Ius Gentium

University of Baltimore School of Law's Center for International and Comparative Law Fellows discuss international and comparative legal issues


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The Two Systems – Economic vs. Moral Rights

Daniel Huchla

The Law of Intellectual Property plays a valuable role in most if not all domestic legal systems.  The drafters of the United States Constitution were so cognizant of the value of this right that a congressional empowerment clause was designated specifically for Intellectual Property, more commonly known as the Copyrights Clause.[i]  Efforts toward the harmonization of intellectual property rights on an international scale have drawn into question two distinct approaches to copyrights, the protection of economic rights, and the protection of moral rights. In its history, the United States has viewed copyrights from an economic perspective. Whereas European nations are more likely to construct copyrights as moral rights. These differing perspectives might be illustrative while considering the pending litigation surrounding the commercialization of the writings of J.R.R. Tolkien.

huchla_blog3_photo1Cover art for editions of novels written by J.R.R. Tolkien and published by Houghton Mifflin in 1999.[ii]

The film adaptation of The Lord of the Rings Trilogy was a massive commercial success which received massive critical acclaim.[iii] This film lead to its own set of disputes over the sharing of profits between the filmmakers and the Tolkien estate. With the success, it was foreseeable that Warner Bros. would want to acquire rights to The Hobbit as well.[iv] A contract was signed, and three films were adapted from the novel. Although The Hobbit films were slightly less successful or acclaimed, this was not the cause for dispute between the Fourth Age, Ltd. (the corporate form of the Tolkien Estate) and Warner Bros. The lawsuit arose from the attempt to commercialize/market the films through the development of Lord of the Rings/ The Hobbit themed casino games.[v]

Under the United States economic rights approach, copyrights are designed to provide the incentives for authors to create. From this approach, an author’s interest is in the exclusivity of the economic exploitation of their work. Generally, from this approach once a copyright is licensed through contract, the author’s interest in the intellectual property is limited by the terms of the contract. Depending on the terms of the contract surrounding the marketing of the film, under a purely economic construction of copyright, Warner Bros. might be entitled to relief under contract law.[vii]

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Image of U.S and U.K flags superimposed.[vi]

Under the European moral rights approach, copyrights are viewed from a perspective beyond pure economics due to a belief that there is an “intimate bond between authors and their works.”[viii]  Under this theory works are viewed as an extension of the individual. Accordingly, countries that subscribe to this construction of copyrights such as France, Germany, and the United Kingdom provide additional protections to authors. Among these protections are a right to ensure the integrity of a work.[ix] The right to ensure the integrity of a work is a separate right from the commercial copyright and accordingly would not be waived while licensing the copyright. This right would likely enable the Tolkien Estates to contest the marketing of the film adaptations through the creation of casino games.

Moral rights are acknowledged under International Law through the Berne Convention and Trade Related Aspects of Intellectual Property (TRIPS) agreement.[x] Article 6bis of the Berne Convention provides:

(1) Independently of the author’s economic rights, and even after the transfer of the said rights, the author shall have the right to claim authorship of the work and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the said work, which would be prejudicial to his honor or reputation. [xi]

The United States, while ratifying Berne, believed  that these obligations were sufficiently met by domestic law without further action.[xii]  This claim does have some basis in the findings of the Second Circuit in Gilliam v. American Broadcasting Companies, Inc..[xiii]  In this case, there was a dispute about the abuse of editorial discretion under a license agreement with the BBC to bring Monty Python’s Flying Circus to the United States.[xiv] The court protected the claims of integrity on behalf of members of Monty Python under the Lanham Act, 15 U.S.C. § 1125.[xv] Though the application of the Lanham Act in this fashion has been questioned. Accordingly, it is uncertain just how the District Court might interpret the moral rights of the Tolkien Estate, creating unclear bargaining position for any potential settlement.

Despite this rather contentious dispute between Warner Bros. and the Tolkien Estate, this has not stemmed interest in the development of additional films set in Middle-Earth. Fans of the novels and films alike have speculated about the possibility of adapting another of Tolkien’s beloved novels, “The Silmarillion.”[xvi]  Perhaps the Silmarillion will make it to the silver screen, but that will depend upon the resolution of the current litigation between Warner Bros. and the Tolkien Estate.  However, if moral rights were more clearly accepted in the United States, “The Silmarillion” might be more likely to become the next blockbuster film.

Daniel Huchla is a third year law student at the University of Baltimore and a graduate of Miami University with a Bachelor of Music. During his undergraduate studies, he performed in an International Opera Festival located in Brazil. He also serves as Associate Managing Editor for the University of Baltimore Law Review. Areas of interest include Administrative Law, International Humanitarian Law, International Criminal Law, and National Security Law. He is currently a Law Clerk with the Law Offices of McCabe, Weisberg & Conway.

[i] U.S. Const. art. I, § 8, cl. 8.

[ii] https://theliteraryomnivore.wordpress.com/2011/03/20/the-sunday-salon-out-of-print-and-current-us-editions-of-the-lord-of-the-rings/.

[iii] http://www.the-numbers.com/movies/franchise/Peter-Jacksons-Lord-of-the-Rings#tab=summary; http://www.theonering.net/torwp/2004/03/03/24877-complete-list-of-trilogy-oscar-nominations-wins-2/.

[iv] http://www.hollywoodreporter.com/thr-esq/warner-bros-claims-tolkien-estate-428390

[v] http://www.hollywoodreporter.com/thr-esq/tolkien-estate-sues-warner-bros-393212; see Fourth Age Ltd. v. Warner Bros. Digital Distribution Inc., 2013 WL 11316952 (2013); see also http://www.casinocenter.com/hobbit-quest/.

[vi] http://expatessentials.net/education-us-v-uk-education-systems/.

[vii] http://www.hollywoodreporter.com/thr-esq/tolkien-estate-sues-warner-bros-393212

[viii] Cyrill P. Rigamonti, Deconstructing Moral Rights, 47 Harv. Int’ L. J. 353 (2006).

[ix] Id.

[x] Berne Convention, https://www.law.cornell.edu/treaties/berne/overview.html.

[xi] https://www.law.cornell.edu/treaties/berne/6bis.html.

[xii] Edward J. Damich, Moral Rights in the United States and Article 6bis of the Berne Convention: A Comment on the Preliminary Report of the Ad Hoc Working Group on U.S. Adherence to the Bern Convention, 10 Colum.-VLA J. L. & Arts 655 (1985).

[xiii] 538 F. 2d 14 (2nd Cir. 1976).

[xiv] Id. at 23.

[xv] Id. at 24.

[xvi] See e.g. http://www.tolkienlibrary.com/press/1180-on-the-possibility-of-a-silmarillion-movie.php.

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Faux-Pas Fashion “Caveat Emptor”: Let The Buyer Beware

Kia Roberts Warren

Growing up in one of the fashion capitals of the world (NYC), I am, admittedly, a bit of a fashionista. I learned at a very young age that if you go down to Canal Street and enter a store looking for a Chanel boy bag that someone will take you to the small back room or a van filled with every designer name imaginable. This is the second oldest profession: counterfeiting. Many consumers believe that these counterfeiters are doing a service because consumers do not want to pay an exorbitant price for the real thing. However, counterfeiting is not a victimless crime.

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A counterfeit is a trademark infringement, a manufactured good being passed off as an original under the trademark.[1] This is harmful to luxury brands because their trademark is their business. Luxury brands rely on their trademarks to attract consumers and the brand mark signals to consumers the high quality of their products. Counterfeiting hurts the economy. The United States economy loses up to $250 billion in sales each year and 750,000 jobs lost.[2] In 2015, the EU economy reported a value 9.7% of their total sales every year or $28.7 billion and 363,000 jobs lost.[3]KRW Blog2_Photo2

Counterfeiting is a $600 billion industry and represents 5-7% of total world trade.[4]  And, these numbers are only increasing due to modern technology and the Internet. Because consumers can now shop within their own homes, counterfeit sales are on the rise because companies cannot watch the internet 24/7 looking for counterfeit sites [5] In 2007, for example, $119 billion worth of knock-off merchandise were purchased on the web.[6]

If clothing does not interest you like it does me, just know that more than clothing and handbags are counterfeited. Counterfeits have spread to toys, electronics, cosmetics, and pharmaceuticals,[7] many of which are sold through legitimate retail stores and websites.[8] These are public safety issues; these counterfeits are made with hazardous materials to the environment and to people’s health. Counterfeit luxury goods, also, have serious criminal ramifications that are not known to most consumers.

Bangladesh

Shakil Khan, 10, has worked for 4 months in a garment factory in Old Dhaka, making money for his impoverished family in Chandpur, Bangladesh. Nafeesa Binte Aziz/Toronto Star

Counterfeit luxury goods aren’t just hurting the economy, but promote child labor exploitation, human trafficking, drug trafficking, and even terrorism as well as other civil, criminal, and administrative crimes.[9] A Vietnamese crime gang leader earned $13 million selling counterfeit watches in New York.[10] Children, as young as six, are treated to excessively cruel and criminal treatment.[11] Forced laborers are smuggled into the country with the products to sell them and to place the finishing touches on the goods after getting across the borders.[12] There have been reports of authorities uncovering operations where proceeds from drug trafficking were channeled into counterfeiting and, vice versa, where profits from the sale of counterfeit goods were used to further other illicit operations.[13] The FBI has evidence that the World Trade Center 1993 bombing was financed with counterfeit luxury goods on Canal Street.[14] In 1996, the FBI found that followers of Sheik Omar Abdel Rahman, a blind cleric who was sentenced to 240 years in prison for plotting to bomb New York City landmarks, had made millions of dollars selling counterfeit t-shirts bearing Nike and Olympics logos.[15]

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So what can be done to protect fashion maisons and stop crime? Louis Vuitton employs about 40 lawyers, 250 independent investigators, and spends over $20 million each year to fight counterfeiting of its products.[16] Fashion maisons also turn to MarkMonitor (a corporation that accesses data and detects unauthorized channels and shuts them down) for help.[17] Of course, all of these costs get passed on to the consumer. There are also national laws in place. For example, the U.S. enacted the Lanham Act and Copyright Act of 1976.[18] In France, consumers can be forced to pay a costly fine and possible jail time for owning a counterfeit.[19] This idea is catching on in Italy and Britain as well. The European Union has placed two new regulations dealing with counterfeits.[20] On the international level there is International Anti-Counterfeiting Coalition (IACC), Office for Harmonization in the Internal Market, Anti-Counterfeiting Group, International Intellectual Property Alliance. The World Trade Organization has its members sign the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement.[21]

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In 2008, Louis Vuitton sued eBay in a French court. The French court ruled that eBay did not do enough to prevent the counterfeit sales from occurring on the site and eBay was ordered to pay $60.8 million in damages.[22] In a UK court, Cartier and Montblanc were recently granted orders ruling Internet providers to block websites selling counterfeit watches under their trademark.[23] Moncler has recently become victorious in the judicial arena. The Uniform Domain Name Dispute Resolution Policy under the World Intellectual Property Organization (WIPO) granted the transfer of 50 domain names incorporating its trademark.[24] In its case against Royalcat (a Chinese company), the Beijing IP Court awarded the maximum statutory damages in a trademark infringement action.[25]

As consumers we have the power to stop the counterfeiting industry. We are hurting ourselves. We have a responsibility to protect ourselves and each other. So, if you see someone considering buying a counterfeit Prada tell them “caveat emptor.” We need to educate each other about where and who are money is going to.

For more info on how to spot a fake, click here.

Kia Roberts-Warren is a 2l at University of Baltimore. She has always had an interest in international affairs. She is interested in private international law as well as international humanitarian law. She is on the executive board of ILS as the Career Development Director and is on the Phillip C. Jessup Moot Court Team.

[1] http://www.oecd.org/sti/ind/2090589.pdf

[2] http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1254&context=honors

[3] http://qz.com/460932/fakes-are-costing-europes-fashion-industry-10-of-its-sales-and-thousands-of-jobs/

[4] http://michiganjb.org/issues/1/article4.pdf

[5]http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1254&context=honors

[6] http://michiganjb.org/issues/1/article4.pdf

[7] https://www.iwu.edu/economics/PPE17/lewis.pdf

[8] https://www.iwu.edu/economics/PPE17/lewis.pdf

[9]  https://www.unodc.org/documents/counterfeit/FocusSheet/Counterfeit_focussheet_EN_HIRES.pdf

[10] https://www.iwu.edu/economics/PPE17/lewis.pdf

[11] https://www.unodc.org/documents/counterfeit/FocusSheet/Counterfeit_focussheet_EN_HIRES.pdf

[12] https://www.unodc.org/documents/counterfeit/FocusSheet/Counterfeit_focussheet_EN_HIRES.pdf

[13] https://www.unodc.org/documents/counterfeit/FocusSheet/Counterfeit_focussheet_EN_HIRES.pdf

[14] http://michiganjb.org/issues/1/article4.pdf

[15] http://michiganjb.org/issues/1/article4.pdf

[16] http://michiganjb.org/issues/1/article4.pdf

[17] http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1254&context=honors

[18] http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1254&context=honors

[19] http://crefovi.com/articles/fashion-law/efficiently-fight-counterfeiting-fashion-luxury-sectors/

[20] http://crefovi.com/articles/fashion-law/efficiently-fight-counterfeiting-fashion-luxury-sectors/

[21] http://www.oecd.org/sti/ind/2090589.pdf

[22] http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1254&context=honors

[23] http://www.thefashionlaw.com/home/cartier-wins-court-order-blocking-sites-selling-fakes

[24] http://www.wipo.int/amc/en/domains/search/text.jsp?case=DNL2015-0031

[25] http://www.worldtrademarkreview.com/Magazine/Issue/59/News/Beijing-IP-Court-grants-maximum-amount-of-statutory-damages-for-the-first-time