Musical Divorce 3: A strategic approach to trademark issues in band partnership agreements
(A four-Part Article on Musical Divorce)
Trademarks have become very important in today’s global market. When The Platters, an American band that had a number of chart-topping hits in the 1950s and 1960s, broke up, what followed was four decades of legal wrangling and litigation. With the Platters, most of the lawsuits revolved around who would get custody of the band’s name. So important are trademarks in today’s economy that there are now businesses that specialize in valuing trademarks and associated assets such as brands, logos, image rights, and domain names. According to David Haigh, founder of Brand Finance, a brand-valuation consultancy, “the single largest source of intangible value in a company is its trademark.” What is a trademark? How are trademarks protected? How important are trademarks in the music industry?
What Is a Trademark?
The World Intellectual Property Organization defines a trademark as “a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises.” A band’s trademark can be very valuable and ownership of such a trademark determines who can continue to use the mark long after the band has dissolved. It is important that a band agreement addresses ownership issues because such issues are not addressed in Nigeria’s primary trade mark statute – theTrade Marks Act (Chapter 436), Laws of the Federation of Nigeria (Trademarks Act).
Valuation of Trademarks
So important are trademarks to businesses that books are written and courses offered on how to estimate the value of trademarks. According to Forbes.com (2011), the 10 most valuable trademarks and their estimated value are: Google (Trademark value: $44.3 billion); Microsoft (Trademark value: $42.8 billion); Wal-Mart, (Trademark value: $36.2 billion); IBM (Trademark value: $36.2 billion); Vodafone (Trademark value: $30.7 billion); Bank of America (Trademark value: $30.6 billion); GE (Trademark value: $30.5 billion); Apple (Trademark value: $29.5 billion); Wells Fargo (Trademark value: $28.9 billion) and AT&T (Trademark value: $28.9 billion).
Trademark and the Music Industry: What Is in a Name?
Trademark is very important in the music industry and can translate into millions of dollars in merchandising revenue alone. A trademark can also help a band build its brand by inspiring loyalty and motivating purchasing. In the business world generally, really valuable trademarks can be monetized and used to generate cash through licensing and collateralization. Unfortunately, in the music industry, while considerable attention is frequently focused on copyright issues, trademark issues are frequently ignored until it is too late. Yet, many fights by former band members are not over copyrights but over the trademarks and trade names. When American rock band, The Beach Boys, started splintering, what followed was a $4 million lawsuit over trademark rights in the band name that lasted for years. At one time some members of the original band toured as “The Beach Boys” while other members of the original band toured as “Beach Boys: Family & Friends” and this predictably led to more litigation. Although the group never actually broke up officially, the original group has mutated and has gone through multiple versions; some original members have left or died and new members have joined the band. Live, the ‘90s alternative rock group has also been embroiled in litigation since the original lead singer, Ed Kowalczyk, left the group in 2009 and allegedly launched a tour under the name “Ed Kowalczyk of Live.” One of the thorny issues in Live’s case is whether Ed Kowalczyk has the right to continue to use the band name on solo projects even though he has left the group. In 2012, a $2 million trademark infringement lawsuit was initiated to stop Ed Kowalczyk from using “Live” as part of his solo act. Although the case has since settled, the lesson is that trademark issues need to be fully discussed and addressed in a written contract.
Music Bands, Trademarks, and Domain Names
Ownership of a trademark can translate into rights over domain names identical to the trademark and the right to go after domain name hijackers and cybersquatters. In Backstreet Productions, Inc. v. John Zuccarini, CupcakeParty, Cupcake Real Video, Cupcake-Show and Cupcakes-First Patrol, the Backstreet Boys, a well-known pop singer group in the United States fought to have certain domain names that were identical or confusingly similar to the group’s trademark cancelled or transferred to them. The domain names that were in dispute in the case included: <backstreeboys.com>, <backsreetboys.com>, and <backstreetboyspics.com>. In a decision rendered on August 24, 2001, the Administrative Panel established to hear the case concluded that the disputed domain names were identical or confusingly similar to the trademarks of the Backstreet Boys and ordered that the said domain names be transferred back to the group. The Backstreet Boys were successful in the case largely because the group successfully established that it had trademark rights over the term “Backstreet Boys.” The case goes to show the ever-growing importance of trademarks in the Internet Age.
Trademarks and Band Partnership Agreements
Given the importance of trademarks, issues pertaining to ownership of trademarks ought to be clearly addressed in a band partnership agreement. Regarding trademarks, logos, and image rights, a band partnership agreement must offer detailed and unambiguous answers to the following questions:
1.Who owns the name of the band? Does the band name belong to the partnership? Are band members (partners) permitted to use the band name independently without the written consent of the band partnership? Do all the members get to use the band name as they please?
2.Who owns the band’s logo?
3.What happens to the name of the band if the band dissolves? Who gets the right to use the band name, logos, domain names, and image? Will the band name be sold or licensed to third parties? Can band members individually continue to use the band name, logos, domain names and images? Do only the original band members get to use the name?
4.What if the band does not break up but a band member quits? Can the member that quit still continue to use the name of the band for solo projects? Do departing band members have any interest whatsoever in the band name, domain name, logo, and image?
5.What if the band does not break up but a member is fired for a legitimate reason? What rights does the fired member retain? Can the member that is fired continue to perform using the name of the band?
6.What about new members, people who joined the band after the band was formed? What rights do new members get over the band’s trademarks and logos?
The questions posed in this article are not spelled out in any black letter law and should be clearly addressed in a band partnership agreement. What works for one band may not work for another. The members of a band could decide that in the event of a break up, the band name will be retired and no one would be permitted to use the name even if individual band members are still performing. On the other hand, the members could decide that in the event of a break up only a majority of the group members that are still performing together, or only the lead singer, or only the original founder of the group can continue to use the name. The possibilities are endless. What is important is that there is a clear agreement among the members of a music group about what will happen if and when a break up occurs.
Effective Trademark Management Starts with Trademark Registration
In most countries, oownership of a trademark registration is prima facie evidence of the validity of the trademark. Not surprising, many entertainers go to great lengths to register and protect their trademarks. International singer and entertainers, Madonna Ciccone,p/k/a Madonna,owns U.S. Trademark Registrations for the mark MADONNA for entertainment services and related goods (Reg. No. 1,473,554 and 1,463,601). Stefani Germanotta (p/k/a Lady Gaga) has trademark registrations for LADY GAGA in the United States of America and China. Through the company, Backstreet Productions, Inc., the Backstreet Boys, a well-known pop singing group in the United States, owns United States Trademark Registration No. 2,241,482 for the Backstreet Boys mark. Even music artists that have not registered their names as trademarks claim common law trademark rights over these names. Given the importance of trademarks in the music industry and in the business world generally, the starting point for members of music bands is to protect the band’s trademarks. In Nigeria, a valid registration inPart A of the register as proprietor of a trade mark in respect of any goods gives to the registrant the exclusive right to the use of that trade mark in relation to those goods.Furthermore, in Nigeria, trademark registration allows a trademark owner to bring a trademark infringement action in Nigeria. Article 3 of the Nigerian Trademark Act states that “[n]o person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark.” In the process of registering a trademark, a band must consider registering the trademark for all relevant classes of goods. Article 4 of the Nigerian Trademark Act states that “[a] trade mark must be registered in respect of particular goods or classes of goods.” Consider that the Backstreet Boys’ U.S. Trade Registration covers International Class 9 (for pre-recorded compact disks, audio cassettes and video cassettes featuring music); International Class 14 (jewelry, namely, dog tags); International Class 16 (paper goods/printed matter, namely, posters, bookcovers, postcards, unmounted photographs); International Class 18 (leather goods, namely, backpacks and fanny packs); International Class 25 (clothing, namely, hats, T-shirts and jackets); and International Class 41 (entertainment in the nature of live performances by a musical group).
Conclusion
Trademarks are very important in today’s global economy and are particularly important in the entertainment business. For music artists, trademark could mean millions of dollars in merchandising revenue. While much of the battle between members of music bands are over copyright ownership, frequently forgotten until it is too late are issues relating to trademark ownership and rights. A strategic approach to trademark and brand management starts with effectively protecting a band’s trademarks and ensuring that trademark issues are carefully addressed in band partnership agreements.
Dr. Uche Ewelukwa Ofodile
LL.B. (Nig.); LL.M. (London); LL.M. (Harvard); SJD (Harvard)
Professor of Law, University of Arkansas School of Law