Since this opinion comes from a motion to alter or amend the judgment, it skips over a lot of things, as will I, but one part of the holding is of significant interest—read on for a cautionary note on drafting a license to use a name. Bart had a license from Mercado (whose continuing validity was in question) to use Mercado’s name and likeness. When a dispute arose, Mercado sued for, among other things, violation of his publicity rights.
The court found that Bart only had the right, pursuant to the license, to use Mercado’s name and likeness for existing or new materials related to Mercado’s psychic and astrological services. New materials were defined as materials “relating to Mercado's psychic and astrological services of whatever nature whatsoever,” but that turned out to be insufficient.
In the modern economy, services can change fast. Bart’s co-defendant used Mercado’s name and license for waltermercado.net, providing interactive astrological and psychic consultation through the internet, including some daily horoscopes published under Mercado’s name as well as live psychic readings. Likewise, co-defendant Waltervision entered into a contract allowing another company, SCI, the right to use the Mercado mark in connection with various 800 numbers, prepaid paid calling cards and pay per call live astrological and psychic readings through 900 numbers, including the creation of a new website, Telewalter.com, and the use of Mercado's name and likeness to advertise the astrological and psychic services being sold. SCI produced gift cards featuring Mercado's name and likeness and a press release for the launch of “Walter Mercado's Psychic and Astrology Network, starring Walter Mercado.” Defendants also operated an SMS/text-messaging service using his name and likeness with horoscopes not created by Mercado. Co-defendant Walter Int’l published horoscopes using Mercado’s name and likeness in a Mexican newspaper; Mercado didn’t write them.
The court found that these weren’t New Materials under the contract because they didn’t relate to Mercado’s psychic and astrological services. “This is not necessarily contingent on Mercado providing personal services to Bart, but New Materials must relate to psychic and astrological services provided by Mercado himself.” The contract’s use of the term “produce” didn’t mean “create,” since the contract itself was written “in a manner that distinguishes between the two verbs. The Preexisting Materials provision uses the verbs ‘created or originated,’ while the New Materials provision does not use the verb ‘created.’” Thus, the right to develop new materials “contemplates a product already in existence that is related to Mercado's psychic and astrological services. It does not give Bart the right to create new materials using Mercado's Name and Likeness. If the parties had intended to grant Bart such a right, the parties could have used the verbs ‘create’ or “originate,’ as they did in the Preexisting Materials section.”
Because of the limitation of the contract, even though defendants might own the mark, they were unable to expand the scope of their services without violating Mercado’s right of publicity. I leave as an exercise for the reader how this might have been fixed, from Bart's perspective.
When the court turned to the false advertising claims, matters grew even more complicated. Bart, as owner of the mark, might have the right to use the mark to advertise its services even if it didn’t have the right to use Mercado’s name and likeness. The court considered the mark to be “a type of endorsement.” Bart, as owner, could use its own mark as an endorsement for advertising purposes without becoming liable for false endorsement. Endorsement doesn’t require actual involvement in or development of the sponsored product. (What about the FTC Guidelines, then?)
However, “endorsing a product and saying a product is created by the endorser are two different things.” Thus, even as owner, Bart couldn’t advertise Mercado as the source of its products, except for the preexisting materials and the new materials that were in some way Mercado’s work product. (Great example for Mark McKenna’s investigation of the meaning of Dastar.) For example, the website featured Mercado's photo and signature with a message that read “Live consult with my most profound psychics.” The court ruled that defendants couldn’t use this photo and signature to promote the website, nor could they refer to “Mercado's most profound psychics.” Instead, if they owned the mark, they could use it to refer to the business—e.g., “‘profound Walter Mercado psychics’—but Bart cannot say it is selling the work product of Mercado.” (Are consumers likely to understand this distinction? What about the domain name?)
Likewise, ads for the SMS service couldn’t use Mercado’s name and likeness. Further, defendants couldn’t “advertise the SMS Services as if Mercado himself were authoring the horoscopes and messages or has personally selected the psychics authoring the same.… However, advertising consults from ‘Mercado's powerful psychics’ or that consumers ‘will be connected with the good energy of Walter Mercado’” would be allowed if Bart owned the mark. (Hunh? How is that not using his name?)
Mercado also claimed a violation of his moral right to avoid attribution. But Puerto Rico law only provides an attribution right, not a right against attribution for work not the author’s: “[t]he author or beneficiary of a literary, scientific, artistic and/or musical work has the right to benefit from it, and the exclusive prerogatives to attribute to him/herself or retract its authorship, dispose of his/her work, authorize its publication and protect its integrity ...”