“Character merchandising can be defined as the adaptation or secondary exploitation, by the creator of a fictional character or by a real person or by one or several authorized third parties, of the essential personality features (such as the name, image or appearance) of a character in relation to various goods and/or services with a view to creating in prospective customers a desire to acquire those goods and/or to use those services because of the customers’ affinity with that character.”

Introduction

Intellectual property rights are supposed to entail a possibility of profit from the exploitation of intellectual works, a profit that stems from the act of branding, creating or innovating. Although, the name might not suggest it, character merchandising is an ancillary addition to the established intellectual property rights. It can be seen as an extended profiting strategy that allows the right holders to use existing well-known personalities of fictional or real-life characters, to promote and provide goods and services to those who can be catered by the appeal of such characters. In modern day, character merchandising is an effective way to broaden the reach of an intellectual property and is often used as a marketing strategy more so to garner attention than to be a separate profit sphere. That being said, the profit generating capacity of character merchandising cannot be ruled out.

In simple words, character merchandising means that the exploitation of a famous character to gain profits, by selling merchandises with its name, or face, or tagline on it. Merchandises can range anywhere from a t-shirt, cup, bottle, toy, 3D caricature to a poster or a wallpaper. Merchandising can be done by either the owner of the character (i.e., the person who owns the IP for the character) or can be done by another company altogether. In the case of a company, a few rights of the character are licensed to these companies and in turn the company gives the owners a share of the profits as royalties.

Character merchandising in its organised and successful form can be traced back to Walt Disney using its characters for secondary commercial exploitation, by making merchandises after their works such as posters, tee shirts, toys etc. Overtime, development surrounding character merchandising has boomed across the globe owing to animated movies, addition of an array of fictional characters and most notably superhero movies under the Marvel and the DC banner.

Types of Character Merchandising

There are three different types of character merchandising: fictional character merchandising, personality merchandising and image merchandising.

Fictional character merchandising includes the artistic works like that of Cinderella or Pinocchio or in cinematographic works like Mickey Mouse or Batman or Donald Duck, etc. These characters and their essential elements when put on a product, attracts consumers that want these elements on the products more than the product itself.

Then there is personality merchandising which includes merchandising of the person who plays the character and not the character only. A prime example of this is Iron Man; for example, the t-shirts that are red and gold can easily be associated to Iron Man and people buy it because of such association. On the other hand, if a cricketer is endorsing a deodorant brand, then people, owing to the distinct personality acquired by the cricketer, will buy the product because the cricketer is associated with that brand.

Lastly there is image merchandising in which the actual person and the character he plays are not differentiated. People associate the person as the character itself, instead of their actual personality, for example, Robert Downey Jr. is more famous as Tony Stark and Iron Man than as his himself i.e., his actual personality, therefore people would want to buy Iron Man merchandise with his face or with his voice (in a toy).

Similar to the above, a fourth type of character merchandising can be identified, i.e. the Merchandising of artistic works includes works of art that are used for on products such as, artistic work of Leonardo Da Vinci, especially the Mona Lisa, is world famous and various products are merchandised based on it, even in several museums.[2]

Protection for Character Merchandising

Character merchandising does not have one specific legislation that governs it but falls under the scope of protection of many IP laws, mainly trademarks, copyrights and designs. Copyright, provides a more essential protection to the owner for merchandising of products, for example, in the cases of cartoons or animated images and pictures, the artist who creates them becomes its owner and can give others the right to exploit it in a manner that allows for merchandising of the characters or any aspect of his/ her work.

Although the copyright-ability of a character depends upon the uniqueness of such character, this was discussed and established in the case of Arbaaz Khan v. North Star entertainment Pvt. Ltd.[3] (2016) by the Hon’ble Bombay High Court. The Court while examining if a copyright subsists in the character "Chulbul Pandey" from the Dabangg franchise, was of the opinion that, "As to the general principal that the character is unique and the portrayal of that character, as also the "writing up" of that character in an underlying literary work is capable of protection is something that I think I can safely accept."

In viewing the question that if, “copyright can subsist not in the literary work but in the character as well?”, the Court held that, “… the realization of a persona with iconic characteristics and traits that make him or her unique. Where such a character is developed and realized by a person entitled in law to hold copyright, there should be no difficulty in accepting that such copyright does subsist in that character and that a person or entity is entitled to it. The on- screen persona of Rocky from the Rocky franchise, James Bond from the film franchise (distinct from the literary character), certain characters from the Star Wars series (Darth Vader, Obi Wan Kenobi, Han Solo, Chewbacca, and others), John McClane from the Die Hard franchise, and the many characters in Star Trek (most especially Kirk, Spock and McCoy) are all possible examples.” Hence deciding that for a character to gain copyright, the character must be unique and that the way the character is written and developed (the literary work) being copyrighted should also be distinct in nature. The Court granted the plaintiffs right over the character under copyrights.

Now if it is an actual person who is playing a character then the question of “who is the owner?” comes into play. This issue arises as every person has a right to privacy and a right to publicity. So, the question arises whether just because a person is a public figure, does he lose all his right to privacy? Also, who is the owner of the character that is played by the real life actor?

There are two schools of thought on this subject- The first states that like an author is given an incentive to share his work and labour along with the copyright and the right of exploitation that comes with it, an actor should also be subjected to the same rule. Second, the actor who plays the character already puts a lot of labour and effort to make the character his and to give him a different personality, so he should have rights on it.

Another issue is when the image of an actor is being used by the producer for some other purpose or for endorsing a brand. The actor can claim that it is his photo and he has a right to publicity and the producer can say that since the actor signed up for the movie, they surrendered their rights of publicity.[4]

No country so far has enacted a sui generis legislation on the protection of character merchandising. Furthermore, there exists no international treaty dealing specifically with it. Therefore, any person or entity must rely on different forms of protection and, consequently, different legal texts.

As mentioned above, one of the most important areas of law involved in the legal protection of character merchandising is intellectual property law. Character merchandising is protected under the various heads of intellectual property which often leads to creation of an overlap. A character which takes its birth from literary works is directly protected under the copyright law, for example, all the movies or series based on famous novels have fictional characters that have a separate copyright such as Harry Potter Characters, Game of Thrones Characters; when an artist makes a drawing of the character again its protection is governed by the copyright law, for example, all the super-hero movies have characters stemming from comic books and are already copyrighted.

Ownership of Rights for Character Merchandising

The rights attached to a character is usually vested with the creator of such character. Unless the creator of the character has licensed or transferred his right forward to another individual, in which case that individual becomes the owner. In case the character is created in due course of employment then the owner of such work would be the employer.

In case there is image merchandising, i.e., merchandising based on the image of a certain actor famous for playing a certain character on screen, the rights become attached to such real person (the actor) and is owned by such person.

Instances of Character Merchandising Cases in India:

1. Star India Pvt. Ltd v. Leo Burnett.[5]

This case is in relation to the TV show “kyunki saans bhi kabhi bahu thi”, where the Defendants came up with the commercial for a consumer product “Tide Detergent” telecasting it with a title, “kyonki bahu bhi kabhi saas banegi” and characters of a grandmother, mother-in-law and daughter-in-law, similar to the characters of J.D., Savita, Tulsi as in the serial of the plaintiff.

The plaintiffs contended that there has been an infringement of copyright because an average viewer will have an impression that the plaintiffs are endorsing the defendant’s product and there is a connection between plaintiffs in the said serial and the defendants and their product.

The court opined that, "The characters to be merchandised must have gained some public recognition, that is, achieved a form of independent life and public recognition for itself independently of the original product or independently of the milieu/area in which it appears" . The test of substantial similarity was applied to the case at hand only to conclude that prima facie, quantitatively and qualitatively, the two works are different and there is no work of substantial copying or similarity between the two.

The case was hence granted in the favour of the defendants that no infringement had occurred and no cause of action arose. The Court stated that this was because the Plaintiffs pleading by way of passing off and character merchandising was of a future potential and no actual or substantial damage was established.

2. Raja Pocket Books v. Radha Pocket Books.[6]

In this case, Raja Pocket Books (Plaintiff) developed a character of a man that wore a green body suit and had a red buckle-belt, famously known as ‘Nagraj’. The character was popular amongst the people and it was the USP of the comic on a large scale. Radha Pocket Books (Defendant) also started a comic with a similar character who adorned a similar look and was named ‘Nagesh’ which was also quite similar to the character name ‘Nagraj’. They both had similar fictional powers as well, that of a snake.

The Hon’ble Delhi High Court held that the copyright of ‘Nagraj’ was with the Plaintiff and the Defendant’s character was likely to infringe upon the Plaintiff’s if they continued to use it in any image or poster or any advertisements which would ultimately amount to infringement of the Plaintiff’s copyright.

This case shows the use of copyright laws to protect a character and its ‘character rights’ thereof. This decision was based on the fame of the character and how public related to the distinctiveness of the character and related it to a specific publishing house.

3. Diamond Comic Ltd. & another v. Raja Pocket Books & Others.[7]

In the present case the Defendant was the owner of a popular character by the name of ‘Shakitman’, had assigned the rights to the Plaintiff to turn his character into comics by the Plaintiff. After a period of time when the character had gained popularity after being marketed by the Plaintiff and had gained a reputation in the comics market, the Defendants started manufacturing comics on their own. The Hon’ble Delhi High Court in this case held that the Defendant had assigned his character to the Plaintiff and therefore he was not in a position to exploit it by making comics of their own as it would constitute copyright infringement.

4. Disney Enterprises & Anr. v. Santosh Kumar & Anr.[8]

In this case the Hon’ble Delhi High Court held the Defendants (Santosh Kumar & Anr.) were liable for selling products that contained representations of characters such as Hannah Montana, Winnie the Pooh, etc. whose merchandising rights were owned by the Plaintiffs (Disney Enterprises Inc. & Anr.).

The Court held that there is an intense degree of association between the plaintiffs and the aforementioned characters, which is why any reference to these characters reminds the public exclusively of the plaintiffs.

5. King Features Syndicate Inc. v. O And M Kleeman Ltd.[9]

This is a UK case which involved the famous character “Popeye”. The owners of the copyright of the drawings of Popeye had given some companies the license to make 3D models of the drawings. Another company to whom the license was not issued was importing the 3D models of this character and was selling it. The Plaintiff sued the Defendant stating that it was infringing their copyright. The Defendant took the defence that the Plaintiff’s had not copyrighted their drawings under the Copyright Act, 1911.

The Court held that it was indeed copyright infringement. This is because, there is no copyright protection for ideas and thoughts but anything that is expressed gets protection. In this case, the famous character of Popeye was in the form of a drawing and thus, was entitled to protection.

Conclusion:

Character merchandising has recently become famous in India because of its commercial nature. Simply put it means that a character (image, person playing a character or such) is merchandized to earn money and this is done so by using its fame or popularity. The scope of character merchandising being considerably big, the existing intellectual property regime may not be sufficient to protect the entire legality of the concept or safeguard its vulnerability. Although the trademark law provides protection for a name or a particular image, and the copyright law protects an individual’s creations, but they fall short in protecting the reputation of a person or fictional character from unauthorised commercial exploitation.

The legal uncertainties not only prove to be a hindrance to the business interests but also result in unanticipated losses to the rightful copyright owners. The need of the hour is to use the existing laws with a new perspective and evolve a mean path where the celebrity can reap the benefit of fame without obstruction, while at the same time the copyright owners can utilize their content to the maximum.

Notwithstanding the availability and extent of existing forms of legal protection, the practice of merchandising the essential personality features (mainly the name and the image) of a fictional character or of a real person has rapidly evolved in some countries from a subordinate activity into an important independent source of revenue and even, in some cases, into a civilizing force if one considers its impact on the public at large (mainly on the younger generations).

India has a flourishing market for merchandising whereby character merchandising for kids has fetched unprecedented results. Indian comic characters also have ample scope of commercial exploitation.

Evidently, in light of the positive aspects of the concept of character merchandising, its practice has to be maintained in keeping with the balance between the necessity to preserve competition on one hand and on the other, maintain protection of individual rights pertaining to intellectual property in spite of character merchandising, for “Good merchandising will always take the consumer from deciding whether that are going to buy which are they going to buy”, said Steward Goldsmith, the Vice President of Sales for Todson.[10]