Legalities 14: Contracts and Trademarks

Q. I’m considering a contract to paint a fiberglass sculpture for a public art project in my home state. The art will be displayed in front of a high profile museum, and proceeds will go to a good community cause, plus, a portion to the artist. There’s also lot’s of media press. However, the contract writes that the artist turns over

“entire right, title and interest in the Design, including, but, not limited to all derivative works based on the Design, including but not limited to any rights it may have in the Finished Sculpture, together with any and all copyright applications and registrations therefore.”

Am I right in being concerned that the “derivative works” could effect my right to paint new illustrations in the future (not the same painting, but, what if I have characters, animals, moons, buildings, etc.. that may be similar and are considered my style?) And does the phrase, “together with any and all copyright applications and registrations therefore” include illustrations and their registrations that I’ve created in the past, present and future, that are not related to the sculpture project? Hopefully, I’m being over concerned, but, I’m learning more and more about loopholes in contracts.

A. This is a good example of how an overly aggressive “all rights” clause in a contract can exceed what’s really necessary and create unintended consequences. To answer your last question first, this language creates a potential problem only re: NEW paintings: it would not give the city any retroactive rights with respect to any paintings you’ve already created.

Derivative Works. In copyright parlance, a “derivative work” is a new work that incorporates copyrightable elements from an existing work, and adds additional copyrightable authorship. A derivative work would be an infringement if it is not authorized by the copyright owner of the original work. Examples of derivative works based on visual art, like the painting you would be applying to the sculpture, could be a photograph of the painted sculpture, a greeting card, poster or brochure showing all or part of your painting, miniature replicas of the painted sculpture sold as souvenirs, or a tv ad showing the sculpture. I suspect these are the sorts of ways the city wants to be able to use your painting in derivative works.

However, you are absolutely correct that the contract language you quoted would give the city more than that – it gives the city the exclusive rights to derivative works, which means you would lose your own right to create derivative works, and/or if you create derivative works, the copyright in those works would automatically transfer to the city. The danger is that this could be interpreted to cover any new paintings you create which incorporate the same or “substantially similar” visual elements that are in your sculpture painting.

If your characters, animals, moons or buildings are considered copyrightable elements rather than just your painterly style, this could mean that you don’t have the right to create new paintings with those characters, animals, moons, buildings, etc. (or again, if you do create such paintings, the city will automatically own the copyrights). (Unfortunately, there’s no easy rule for distinguishing between copyrightable expression and noncopyrightable artistic style. But generally, the more unique your style, and the more specific the artistic details at issue, the more likely they will be considered copyrightable expression. For example, think of the specific way that Modigliani depicted women’s faces – that would be copyrightable expression. On the other hand, think of the similar painterly style shared by the Impressionists, e.g., Monet, Sisley and Morisot. These artists were not infringing each other’s copyrights. This concept is explored some more under “copyright infringement” below.)

So I see two possibilities:

1 – If your sculpture painting has characters, animals, moons, buildings, etc that are the same or have similar artistic details as in your previous paintings, then the sculpture painting itself is a derivative work based on your earlier paintings. In that case, the city would receive copyright only in what’s new about your sculpture painting – e.g., the particular way the sculpture painting combines these elements, and not in the characters, animals etc. themselves. So in that case it would be relatively safe to go with the city’s contract language. However, I would want you to ensure that any copyright application identifies those elements as “pre-existing works” (in Space 6a in the copyright application form) and states that the new authorship (Space 6b) includes a new “selection and arrangement” of those pre-existing elements.

2 – If you are creating new visual elements for this painting, you need to ensure that the rights you give to the city do not prevent you from painting similar characters, animals, etc. in the future. In similar situations where a public entity is commissioning artwork, I have negotiated for clauses that either (a) change the rights granted to a non-exclusive, perpetual license to reproduce and create derivative works from the artwork (in other words, you keep copyright ownership but the city keeps full rights to reproduce your painting however it wants to), or (b) assign copyright to the city but explicitly allows you to create (and own the copyrights in) substantially similar works and derivative works despite the city’s copyright ownership for the sculpture painting. That protects your right to continue working in your unique style and to continue using your own visual elements.

Generally I have not had trouble getting these types of contract modifications. Most public entities understand that artists must have the right to continue working in their own style and to create works that include similar elements. Moreover, the value of the publicly owned work increases if the artist becomes well known for that style. (For example, think of Keith Haring – how valuable would his first painting of a figure be, if he’d been forced to give up that way of drawing the figure after he created it?)

Q. I have designed a logo which is similar to a known trademark logo.  My new logo uses elements taken directly from the trademarked logo, but manipulated in a way that makes the new logo look dramatically different.  However, it is very easy for anyone who has seen the trademarked logo to recognize the source of my new logo.  My service is completely different (and in a different legal class) than that of the trademarked logo.  How much does one have to change an existing logo to avoid trademark infringement?

A. This is a common question, but unfortunately it cannot easily be answered.  Although I’ve often heard people cite an alleged “20%” or “25% Rule,” e.g., that you can avoid infringement by changing your copy a certain percentage from the original – those are myths. There are no formulas for calculating infringement, especially for visual works. And when you think about it, mathematical rules for visual works make no sense.  How could you determine what comprises 25% of a visual work? How would you assign a percentage value to colors, composition, rendering style, etc.?

Your situation is particularly complicated because you are working with a logo design, which may be covered by copyright, trademark, and/or dilution law. Each of these has different standards for determining infringement.

Copyright infringement. Under copyright law, the standard for infringement is “substantial similarity.” Substantial similarity means an average observer would recognize that the second work takes copyrightable authorship from the first one. So the first question is, what is copyrightable authorship? 

There is an absolute rule that copyright does NOT cover type fonts, and that rule has been extended even to unique typographical designs. Also, simple symbols and common geometric shapes generally do not qualify for copyright protection. So if your logo is made solely of type, or a relatively simple graphic shape, the copyright analysis will not apply.

With respect to pictorial or design elements, copyright covers “expression,” that is, the artistic choices made in expressing an idea, but not the underlying idea itself. For example, more than one illustrator has depicted the idea of a figure removing part of his head along with his hat.  However, there is no infringement when the artistic decisions used to depict that idea are different, e.g., different postures for the figure, different composition, and different rendering styles.

Copyright infringement occurs when your new work incorporates artistic expression from the original, even if it takes only a small part of the original work, and even if you add a lot of your own original expression. For example, if the second illustrator rendered the same figure in the same pose, removing the same hat, even if his illustration has a different background. There is a famous quote from Judge Learned Hand that goes “no plagiarist can excuse the wrong by showing how much of his work he did not pirate.”

If your logo includes pictorial elements, then these standards would apply. I don’t have the benefit of seeing the logos in question, but based on your statement “it is very easy for anyone who has seen the trademarked logo to recognize the source of my new logo,” your logo may be a copyright infringement.

Trademark infringement.   The standard for trademark infringement is “likelihood of consumer confusion,” or for short, “confusing similarity.” This is a very different standard from substantial similarity under copyright law. Trademark law is not concerned about whether artistic expression has been copied. Rather, trademark law protects how a logo functions as a brand name, that is, to designate the source of goods or services. A new logo is confusingly similar to the original logo if consumers who encounter it might believe that it represents the same company. This is generally analyzed by looking at the similarity of the logos, the similarity of the parties’ respective goods and services, and several other factors, such as the strength of the original logo’s reputation, the relative sophistication of each party’s customers, etc.

In your situation, your “service is completely different (and in a different legal class) than that of the trademarked logo.” This sounds like you might have a strong argument that your new logo is not confusingly similar to the original (depending upon how the other factors in the analysis would come out). Goods and services are confusingly similar if they are related to each other in the marketplace, or if they are the types of goods/services that are generally offered by the same company. This doesn’t depend upon the “legal class” that the goods or services fall into for the purpose of trademark registration. (In order to register a trademark, you have to describe the specific goods and services for which it is used. The goods or services are categorized into 46 different “classes,” and you pay a filing fee for each such class.) For example, Starbucks uses the same logo for both its retail coffee shops (Class 43) and as a brand name for various packaged food products (Classes 30, 32). All of these would be considered confusingly related because consumers would expect restaurants to market packaged versions of their foods.

Dilution.   Dilution is a legal concept that protects famous trademarks from being “diluted” by the presence of similar trademarks in the marketplace. Dilution can happen even if there is no confusing similarity. Rather, dilution occurs when consumers no longer associate the famous trademark with just one source. For example, if Starbucks were to adopt the brand “Xerox” for a new iced coffee drink, that would cause dilution of the famous Xerox trademark. Even though consumers would know that the Xerox coffee drink is not related to the famous Xerox photocopiers, they would now be associating the Xerox mark with another product, and the value of Xerox’s famous mark would be diminished.

Based on your statement that your source of inspiration is a “known trademark logo,” it sounds like you may be dealing with a famous trademark. Dilution can occur even if the second trademark is not identical to the original. Thus, based on your statement that anyone will recognize the original trademark as the source of your logo, you may need to worry about a potential dilution claim.

All of these concepts are difficult to discuss in the abstract. Even when visuals are available, the analyses re idea vs. copyrightable expression, substantial similarity, and confusing similarity are so subjective that its often hard to predict how a court would rule. When the defendant deliberately copied someone else’s creative work, that fact is often a key factor in holding the defendant liable. The judge or jury may feel uncomfortable about excusing deliberate copying, even if there is a good argument that enough changes were made to avoid legal infringement.

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Legalities is a service mark of Linda Joy Kattwinkel. © 2005 Linda Joy Kattwinkel. All Rights Reserved. The information in this column is provided to help you become familiar with legal issues that may affect graphic artists. Legal advice must be tailored to the specific circumstances of each case, and nothing provided here should be used as a substitute for advice of legal counsel.

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