A lecture I gave, back in 2012, to postgraduate executive students on the Engineering and Technology Management Masters Programme at Bogazici University. Albeit a little late for "Star Wars Day", which was on the 4th of May, it seemed an opportune occasion to share.

1. © Mehmet Nafi Artemel, 2012 1

2. © Mehmet Nafi Artemel, 2012
Franchising
Merchandising
Difference between Franchising and Merchandising
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3. © Mehmet Nafi Artemel, 2012 3

4. “Ne kadar köfte, o kadar ekmek!”
4

5.  A franchise agreement often involves the
franchisor (i.e. Ramiz Köfte) giving the
franchisee (e.g. Ramiz Köfte branch at
Akmerkez shopping mall – I don’t know the
owners’ name or company name!) the right to
use the franchisor’s (Ramiz Köfte’s)
intellectual property rights (IPRs) such as for
example:
5

6.  The right to use the name “Ramiz Köfte”, which
is registered as a trade mark (UK spelling!)
 Other IP rights (e.g. copyright in the menus; the
tray covers (i.e. the sheets of paper on the trays)
etc.; trade secrets which may be involved in the
making and serving of the meatballs)
 Industrial design in a meatball?
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8. © Mehmet Nafi Artemel, 2012 8

9.  In the case of franchising, the franchiser
allows another person (the franchisee) to use
his way of doing business (including
trademarks, know-how, customer service,
software, shop decoration, etc.)
9

10.  The franchised system is a package
comprising intellectual property rights
relating to one or more marks, trade names,
industrial designs, inventions, and works
protected by copyright, together with
relevant know-how and trade secrets, to be
exploited for the sale of goods or the
provision of services to end users.
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12.  The term “merchandising” as used by
marketing professionals refers to a whole
range of allied activities that improve access
to and visibility of products, such as designing
of shop layout, proper window displays,
product groupings, etc.
12

13.  The term as used by lawyers and in the field
of IP in particular refers to use of fictional or
real characters to promote the sale of various
products and/or services.
13

14.  Character and personality merchandising is
one of the most modern means of increasing
the appeal of products or services to potential
customers who have an affinity with that
character or personality.
14

15.  It is generally argued that the main reason for
a consumer to buy medium to low-priced
mass goods is not because of the product
itself but because of the name or image of
the celebrity or fictional character that is
reproduced on the product.
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17. Example: Harry Potter
 Warner Bros. acquired worldwide merchandising
rights for the Harry Potter character in the
popular children’s book series by J.K. Rowling.
 Warner Bros. has in turn divided up these license
rights to various of its business partners /
licensees:
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http://www.statisticbrain.com/total-harry-potter-franchise-revenue/

20.  Hasbro has the rights to develop and distribute trading cards
and youth electronic games
 Mattel (Hasbro’s competitor) makes toys
 Electronic Arts (the California software entertainment
company) is licensed to make Harry Potter computer and
video games
 Coca-Cola™ secured other rights relating to marketing of the
first Harry Potter film
[“The Harry Potter Phenomenon”, Interview with NilsV
Montan, President of InternationalTrademark Association,
Managing Intellectual Property, April 2001, p. 18]
20

21.  Character merchandising is, strictly
speaking, the use of popular fictional
characters (commonly from a book or a film)
to promote the sale of various products
and/or services.
21

22.  But, character merchandising is usually used as
an umbrella term which refers to:
 Fictional human beings (e.g. Harry Potter,Tarzan or
James Bond)
 Fictional non-human beings (e.g. Donald Duck or
Bugs Bunny)
 Real persons (e.g. famous personalities in the film or
music business, sportsmen)
22

23.  The following examples of character merchandising
can be given:
 a toy is the three-dimensional reproduction of the fictional
character Mickey Mouse;
 aT-shirt bears the name or image of fictional characters;
 the label attached to a perfume bottle bears the name of
an actor or actress;
 an advertising movie campaign for a drink shows a pop
star drinking it. 23

24.  As an organized system, character
merchandising originated and was initiated in
the United States of America in the 1930s in
theWalt Disney Studios in Burbank
(California).
24

25.  When this company created its cartoon
characters (Mickey, Minnie, Donald), one of
its employees, Kay Kamen, established a
department specialized in the secondary
commercial exploitation of those characters
and, to the surprise of most, succeeded in
granting an important number of licenses for
the manufacture and distribution of low-
priced mass market merchandise (posters,T-
shirts, toys, buttons, badges, drinks).
25

26.  In the context of copyright, the most relevant
aspects of the merchandising of fictional
characters (such as Mickey Mouse, Donald
Duck, Pluto) are ?
26

27.  books, pamphlets
 cinematographic works
 works of drawing
 photographic works
 sculptures, dolls, puppets or robots (i.e.
three-dimensional works)
27

28.  Industrial design protection is granted by the
relevant authority (inTurkey:TheTurkish
Patent Institute) for the protection of the
ornamental or aesthetic aspects of articles.
28

29.  Industrial design protection is mainly relevant
for cartoon characters represented in the
form of aesthetic designs for three-
dimensional articles which mainly belong to
the toy or costume jewelry areas (dolls,
robots, puppets, action figures, brooches)
which generally originate in cartoons.
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30. © Mehmet Nafi Artemel, 2012
The ‘StarWars’ case
30

31.  The ‘StarWars’ case illustrates:
 the length to which IP rights holders will go for protecting
their intellectual property rights in artifacts made for a film
and which are subsequently used for merchandising
purposes
 the distinction between copyright and industrial designs and
 how these are formulated under different legal
systems/jurisdictions (i.e. the US and UK) and
 the resulting differences of outcome in a dispute
31

32.  Lucasfilm, named after its founder, George
Lucas, was the production company that
made the StarWars film series
 The ‘StarWars’ films became hugely
successful for spinoff merchandising activities
based on the characters and paraphernalia
 The film’s story-line and characters were
conceived by George Lucas
32

33.  This case concerned a dispute over
intellectual property rights in certain articles
that were created for use in the first Star
Wars film which was called:
?
33

34.  “StarWars Episode IV – A New Hope”
 1Yıldız Savaşları: Bölüm IV –Yeni Bir Umut
(film) (1977)
(Star Wars: Episode IV – A New Hope)
34

35.  The most important of these articles for the
purposes of this case was the ‘Imperial
Stormtrooper’ helmet
 Lucasfilm owns copyrights in the ‘artistic works’
(sanat eserleri) created for the StarWars films
 Lucasfilm builds up a successful licensing
business, including the Imperial Stormtrooper
helmet
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37.  Between 1974 and 1976 George Lucas’
concept of the ‘Imperial Stormtroopers’ as
threatening characters in “fascist white
armoured suits” was given visual expression
in drawings and paintings by an artist in the
US, Mr. Ralph McQuarrie
37

38.  In 1976, Lucasfilm contacts Mr. Ainsworth in
the UK for the production of items for use in
the first StarWars film
 Lucasfilm gave Mr. Ainsworth drawings and a
model
 Mr. Ainsworth keeps the moulds (kalıp) which
he had used to create the items
38

39.  The Imperial Stormtrooper helmets produced
by Mr. Ainsworth were used as costumes in
the 1977 film, ‘StarWars Episode IV’
39

40.  In 2004, Mr. Ainsworth sets up a website from
which he began to sell replicas which he created
from the original moulds that he had kept
 Mr. Ainsworth sells between USD 8,000 -30,000
of the goods in the US
 Lucasfilm notices the sale of replicas by Mr.
Ainsworth and sues him for infringement of
copyright in the US
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43.  The claimant (the term in the UK) (or the
plaintiff) (i.e. inTurkish: davacı) is ‘Lucas Film’
 The defendant (Turkish: davalı) is Andrew
Ainsworth
 The case is between a company in the US
(Lucasfilm owned by George Lucas) and an
individual in the UK (Andrew Ainsworth)
43

44.  Lucasfilm (claimant/plaintiff) sued Andrew
Ainsworth ( defendant) for the first time in
the US.
 Lucasfilm sued AndrewAinsworth for
infringement (ihlal/tecavüz) of copyright
under US law
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49.  Lucasfilm obtained a default judgment
(gıyabi karar) for USD 20 million against
AdrewAinsworth since Mr. Ainsworth did not
take active part (i.e. did not appear in court)
in the proceedings (dava)
49

50.  Since Mr. Ainsworth had no assets in the US,
Lucasfilm sought to enforce the US judgment
in England
 Lucasfilm also commenced proceedings in
the English High Court for:
 Claims (iddia) of infringement (ihlal) of
English copyright and claims under US
copyright law
50

51. Stages (aşamalar) of proceedings (davalar) in the
UK:
 2008:The High Court 8/04/2008 – 31/07/2008
 2009:The Court of Appeal 3/11/2009 – 16/12/2009
 2011:The Supreme Court 7/03/2011 – 27/07/2011
51

52.  Hearing dates (duruşma günleri/celse):
 8th, 9th, 10th, 11th, 14th, 15th, 16th, 17th, 18th,
21st, 22nd, 24th, 25th, 29th, 30th April and 1st and
2nd May 2008
 Judgment (Karar): 31/07/2008
▪ 280-paragraph judgment
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54.  Hearing dates (Duruşma günleri):
 3/4/5 November 2009
 Judgment (Karar ): 16/12/2009
▪ 209-paragraph judgment
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56.  Hearing dates (Duruşma günleri):
 7, 8 and 9 March 2011
 Judgment (Karar ): 27 July 2011
 115-paragraph judgment
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57. © Mehmet Nafi Artemel, 2012 57

58.  Lucasfilm sued in the English court for once
again for copyright infringement
 Lucasfilm sued this time for copyright
infringement under UK copyright law
 Lucasfilm also sought to enforce the US
judgment
58

59.  Lucasfilm claimed that copyright in the helmets
had been infringed
 The High Court posed itself the following
question:
“(i) Are any of the helmets artistic works within
the scope of the 1988 Act, so as to attract
copyright in themselves?This involves a
consideration of whether they are either
sculptures or works of artistic craftsmanship.”
59

60.  FİKİRVE SANAT ESERLERİ KANUNU
 Kanun Numarası: 5846
60

61. III - GÜZEL SANAT ESERLERİ:
Madde 4 - (Değişik madde: 07/06/1995 - 4110/2 md.)
Güzel sanat eserleri, estetik değere sahip olan;
1.Yağlı ve suluboya tablolar; her türlü resimler, desenler, pasteller, gravürler,
güzel yazılar ve tezhipler, kazıma, oyma, kakma veya benzeri usullerle maden,
taş, ağaç veya diğer maddelerle çizilen veya tespit edilen eserler, kaligrafi,
serigrafi,
2. Heykeller, kabartmalar ve oymalar,
3. Mimarlık eserleri,
4. El işleri ve küçük sanat eserleri, minyatürler ve süsleme sanatı ürünleri ile
tekstil, moda tasarımları,
5. Fotoğrafik eserler ve slaytlar,
6. Grafik eserler,
7. Karikatür eserleri,
8. Her türlü tiplemelerdir.
Krokiler, resimler, maketler, tasarımlar ve benzeri eserlerin endüstriyel model
ve resim olarak kullanılması, düşünce ve sanat eserleri olmak sıfatlarını
etkilemez.
61

62.  Artistic works (sanat eserleri) are defined in
English copyright law as follows:
CDPA, 4(1):
“In this part ‘artistic work’ means-
(a) a graphic work, photograph, sculpture or
collage, irrespective of artistic quality,
(b) a work of architecture being a building or a
model for a building, or
(c) a work of craftsmanship.”
62

63. “a) artistik niteliği olup olmadığına
bakılmaksızın, grafik eser, fotoğraf, heykel
veya kolaj,
b) bir bina veya bina modeli olarak mimari
eser veya
c) bir zanaat eseri”
63

64.  The High Court dismissed the claims (iddiaları
yersiz buldu) for infringement of English
copyright
 It was held (mahkemenin kararı uyarınca) that
helmets were not copyright protected because
they were not:
 Sculptures or
 Works of artistic craftsmanship
64

65.  The Court of Appeal agreed with the High Court
that the helmet was not a sculpture because:
 a sculpture is a work of the artist’s hand intended to
be appreciated as a work of art.
 Example given by the judge: a pile of bricks created
by an artist to be displayed in an art gallery is
undoubtedly a sculpture; a similar pile made by a
builder preparing works across the road is clearly not.
65

66.  According to the Court of Appeal the helmets
were created for utilitarian purposes within
the film as costumes and props.
 In other words they were not created to be
appreciated as works of art.
66

67.  The Supreme Court agreed and affirmed
(onadı) the judgments of the High Court and
the Court of Appeal, and held that the helmet
was not a sculpture
67

68.  In English copyright law, copyright subsists
(içinde bulunur, var olur) amongst other
things, original “artistic works”, which
includes a “sculpture”, irrespective or artistic
quality.
68

69.  In the StarWars case, it was significant to
determine whether a helmet was a
“sculpture” for two reasons:
69

70. 1) If it had been a sculpture, any copying of the
helmets which Mr. Ainsworth had originally
produced would have infringed Lucasfilms’
copyright
2) If it was not a sculpture, Mr. Ainsworth had a
defence (müdafaa) which is recognised only
in English law:
70

71.  Although copyright undoubtedly subsisted in
the drawings of the helmet and the technical
drawings of the helmet (as graphic works)
these drawings were considered “design
documents” by the Court.
 Therefore, under section 51 of the CDPA it
was not an infringement of copyright in those
drawings to make articles to those designs.
71

72.  It is not an infringement of any copyright in a
design document which records (barındıran) a
design for anything other than an artistic work to
make an article to the design (tasarıma göre
yapmak) or to copy an article made to the design
(according to section 51 of the CPDA Act in the
UK)
72

73.  51 Design documents and models.
 (1) It is not an infringement of any copyright
in a design document or model recording or
embodying a design for anything other than
an artistic work or a typeface to make an
article to the design or to copy an article
made to the design.
73

74.  “Tasarımına dayanarak bir ürünün yapılması
veya tasarımına dayanarak yapılmış bir
ürünün kopyalanması, bu tasarımın bir sanat
eseri veya yazı karakteri için [oluşturulmuş]
olmaması kaydıyla, kayıt altına alındığı veya
tecessüm ettiği tasarım dokümanı veya
modeli uzerinde var olan herhangi bir telif
hakkının ihlalini oluşturmaz”.
74

75.  If the helmet did not qualify as sculpture
(which it did not) and was therefore not an
artistic work, Mr. Ainsworth had a defence to
an English copyright action based on
infringement of Mr. McQuarrie’s (the original
artist) graphics.
75

76.  It was accepted that under US law, copyright
subsisted in the articles and that Mr.
Ainsworth had according to US law infringed
Lucasfilm’s copyright by selling replicas to
customers in the US through his website.
 But, it was not an infringement of UK
copyright law for Mr. Ainsworth to make and
distribute three-dimensional copies of the
helmet
76

77.  “Ainsworth now knows he can continue to make
his replica helmets for sale in the UK without fear
of infringing copyright in the country. But he is
prevented from selling the merchandise into the
US.”
 Source: James Nurton. Managing Intellectual
Property. London: Jul/Aug 2011 (c) Euromoney
Institutional Investor PLC Jul 2011)
77

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80. © Mehmet Nafi Artemel, 2012 80
Lucasfilm Ltd. Responds to United Kingdom Supreme Court Ruling
on Copyright Infringement
LONDON–(BUSINESS WIRE)–Today, the UK Supreme Court issued a
split ruling in the copyright infringement lawsuit brought by Lucasfilm
involving the Stormtrooper costumes from StarWars.
The Court agreed that Mr. Ainsworth’s replica costumes infringe
Lucasfilm’s US copyrights, and ruled that those rights are enforceable
in the UK with respect to activities outside of the UK.
This is the first time the Supreme Court has ruled on an issue of
great commercial and legal importance, namely the jurisdiction of the
courts in the UK over infringements taking place abroad.The judgment
is an important step in modernizing UK law and bringing it into line
with the EU.

81. © Mehmet Nafi Artemel, 2012 81
“The decision unfortunately also maintains an anomaly
of British copyright law under which the creative and highly
artistic works made for use in films — which are protected by
the copyright laws of virtually every other country in the world
— may not be entitled to copyright protection in the UK .
Lucasfilm remains committed to aggressively
protecting its intellectual property rights relating to StarWars
in the UK and around the globe through any and all means
available to it, including copyright, trademark, design patents
and other protections afforded by law. We encourage the UK
government’s recent efforts to modernize its copyright and
design laws to afford full protection to three dimensional
artistic works.”

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