Dr. Andreas Leupold LL. M. (UT)
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Dr. Andreas Leupold LL. M. (UT)
German Lawyer / Business Mediator
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A lesson for game studios and artists: Creator of Angry Birds is seeking compensation in the millions of dollars from toymaker

August 18, 2014

On August 4, 2014, Juli Adams, the artist that created the original  characters of the extremely successful video game “Angry Birds” sued the American toymaker Hartz Mountain Company for breach of contract, unjust enrichment and misappropriation of the trademark “Angry Birds” (see
http://www.gamasutra.com/view/news/222617/Artist_claims_she_invented_Angry_Birds_files_complaint_seeking_compensation.php for a downloadable copy of the full complaint filed in the U.S. District Court for the Western District of Washington at Seattle). While on its face this case appears to be primarily a trademark case, as Ms. Adams claims that Hartz had no right to register the trademark in its own name and license it to Rovio, the Finnish creator of the video game, it can also serve as a lesson both for video game makers and anyone who contributes artwork to video games.

I. The facts
The facts of the case drawn from the complaint can be briefly summarized as follows:
  • Ms. Adams and the toymaker Hartz entered into a licensing agreement under which there was to be “no transfer of ownership of the “Angry Birds” Intellectual Property from the plaintiff Juli Adams to Hartz. The Agreement gave Hartz only limited licensing rights, which included Hartz’s obligation to obtain trademark protection for Plaintiff Adams’ Intellectual Property.”
  • Accordingly, Hartz registered the trademark “Angry Birds” for toys and sporting goods and distributed plush-toys under that trademark from 2007;
  • In 2009, Rovio released the video game “Angry Birds” and started to market its own t-shirts, plush toys, and cell phone accessories under its trademark “Angry Birds”;
  • Although Rovio´s trademark did not extend to toys for pets because that trademark had already been registered to Hartz in 2007, Hartz then entered into an exclusive licensing agreement with Rovio for allowing allowed Hartz to market and sell Rovio’s Angry Birds pet toys;
  • Although the license agreement between Ms. Adams and Hartz expired in 2012, Hartz continued to distribute pet products based on the title character of Rovio´s video game under the name “Angry Birds”;
  • According to the complaint, the creator of the original “Angry Birds” received a total amount of US $11,228.59 while Hartz “reaped millions” from the sale of its plush toy line under that name although “Hartz had and has no legal or beneficial right to sell Rovio themed “Angry Birds” pet toys”.
II.  The lesson for video game and toy makers
These facts suggest that both Rovio, the creator of the video game “Angry Birds” and Hartz, the maker of the “Angry Birds” plush toys overlooked the obvious fact that their partnership could not reach its intended purpose, as neither of them was entitled to license the other party the rights needed for distributing “Angry Birds” plush toys. Rovio could not and did not acquire any rights in the designation “Angry Birds” for toys, since it had already been registered by Hartz for the plaintiff, so Rovio was not in a position to license any trademark of that name to Hartz for marketing “Angry Birds” plush toys. Hartz, on the other hand didn´t have anything to license to Rovio either, since its own licensing agreement did not permit any sublicensing. And due to the expiration of Hartz´s licensing agreement with Ms. Adams in 2012, Hartz could not base its own distribution of the toys on that agreement any longer because it no longer had rights to use any of Ms. Adams creative works or the trademark. If this is the case, it is not unlikely that Hartz may soon have to enter into negotiations on how to settle this case against payment of a significant amount to Ms. Adams. And what about Rovio? Must it worry too to get sued by the creator of the original “Angry Birds”? Given the similarity between Ms. Adam´s “Angry Birds” and Rovio´s video game character, it is not unlikely that Rovio may face a complaint based on copyright infringement in the United States and other countries and its own distribution of “Angry Birds” plush toys may also have infringed Ms. Adam´s older trademark.

To avoid such undesirable consequences, video game studios must understand that their business model may be built on sand, if they fail to secure all rights needed for marketing not only their game but also for any merchandising products based on the game´s characters. Obtaining exclusive rights of use in the game´s characters is crucial for successfully marketing the game without being exposed to cease and desist or damage claims from the creators of the characters that inspired the game if such characters closely resemble original works of authorship created by other artists. If a graphic designer created illustrations for a comic strip or sketches for toy figures, such works cannot be used for a video game without permission and appropriate compensation of their creator. Even if a fictitious character´s name has been protected as a trademark for physical toys only, it cannot be excluded that a court may treat the sale of a video game under that name as an infringement of that trademark as such use of the name may create a confusion as to the source of the game or at least cause consumers to assume that the distributor of the video game obtained a license from the trademark owner and creator of the original character. Damage claims can be a costly matter but the risk of facing cease and desist claims can have even more severe consequences as it can prevent the publisher from any further distribution of a video game that has been successfully introduced to a worldwide player base.

Bottom line: Michael Gorbachev´s famous quote "He who comes too late is punished by life" still holds true and must be observed by game developers and publishers as well. 

 

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