the case, it helped to set precedent in its favor whenever it chooses to copy other designers. The Samara case is still the prevailing law of the United States, which limits the availability of trade dress protection to product configurations. The commercial reality is that very few private parties have the resources to litigate such cases against Wal-Mart, all the way to the Supreme Court, and even fewer can win. In contrast, Wal-Mart possesses both the will and the resources to dedicate serious efforts to altering the legal landscape in its favor.

Can the Swastika Seriously Be "Rehabilitated"?

Ancient pottery with a swastika
Without a doubt, the most shocking and recognizable symbol of modern racial hatred is the swastika.

Adopted by Adolf Hitler as the banner for the German National Socialist (Nazi) party in the 1930's, the swastika has become synonymous with racial animosity and violence ever since then.

However, the swastika actually originated as an ancient symbol symbolizing the sun, and was used by many different cultures and religions before Hitler saw fit to adopt it for political usage.  Artifacts such as pottery and coins from ancient Troy show that the swastika was a commonly used symbol as far back as 1000 B.C.
Flag of the Third Reich

Now, one modern religious group is engaged in a high-profile bid to "re-brand" the swastika, and it is making some people see red.

The Raëlian Movement, who believe that Extra-Terrestrials originally created all life on earth, have used a symbol that is the source of considerable controversy:  an interlaced star of David and a swastika.

The Raelian Movement's Symbol
The Raelians apparently believe that the Star of David represents infinity in space whereas the swastika represents infinity in time, i.e., there being no beginning and no end in time, and everything being cyclic.

In 1991, their symbol was changed to remove the swastika, out of respect to the victims of the Holocaust, but as of 2007 has been restored to its original form.
According to the the movement's website, ProSwastika.org, on Saturday, July 12, 2014, the International Raelian Movement repeated the culminating event of its annual swastika rehabilitation effort by flying banners featuring the symbol over beaches adjacent to New York City, Miami and other U.S. locations.

But in contrast to prior years, this year’s flybys will constitute the grand finale for an entire week of events rather than for the 24-hour period formerly known as Swastika Rehabilitation Day.

“We decided we need an entire week to really get the word out,” said Raelian Guide Thomas Kaenzig. “Swastika Rehabilitation Week began on July 5, and we’ve already held events in about 20 cities in Africa, Australia, Asia, Europe and South America. This weekend we’ll hold events all over North America, including the United States and Canada.”

And indeed, they did.  USA Today reports that the banner has caused quite a stir when it was flown over New York's Coney Island.

Canada’s largest billboard company rejected the group’s order for a large sign it wanted to display in that country, Kaenzig said.

“The company representative said many people would see our ad as offensive and inflammatory, so they wouldn’t post it,” Kaenzig explained. “So this poses a real catch 22. How can the world be reeducated about the truth of this symbol if we can’t get the word out to show people? Luckily, religious freedom is more respected in the United States than in Canada, so we are able to do more here.”

Kaenzig said pre-Nazi era swastikas still exist in hundreds of public places in the United States.

Mosaic swastika tile
“It’s still readily seen in NYC subway stations and museums, in the old U.S. mint, at the Garfield Monument, and in Native American artwork,” he pointed out.

“There's even a town in upstate New York that was named ‘Swastika’ after gold was found there a century ago.  And although most people in the West don’t realize it, the swastika is still a revered symbol for billions of Asians, for whom it signifies good luck and good will.”

He said the Raelian Movement launched an offshoot group, the ProSwastika Alliance, with the goal of uniting all religions that cherish the swastika, and noted that it is cherished by Raelians since it intertwines with a six-pointed star to form the Raelian symbol.

“501c3 tax exemption status for the alliance is pending,” Kaenzig said. “We’ve submitted the IRS application.”

There is no word from the IRS on the application's status.

Needless to say, taking a symbol that was widely used in connection with mass murder and "rehabilitating" it through rebranding may very well be impossible.

Thursday, July 10, 2014

Service of Process Can Frustrate IP Rights

Service of process is the fairly mundane procedure by which a party to a lawsuit gives an appropriate notice of initial legal action to another party (such as a defendant) in an effort to exercise jurisdiction over that person so as to enable that person to respond to the proceeding before the court, body, or other tribunal.  Notice is typically furnished by delivering a set of court documents (called "process") to the person to be served.

Within the United States, this is usually a fairly simple matter that involves having a licensed process server (or in some cases, a U.S. Marshal or Sheriff) deliver a hard copy of the Summons or other legal document to the Defendant or to a corporate representative, in the case of a corporation.  For some corporations, it may be sufficient to serve the Secretary of State where the company is incorporated.

In those cases where a party to be served is difficult to locate, the court may permit substitute service through publication in a local newspaper.
For the vast majority of cases, process can be routinely served in one or more of these manners, and a defendant would have a tough time arguing that he was not properly served, if he chooses to default and claim that he didn't know about the case.

But for brand owners whose infringers often reside well outside the United States, service of process can become a rather tricky prospect -- one that may even frustrate all relief entirely.

International service of foreign judicial and extrajudicial documents is governed in general by the 1965 Hague Service Convention.

Prior to the enactment of the Hague Service Convention, service of process in civil cases was generally effected by a letter rogatory, a formal request from the court in the country where proceedings were initiated or underway to a court in another country where the defendant resided. 

This procedure generally required the use of consular and diplomatic channels as the request had to be made to the foreign minister (Secretary of State in the United States) of the defendant's country by the foreign minister of the originating court.

Since 1965, member states designate a central authority for service of process and requests go directly there. 

In addition, some governments allow some type of service directly by mail or personal service by a person otherwise authorized to service process without involvement of local courts.

By way of example, the United Kingdom and Hong Kong permit a person or corporate entity to be served through simple International Registered Mail. The People's Republic of China, however, formally objected to this process and insists that any form of such service is not only ineffective, it is illegal.

Therefore, the process of service of process on a Chinese national can take months or sometimes years, and cost tens of thousands of dollars. In some cases, the documents must be translated into a foreign language such as Cantonese or Mandarin.

And, to make matters even more challenging, assuming that the Chinese national or entity does not participate in the foreign proceeding, there is no guarantee that the Chinese government will enforce a foreign default judgment against his assets located there.

The end result is that that the People's Rebublic of China has effectively insulated approximately 1/5 of the world's population from simple service of legal process from abroad.