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 ...”
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