Copyright infringement liability in cross promotional products -Lucasfilm v Ren Ventures

Copyright law grants a creator of a new work several exclusive rights. The copyright law of the United States uses the word author, but that term includes many different creative vocations like, musicians, sculptors, photographers and film makers. Creators of new works are granted the exclusive right to copy, distribute, perform, display and prepare derivative works based upon the original work. A copyright can be registered to strength the rights granted to a creator, but registration is not required for the rights to be granted. If someone other than the copyright owner exercises one of these exclusive rights that is considered copyright infringement. A copyright owner can request an injunction from a court to stop copyright infringement and can get monetary damages for copyright infringement which has already occurred.

Cross promotional products are a big business. Cross-promotion is a form of marketing promotion where customers of one product or service are targeted with promotion of a related product. A familiar example of cross promotion are toys which are based on television shows or movies. The objective of cross promotion is to leverage the fan base of a movie to drive toy sales or vice versa.

Typically cross promotion is done as a collaboration of both parties. A movie studio will collaborate with a toy manufacturer and create a licensing agreement. But sometimes manufacturers will attempt to create a toy based on a movie and not get a license from the movie studio. The manufacturer will attempt to argue that they are not infringing on the copyright of the movie because their products are protected by fair use. This argument is on shaky legal ground.

An example of a manufacturer that attempted to sell a product based on a copyrighted work and failed to prove fair use is Lucasfilm Ltd. LLC, et al. v. Ren Ventures Ltd., 17-cv-07249-RS (N.D. Cal. June 29, 2018). The Plaintiff in the case Lucasfilm owns the copyrights covering at least three Star Wars movies. Defendants Ren Ventures are the creators and distributors of “Sabacc – The High Stakes Card Game,” a mobile game app. The game allegedly mimics a game which appears in the Star Wars movies. To promote the game app on social media websites the defendants use dialogue and images from Lucasfilm’s copyrighted works. Lucasfilm sued Ren Ventures for copyright infringement and trademark infringement.

The district court sided with the plaintiff that the use of Lucasfilm’s copyrighted works to promote the mobile game app was not a fair use. The defendants probably could have avoided liability for copyright infringement had they not used images from the copyrighted works to promote the mobile game app. The court reviewed each of the four factors in a fair use defense.

For the first factor, purpose and character of the infringing work, the court found in favor of Lucasfilm. Because defendants merely reposted images and dialogue from original works, for a commercial purpose, with only some minor alterations or additions, the use was not transformative. The second factor, nature of the copyrighted
work, favored defendants. Because Star Wars has bee published extensively Lucasfilm has likely realized their expressive and economic interests to a great extent. The third factor, amount and substantiality of the portion used,
weighed for a finding of fair use, because defendants used clips only seconds long. The court found that the clips used by the defendant are quantitatively insignificant. The final factor, effect of the use upon the potential market, the court found the clips used by the defendants could have an adverse effect on the market for derivative works. The court presumed a likelihood of market harm because defendant’s use was not transformative and commercial. Because the defendants did not produce evidence to show lack of market harm to Lucasfilm from their unlicensed use, the court concluded that the fourth factor weighed against fair use.

Had the defendants not used the copyrighted works to promote their mobile game app they might have avoided a copyright infringement lawsuit.

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