Nobody puts Lions Gate Entertainment Inc.’s (“Lions Gate”) Dirty Dancing brand in a corner – except for a California federal district court and an allegedly infringing ad campaign.

Why were Lions Gate’s trademark and unfair competition claims preempted by copyright?

Allegedly Infringing Ad Campaign

In 2014, TD Ameritrade Holding Corporation and a number of its subsidiaries (“TD”) hired advertising agency Havas Worldwide New York, Inc. (“Havas”) to create a national advertising campaign, including online, television and print ads. From approximately October 2014 to April 2015, TD and Havas (collectively, “Defendants”) ran a campaign that purportedly drew inspiration from Dirty Dancing’s famous “nobody puts baby in a corner” quote and final dance scene. The main line of the subject ad campaign was “nobody puts your old 401k in a corner,” with an encouragement to enroll in TD’s IRA plans. Some versions of the advertisements featured a man lifting a piggy bank over his head after the piggy bank ran into the man’s arms, as well as the song, “(I’ve Had) the Time of My Life,” which also played during the final dance scene in Dirty Dancing.

In April 2015, Lions Gate (owner of the film Dirty Dancing) contacted Defendants about the allegedly infringing ad campaign, claiming that Defendants’ ads intentionally copied the film and were designed to create an unlawful association with Lions Gate and its commercial activities. Ultimately, Defendants ceased the campaign but refused to pay Lions Gate for the alleged infringing use.

Lawsuits (and Havas and TD’s Partial Victory)

After settlement discussions stalled, Defendants filed a declaratory judgment lawsuit in the Southern District of New York, while Lions Gate filed its own suit in the Central District of California (Case No. 2:15-cv-05024-DDP-E) alleging copyright infringement, trademark infringement, trademark dilution and unfair competition. In the fall of 2015, Defendants voluntarily dismissed their suit and filed a motion to dismiss Lions Gate’s action, claiming (among other things) that Lions Gate’s unfair competition, trademark infringement and trademark dilution causes of action were preempted by the Copyright Act.

On March 14, 2016, referencing 17 U.S.C. § 301(a) and the Supreme Court’s 2003 Dastar ruling, the Court determined that Lions Gate’s federal, state and common-law unfair competition and trademark infringement causes of action were preempted by copyright law because:

  • copyrighted and copyrightable subject matter was involved in those causes of action (i.e., the motion picture Dirty Dancing and related literary, musical and choreographic works); and
  • the same rights were asserted in those causes of action as Lions Gate asserted in its copyright infringement cause of action (i.e., reproduction and distribution of the copyrighted work and preparation of a derivative work).

According to the Court, “the same rights are alleged in the causes of action – the right to be the exclusive licensor and user of the sentence ‘Nobody puts Baby in a corner.’ Therefore, Plaintiff’s trademark infringement and unfair competition causes of action are also dismissed with prejudice because they are preempted by the Copyright Act and so any amendment would be futile.”

The Court also dismissed Lions Gate’s trademark dilution cause of action for failure to state a claim, conceding that trademark dilution claims are “not perhaps preempted by the Copyright Act.”

Legal Risk Remains for Ad Agencies

Although TD and Havas scored a partial victory with the dismissal of Lions Gate’s trademark and unfair competition claims, the Court has allowed Lions Gate to proceed with its copyright infringement cause of action. Regardless of the case’s outcome, the creative decisions made by the above-mentioned Defendants proved fatal to their allegedly infringing ad campaign.

To minimize the risk of similar legal surprises, as early as possible in the creative process, campaign scripts and footage should be carefully vetted by an experienced intellectual property attorney to ensure that third-party brands and creative content, both visual and spoken, are properly cleared.