Pixar Sued Over a Light Fixture

There was big intellectual property news last week as Disney was sued because of its subsidiary, Pixar, for trademark infringement. The plaintiff, Luxo, is a Norwegian company that makes swivel lamps. Pixar’s first film, “Luxo Jr.”, was a 2-minute computer animation showing what the company was capable of. The creator of Pixar has even said the inspiration for his digital short Luxo Jr., was based on the Luxo lamp. Does anything sound weird about that to you? Pixar not only took the Luxo lamp image but also apparently stole the name of the company as well. Someone should have told them that they’d have better luck getting away with committing trademark infringement if they didn’t also name their product after the alleged inventor.

The swivel lamp is also the inspiration behind Pixar’s logo. You can see a similar lamp at the beginning of “Toy Story” and “Wall-E.” However, Luxo has never brought suit before on any trademark infringement by Pixar.

Disney began selling and distributing the “Limited Edition Luxo Jr. Lamp Collectible Pack” in the U.S. and elsewhere. The pack consists of a DVD of the movie “UP” along with a replica lamp called a Luxo Jr. The lamp looks strikingly similar to Luxo’s lamps. In the complaint, Luxo alleges that it was not consulted about the use of the lamp and is not being paid for its use. It claims it has a trademark in the name Luxo. It alleges that this is a clear infringement of that trademark because the lamp is being sold without its permission.

Luxo also alleges that the lamps marketed by Disney are of inferior quality to their lamps and confuse consumers into thinking Luxo made Disney’s lamps. This would ultimately damage Luxo’s reputation. In the suit, Luxo is asking for the court to hand over all the materials created by Disney so they can be destroyed. It also wants an injunction to forbid the further sale of any Luxo lamps. Finally, Luxo asks for damages for Disney’s profits from sales of the lamp. The Collectible Pack is currently listed on Amazon for $120.99.

It seems odd to me that Luxo decided to bring suit now. Pixar has been profiting from the Luxo lamp for over twenty years. They should be time-barred from bringing suits. However, Luxo’s lawyers have argued that the image was previously only used on screen, in the world of make-believe. They also argue that the Luxo name was never used previously, either. Now that Disney has exploited the image for profit, Luxo has decided to bring suit.

This case seems interesting to me for two reasons.

-It illustrates the point that businesses need to be careful of the images they use to brand themselves. If it is too similar to another company’s image, you could end up paying massive amounts of damages.

-I will be anxious to see what arguments are made about Luxo sitting on its rights too long, barring the company from bringing suit now.

The Future Of Movies

There is no aspect of filmmaking that is evolving faster, or as successfully as digital filmmaking and its offshoots.

In June 1999, Twentieth Century Fox released George Lucas’ digitally mastered Star Wars: Episode 1 – The Phantom Menace. This was the first time that a major studio released a film digitally.

Digital filmmaking represents a huge breakthrough in the way films are produced. Digital filmmaking has been compared to the arrival of sound in 1927.

Digital filmmaking provides tremendous cost savings during production and in post-production. Filmmakers are not burdened with servicing the bottom-line requirements of banks, studios, insurers, completion guarantors, foreign sales companies, and distributors.

New delivery systems for entertainment content are continually emerging. Apart from the traditional means of distributing films and TV, programming can now be delivered by digital methods such as delivering TV directly to the home (DirecTV), or over the Internet, which is used to deliver such online streaming services such as Lion’s Gate/Trimark’s CinemaNow.

Where a digital distributor wants to exhibit a movie over the Internet on its website, over DSL systems, or via a private, closed delivery system, they will provide a producer with a distribution agreement.

There are some factors that a producer should be aware of when negotiating a distribution agreement.

The Licensing Period

Your license term for digital exploitation will depend on what other rights (if any) you have previously licensed. If you have had no previous exploitation, try to negotiate the license for six months so that you can reassess the digital marketplace in the not too distant future.

Advertising

The digital distributor will usually want to use the names, voices, likenesses, and photographs of actors for their marketing purposes. You should be careful not to grant rights to the digital distributor that are not available under your various talent agreements.

One provision that a producer should ask for is a commitment on behalf of the digital distributor to advertise the movie in a negotiated manner.

License Fee

Obtaining an advance against royalties for a digital license is difficult. If an advance is not possible, a producer should ask for a large share of the gross revenue for downloads, streaming, etc (ask for around 50%).

Also, ask for a share of advertising revenues associated with the viewing of your product. If relevant, also ask for stock options and the right to purchase stock at less than market rates. Specify the minimum rates to be charged for downloads and viewings. You must make sure you are clear as to how your share of royalties from subscriptions is to be calculated.

You should receive monthly statements within 60 days detailing all relevant financial details associated with the digital distribution. The distribution agreement should have a provision allowing you to audit the digital distributer’s financial records. It is wise to negotiate for the digital distributor to pay for the cost of an audit.

Cross-links

A provision should be included in the distribution agreement requiring cross-linking of the digital distributor’s site with your official site as well as the right to sell merchandise from your site.

Delivery of materials

It is advisable to attempt to get the territorial distributor to pay for subtitled versions of the product that may be required.

The digital distributor should agree not to authorize any copies of the sub-master to be made without your prior written consent and should agree to keep the motion picture sub-master secure during the license period and agree to destroy any encoded and compressed versions of the movie after the license period.

The protection of intellectual property

A producer should reserve all rights concerning their product and any other software or intellectual property.

Breach

A common provision in a digital licensing agreement provides for a reasonable notice period for breaches on either side but in the event of a breach on behalf of the digital distributor, you waive your right to any injunctive relief, the right to terminate the agreement or seek recision. The only remedy would be an action at common law for damages.

Talent Agency Scams

For teenagers wanting fame and fortune (and let’s face it, whose teenager doesn’t fit into this category?), there is an all too popular scam that, while not new by any means, can devastate a wannabe star, both financially and emotionally. It goes something like this: con artists posing as legitimate talent agencies advertise on television, radio, or in the paper looking for the “next big star.” Sure enough, when eager applicants call the provided number, they’re assured that they’ll be trained and “guaranteed” a prestigious career in the entertainment agency, usually in exchange for a large, upfront payment. Of course, these promises rarely materialize, and any training that clients receive is nominal. Here are a few good ways to determine if your talent agency is the real deal or simply part of a scam, out to rob you of your hard-earned money.

Guarantees

As most of us know, there are never any guarantees in the entertainment industry. If a talent agent guarantees that you’ll be the next big star or that you can have your pick of roles when you’ve completed the requisite training, be wary.

Pressure Tactics

Studies have shown that high-pressure sales tactics that urge you to sign right away are successful because they eliminate the time you need to consider something objectively and with a critical eye. It’s never wise to make a large financial decision quickly, and chances are if someone’s pushing you to do just that, it’s because they know that you’ll walk away if you decide to take some time to think about it. Do yourself a favor and at least consider your options before you give into someone’s high-pressure sales pitch.

Demand for Upfront Payment

Most legitimate talent agencies, particularly in Hollywood, work on commission, not for an upfront amount of cash. If your agency of choice is demanding a large payment before they even start working for you, chances are, it’s a scam. Some legitimate agencies do require fees for photos, promotional materials, or other “start-up” costs, but they’ll be more than willing to show you a list of these charges and explain each one.

Want a surefire way to avoid these scams once and for all? If you or your child is thinking about getting into show business in any capacity and are in search of a talent agent, be sure to ask anyone you interview if he or she has a current talent industry bond. The talent agency bond is a guarantee that the talent agency purchases from a bond company to demonstrate its willingness to abide by laws and regulations governing the industry. As one can imagine, talent agency bonds are very common types of California surety bonds, but most (if not all) talent agencies in the US are required to have one by state law. The best part is that finding a talent agency with a current surety bond costs you nothing but a little time and can pay off with plenty of peace of mind later.