Creative Spring 2003 Industries Update A Publication of Dorsey & Whitney's Creative Industries Group

Naomi Campbell: The exposing the fact that she had been attending meetings at Narcotics Anonymous.Whilst Campbell was awarded Supermodel, The Case, a mere £3,500 in damages, the case served as an the Damages – and the interesting, and high-profile, reminder that damages can be awarded for breaches of data protection rights as Implications enshrined under the Act.

Just when is publication in The Act gives legal rights to individuals (defined as the public interest? “data subjects”) in respect of personal data processed about them by others (defined as “data controllers”). by Anastasia Fowle Data controllers are required to “process” data subjects’ London • 020.7588.0800 personal data in compliance with the Act. If data [email protected] controllers do not comply with the Act, data subjects are entitled to seek damages. In October 2002, The Daily Mirror newspaper won its appeal against Naomi Campbell, the internationally There have been very few cases where compensation renowned fashion model celebrity, after she had sued has been claimed for breach of the data protection for alleged breach of confidentiality and data protection rights conferred by the Act. rights. At the time of writing, as her lawyer Keith continued on page 2 Schilling seeks leave to petition to go to the House of Lords, the case has already established itself as a landmark in English law on privacy and the media. UK Film Finance Less attention has been paid to its implications for data protection - which are also highly significant. Funding Opportunities for the UK Film Industry Naomi Campbell’s action was initiated in the spring of 2002, with respect to articles and photographs published by Mirror Group newspapers in The Daily by Victoria Lockley Mirror.The articles revealed that she was a drug addict London • 020.7588.0800 and was attending meetings of Narcotics Anonymous. [email protected] Details of the meetings were published in the Mirror It is no secret that the UK economy is suffering along alongside photographs of her leaving such meetings. with the world’s economy. And although many would argue that it has held up relatively well during the Personal Data extended downturn, particular sectors are under By overturning an earlier, favourable ruling in her pressure – and none more so than the film industry. “breach of confidence” claim against The Daily Mirror, the Court of Appeal left Ms Campbell facing a possible The body-blows have rained down from all directions: legal bill of £700,000-plus. But it is not just money that SAG & Equity strikes; broadcaster cutbacks (Channel hangs on what happens when the case eventually Four shut down Film Four, its production wing, and reaches the House of Lords. slashed film investment to one-third prior levels, whilst both Sky and Granada closed their film divisions, A key aspect of this case in the High Court was the leaving only the BBC); the imminent expiry of three award made to Ms Campbell under the UK’s Data National Lottery franchises that provide film funding; a Protection Act of 1998 (‘the Act’). Before being decrease in pre-sales opportunities across Europe and a overturned, she had successfully argued that the Mirror halving of US production support. It is little wonder should not have revealed her personal medical “data”by continued on page 3

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Naomi Campbell • If the Mirror was not exempt under Section 32, did it contravene the first data protection principle – Data Subject and Data Controller that personal data shall be processed fairly and Although the Campbell case touched on other areas of lawfully and in particular that it shall not be law,such as breach of confidence and human rights, the processed unless certain conditions are met. data protection aspect was the most interesting. • If it was found that the Mirror had contravened the Although the Court of Appeal overturned the High first principle contained within the Act, could it Court judgment, it is important to be aware of the establish a defence under section 13(3) of the Act? possibility extended by the Data Protection Act to Section 13(3) confirms that it is a defence to prove other celebrities in similar cases. that the defendant had taken “such care as in all circumstances would be reasonably required” to To be caught within the scope of the Act, certain comply with the requirement concerned. statutory requirements had to be met. The Mirror was • What level of compensation would be appropriate deemed to be properly regarded as a “data controller” should the Mirror fail to overcome the above and Naomi Campbell a “data subject.” It was by no hurdles? means controversial that photographs and information The High Court Judgment protecting Naomi Campbell undergoing therapy at Narcotics Anonymous were regarded as “personal data.” The High Court found against Mirror Group Newspapers on every point. The personal data clearly The Data Protection Commissioner has drafted codes amounted to sensitive personal data as it related to of practice covering the use of CCTV operations in Naomi Campbell’s health condition.The Mirror could which it is expressly noted that film footage and find no exemption under the Act because the photographs can be regarded as personal data. Personal exemption only applies before publication has taken data under the Act is defined as follows: “Data which place. In this case, publication had clearly already taken relates to a living individual who can be identified from place. The first data protection principle contained in those data or from those data and other information the Act was clearly breached as the information was not which is in the possession of, or is likely to come into published fairly and lawfully. the possession of the Data Controller and includes any expression of opinion about the individual and any The publication by Mirror Group Newspapers was indication of the intentions of the Data Controller or unfair because the method employed by Mirror Group any other person in respect of the individual.” It was Newspapers included surreptitiously taking accepted by both parties that the obtainment, photographs of Ms Campbell as she left a Narcotics preparation and publishing of the information by The Anonymous meeting; it was unlawful because they Mirror amounted to “processing” as defined in the Act. were in breach of confidence. The Act states that personal data cannot be processed unless certain Key Issues conditions are met. The Mirror Group relied on the With the above in mind, the High Court had to decide defence that the disclosure of personal data was in the five issues in relation to the Act: substantial public interest. Mr Justice Morland held • Was the personal data “sensitive” personal data, as that details of Naomi Campbell’s therapy were not in defined in the Act? the substantial public interest. There was also no defence under section 13(3) as The Mirror had not • Did the Mirror’s processing of the personal data fall taken such care as was reasonably required to comply within an exemption from liability under the Act, with the Act. namely under section 32 of the Act? Section 32 exemptions relate to special purposes, and in this The impact of the High Court’s decision was to remind particular case, the exemption claimed by the the media that the Act can be a powerful tool to a Mirror was that the processing was undertaken potential claimant and, should the media wish to rely with a view to the publication of journalistic on the “journalistic exemption,” this will only apply to material. the processing of material that takes place before publication. Once the material has been published, the

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exemption no longer applies and the media will find UK Film Finance themselves with no additional protection. that only 40 films were shown during last year’s The Effect of the Court of Appeal Ruling London Screenings, compared with 400 in previous years, or that many industry players bypassed London The Court of Appeal reversal, however, appeared to altogether and confined their autumn activity in owe much to the need to balance article 8 (respect for Europe to MIFED in Milan (although the spurning of private and family life) and article 10 (freedom of London is hopefully a one-off, brought on by expression) of the European Convention on Human worldwide belt-tightening). What’s more, local Rights. Campbell had conceded from the outset that production is down by 40% from 2001 and inward the Mirror was entitled to reveal she had a drug problem investment is half what it was during 2000. – but she objected to the disclosure of details of her therapy.The appeal court judges did not feel that the So is there anything to be optimistic about? Perhaps. Mirror had gone too far in this respect – as they put it, For several years tax-based incentives have generated a story without background detail would have film-related investment. However, they’ve been “bordered on the absurd.” frequently abused, to the detriment of the industry, by channelling significant monies into TV instead of film. The overall message from the Court of Appeal must be Of the £2.5bn sheltered in 2001 via “film” investment, that celebrities need to think long and hard about 70% was in fact related to investment in television balancing their need for publicity with their desire for projects. Section 99 of the Finance Act 2002 changed privacy. Certainly, the decision has done nothing to this by restricting film-related tax relief to films clarify whether or not the UK has a law of privacy,over “genuinely intended for theatrical release.” and above the law of confidence, and article 8 (respect for privacy and family life). Campbell never pursued an The impact of this change is that bona fide film product independent breach of privacy claim, focusing instead is in great demand, as investors scramble – in advance on alleged confidence and Data Protection Act of the 5th April cut-off date – to find eligible films to infringements. purchase via classic sale & leaseback transactions. In the As far as the Data Protection Act aspect of the case is short term, a scarcity of eligible product should increase concerned, the appeal court held that section 32 of the the transactional “net benefit” received by the film’s Data Protection Act did provide an exemption where a producer, from the typical 10% up to 15% or more of journalist reasonably believed that publication of such the purchase price. In the long term, the refocusing of “data” would be in the public interest. In other words, the tax relief onto its intended beneficiary, cinematic the press can rely on this exemption to avoid the need film, will shore up the industry’s arsenal of financing for obtaining celebrities’ consent before publishing a options. However, it is important to remember that the story that they reasonably believe to be in the public sale & leaseback relief granted under Section 48 Finance (No 2) Act 1997 is slated to expire on 1 July interest. D&W 2005. It could very well be extended, but this remains to be seen.

In any event, the industry’s financial arsenal continues to grow, with financiers and entrepreneurs regularly devising creative new funds.When one adds to sale & leaseback the various pre-existing “film production” vehicles which can gap finance between 25% and 40% of a film’s budget, “hybrid” schemes, Enterprise Investment Schemes (EIS), foreign tax relief, public money such as Film Council grants, merchandising/product placement opportunities and the usual pre-sales cash, filmmakers are not exactly bereft of available funds.

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What follows is further detail regarding the industry’s non-treaty parties. The UK is also a party to the tax-related funding opportunities: European Convention on Cinematographic Co- Production, relating to multi-lateral co-productions Sale & Leaseback between the signatories.This convention applies to co- This involves cash-rich individuals acting together as productions between at least three co-producers from film “trading partnerships” These partnerships purchase at least three separate convention parties, or co- the master negative/tape of a British film (along with productions between at least three such co-producers worldwide distribution rights) from a film’s producer, and one co-producer from a non-convention party. and then immediately lease the negative/tape and all NOTE: When weighing up whether or not to make a distribution rights back to the producer (usually for a film under a co-production agreement, the producers period of 10-15 years).The producer receives the “net must also consider any additional film-related tax benefit” of the transaction, usually between 10% and benefits that may exist in foreign jurisdictions and the 14% of the film’s purchase price (as stated, higher potential pairing of foreign schemes with domestic percentages are available in the current environment), schemes. with the balance being put into escrow to meet the lease payments. This net benefit can be used to help Film Production Schemes finance the production company’s operations, or to plug a particular film’s budgetary hole. The Inland Unlike sale & leaseback, these schemes represent “real” Revenue allows the film trading partnership to defer investments in films, carrying upsides and downsides. (not avoid) tax liability, by deducting an amount equal Again, film partnerships are generally involved and the to the whole of the film’s purchase price from their investment is usually made in films for which partial current year taxable profit (films costing £15m or funding packages are already in place. The “gap more, however, must spread the deduction over three finance” investment of the film partnership usually years).This is a very popular investment vehicle because consists of a combination of (1) investor money; and (2) of its low risk: eg the tax deferment benefit is not in production loans taken out by the partnership (against any way tied to the success or failure of the film. the film’s pre-sale and/or subsidy commitments already secured). For a film producer, this investment can take It’s important to note, however, that these sale & care of between 25% and 40% of a film’s budget. For a leaseback transactions may only take place with: (1) partnership, the investment can provide both a tax qualifying “British” films; or (2) films which are made deferral and an equity stake in the film’s success (or as official “co-productions”. failure). Producers should be aware that this type of production funding is not simply there for the taking. British qualification is linked to five main aspects of the The financiers offering these products will want to film: (1) the film producer’s location (2) the percentage guarantee a high recoupment position for the partners, of production cost spent in the UK (3) the percentage as well as seeking reassurance that certain key pre-sales of labour costs spent paying Qualifying Labour versus are not tied up until after investment takes place, and that spent paying Non-Qualifying Labour (4) the that the film passes muster with their in-house film amount of material borrowed from a previously panels. And in a related move to create further certified film, or from a film by another maker; and (5) collaboration between financiers and filmmakers, some the genuine intention of “theatrical release.” film partnerships will be offering development funds to high-quality, promising projects. Qualification via co-production depends on treaties. The UK is party to bi-lateral co-production treaties Hybrid Schemes with France, Germany, Italy, Norway, New Zealand, Australia and Canada. Generally, each treaty requires New “hybrid” schemes are currently evolving which that two or more co-producers from each country combine the classic sale & leaseback transaction with an produce the film and that each co-producer meets equity or distribution component. The structures of minimum levels of creative and financial input. There such schemes vary according to their provider – one are also provisions regarding the acceptable level of example being the marriage of sale & leaseback with a creative and financial input that may be received from further, relatively low-risk investment in the film’s exploitation rights.

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EIS – Enterprise Investment Schemes Reasons to Be Cheerful These were introduced to promote investment in The UK film industry has much to be optimistic about. smaller companies, including independent film One can simply look around and see its continuing producers and/or distributors. Generally, a trading triumphs: production company (or a holding company with trading subsidiaries) can offer “eligible” shares in the • UK films nabbed the top prizes last year at both company to individual investors, who in turn receive an the Berlin film festival (Bloody Sunday) and Venice income tax reduction based on the amount of their film festival (The Magdelene Sisters), and the UK investment. Shares may also be offered to individuals continues to churn out true indie commercial and trustees of certain trusts who can then postpone successes such as Bend It Like Beckham and Morvern certain capital gains taxes that arise around the time of Callar; the investment. In addition, there are also some capital • For the first time in history, the UK has overtaken gains exemptions that may benefit the investor once a Germany to become the second largest European favourable disposal of the shares has been made (if such market for admissions (behind France); disposal takes place after five years of ownership). If the • UK distribution capability is amongst the most disposal is unfavourable (no matter when it occurs), reputable worldwide; and then loss relief becomes an option. • The levelling out of UK labour rates.

Distribution – Time for a New Tax Break? Such considerations led British Film Commissioner The Film Council recently announced the need to Steve Norris to predict a 10-20% upturn in production focus on distribution, not production, as the key to a rates once 2002 is accounted for. This will mean a sustainable British film industry.To achieve the required return to normal rates, rather than a sequel to 2000 shift of emphasis, it has called for a tax break that gives (when US$836.5 million of inward investment came incentives to distributors – both strong independents into the UK industry). But there is certainly nothing and American studios – to invest in and acquire British wrong with normality given current conditions. And films. The Council acknowledges that the existing tax thanks to government initiatives and eager investors, breaks have delivered many significant benefits. there ought to be plenty of money, work and (hopefully) good flicks to go round for some time to The 100% first year write-off – Section 48 – come. D&W introduced by the Government in 1997, has been a success, boosting the industry by helping to create jobs and films. And the other tax break, Section 42, continues to help attract big American movies to the UK. That said, both rely on the sale and leaseback structure, and as a consequence, have done little for distribution. Bearing in mind the fact that the current Section 48 relief expires in July 2005, the industry needs to start planning for a new break now.

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IN BRIEF: Arsenal Trade Whatever the end result, it is worth noting that this case (and those which follow on its heels) will be crucial in Mark Dispute Still determining the value of registered trade marks, Simmering particularly with respect to sport franchises and entertainment companies. Indeed, the very survival of Power of brands hangs in “unofficial” merchandising operations is at stake, in the UK as well as throughout Europe, as the ECJ appears to balance be signalling its determination to expand brand owners’ by Aaron Stephens power against such players. When and if the ECJ’s view London • 020.7588.0800 ultimately succeeds, the stamping out of these free- [email protected] riders is, in our opinion, good policy and would be music to the ears of brand owners and character The European Court of Justice (“ECJ”) recently ruled merchandisers throughout Europe. Again, we will in favour of Arsenal Football Club (“Arsenal”) in its include a comprehensive article outlining the history long-running dispute with London street-trader and significance of this case once a final judgment is Matthew Reed, who was selling unofficial Arsenal rendered. D&W merchandise outside the club's Highbury football ground. However, when the case returned to the High Court, Chancery Division (which had referred certain legal questions to the ECJ) Mr Justice Laddie ruled that WHO WE WORK FOR (representative list) the ECJ had exceeded its jurisdiction by making • Sony Music Entertainment • Vivendi-Universal findings of fact inconsistent with those provided to it • ABC • *NSYNC • EM.TV • Vera Wang • The Jim by the High Court. Specifically, he stated that in such Henson Company • Madstone Films/New Yorker cases (i.e. cases referred to the ECJ) it is exclusively the Films • Kuhn & Co.• J&M Entertainment/Myriad province of the national court to decide issues of fact, Pictures • Sanctuary Records • GoodTimes leaving the ECJ to simply determine issues of law Entertainment • Saatchi and Saatchi • Penguin Putnam within such factual boundaries. • Linda Evangelista • Julien MacDonald

The ECJ’s decision was problematic since it appeared to WHAT WE DO discount Laddie’s findings of fact from the High Court trial and substitute its own findings, particularly with Dorsey & Whitney, a multinational partnership, is a law respect to the factual issue of whether or not consumers firm that understands the creative process. We help were “confused” by Mr Reed’s use of Arsenal trade clients protect and leverage their images, their marks. Citing this apparent over-exercise of ECJ productions and their talents. Our Creative Industries power, Laddie applied his original version of the facts Group exists exclusively to serve the needs of to the ECJ’s statement of the law, which resulted in a individuals and companies in the media, entertainment, ruling for Mr Reed in direct contradiction of the ECJ fashion/luxury brands and sport markets. Our ruling. However, recognising that it is in no one’s international platform gives clients access to our global interest to have such divergent rulings coming out of a capabilities - we provide legal counsel on everything national court and the ECJ, he then went on to grant from artistic and intellectual property protection to the parties a hearing in the Court of Appeals to argue dispute resolution, from London to L.A., Tokyo to the issues further. To ronto.

This case has long been the focus of keen attention, not The Group regularly mobilises the expertise of least as a sign of football clubs' increasingly rigorous colleagues around the globe to provide specialised, approach to exploiting and protecting intellectual seamless service to clients involved in the music, film, property. However, given its unsettled status we will TV, video, DVD, fashion/luxury brands, advertising, postpone a comprehensive article on this case until a publishing, sport, leisure, animation and technology final judgment is rendered by the English courts. sectors.

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Celebrities Are the Stars in 2002/2003 Group News Domain Name Disputes Kuhn & Co and The Film Council’s Inside by Philip Baker-Shenk and Pictures Training Programme Rebecca L. Roby Washington, D.C. • 202.442.3000 The Group co-sponsored the three-stage [email protected] programme with United International Pictures [email protected] based out of London and LA. John Byrne, Helene Freeman and Victoria Lockley provided a two-part Since January 2000, when it first became possible to file training session for the 13 delegates, hand picked domain name complaints under the Uniform Domain from hundreds of industry submissions. The Group Name Dispute Resolution Policy (UDRP), there has will be co-sponsoring the event again in 2003 and been a steady stream of cases involving celebrity-linked providing a ‘legal surgery’ for the candidates. domain names. In most of these, the celebrities have successfully obtained or cancelled the disputed domain Raindance Film Festival name registrations. Most recently, Kevin Spacey, Jason and Jeremy Giambi, Barry Zito and Robbie Williams The Group was the main sponsor of the largest have secured significant victories. independent film festival in Europe. Victoria Lockley and Aaron Stephens contributed to a At the start of August this year, following a long and debate on film finance and John Byrne and Robert expensive legal wrangle, a National Arbitration Forum Downing spoke at a panel regarding the (NAF) panel ordered the domain name relationship between film and the computer games “kevinspacey.com” to be transferred to Kevin Spacey, industry. the actor. The panel noted that “the use of the kevinspacey.com domain name for an unauthorized fan UK Film Funding Guide site, as an apparent stratagem after previously using the The Group is contributing to the “Business of site to direct Internet traffic to its own commercial site, Filmmaking” chapter in this highly-regarded guide demonstrates that [registrant] is not making fair use of published by Shooting People. the domain name within the meaning of the policy.” This was not the first time that Mr Spacey had Production Match encountered the UDRP process. Back in March 2001, he launched similar proceedings against a notorious The Group was a headline sponsor for this new cybersquatter, John Zuccarini, who had registered event for filmmakers. Ian Craig and Victoria kevinspacy.com, a domain name incorporating a Lockley spoke on intellectual property rights and slightly different spelling of the actor’s name. Here too, the film industry. the NAF panel ordered the transfer of the domain name to Mr Spacey,concluding that “bad faith is shown International Visual Communications by registrant’s intentional attempt to attract, for Association commercial gain, Internet users to registrant’s web site or other on-line location, by creating a likelihood of Dorsey & Whitney was the Grand Prix Sponsor at confusion with Mr Spacey’s mark as to source, the IVCA’s annual award ceremony. Anastasia sponsorship, affiliation, or endorsement of [registrant’s] Fowle,Victoria Lockley and Ian Craig also spoke at web site or location or of a product or service on a number of seminars for IVCA members. registrant’s web site or location.” In both instances, the The Group has an extensive library of topical only remedy available to Mr Spacey under the UDRP guidance notes covering a wide range of issues was the transfer or cancellation of the subject domain affecting the Creative Industries. For further name. No financial damages were available. information please contact Aaron Stephens Other celebrities have also pursued UDRP actions ([email protected]). against cybersquatters with great success.They include

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Mick Jagger, Serena and Venus Williams, Celine Dion where there was insufficient evidence of how personal and the late Jimi Hendrix. It is, of course, no names had been used in a trade mark sense as a label of coincidence that the elements of proof required under particular goods/services). the UDRP (as well as the way these elements are applied by the panelists in celebrity cases ) tend to Where a celebrity’s name is held to be a common law favour famous claimants. trade mark, it is because it has taken on a secondary meaning (the public has come to associate that name To succeed in a UDRP proceeding, the complainant with a particular source). Once a celebrity establishes must prove each of the following elements (described common law trade mark rights in his/her name, the in greater detail below): next step of finding a domain name identical or confusingly similar to such rights is virtually automatic • The domain name registered by the respondent is (as in the Julia Roberts domain name case). identical or confusingly similar to a trade mark or service mark in which the complainant has a right However, this ability to prove secondary meaning may • The respondent has no rights or legitimate be getting more difficult.This summer, in the first case interests in the domain name; and of a professional athlete losing his claim under the • The domain name has been registered and is being UDRP, the panel decided that the brothers Jason and used in bad faith. Jeremy Giambi, both professional baseball players, had not established secondary meaning in their surname. Identical and/or Confusingly Similar Having trade mark rights in a personal name, either The first element is usually satisfied fairly easily if through registration or through secondary meaning, registered trade marks are involved, as was the case in can also defeat typosquatters (individuals who register the recent dispute involving the registration of misspelled versions of famous name as domain names). robbiewilliams.info. Robbie Williams had registered the For example, while Britney Spears has registered the mark ROBBIE WILLIAMS for entertainment services domain name britneyspears.com as her official website, in the UK and Europe and this helped persuade the enterprising porn peddlers have registered a robust panelist to order the transfer to Mr Williams, after website with the domain name brittanyspears.com. Is finding the registrant had no legitimate interest in the this an infringement of Britney Spears’s common law domain name and had used it in bad faith. Even if his trade mark rights? Would a trade mark registration of name had not been registered as a trade mark, Mr her properly spelled name give her any additional Williams would probably have been successful. If a grounds with which to persuade NAF or WIPO to celebrity does not have a registered trade mark, it is a transfer to Britney the brittanyspears.com domain matter of establishing whether or not he/she has name? Some decisions would indicate yes. common law trade mark rights in his/her personal name, and whether there is some commercial issue at For example, actor and comedian Billy Connolly stake. One panelist has noted that ‘where the successfully defeated the typosquatter who registered complainant was successful [in having trade mark rights the domain name billyconnelly.com.The panel found found in his or her name] he or she either used the that the domain name contained a common misspelling personal name in question as a marketable commodity, of Mr Connolly’s last name, noting that Connolly and allowing his or her name or image to be used for a fee, Connelly are phonetically equivalent and concluding to promote someone else’s goods or services, or for that a “likelihood of confusion must exist.” direct commercial purposes in marketing of his or her own goods and services.” Rights or Legitimate Interest After establishing trade mark rights in their name, NAF and WIPO panelists tend to find that a celebrity enabling the conclusion that the registered domain has common law trade mark or service mark rights in name is identical or confusingly similar to their trade his/her individual name, although there are some mark rights, the celebrity must demonstrate that the significant cases to the contrary (including those registrant lacks rights or legitimate interests to the concerning Bruce Springsteen, Ted Turner and Sting, registered domain name. In considering whether or

8 Creative Industries Update not the respondent has rights or legitimate interests in To date, many celebrities have had great success a domain name, the panels will check whether the applying the UDRP to domain names containing their registrant (1) has used the domain name in connection names. In order to achieve such successful outcomes, with the bona fide offering of any goods or services, (2) celebrities should be advised to register their names as is commonly known by the domain name, or (3) has trade marks, while making sure that they can establish made legitimate noncommercial or fair use of the common law rights in their names where they do not domain name, without intent for commercial gain to enjoy the protection of a registered trade mark in a misleadingly divert consumers or to tarnish the trade given jurisdiction. D&W mark or service mark at issue.

Bad Faith Fashion: As European Under the UDRP, the following non-exhaustive Design Rights Dress Up, circumstances, if found, may demonstrate bad faith by This Season’s Trend Is the registrant. Simplicity (i) circumstances indicating that one has registered or acquired the domain name primarily for the Unregistered design rights purpose of selling, renting, or otherwise spell bad news for copycats transferring the domain name registration to the complainant who is the owner of the trade mark by Aaron Stephens or service mark or to a competitor of that London • 020.7588.0800 complainant, for valuable consideration in excess [email protected] of one’s documented out-of-pocket costs directly related to the domain name; or On 6 March 2002 an EU regulation protecting (ii) one has registered the domain name in order “Unregistered Community Designs” came into force. to prevent the owner of the trade mark or service This new right forms part of a larger Community mark from reflecting the mark in a corresponding design rights regime that, by 2003, will also protect domain name, provided that one has also engaged “Registered Community Designs” and should equip in a pattern of such conduct; or designers with a welcome extra layer of international protection on top of the rights that already exist in their (iii) one has registered the domain name primarily home countries. for the purpose of disrupting the business of a competitor; or A “design” is broadly defined to include the (iv) by using the domain name, one has “appearance of the whole or a part of a product intentionally attempted to attract, for commercial resulting from the features of, in particular, the lines, gain, Internet users to a web site or other on-line contours, colours, shape, texture, and/or materials of the location, by creating a likelihood of confusion product itself or its ornamentation.” The Regulation with the complainant’s mark as to the source, goes on to specifically include within this definition the sponsorship, affiliation, or endorsement of the web packaging and get-up of products, graphic symbols and site or location or of a product or service on the typographic typefaces. web site or location. For a design (either registered or unregistered) to qualify for protection, it will have to be “new” and have Signing Off… “individual character”:

So where next in this fast-evolving field? The World New: A “new” design will be one that is not identical Wide Web continues to create opportunities for bad (or one that does not differ only in immaterial details) faith domain name registrations – and the recent from a design that has been previously made available introduction of new top level domain names – .biz, to people specialised in the relevant sector within the .info, .us, and .name. – can only add fuel to the fire. EU.

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Individual character: A design will have “individual Benefits character” provided that the overall impression that it Fashion designers (and those who work in similar produces on an informed user differs from the industries where trends come and go quickly) will impression produced by other designs previously derive a real benefit from the unregistered design right. available to people specialised in the relevant sector The automatic attachment of the right (following within the EU. satisfactory “publication” of the design) bars copycats Other defining factors: The design must not subsist from striking before formal registration. In addition, in features solely dictated by the technical function of the three-year term provides a market monopoly on the product to which it is applied; it must not be the design for the useful life of the vast majority of dictated by the need to permit the product to be fashion designs. And of course, if three years is not connected to, placed in, around, or against another enough, a long-term registered right can be applied for product; and it must not be for a component part of a while the unregistered right is protecting the design. larger product (unless that component remains visible D&W during normal use of the larger product). Copyright in Unregistered Community Designs Commissioned Films – A The unregistered design right arises automatically on the date when the design is made available to the public in Refresher Course such a way that, in the normal course of business, people within the community (who specialise in the Film production companies relevant sector) would reasonably be expected to be need to understand the law of aware of it. As the name clearly points out, there is no copyright need to register your design(s) in order to gain unregistered design rights. Once arisen, the protection by Victoria Lockley lasts for a term of three years. Infringement occurs if London • 020.7588.0800 someone who copied the design then goes on to make, [email protected] offer, put on the market, import, export, use, or stock a product which incorporates the design, or to which the The law surrounding copyright in commissioned design is applied. The caveat that the design must be works, specifically films, is complex and sometimes hard copied before infringement can occur is important, to establish. This article sets out the position under because the unregistered design right does not protect English law (but excludes copyright that may also exist against designs that have been independently created by in underlying works, including the script), where a someone else. commissioning agreement is not reduced to a written agreement, or where the written agreement is vague or Registered Community Designs silent on the issue of copyright ownership. The registered design right must be filed for with the Office for Harmonisation in the Internal Market Basic Foundations (OHIM). Once successfully registered, the design will Under the Copyright, Designs and Patents Act 1988, be protected from the date of filing for up to 25 years the “author” of a film is the first legal owner of any (five separate renewable periods of five years each). copyright in the film. Historically, the author was Whether a design was copied or arrived at defined as the film’s producer/production company. independently, it can still infringe a previously However, ever since the introduction of the Copyright registered design. Otherwise, the circumstances where and Related Rights Regulations 1996, this definition infringement can occur will be the same as for has been extended to embrace the principal director as unregistered designs. well. Therefore, the current position is that the producer and the principal director are now considered joint authors of a film, and consequently joint first legal owners of the film’s copyright.

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If a situation exists (which would be rare in the purpose envisaged by the parties, without receiving any industry) where a film’s director can properly be equitable interest in the copyright. Alternatively (but considered an employee of the production company and only in circumstances where there is a written if the film was created during the course of that agreement), a court may find an assignment of employment, then first legal ownership rests solely with copyright in the commissioner’s favour. What actually the production company. happens will depend entirely on the facts and on what terms the court implies into the contract. For a term to Commissioned Films be implied into a contract, it must: (1) be reasonable Films produced under commissioning arrangements and equitable; (2) be necessary to give business efficacy demand special attention.The “authors” are in no legal to the contract; (3) be so obvious that “it goes without sense employees of the commissioner, so first legal saying”; and (4) be capable of clear expression and not ownership of copyright in a commissioned film vests in contradict any express term of the contract. the usual manner (with the film production company If the facts suggest that a commissioner has been and the principal director). The commissioner’s interest assigned equitable title to the copyright, it will be will depend entirely on the terms of its arrangements entitled to use/exploit the film, as well as to bring with these copyright owner(s). proceedings for infringement and to defend itself Legal Title vs Equitable Title against an action for infringement by claiming consent. Ownership of property, including copyright, is usually However, equitable title is not binding on a bona fide expressed in terms of “title.” Title gives the property purchaser of the film’s copyright, assuming such owner the right to do as he wishes – whether that be purchaser takes title without notice of the equitable modifying, selling or licensing the property. title.To guard against this eventuality,the commissioner would need to launch legal proceedings to perfect its However, in certain circumstances (including own title in the copyright. commissioned films), title can be split into “legal title” and “equitable title,” or “legal ownership” and If there has been no equitable assignment of copyright, “equitable/beneficial ownership.” This is because, there may still be an implied licence. If the although belonging to the author, the copyright is commissioning contract is in writing, this could viewed as being held on trust by the author for the potentially be an exclusive licence (which would allow commissioner’s benefit. Thus the author owns the legal the commissioner to bring an action for infringement). title and the commissioner “owns” a beneficial interest If no writing exists, then it could only be some lesser in that legal title. type of licence, which would only provide the commissioner with a defence against infringement If a contract for the commissioning of a film deals proceedings commenced by the copyright owner. expressly with copyright issues, then there is usually no dispute. The author, the first legal owner, simply assigns To r ecap, the interests that may be acquired in a both legal and equitable title in the film’s copyright commissioned film by a commissioner are: over to the commissioner. Alternatively, the author expressly does not make any such assignment. Parties to • Full legal and equitable title to the copyright such agreements are free to negotiate whatever terms • An equitable title to the copyright (that may be they wish. perfected into full legal and equitable title) • Exclusive licence to the copyright But if a commissioning arrangement is silent or vague • Some lesser form of licence to the copyright on this issue, or if there is no agreement in place (and •A licence to use the film (with no copyright the commissioner is attempting to exert its interest in interest whatsoever) solely for the particular the copyright), the contract must be interpreted to purpose envisaged by the parties discover the parties’ intentions. A court may find that the parties intended the commissioner to be granted an implied license to use the film solely for the particular

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Bargaining Chip service or product offered is authorised or sponsored by the celebrity in question. A film production company is therefore in a position to decide just how much or how little copyright interest The law, as always, is on a catch-up cycle. There is no in a film it wants to grant to a commissioner and such doubt the use of a celebrity’s image is likely to increase considerations may be factored into the commercial potential revenue. Photographs of celebrities are easy terms of its production agreements (it is important to to come by and the use of a name alone is often take advice on these issues). sufficient to raise revenue. So the question is: how do you protect the commercial value of a person’s own One thing to remember, however, is that to be able to identity or performance and prevent its assign copyright or to license away some interest in misappropriation? copyright, the production company must take steps to ensure that it is, in fact, the “first legal owner.” It needs The English courts have recently been faced with this to ensure that it has proper employment arrangements dilemma, notably in the Elvis case, and more recently in and/or all necessary assignments of copyright with the Eddie Irvine case. The Elvis case established that respect to the film’s principal director(s). It also needs to there was no “free-standing general right to character ensure that it has secured any “underlying” copyright exploitation enjoyable exclusively by the celebrity.” that may initially belong to other production staff This means that “image rights” claims must be and/or performers. Failing to take such steps could artificially confined within claims made under seriously undermine any attempt to use copyright recognised legal rights, including: ownership as a tool for exploiting commissioned films, not to mention non-commissioned films. D&W • Malicious falsehood • Defamation • Advertising codes You Want to Use My • Trade mark infringement. Halliwell v Panini (1997) confirmed the application of UK trade mark law Image – It Will Cost You as a badge of origin and as a means of protecting Image rights are here to stay the trade • Passing off (see Eddie Irvine case below) • Copyright. For copyright protection to exist there by Anastasia Fowle must be a permanent embodiment of the image, London • 020.7588.0800 and copyright subsists in the work, rather than [email protected] with the individual. The Copyright Designs and Patents Act 1988 does recognise “moral rights,” including the right to be identified as the author, In a world where “image is everything,”sports stars and but this right can only be infringed once it has other celebrities can dramatically increase their been asserted earnings by exploiting their personalities. • Independent television commission code of Personality right is an individual’s right to exploit advertising standards and practice his/her name, likeness and other attributes in a • Data Protection Act 1998. Naomi Campbell commercial manner (via merchandising, promotion recently brought an action against the Daily and sponsorship deals). But this exploitation can cause Mirror, claiming breach of the Data Protection Act problems. Firstly, from a commercial standpoint, it’s (see article in this issue) difficult to quantify the value of the image and in turn • Control of misleading advertisement regulations to compensate the personality concerned for use of the • Registered Designs Act image. Secondly, UK law does not recognise image rights per se. The unauthorised use of a celebrity’s The courts will sometimes stretch interpretations of personality for commercial purposes is allowed traditional legal remedies to achieve just results. In one provided the general public does not believe that the case, Eddie Irvine sued Talksport for passing off (for a

12 Creative Industries Update claim in passing off to succeed, the claimant must show This need to enforce the commercial value associated goodwill, misrepresentation and damage). An with a celebrity’s identity is crucially important.Whilst advertisement had shown Irvine holding a portable the English courts are apparently more willing to radio (bearing the words “Talk Radio”) in a recognise a “personality/publicity right,” albeit by a manipulated photograph – he had not held the portable strained interpretation of existing law, they are less radio, nor did he endorse Talk Radio.The photograph willing to adequately compensate the celebrity. had been obtained by approved means, so there was no question of mounting a claim under copyright Some argue that creating a publicity right would offer infringement. However, the judge agreed that as a result too much protection to celebrities, preventing others of the misrepresentation, Irvine had suffered damage to from making even passing references to them. his goodwill. Although he was successful in his action, However, the practical reality is that others are able to the damages awarded were only £2,000 – a small cash in on a celebrity’s status and fame without having fraction of the legal costs incurred. It is likely that in to seek permission from the celebrity and without future cases further attention will be paid to the having to account to the celebrity for any of its appropriate level of damages (for example in cases earnings. The law needs to change. It needs to where the product is one with which the celebrity does recognise that images have value and the commercial not wish to be associated). It is still unclear whether use of such image should be regulated. there will be any liability for passing off where an Whilst non-commercial use of celebrity images and advertisement merely implies that a personality has names may be acceptable, it is the commercial use that agreed to the use of his or her name or likeness in an needs to be restrained. However, where should the line advertisement, without actually positively endorsing be drawn? The use of a celebrity name or picture in a the product. It seems likely that this issue will be magazine may be considered purely editorial and confronted in the near future and it appears that if informative, but it is also being used to sell a courts are willing to recognise false endorsement claims commercial product (the magazine). under the passing off ambit, then it is likely that false suggestions of authorisation will be founded in the Are These Rights Actually Anything New same way. However, this is by no means certain. Insofar as the Commercial World is Concerned? The Difference Between a Publicity Right and Whilst, David Beckham (see below) may have a Right to Personality generated much publicity with his recent deal with Manchester United and thereby sparked the “image In some jurisdictions, a right to personality is the rights” debate, contracts with European footballers and exclusive intellectual property right of a person to use Formula One Drivers have for some time recognised his/her own name, voice, image, signature and any and made specific reference to the athletes’ “image other distinguishing characteristics by which they rights.” For example, footballer Figo was required could be specifically identified. This ability to control under his contract with Real Madrid to sign all of his the exploitation of a likeness is not a financial right – image rights to the club, not just those rights that rather it is a personal intellectual property right which related to football. This meant that he had to give the is arguably not inheritable or assignable. To protect a club half the earnings from his £1.2 million Coca-Cola personality right, celebrities have to rely on the various endorsement. neighbouring rights to prevent unauthorised usage. In the United States, sports personalities have for a long Conversely, a publicity right is a right held by all time recognised the commercial value in licensing their individuals preventing the misappropriation by another image rights. The United States recognises the right of of the commercial value of their own identity or publicity as a subset of the right of privacy that limits performance. The right does not give the personality the unauthorised use of the name, likeness and other privacy, but it does give them a financial interest in the aspects of the identity of individuals. There are, use of their identity. however, many journalistic uses of identity which exempt newspapers and publications from regulation.

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States such as California and New York have the most David Beckham and His Contract with highly-developed right of publicity laws. For example, Manchester United the California statute states that “any person who Like other European footballers, David Beckham has knowingly uses another’s name, signature, photograph, no doubt about the commercial value of his image and voice or likeness, in any manner …. for the purposes of has negotiated a deal whereby Manchester United have advertising or selling …. without such person’s prior to pay for the privilege of using his “image rights.” consent …. shall be liable for any damages sustained by the person/persons injured as a result thereof.” To He has licensed Manchester United to use his name, succeed, the Plaintiff must prove the following: signature and other indicia. Manchester United have in effect a contractual image right of David Beckham. 1. The Defendant’s use of the Plaintiff’s identity Whilst the details of the contract between David 2. Appropriation of the Plaintiff’s identity to the Beckham and Manchester United are not known, if the Defendant’s advantage, commercial or otherwise contractual image right license is exclusive to the 3. Lack of consent licensee (i.e., Manchester United) then David Beckham 4. Resulting injury will not be able to license anyone else the use of the rights, nor, in theory would he be able himself to use The Lanham Act is federal statutory law dealing with such image rights. It is entirely plausible that David trade marks; its provisions prohibit the use in commerce Beckham has granted such a licence with respect to his of symbols or devices likely to deceive consumers as to “football image,”but perhaps has not with regard to his the sponsorship of goods or services by another person. “image” off the field. Alternatively, he may have done The Lanham Act has been applied to false endorsement a deal “Figo-style,” whereby Manchester United have cases. In the case Waits v Frito-Lay,Inc. it was stated that rights to all his image, whether on or off field. There the the Act “prevents the unauthorised use of the has been speculation that the deal is either a means of celebrity’s identity …. through the misuse of a getting around the club’s wage structure or of ensuring trademark (i.e., a symbol or device such as a visual that Beckham cannot challenge the club’s use of his likeness, vocal imitation or other uniquely image. distinguishing characteristic) which is likely to confuse consumers as to the Plaintiff’s sponsorship or approval And Finally …… of the product.” It seems to be the case that in the US a celebrity’s identity can be protected even when it Image rights aren’t just about protecting the celebrities hasn’t actually been used, but merely where the and stars of the world, they can also protect the man on advertisement evokes thoughts of the celebrity. For the street! A man who was photographed without his example, in the case of Onassis v Christian Dior, consent eating a butterscotch tart has had his complaint Christian Dior used a Jacklyn Onassis look-alike upheld by the Press Complaints Commission (PCC). wearing a pill-box hat and pearls who, to all intents and Whilst the newspaper apologised for the photograph, it purposes, imitated Jacklyn Onassis’s appearance in an claimed that the individual had no reasonable advertisement for one of Dior’s products. The Plaintiff expectation of privacy as he was not in a private place. was entitled to bring a claim under publicity law rights. PCC disagreed and stated that “in this case, the Commission considered that customers of a quite café Under US law, not only can the person whose identity could expect to sit inside such an establishment has been infringed claim right of publicity but also (if without having to worry that surreptitious photographs the applicable law permits) the assignee, exclusive will be taken of them and published in newspapers.” licensee or any other successor of the right of publicity. Remedies include injunctions and damages. It seems clear that image rights are here to stay - but how they will be implemented and interpreted by the courts remains to be seen. D&W

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Final Judgement In addition, the Court was in no way persuaded by the argument that life-plus-70 years somehow crosses a line Eldred v.Ashcroft – Mickey wins the big one and is no longer a “limited time” but is in effect As was expected, copyright owners were given a “perpetual.” The Court noted that copyright extension significant victory in January when the US Supreme acts have been passed in 1831, 1909 and 1976 and that Court upheld the constitutionality of the 1998 law the present extension was no more of a perpetual which added 20 years to all existing and future copyright than any of those previous extensions. copyrights. The Copyright Term Extension Act With respect to the petitioners’ argument that the (“CTEA”) was challenged by a consortium of internet CTEA was improper with respect to existing publishers and others whose products and services copyrights, the Court ruled that Congress has a exploit or build upon materials which have entered the consistent and valid historical practice of treating future public domain. The petitioners’ argument was that and existing copyrights equally when enacting although Congress has the authority (pursuant to the copyright extensions. The rationale behind this “Copyright Clause” - Art. 1, Section 8 of the practice is to ensure that authors receive fair treatment, Constitution) to grant copyrights for “limited times,” because an author who sold his work, for example, a the CTEA amounted to an unconstitutional “perpetual year ago should not be put in a worse position than the copyright.” In addition, the petitioners argued that the author who sells his work the day after the passing of CTEA violated the First Amendment’s free speech the extension act (presumably this is even more relevant guarantee. when you are talking about a 20 year uplift in Crucially, the petitioners did not challenge the validity protection). of the new protection period itself: “creation until 70 Finally, with respect to the First Amendment claim, the years after the author’s death” (which replaced the life- Court stated that copyright law has built-in free speech plus-50 years period established in 1976), or the protections which make the petitioners’ argument congressional practice of periodically extending unpersuasive. Firstly, a copyright only grants an author copyright terms. Instead, they simply argued that this an exclusive right to his particular expression of an idea, new period should be inapplicable to all published works not the idea itself. Secondly, the “fair use” doctrine with existing copyrights. The position was essentially that goes further and operates to allow others to use such a whatever term of protection is in force when a particular expression of an idea in certain specified copyright is granted is “constitutionally fixed”; circumstances. In addition, the CTEA itself contains therefore any subsequent extension by Congress with provisions which supplement these traditional First respect to such fixed copyrights exceeds the power of Amendment safeguards, by giving special rights to Congress and is unconstitutional. libraries, archives and similar institutions to reproduce, With regard to the petitioners’ First Amendment claim, distribute, display or perform copies of certain the argument was that the CTEA is a content-neutral published works during the last 20 years of any term of regulation of speech that fails under applicable judicial copyright. The combination of these factors led the scrutiny. Court to hold that the CTEA does not impermissibly restrict free speech. The Court ruled that the CTEA was a rational exercise of congressional authority that did not fall foul of the The court split was 7-2, with Ginsburg, Rehnquist, Copyright Clause, as it is within Congress’ legitimate Scalia, O’Connor, Kennedy, Souter and Thomas in the authority to determine the proper scope of any majority and Stevens and Breyer dissenting. copyright monopoly granted to authors. In addition, This decision is a major victory for song publishers and Congress had several legitimate motives for enacting other large media/entertainment concerns who own the CTEA, including the wish to bring US copyright massive back catalogues of copyrighted materials and law in step with the 1993 EU directive instructing EU generate substantial revenues through their licensing members to establish a copyright term of life-plus-70 operations. Of course, it will also benefit all authors of years, as well as demographic, economic and works eligible for copyright protection, large or small. technological changes which have occurred since 1976.

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