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Costumes, Characters and Copyright: a Cosplayer’s Guide to Recent Cases

June 16, 2017 articles Comments Off on Costumes, Characters and Copyright: a Cosplayer’s Guide to Recent Cases

Introduction

No more eloquent a description of a fan costumer, or cosplayers as they are known, exists than in the amicus curiae brief filed by the International Costumer’s Guild in the recent U.S. Supreme Court case Star Athletica, LLC v. Varsity Brands, Inc.[1], where the costume creators were described as a “community of celebrants of culture”.[2]

Indeed, the Star Athletica case has been highly anticipated by cosplayers and fan filmmakers who want to know the creative lengths to which they may go to express their affiliation with and love of popular culture icons, historical figures and fantasy characters as part of this costuming aspect of modern fandom[3], without infringing another’s copyright. They truly consider costuming as an art form.

Several key copyright cases have been decided in the past few years which give some guidance to these creators, culminating in the United State Supreme Court weighing in on the question this year in Star Athletica. The case between two cheerleading uniform companies[4] was recognized by cosplayers as having the potential to lock them out of being able to lovingly create or re-create the costumes and uniforms that show their affiliation and association with an interest group, fictional or real. And although clothing has always been categorized as a “useful item” under the copyright law, and thus ineligible for protection, the copyrightability of decorations on, or making up parts of clothing, has not been definitively decided.

Uniform case decided “by the book”

When deciding a case based on a federal law, the court always looks to the language of the statute for its interpretation. Justice Thomas, the author of the majority opinion in Star Athletica LLC v. Varsity Brands, Inc.[5], did that very thing and reiterated the main requirement of copyrightability – it must be an original work of authorship fixed in any tangible medium of expression”[6] and a “pictorial, graphic or sculptural work”[7]. Justice Ginsburg did point out in her concurrence that the Supreme Court has recognized that copyright requires an admittedly “very low level of creativity in a work, (where) even a slight amount will suffice.”[8] However, Justice Breyer in his dissent stated that he did not agree that the designs Varsity Brands, Inc. submitted to the copyright office are eligible for copyright protection, since they cannot be perceived as a two or three dimensional works of art separate from the useful article.[9]

 

 

The claim to copyrightability of the simple geometric designs arranged on Varsity Brand’s cheerleading uniforms was pointedly not decided by the Court, and both the majority and Justice Ginsburg said they expressed no opinion on whether the surface designs on the uniforms at issue are eligible for copyright protection.[10] Although Varsity Brands, Inc. holds over 200 copyright registrations for the two dimensional designs depicted on their uniforms and other garments, they filed pictures of the designs as they appear on the uniforms. This raised the question of whether they had a copyright in the designs themselves, or just in the pictorial work of the uniforms with the designs.  Looking at the submissions by Varsity Brands, the claimed designs are little more than edging along the lines of the uniform shape; Justice Breyer in his dissent said “considered on their own, the simple stripes and are plainly unoriginal”[11] and cannot be copyrighted.

Courts around the country have formulated tests to determine the separability of copyrightable features incorporated into a useful article, and the Supreme Court was asked to settle the “widespread disagreement” over the matter. The Supreme Court’s opinion did not take into account some of the arguments put forth by the parties who submitted amicus curiae briefs, such as the non-mechanical functions of certain uniform designs that serve to identify the wearer with an interest group or association. I believe their interests and those of other costume makers and cosplay enthusiasts were served by the court deciding that the cut, shape and dimensions of articles of clothing were still not eligible for copyright.

The court ultimately held that:

“a feature incorporated into the design of a useful article is eligible for copyright protection only if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated.”[12]

Imaginative removal of the design

Justice Thomas gave several examples of the test for whether a design feature of a useful article, in this case a cheerleader uniform, can be considered a “pictorial, graphic or sculptural work only if, and only to the extent that, such design incorporated pictorial, graphic or sculptural features that can be identified separately from, and can exist independently from, the utilitarian aspects of the article” under the statute.[13] He used a decorated guitar to illustrate how the design, “etched or painted on the surface of a guitar could be imaginatively removed from the guitar’ surface and placed on an album cover, (and) it would still resemble the shape of a guitar, but the image on the cover does not “replicate” the guitar as a useful article.”[14]

In deciding that the lines, chevrons and color blocks claimed as a copyrightable design on the cheerleader uniforms could be removed from the uniform and placed on a painter’s canvas or other medium and would qualify as a pictorial, graphic or sculptural work on its own, the opinion does not decide whether these “standard uniform elements”[15] which are “plainly unoriginal”[16] would withstand a challenge of their copyrightability. However, the Court did emphasize that even if Varsity Brands Inc. were able to establish “a valid copyright in the surface decorations at issue here, (they) have no right to prohibit any person from manufacturing a cheerleading uniform of identical shape, cut and dimensions to the ones on which the decorations in this case appear. They may prohibit only the reproduction of the surface designs in any tangible medium of expression – a uniform or otherwise.”[17] This leaves intact the near-century old principle that fashion designs are not copyrightable, except for designs that can be separately imagined apart from the garment. The same principle strengthens the case for cosplayers who replicate the uniforms or clothing of fictional or historical persons, as they are free to make a costume which copies the cut, shape, and dimensions of the original garment, but may not reproduce any separable designs or decorative element that would be eligible for copyright protection on its own.

Free speech implications

For the purposes of Cosplayers and other makers of homemade costumes and uniforms which identify them with teams, groups, associations, or causes, this special clothing allows their self-expression and even self-actualization through apparel they created.[18] In fact, costume-making implicates First Amendment associational and free speech individual rights guaranteeing “the freedom to engage in association for the advancement of beliefs and ideas.” Clothing allows individuals to engage in speech and associative activities, and the Supreme Court has also recognized that “the citizenry at large has a ‘liberty’ interest … in matters of personal appearance.”[19] Although the Court did not take up the constitutional implications in this case, the issue may well come up in future cases.

TV and movie characters and copyright

Once costume makers get their creations past the separablity issue, the next hurdle is considerably more difficult, especially for fans of famous popular culture icons. This is due to the line of recent cases making clear that characters in comic books, television shows[20], and motion pictures[21] may be entitled to copyright protection. However, the character must be “especially distinctive and contain some unique elements of expression”[22] and it cannot be a stock character, nor be a character “lightly sketched” and lacking description.[23]

The 9th Circuit Court in California, which hears the majority of these kinds of cases as they are in the heart of Hollywood and moviemaking, have developed a three-part test for determining whether a character in a comic book, television program, or motion picture is entitled to copyright protection: First, the character must generally have “physical as well as conceptual qualities.” Second, the character must be “sufficiently delineated” to be recognizable as the same character whenever it appears. Considering the character as it has appeared in different productions, it must display consistent, identifiable character traits and attributes, although the character need not have a consistent appearance. Third, the character must be “especially distinctive” and “contain some unique elements of expression.”[24]

The Batmobile is a copyrightable character

The DC Comics v. Towle case involved a custom car maker’s building and selling of two replica automobiles, one of the Batmobile from the 1966 Batman television series, and one replicating the Batmobile in the 1989 film BATMAN.[25] The 9th Circuit was called upon to decide whether the Batmobile was distinctive enough to be a copyrightable character, such that Towle’s automobiles infringed upon CD Comics’ rights under copyright law. Towle used the name “Batmobile” in his advertising and domain name for his business, which targeted avid Batman collectors who paid upwards of $90,000 for each replica automobile. He admitted that he intentionally copied the design of the Batmobile in the 1966 television series and the 1989 movie, although he was not licensed or authorized to reproduce, make or sell any products bearing the trademark or copyright of DC Comics. His defense was built around his alleged belief that the Batmobile was not a copyrightable character and therefore he did not infringe DC’s rights by building his replica cars.

DC had retained its merchandising rights to all DC characters in the comic book Batman, including “any other character or thing included in the Property … or under a name which incorporates any phrase, clause or expression used in DC’s comic strips or comic magazines….”[26] in its licenses to both the television series and the motion pictures. Even though there were several sublicenses involved with both the TV series and the movie, those licensees did not have the right to reproduce or sell any products based on characters from the original Batman comic books. The licenses’ language indicates that DC considered the characters and “things” in the Batman comics to be distinctive enough that merchandising and products were anticipated based on them.

The court used its three part test as set out above, and held that the Batmobile originally depicted in the 1940s comic books and later on television and in movies, kept its distinctiveness as a character no matter whether it was in the two dimensional format of a comic book, TV show or motion pictures, or in three dimensional form such as an actual car. Although the Batmobile depicted in the 1966 TV series starring Adam West[27] did not copy exactly the version of the car depicted in the comic books, it maintained “… a bat-like appearance and was equipped with state-of-the-art weaponry and technology.”[28] Likewise, the Batmobile in the 1989 BATMAN movie was not an exact replica of either the comic book or the television Batmobile, but still featured futuristic crime-fighting technology, as is part of the distinctiveness of the Batmobile character. Thus, all the various Batmobiles were “sufficiently delineated” wherever they appeared. They were “… known by one consistent name that identifies it as Batman’s personal vehicle,” and, although some of its physical traits have changed over time, several have remained consistent, including its “high-tech gadgets and weaponry,” “bat-like motifs,” and its jet black color. Additionally, the district court found that the Batmobile is always “depicted as being swift, cunning, strong and elusive,” and is even portrayed as a “superhero” and “Batman’s sidekick, if not an extension of Batman’s own persona.”[29] The court applying these tests determined that the Batmobile displays “consistent, identifiable character traits and attributes,” and “contains unique elements of expression” along with a “unique and highly recognizable name” The 9th Circuit Court of Appeals therefore found that the Batmobile was not a stock character and was eligible for copyright protection. In its conclusion, the Court could not resist a Batman quote: “As Batman so sagely told Robin, “In our well-ordered society, protection of private property is essential.” Batman: The Penguin Goes Straight, (Greenway Productions television broadcast March 23, 1966).”[30] DC Comics was the owner of the Batmobile character, and Towle had infringed it with his unauthorized reproductions.

The Cosplayer’s dilemma

Cosplayer value exactness in portraying their favorite TV or movie characters, and have expressed their affiliation and love for them in very creative and even ingenious ways. Some have even developed custom fabric treating processes to replicate metal, and have actually “invented real technologies based on fictional concepts, such as a working Captain America electromagnetic shield and a functioning Star Trek phaser.[31] This kind of creativity and problem-solving advances the very purpose of the copyright law and its constitutional foundation, “(t)o promote the Progress of Science and useful Arts.[32]” Some cosplayers engage in period costuming and attend various renaissance fairs and major conventions, constructing elaborate costumes, accessories and props based on their research of the historical period. The most popular type of costuming is comic book-based costuming, which has spurred the wildly popular ComicCon and other major conventions across the country that thousands of fans enjoy.

With a fully fleshed out, distinctive and recognizable character which is eligible for copyright protection, the cosplayer wanting to reproduce his or her favorite character must do it for love and not money. It is widely known that many of these conventions offer cash prizes that are not insignificant for the best and most accurately created costumes. The worry of cosplayers is that prizewinning may be seen as a commercial activity using the copyrighted works of another, and be seen as infringement. Because of the underlying earnestness of fan costume makers who make only one costume for themselves, do not offer reproductions of the costume for sale, and do not directly make money from them through licensing or otherwise, the holders of the right to the characters have so far been gracious in allowing this kind of costuming. Fans who have tried to make replica costumes for other purposes such as fan films have another hurdle to get over, the written or unwritten rule that fan film can’t be commercial.[33]

Enter and Exit Axanar

The concept of “fleshing out” a character so that it is distinctive enough to merit copyright protection was again revisited in Paramount Pictures Corp. and CBS Studios Inc. v. Axanar Productions, Inc.[34] Alec Peters, the president of Axanar Productions, raised over a million dollars on two different crowdsourcing sites to finance a prequel to the Star Trek series. He used material from the original television series, the movie, and even from a novel and game legitimately licensed by individuals from Paramount. Peters offered his 20 minute short film “Prelude to Axanar” to donors, as well as merchandise bearing the trademarks of Star Trek. He released “Prelude” on YouTube to promote and raise funds for a full length movie. He used a professional crew, planned to build a sound stage for this and other movie, and did everything to try to stretch the line between fan films and commercial films. The owners of the Star Trek copyright and trademarks saw all this as clear infringement, and sued Peters and his company.

Citing DC Comics v. Towle, the District Court in the Axanar case applied the 9th Circuit’s three part test for a copyrightable character: it must have physical as well as conceptual qualities and must be sufficiently delineated to be recognizable as the same character wherever it appears. It must be especially distinctive and contain some unique elements of expression. In its discussion of the uniforms of the Klingon and Vulcan officers in Star Trek, the court used the standard set out several months later by the US Supreme Court in Star Athletica, that “[t]he artistic aspects of these costumes that can be identified separately from, and are capable of existing independently of, the utilitarian purpose of the costume” are copyrightable[35]. Without separately identifiable artistic aspects, the uniforms are “a grey tunic with shoulder covers and a red neckpiece” and “an Asian style long robe and a drape decorated with Vulcan writing.”[36] Although the Axanar court did state that “The combination of artistic visual elements of these uniforms likely contain original expressions protectable under the Copyright Act.”[37] Under the new Supreme Court rule, presumably only the “Vulcan writing” would be a copyrightable artistic element separate from the uniform design itself.

The U.S. District Court brushed aside Axanar Productions’ argument that the two fictional species in Star Trek, Klingons and Vulcans, were not copyrightable characters, finding them especially distinctive and recognizable, with unique element of expression. The Court found the same with the Garth of Izard character, as Garth was a featured character in one television episode, the title character of one novel, and appeared in the Four Years War game – it was not “obscure or lightly sketched.”[38] The Court even give an example of what is meant by “lightly sketched” characters in copyright law, citing Olson v. Nat’l. Broad. Co.: “The … characters are depicted only by three- or four-line summaries in the … treatment and screenplay, plus whatever insight into their characters may be derived from their dialogue and action.”[39]

The Court also held that the “defendants intentionally used elements from the Star Trek Copyrighted Works to create works that stay true to the Star Trek canon down to excruciating details”[40] so there was no transformative use, nor was Prelude to Axanar a parody, shooting down the defendant’s fair use defense. The commerciality of the project was established by the nonmonetary benefits hoped to be obtained by Alec Peters such as other job opportunities, and the fact that it was distributed free did not persuade the court that the defendants did not derive indirect commercial benefits, including the successful fundraising campaign, from Star Trek’s popularity. In addition, the fourth element of fair use analysis, market impact, was found by the court to be significant, since the fact that Prelude was distributed ”free” online may likely increase the risk of market substitution as fans choose free content over paid features.[41] The parties settled soon after this opinion was issued, and Alec Peters was ultimately unsuccessful in attempting to again crowdfund his movie studio project. His campaign failed as he did not reach his $60,000 goal, raising only $22,000. One commentator opined that “the 15,000 previous Axanar donors stayed away.”

Fallout for fan films

In the middle of the litigation over Prelude to Axanar, the owners of the Copyrighted Star Trek Works came out with strict new rules for making Star Trek fan films in June of 2016.[42] No longer would fans be guided by somewhat flexible “unwritten rules” in their homages to their favorite fictional world – Alec Peters and Axanar Productions went too far and ruined any possibility of wide open productions for future Trek fan film makers.

The new rules for Star Trek fan films limit any production to 15 minute segments for an entire original story, with no more than two episodes for a total of 30 minutes, with no additional episodes,  parts, sequels, seasons or remakes. The rules also prohibit fans from making their own props, uniforms and other costumes, stating that “if commercially available”, filmmakers must use “official merchandise.” The title cannot include the name “Star Trek”, and the filmmaker can’t use the term “official” in any of its marketing, promotions or social media for the fan production.  In addition, the filmmakers must be amateurs, they cannot be paid, and can’t be employed on any Star Trek or CBS/Paramount licensees’ productions. Fundraising is to be limited to $50,000, the film cannot be distributed in physical form such as DVD or Blu-ray; no merchandise can be sold or given away, and there can be no licensing of fan-created production sets, props, or costumes.

It is likely that other owners of copyrights to popular movies, television shows and other works will follow suit and develop rule for fan made productions as CBS/Paramount did. Lucasfilms, owner of the Star War films franchise, set out rules for Star Wars fan productions several years ago, couching the rule in a “contest” format and limiting any Star Wars fan film to only five minutes in length, with restrictions similar to the Star Trek rules.

Cosplayers’ guidelines from the Supreme Court

Despite the tightening up of fan film rules by the Star Wars and Star Trek owners, the United States Supreme Court in the Star Athletica case has left open a way for cosplayers to create celebratory replica and tribute costumes based on their favorite characters. As stated in the case, the shape, cut and dimensions of uniforms and by extension, costumes, like all fashion designs, are not copyrightable. Only the surface designs that are separable from the garment and would be copyrightable in themselves as artistic works are eligible for copyright protection.

Cosplayers pride themselves in making their costumes fully authentic and identical to the originals, and value that exactness in contests and competitions. However, it may be that more creativity on their part is necessary to get over the hurdles of the “especially distinctive” character and copyrightable decorations on costumes. After all, the fan created costume or fan film “does not seek to be the original work, but rather to embody it and show appreciation by a fan of the work who wishes to replicate the aesthetics to express their love for it.”[43] These “acts of association through apparel” are free to continue with the blessing of the Supreme Court for cosplayers who add that little extra spark of originality to their creations.

 

©2017 Mary Ellen Tomazic

 

 

[1] Star Athletica LLC v. Varsity Brands, Inc., 580 U.S.__, No.15-866 (March 22, 2017.)

[2] Amicus Curiae brief of Public Knowledge, International Costumers Union, and the Manticoran Navy at p. 15,  Star Athletica LLC v. Varsity Brands, Inc., 580 U.S.__,  No.15-866 (March 22, 2017.)

[3] Amicus Curiae brief for the Royal Manticoran Navy: The Official Honor Harrington Fan Association, Inc. at p.1, Star Athletica LLC v. Varsity Brands, Inc., 580 U.S.__,  No.15-866 (March 22, 2017.)

[4] Star Athletica LLC v. Varsity Brands, Inc., _580 U.S.__, No.15-866 (March 22, 2017.)

[5] Id.

[6] 17 U.S.C. § 102 (a).

[7] Id. at (a) (5).

[8] Star Athletica LLC v. Varsity Brands, Inc., 580 U.S.__, No.15-866 (March 22, 2017) (Ginsburg, J. concurring, p. 18, n 2.)

[9] Id., Breyer, J. dissenting, p.21.

[10] Star Athletica LLC v. Varsity Brands, Inc., 580 U.S.__, No.15-866 (March 22, 2017), p.10 n 1.

[11] Id., Breyer, J. dissenting, p.30.

[12] Star Athletica LLC v. Varsity Brands, Inc., 580 U.S.__, No.15-866 (March 22, 2017), p. 21.

[13] 17 U.S.C. § 101 (a).

[14] Star Athletica, 580 U.S. __, No.15-866, at 11.

[15] Amicus Curiae brief of Public Knowledge, International Costumers Union, and the Manticoran Navy,  Star Athletica LLC v. Varsity Brands, Inc., 580 U.S.__,  No.15-866 (March 22, 2017) at 17.

[16] Id., Dissenting opinion of J. Breyer, p. 46.

[17] Id., p. 12

[18] Amicus Curiae brief of Public Knowledge, International Costumers Union, and the Manticoran Navy,  Star Athletica LLC v. Varsity Brands, Inc., 580 U.S.__,  No.15-866 (March 22, 2017) at 15.

[19] Id. at 19.

[20] D.C. Comics v. Towle, 802 F. 3d. 1012 (9th Cir. 2015), cert denied 136 S.Ct. 139 (2016) (Batmobile.)

[21] Metro-Goldwyn-Mayer, Inc. v. Am. Honda Motor Co., 900 F. Supp. 1287 C.D. Cal. 1995) (James Bond.)

[22] D.C. Comics v. Towle, 802 F. 3d. 1012, 1019 (9th Cir. 2015), cert denied 136 S.Ct. 139 (2016.)

[23] Id.

[24] D.C. Comics v. Towle, 802 F. 3d. 1012 (9th Cir. 2015), cert denied 136 S.Ct. 139 (2016).

[25] Id., p. 1. Mark Towle does business under the name “Garage Gotham”, where he manufactures and sells replicas of automobiles featured in motion pictures or television programs.

[26]D.C. Comics v. Towle, 802 F. 3d. 1012, 1017 (9th Cir. 2015), cert denied 136 S.Ct. 139 (2016).

[27] The Court seems to wax nostalgic about the Batman television series, describing the “visual onomatopoeia that flashed on screen during fight scenes—Pow! Boff! Thwack!” and other remembrances. Unfortunately during the writing of this article, Adam West passed away at the age of 88 on June 10, 2017.

[28] D.C. Comics v. Towle, 802 F. 3d. 1012, 1012 (9th Cir. 2015), cert denied 136 S.Ct. 139 (2016).

[29] Id., at 1018.

[30] Id., at 1027.

[31] Amicus Curiae brief of Public Knowledge, International Costumers Union, Star Athletica LLC v. Varsity Brands, Inc., 580 U.S.__, No.15-866 (March 22, 2017) at 13.

[32] U.S.C.A. Const. Art. I § 8, cl. 8.

[33] See Paramount Pictures Corp. & CBS Studios, Inc. v. Axanar Productions, Inc., 2017 WL 83506 (U.S. Dist. Ct., Central Dist. of Cal., Jan. 3, 2017). See also Mary Ellen Tomazic, Fan Films – Breaking the Unwritten Rules and Defining Profit (2016), http://met-iplaw.com/met-iplaw2012/?p=185.

[34] 2017 WL 83506 (U.S. Dist. Ct. C.D. Cal. Jan. 3, 2017).

[35] The Court cited its own twenty year old case, Entertainment Research Group, Inc. v. Genesis Creative Group, Inc., 122 F. 3d1211 (9th Cir 1997) for the separability test later used by the Supreme Court in Star Athletic, LLC v. Varsity Brands, Inc., 580 U.S.__, No.15-866 (March 22, 2017)

[36] Paramount Pictures Corp. & CBS Studios, Inc. v. Axanar Productions, Inc., 2017 WL 83506 (U.S. Dist. Ct., Central Dist. of Cal., Jan. 3, 2017).

[37] Id. At 5.

[38] Id. at 6.

[39] 855 F. 2d 1446, 1452-53 (9th Cir. 1988). This case involved a copyright infringement case against the makers of the “A-Team” television series.

[40] Paramount Pictures Corp. & CBS Studios, Inc. v. Axanar Productions, Inc., 2017 WL 83506 (U.S. Dist. Ct., Central Dist. of Cal., Jan. 3, 2017).

[41] Id.

[42] Star Trek Fan Film Guidelines, http://www.startrek.com/fan-films#sthash.BczIAct6.dpuf

[43] Amicus Curiae brief for the Royal Manticoran Navy: The Official Honor Harrington Fan Association, Inc. at p.1, Star Athletica LLC v. Varsity Brands, Inc., 580 U.S.__,  No.15-866 (March 22, 2017.)

Fan Films – Breaking the Unwritten Rules and Defining Profit

February 11, 2016 articles Comments Off on Fan Films – Breaking the Unwritten Rules and Defining Profit

The word “fan” finds its origins in the word “fanatic”, defined as a person “unreasonably enthusiastic” or “overly zealous” about a specified performer, sport, movie or program. Some of the most enthusiastic fans of all are those who profess their love of certain movies or television shows by producing a “fan film.”
Fan films use copyrighted material to pay homage to the original, and under the unwritten rules of this practice, they are not to be sold and no profit is to be made from them. They are not supposed to be in competition with the original film or show, and they are not to be seen as a substitute for the original work. Usually these heartfelt homages are made by amateur filmmakers with their own money, and they do not rise to any significant competitive level with the original in quality, scope or length.
This noncommercial but still infringing use of copyrighted works is termed “tolerated use”, and is allowed by the rights holder despite knowing someone is infringing on their work. The understanding of fan film makers is that under these unwritten rules they cannot profit from their fan film in any way, and it must remain noncommercial (i.e. not for sale) and noncompetitive with the original work. The copyright holder may feel the fan film complements the original work, creates goodwill and adds value in keeping fans engaged and favorite characters alive. On the other hand, it is still direct infringement of copyrights and trademarks that the rights holder may to put a stop to at any time. It is possible that the movie and television studios have allowed fan films to this point because they were not any competition and did not made profits from the use of their copyrights, so committing serious money to sue them did not make sense.
Fan films have been made for decades and many rights holders have unofficially sanctioned them by not suing the makers for copyright infringement. Some rights holders not only tolerate fan films, they encourage them. Lucasfilm holds an annual “Star Wars Fan Film Awards” which they call “the ultimate celebration of Star Wars fan creativity”. However, the rules for this contest state that “SW fan films are limited to 5 minutes in length and nobody that is union affiliated is allowed to be involved.” Obviously a five minute video is by definition not in competition with the full length Star Wars films.
Another issue for rights holders is the use of their logos and other trademarks in fan films which may not square with the reputation and goodwill that are represented by the marks. The fan film may make use of subject matter or topics that the rights holder does not want associated with its trademarks. Or the use can be so poorly executed that it may reflect badly on the rights holder by association, so that it tarnishes the company’s brand. Of course any use by fan filmmakers of the trademarks of the original work in any kind of commerce, either distributing or selling items with the logo or trademarked characters is a violation of the Lanham Act and can be the subject of a separate lawsuit.
These issues all came into sharp focus with the filing of a copyright infringement lawsuit in U.S. District Court in Los Angeles by Paramount Pictures and CBS Studios against Axanar Productions and its president, Alec Peters, along with twenty other “John Doe” defendants who assisted in the making of the film (Paramount Pictures Corp. & CBS Studios Inc. v. Axanar Productions, Inc.) When a group of filmmakers decided to make a Star Trek fan film called “Axanar” and raised over $1 million in donations through Kickstarter and Indiegogo campaigns to produce the movie, the copyright holders sat up and took notice. According to Variety, “(t)he suit notes that the two films are “substantially similar to the Star Trek Copyrighted Works, with Vulcans, Klingons and many of the original franchise’s characters portrayed throughout.” The suit alleges that in their unauthorized derivative works based on Star Trek, the Axanar producers “unabashedly” took CBS and Paramount’s intellectual property to make their movie “look and feel” like a true Star Trek movie. It claims that Axanar was intended to be a professional production, and infringes the plaintiffs’ works by “using innumerable copyrighted elements of Star Trek, including its settings, characters, species and themes.”
The studios in this case seem to have finally drawn the line on how much they will tolerate with fan films, and in their complaint are asking for injunctive relief restraining the Defendants, and anyone acting in concert with them, from directly or indirectly infringing the copyrights of the Star Trek Works, including but not limited to “continuing to prepare, reproduce, distribute, copy, publicly perform, market, advertise, promote, produce, sell or offer for sale the Axanar Works or any works derived or copied from the Star Trek Copyrighted Works”; statutory damages of $150,000 per each separate infringement of the Star Trek Copyrighted Works; reasonable attorney’s fees; and a declaratory judgment that the continued production of the Axanar Motion Picture specifically constitutes infringement of the Star Wars Copyrighted Works.
The case revolves around what “profiting” from a fan film includes – can a filmmaker hire actors, set designers and build out a studio with crowdfunded money to make a “fan” film? Can he pay himself a salary from the funds? Paramount and CBS say no, deciding that this Axanar movie is no fan film but a competing product made from their copyrights and trademarks. The lawsuit is their way of reining in their previous tolerance of unlicensed use of their intellectual property, and protecting their legal rights under federal law. It is the evident hope of CBS and Paramount that the court will set a precedent on what is a fan film that can be tolerated by the rights holders, and what is straight infringement by a rival producer.
The producer of Axanar, Alec Peters, has not made himself popular with the studios or even a lot of Star Trek fans, some of whom contributed money to the project. In his response to the lawsuit on his website, he claims his movie is a “labor of love” that “keeps fans engaged, entertained, and keeps favorite characters alive in the hearts of fans.” He claims to have been in contact with Paramount and CBS before the project was started, but does not say how far he may have been allowed to go with a Star Trek fan film.
Discussions among filmmakers and Star Trek fans reveal the theory that the Axanar movie may have been “too good” and the competition was too much for Paramount and CBS, so they decided to shut it down. The braggadocio exhibited by Peters in criticizing how the owners of Star Trek have exploited the franchise in the past, and that his movie was going to be better, probably did not help his cause. But the very fact that the production was staffed with “industry professionals” as Peters admits in his published response, and that a commercial production studio was being built with the million dollars’ worth of funds donated to make the film, shows that this was a for-profit project. The profit component is the real linchpin to gauge how future fan films will be treated by rights holders.
Some were suspicious that Peters mysteriously kept delaying the start of production while encouraging people to make more donations to his crowdfunding sites for the film. He announced that he was building out a studio “for the production of Axanar,” but also said he wanted to use it to make other films in the future. This plan added to the feeling among fans that Axanar was using another’s copyrighted work for their own profit. The admissions by Peters, along with a financial report sent out to donors that was said to have numerous red flags indicating that he and his girlfriend may have drawn salaries from donated funds, was evidently the last straw for Paramount and CBS.
Whether Peters and Axanar Productions are shut down by a permanent injunction or they settle with Paramount and CBS to voluntarily cease production of this copyright infringing movie is still to be seen. One question has been posed in discussions among filmmakers – will Peters have to return the donations made through Kickstarter and Indiegogo? The project only got as far as a small prequel, “Prelude to Axanar”, so the fans donating cash did not really get what they were promised, a full length Star Trek film. There have been some concerns voiced recently about how stringently the crowdfunding sites monitor projects they accept for the unlicensed use of others copyrighted material, and whether they would take any responsibility to enforce any reimbursement by Peters and Axanar Productions.
The Axanar lawsuit should serve as a cautionary tale for all fan film makers, as it will most likely result in strongly stated and probably strict parameters being set by other rights holders for future tolerated use of their intellectual property. Peters, by going too far in making a film that was no longer a fan film but a low budget film with paid professionals competing with Star Trek works, crossed that line. He may have made it more difficult for fans to pay homage to their favorite movies with a lovingly crafted but still unauthorized work.

©2016 Mary Ellen Tomazic

Mary Ellen Tomazic to speak at Cleveland On the Rise CLE

November 13, 2014 articles Comments Off on Mary Ellen Tomazic to speak at Cleveland On the Rise CLE

Filmmaking as part of a Nonprofit Organization

January 17, 2012 articles Comments Off on Filmmaking as part of a Nonprofit Organization

Installment I. Intro and Background of Nonprofit Laws

Can a nonprofit organization exempt from taxation under I.R.S. §501(c) (3) make a profit? And if so, what kind of trades or businesses can it operate at a profit and still keep its tax exempt status? This question came from a filmmaker whose father has a tax exempt ministry, and who wants to make a film related to the ministry and finance it by selling advertising on a YouTube channel which would show the movie and other videos related to it. Since the documentary is about the ministry, would the YouTube channel advertising income come under the exemption of the nonprofit organization? Before analyzing the options the ministry has for financing its film, it is instructive to discuss the underpinnings and history of the §501(c) (3) tax exempt status for nonprofit organizations and how it has evolved over the last sixty years.

Nonprofit organizations have two concerns under the federal income tax law about running a business: 1) whether the activity adversely affects the organization’s tax exempt status; and 2) if not, will or should the net income of certain businesses run by nonprofits be taxed, and how far should this tax extend?

As a simple rule of thumb, in order to receive an exemption from federal income tax, the profitable trade or business run by the nonprofit must be “related” to the purposes for which the nonprofit received its tax exempt status. Over the years, there was controversy over what “related” meant, and whether the trade or business was allowed to be carried on regularly or just for a brief time. Previous to the Revenue Act of 1950, the requirement was only that profits garnered by exempt organizations be used in furtherance of the tax exempt purposes, without regard to the source of the profits. Nonprofits quickly took advantage of the old rules, carrying on full-fledged commercial enterprises in competition with corporations whose profits were fully taxable. For example, in the case of C.F. Mueller Co. v. Commissioner, Mueller, the largest manufacturer of noodles and macaroni in the U.S. qualified for tax exemption under §501(c)(3) because all its pasta profits were distributed to its sole shareholder, New York University, for the exclusive benefit of its law school. NYU also owned Howes Leather Company, American Limoges China and Ramsey Corporation, a manufacturer of piston rings. As this case was working its way through the courts, the U.S. Congress was debating the first bill on the Unrelated Business Income Tax (UBIT.) In the hearings one representative warned of a “macaroni monopoly” by the university, where all the noodles in the country would be produced by corporations held or created by universities, depriving the Treasury of any tax revenue from an entire industry. The hearings eventually produced Internal Revenue Code § 502 and rules for the “Unrelated Business Income Tax”, providing that an income-producing activity (other than passive investment) that is regularly carried on and not “substantially related” to an organization’s exempt purposes, apart from the need for income to support its charitable or other exempt mission, will be taxed as a regular business. Under § 502, an organization operated for the primary purpose of carrying on a trade or business for profit shall not be exempt from tax under § 501 on the ground that all of its profits are payable to one or more tax exempt organizations. Thus, § 502 denies exemption to so-called “feeder corporations” like the Mueller macaroni company, and other entities that operate a business as their sole activity and typically are obligated to pay over their profits to an affiliated §501(c) (3) organization. The Congress was concerned mainly with unfair competition with for-profit businesses which can use only their profits remaining after taxes, while the tax-free status of §501(c) (3) organizations allow them to use their profits tax-free to expand their operations. The House and Senate Reports both gave examples of these organizations actually using their tax exemptions to buy businesses, acquiring the business with little or no investment of their own part and paying for it in installments out of subsequent earnings, which could not be done if the business were taxable.

Most of the changes in the tax law relating to nonprofit organizations after 1950 have been piecemeal, but the theme of preventing unfair competition between nonprofits and for profit companies continued. Nonprofits benefited from not only their federal tax exempt status, but also from state and local tax exemption, lower subsidized postal rates, antitrust exemptions, and the “aura” of a government imprimatur which helped as a marketing tool and a method of quality control and protection. The Congress was willing to allow otherwise qualified organizations to keep their exemption from taxation as long as the businesses they engaged in were “insubstantial” in relation to their charitable activities, even if they were unrelated to the organization’s exempt purposes. This so-called “commerciality doctrine” was imputed by the courts and commentators into §501(c) (3). However, although the organization is allowed to retain its tax exempt status, such unrelated business activity is still taxable under the UBIT.

Mary Ellen Tomazic is an attorney in Cleveland specializing in entertainment
issue such as copyright, trademarks, contracts and licenses for musical
groups and filmmakers.