Swinging Into Action: Emerging Issues Regarding Advertising Rights and Building Façades

by Hillel I. Parness[1]

In recent years companies have devoted an increasing level of attention to advertising, and we have seen many venues – sidewalks, luggage carousels and our personal computers – become new-age advertising vehicles.  Even outdoor advertising, which has been around for some time, has undergone expansion and change, with entire buildings being equipped for the display of advertising.  Times Square in New York City is widely recognized as one of the locations most densely populated by outdoor advertising.

In a new complaint filed in the federal district court for the Southern District of New York,[2] two parties allege that in the soon-to-be released Spider-Man film, their Times Square buildings have been digitally altered, with the actual advertising that appears on the buildings replaced with other advertisements.  The complaint raises a number of very interesting issues based in trademark law, as well as some broader issues regarding the extent of advertising rights and the implications of some of the newest digital technology.

Whether by coincidence or design, Plaintiffs filed their complaint just over a week after the Second Circuit rendered a decision in case involving the façade of another New York building – the New York Stock Exchange.  This decision, along with a Sixth Circuit decision regarding the Rock and Roll Hall of Fame and an Eleventh Circuit decision regarding a statue and the film Midnight in the Garden of Good and Evil, provides important insights into the issues that might arise in connection with the Spider-Man lawsuit.

This article provides an overview of the legal dispute regarding Spider-Man, an analysis of the legal landscape laid out by these prior decisions, and predictions regarding the issues that will likely be raised by this case and others like it in the future.

Spider-Man (Sherwood 48 Associates v. Sony Corporation of America)

On April 9, 2002, two companies brought an action against five of Sony’s companies, in connection with their upcoming release of the Spider-Man motion picture on May 3.  Sherwood 48 Associates, the owner of two buildings in Times Square in New York City, and Super Sign Company, the lessee of advertising space on those buildings, allege that when their buildings appear in promotional trailers for the film, the Defendants digitally replaced certain billboard advertisements on those buildings with other advertisements.

The Plaintiffs allege that Two Times Square (the building that is the primary focus of the complaint) is “one of the world’s most famous and most recognized buildings [and] the world’s most premier advertising location.”[3]  As shown in an exhibit to the complaint, the view of the building in question is covered by billboards for various companies, including Coca-Cola, Prudential and Suntory Whisky.  Plaintiffs allege that in a preview trailer for Spider-Man

Defendants do not depict Two Times Square as it actually appears.  Rather, on information and belief, using computer-generated imaging and electronic insertion technology, Defendants digitally superimposed the logo of “USA Today” in the location of Two Times Square where, in reality, the “Samsung Spectacular” sign appeared.[4]

 

They further allege that “in certain television commercials for the Spider-Man movie, the ‘Samsung Spectacular’ is digitally replaced with an advertisement for ‘Cingular Wireless.’”[5]

Plaintiffs characterize the motivations of advertisers at Two Times Square as follows:

Advertisers contract for advertising space at Two Times Square not only as a result of the prestige and the favorable connotations associated with the building, but also because the images of the building and their sign will be seen by billions of television viewers, Internet users, movie goers, magazine and book readers, and others during the course of their contact with Sherwood.  Advertisers depend on the fact that their signs will not only be seen by the hundreds of millions of people who pass through Times Square every year but also on the residual impact of their signs appearing in photographs, newspapers, magazines, TV shows, movies, and elsewhere.”[6]

 

Plaintiffs claim that the Defendants “solicited advertising space at Two Times Square and 1600 Broadway.  Specifically, Defendants (or someone acting on their behalf) offered to superimpose advertising at Two Times Square and 1600 Broadway in the Spider-Man movie, the commercials, and the trailer,”[7] that they secured agreements with USA Today and Cingular Wireless, and that they received consideration for the superimposed advertisements.[8]

Plaintiffs allege that, as a result of the digital replacements, they have been harmed, largely in the form of lost advertising revenues:

If Defendants’ conduct is allowed to continue, it is less likely that major corporations and advertisers will contract for advertising space at Two Times Square, 1600 Broadway, or Sherwood’s other properties because the amount of exposure and, therefore, the residual value of their advertising will be diminished.  Current advertisers also will and do believe that the residual impact of their advertisement as used in movies, television, and other mediums will be and has been reduced.  It is less likely that major corporations and advertisers will be willing to pay the premium rates that Two Times Square currently commands once the residual value of the advertising is diminished.

 

Current advertisers will and do wrongfully believe that Sherwood is selling the same advertising space to different advertisers in different mediums.”[9]

 

Plaintiffs’ complaint includes counts for the various iterations of federal trademark infringement, common law unfair competition, deceptive trade practices under New York law, trademark dilution under New York law, and for “Electronic Piracy/Trespass.”  In the first count of the complaint, for Trade Dress Infringement, Plaintiffs allege that “[t]he design and presentation of the unique configuration and ornamentation of Two Times Square and the advertising and signage display at Two Times Square are non-functional elements of the building as a whole,”[10] and that “Sherwood has developed significant secondary meaning in the unique configuration and ornamentation of Two Times Square and the advertising and signage display at Two Times Square.”[11]  Having alleged trademark rights in the image of the building, Plaintiffs state that “Defendants’ superimposition of the ‘USA Today’ logo, the ‘Cingular’ logo, and other advertising onto Two Times Square is likely to cause confusion, deception and mistake as to the origin or source of the altered building and/or the advertising and signage display thereon.”[12]

As discussed in greater detail below, Plaintiffs do not raise a claim for federal trademark dilution, but rather for trademark dilution under the New York anti-dilution statute.[13]

In their final count, Electronic Piracy/Trespass, Plaintiffs allege that “[b]y electronically altering the appearance of Two Times Square and 1600 Broadway, Defendants have appropriated the electronic advertising rights in Two Times Square and 1600 Broadway for themselves and hence have trespassed upon the property of Sherwood.”[14]

Plaintiffs seek a permanent injunction that includes barring Defendants from “manipulating the appearance of Two Times Square, 1600 Broadway, or any other property owned by Sherwood or its affiliates in any manner, including any motion picture, television program, theatrical trailer, or advertisement,” or “inserting advertisements onto Two Times Square, 1600 Broadway, or any other property owned by Sherwood or its affiliates in any manner, including in any motion picture, television program, theatrical trailer, or advertisement.”[15]

Because this case is venued in the Second Circuit, a decision that may figure prominently in any legal analysis is New York Stock Exchange, Inc. v. New York, New York Hotel, LLC.

New York Stock Exchange, Inc. v. New York, New York Hotel, LLC

In 1997, The New York Stock Exchange commenced an action against the New York, New York Hotel and Casino in Las Vegas, alleging that the casino’s use of a replica of the façade of the New York Stock Exchange’s building constituted, inter alia, trademark infringement and trademark dilution.  In 1999 the District Court for the Southern District of New York granted the casino’s motion for summary judgment on all counts.[16]  On the issue of trademark confusion, the court applied the Second Circuit’s  Polaroid likelihood of confusion factors and found confusion unlikely.  Chief among the court’s considerations was the parody inherent in the use of the façade in connection with gambling, and the prominent use of the casino’s “NEW YORK NEW YORK SLOT EXCHANGE” mark.  In light of the intended parody, the court found for the casino on factors such as similarity of the marks and good faith intent of the casino.[17]  The district court also found it unlikely that the New York Stock Exchange would “bridge the gap” between running a stock exchange and running a casino.[18]

On federal trademark dilution, the court noted the Second Circuit’s positions that federal dilution requires both distinctiveness and fame, and that distinctiveness is only satisfied by inherent distinctiveness, rather than acquired distinctiveness.[19]  Analyzing the façade in this light, the court found:

The combination of a classical facade that is regularly used for buildings containing public spaces and the words “NEW YORK STOCK EXCHANGE” as part of the facade does not require a person to exercise imagination to realize that the building houses a stock exchange.   The facade therefore is not “distinctive” as that concept is defined by the Second Circuit in Nabisco.[20]

 

The Second Circuit Court of Appeals largely affirmed the district court decision, but disagreed when it came to dilution via the façade, and when it came to New York trademark dilution:

A stock exchange can be housed in any of a variety of buildings, and the use of a combination of particular architecture with the New York Stock Exchange name might be found by a trier of fact to be rather arbitrary.  Such an image is certainly neither generic nor descriptive of a stock market.[21]

 

“Because NYSE’s mark consisting of its architectural facade and name is inherently distinctive, or so a trier of fact might find,” the Court of Appeals remanded the case to the district court.[22]  Noting that New York’s dilution law does not require that marks be inherently distinctive, the Court of Appeals also remanded the case to the district court to consider whether the casino had violated New York dilution law through tarnishment of the New York Stock Exchange’s reputation.[23]

Another case of interest involved alleged infringement of trademark rights inherent in the façade of Cleveland’s Rock and Roll Hall of Fame.

Rock and Roll Hall of Fame

In 1996 the District Court for the Northern District of Ohio issued a preliminary injunction against a photographer who was selling posters bearing photographs of the Rock and Roll Hall of Fame.[24]  The court found that “As a result of the extensive advertising and promotional activities involving the ‘ROCK AND ROLL HALL OF FAME’ and building design trademarks, the public has come to recognize these trademarks as being connected with or sold by the Museum, its official licensees and/or official sponsors.”[25]  The court also found that “Defendants’ continued infringement would irreparably damage the Museum’s licensing program and revenues.   In particular, it would likely have a negative effect on the Museum’s ability to sign up new licensees and would likely increase the risk that current licensees may breach or terminate their license agreements.”[26]  The injunction included “[u]sing or authorizing or causing others to use in a commercial manner plaintiffs’ ROCK AND ROLL HALL OF FAME and building shape trademarks, or confusingly similar trademarks such as the building image and ‘ROCK N’ ROLL HALL OF FAME’ used in defendants’ poster.”[27]

On appeal, the Sixth Circuit saw things differently:

[W]e do not readily recognize the design of the Museum’s building as an indicator of source or sponsorship.   What we see, rather, is a photograph of an accessible, well-known, public landmark.  Stated somewhat differently, in Gentile’s poster, the Museum’s building strikes us not as a separate and distinct mark on the good, but, rather, as the good itself.[28]

 

The Sixth Circuit took issue with the district court’s findings that “the Museum’s building design is fanciful, that the Museum has used its building design as a trademark, and that ‘the public has come to recognize [the Museum’s building design] trademark[ ] as being connected with or sold by the Museum.’”[29]  “[T]he Museum’s existence as a landmark in downtown Cleveland undermines its ‘fancifulness’ as a trademark,”[30] wrote the court, explaining that a distinctive design does not necessarily carry over into a distinctive trademark.  Furthermore, the court found that the museum had failed to project a consistent image of itself to the public, thus further undermining the premise that the museum used the building as a trademark.[31]  Finding no evidence that the museum building design was used consistently by the museum to function as a trademark, the Court of Appeals remanded the decision to the district court.[32]

A third case is also worthy of consideration because it deals with the replication of another public image – in this case a statue – in a motion picture, and allegations of infringement arising from that replication.

Midnight in the Garden of Good and Evil (Leigh v. Warner Bros.)

Following the release of the film Midnight in the Garden of Good and Evil in 1997, a photographer brought suit against the film company, alleging copyright and trademark violations in the recreation of a particular photograph in connection with film.  The complaint concerned a 1993 photograph of the “Bird Girl” statue in a Savannah, Georgia cemetery, which was used on the cover of the novel on which the film was based.  Because the statue was removed from the cemetery prior to the commencement of filming, Warner Brothers obtained permission from the sculptor’s estate to create a replica of the statue for filming purposes, and created still and film images of the replica for use in and in connection with the film.[33]

On Warner Brothers’ motion for summary judgment, the District Court for the Southern District of Georgia granted the motion with regard to the photographer’s copyright and trademark claims, the latter of which included false designation of origin, false description, distortion and misrepresentation of plaintiff’s artistic work and misattribution of authorship.[34]  Regarding the trademark claims, the court explained that a plaintiff in a trademark case must demonstrate that the mark in question is used to identify the source of goods or services, and “if a picture or work of art merely identifies the artist rather than any products or services, it cannot be protected as a trademark,”[35] concluding that plaintiff had not met his burden.

Nevertheless, the court engaged in a likelihood of confusion analysis, finding with regard to the similarity of the marks “little similarity of design between plaintiff’s work and defendant’s promotional images and film footage other than the choice of subject matter.”[36]  The court also concluded that, with regard to intent,

Plaintiff has produced no evidence that Warner Bros.’ intent in using the Bird Girl image in connection with the movie was to capitalize on plaintiff’s reputation.   Rather, it appears that Warner Bros. intended to capitalize on the association of the statue with the theme or idea of judgment that is central to the story of both the book and the movie.   This association, as discussed in the copyright analysis supra, is not something plaintiff can protect.[37]

 

The Eleventh Circuit Court of Appeals affirmed the district court’s ruling on the trademark claims, finding that “[a]s used in the materials submitted by Leigh, the Bird Girl image ‘strikes us not as a separate and distinct mark on the good, but, rather, as the good itself.’”[38]  The court also considered plaintiff’s argument that the case was analogous to the Second Circuit’s Gilliam decision, where that court found that editing the episodes of Monty Python’s Flying Circus for length and content violated the rights of the original artists,[39] but noted that “Warner Brothers did not actually alter or distort Leigh’s photograph when producing its film and accompanying promotional materials;  instead, it started from scratch, building its own replica of the Bird Girl statue to photograph and film,” and further noted that there was no evidence of Warner Brothers’ intention to attribute the images it created to the plaintiff.[40]

Potential Issues in Sherwood 48 and Beyond

Trademark Use by Plaintiffs: As indicated by the cases discussed above, the first question for Plaintiffs is whether and how they use Two Times Square as a trademark.  Plaintiffs allege that “[t]he design and presentation of the unique configuration and ornamentation of Two Times Square and the advertising and signage display at Two Times Square are non-functional elements of the building as a whole.”[41]  They further allege that “Sherwood has developed significant secondary meaning in the unique configuration and ornamentation of Two Times Square and the advertising and signage display at Two Times Square.”[42]

These allegations raise another interesting issue.  According to Plaintiffs the mark they are trying to protect is the building’s “unique configuration and ornamentation . . . and the advertising and signage display.”  One might characterize the façade of the building (a photograph of which is included as an exhibit to the complaint) as comprised largely of a “stack” of third party billboards.  It will be interesting to see whether Plaintiffs are able to secure trademark protection for – or even demonstrate that they have standing in connection with – a collection of others parties’ trademarks.

In both Rock and Roll Hall of Fame and Leigh, the Sixth and Eleventh Circuits found that the purported marks at issue – images of the actual museum and the replicated statue – were inseparable from the goods themselves, and therefore were ineligible for trademark protection.  If the service at issue is the placement of advertisements on the Two Times Square building, the court may, similarly, determine that the building covered with billboards is not an indicator of source, but is rather the service itself, and therefore is not entitled to trademark protection standing alone.  At the same time, the Sixth Circuit ruled against the Rock and Roll Hall of Fame, in part, because it had not presented a consistent image of the building to the public.  Plaintiffs may try to demonstrate that their publicity efforts, by contrast, have been consistent and steady.

Trademark Use by Defendants:  Beyond the issue of trademark use by Plaintiffs, Plaintiffs will be confronted with the issue of whether or not the Defendants used the image of the building as a trademark.  According to the complaint, the building appears in the movie trailer three times, for a total of up to four seconds.[43]  In their defense, Defendants will probably point to the fact that they produce films, not billboard advertisements, and that the appearance of the building on film serves to represent the building itself, not create a commercial association.  Plaintiffs will likely respond that motion pictures regularly sell the rights to product placement in films, and seek factual discovery to back up their allegations that the Defendants sold “electronic advertising rights” to USA Today and Cingular Wireless.  Even assuming that this proves to be true, Plaintiffs still must convince a court that by selling these rights Defendants were using the building image as an indicator of source.

In New York Stock Exchange, the district court noted that the casino had argued that its use of the exchange’s façade was not a trademark use, but was merely done to represent an actual building.  “This would be an interesting issue,” wrote the court,

if the Casino did not use the mark ‘NEW YORK NEW YORK SLOT EXCHANGE’ prominently on the replica facade, in place of ‘NEW YORK STOCK EXCHANGE.’   With the name change, however, the use of the facade is not merely descriptive.  The words are the Casino’s, and designate the source of the services associated with the replica facade as the Casino.[44]

 

With this in mind, the court went on to apply the likelihood of confusion factors to the casino’s use of the façade.  According to the allegations in Sherwood 48, the Defendants altered the appearance of Two Times Square by replacing one third party advertisement with another third party advertisement, but otherwise (presumably) leaving the image of the building unchanged.  If the district court decision in New York Stock Exchange is any guide, Defendants may argue that the building appears in the film simply to represent the building itself, while Plaintiffs may contend that by selling the rights to replacement advertisements, Defendants are using a representation of Plaintiffs’ building as an advertising vehicle and competing directly with Plaintiffs.

Likelihood of Confusion:  Whether or not the court determines that the parties’ respective uses constituted trademark uses, the court may consider whether the Defendants’ acts would create a likelihood of confusion among consumers.  In the Second Circuit, likelihood of confusion is analyzed by application of the non-exhaustive list of factors enumerated in Polaroid Corp. v. Polarad Electronics Corp.[45]  Without going into a full consideration of the factors, if the court determines that Two Times Square is a source-indicating trademark, the “competitive proximity,” “bridge the gap” and “good faith” factors will likely be hotly contested, for reasons explained above.

In Leigh, the Eleventh Circuit explained that in order for Warner Brothers’ use of the image of the statue in the film to constitute trademark infringement, “Leigh would have to prove that consumers were likely to believe that he sponsored or was involved with the Warner Brothers movie or promotional materials.”[46]  Similarly, the court in Sherwood 48 will likely require Plaintiffs not only to demonstrate trademark rights in the image of the building, but that the use of the building’s image in the film is likely to create an association in consumers’ minds between the building and the film (or perhaps the replacement advertisers).

Inherent Distinctiveness Requirement for Dilution:  As the Second Circuit noted in New York Stock Exchange, the circuit interprets the federal anti-dilution statute to require that marks subject to dilution be inherently distinctive – rather than distinctive through acquired secondary meaning.

In Sherwood 48, however, Plaintiffs have not asserted a claim for federal trademark dilution – which would require a finding of inherent distinctiveness – but rather a claim for dilution under the New York statute, which does not so limit the distinctiveness requirement.  Plaintiffs may have decided not to include a federal dilution claim because they felt the court would not be inclined to find the configuration of billboards on Two Times Square arbitrary with regard to outdoor advertising.  This seems consistent with Plaintiffs’ statement in the complaint that “Sherwood has developed significant secondary meaning in the unique configuration and ornamentation of Two Times Square and the advertising and signage display at Two Times Square.”[47]

Ownership of “Electronic Advertising Rights” in Motion Pictures:  Plaintiffs describe Defendants’ film as a “different [advertising] medium,” and the right to advertise on a building in a film as “electronic advertising rights.”  Plaintiffs are operating on the premise that advertising rights on Two Times Square – whether the real Two Times Square or any representation of the building in any media – are held exclusively by Plaintiffs, even if the representation is in a fictionalized New York City, in a film produced by a third party.  This position, taken to its extreme, could erase any distinctions between entertainment and advertising, and give owners of buildings and landmarks veto power over the use of images of their properties in any possible form of media.  It remains to be seen whether, or the extent to which, the concept is given any legal credence.

Creation of Digital Models: In Leigh, the Eleventh Circuit noted that Warner Brothers did not modify Leigh’s purported trademark – the photograph of the statue – but rather photographed and filmed a replica of the statue that it created.  As more and more films employ digital techniques, the buildings that appear in movies are often physical, or even digital models, rather than images of the buildings themselves.  This should not make a difference in this case on the question of trademark protection (in Leigh neither party had rights in the original statue, whereas in this case Plaintiffs claim they have rights in the original façade), but it is worth flagging the issue for the future, and considering whether, and under what circumstances, it would make a difference if an image of an actual building is digitally altered, or a building is created from scratch within a digital modeling program.

Conclusion

            As new forms of advertising continue to proliferate, along with increasingly sophisticated digital technologies, issues such as those suggested by the Sherwood 48 complaint will continue to be raised, and will likely lead to the further development of the legal discourse that has been emerging regarding trademark protection for images of public buildings, and the rights of advertisers and content creators to manipulate and modify real-world images for a variety of purposes.