Publicity rights, false endorsement, and the effective protection of private property.

• Author: Cooper, Michael A.
• Position: Note

INTRODUCTION

Publicity rights, though lacking a physical manifestation, are of high social benefit. These rights protect the commercial value in an individual's name. As with other forms of property rights, the state should enforce them vigorously and effectively. In theory, these rights are currently protected, an implicit recognition of their value. In practice, however, two concerns are emerging: the devaluation of wealthier individuals' claims for protection and the use of an overly complex test that fails to provide adequate predictability or expedience. Indeed, the intellectual property protected by publicity rights--essentially the right to exploit a well-known reputation commercially--is particularly fragile because its value, though real and substantial, is embedded in public perceptions and can be easily damaged by undesired associations. (1) This Note proposes a revision of the publicity rights test and suggests that courts import the "Endorsement Test" from First Amendment doctrine to remedy these two issues while operating within the familiar framework of its existing jurisprudence. Guided by the rationale for the right, as demonstrated by its theoretical justifications, false endorsement claims should be evaluated under the following standard: In light of the context, would it appear to a reasonable observer that the disputed message constitutes an endorsement?

Dating to Adam Smith's publication of the Wealth of Nations, theorists have long recognized that a myriad of societal benefits flow from the protection of personal property. (2) As with physical property, courts have acknowledged the right of an individual to the intangible goodwill associated with his name. Today, this recognition is represented by the common-law right of publicity (3) and its statutory counterpart, the federal Lanham Act. (4)

There are, however, twin assaults on this element of personal property. First, a recent circuit court decision suggested that the individuals who most often bring suits to protect their publicity rights--wealthy celebrities--are less deserving of such property rights than the often poorer individuals who attempt to trade on their names and images. Even if this position represented a sensible policy, it ignores the reality that many of these individuals likely generated much of that wealth through the savvy development of an endorsement persona, all the while destroying their ability to continue to control or develop such a persona. Second, even where relief is eventually granted, the courts' doctrine creates delays and uncertainty. Indeed, courts often deploy complex balancing tests, evaluating the relevant question as one of fact. This method makes it difficult to offer the protections that the law should afford expeditiously and creates pressures for settlement even where no legal defense should exist.

In light of the importance of these property rights, an effective and expedient means of resolution is needed. The test must be effective at determining whether a false endorsement exists, because overprotection of property rights may be just as socially deleterious as underprotection. (5) Social science literature analyzing how individuals process information offers perspective on how best to protect this intellectual property. Indeed, some existing case law is already consistent with this research.

A review of case law in other realms reveals that there is already a test that can provide the robust protections required. The Endorsement Test from First Amendment case law would ask whether a reasonable person would think that the challenged material suggests that the plaintiff was either endorsing or disapproving the defendant's message. (6) Moreover, the relevant prong of this test already functions as a question of law, (7) allowing judges to dispose of the matter without lengthy trials where the issues are clear-cut. It is also consistent with the leading cases and research in the field. In short, this test, guided by the justifications for publicity rights, would allow individuals to capitalize on their own success, regardless of wealth, and avoid the risk of having their successes damaged through undesirable associations

Part I of this Note traces the theoretical justifications for publicity rights. Part II then introduces the two main threats to their effective enforcement. Finally, Part III proposes a novel formulation that contemplates the reality of human information processing in seeking an effective legal standard.

1. THE ROLE OF PROPERTY RIGHTS IN THE AMERICAN EXPERIENCE

   Property rights have long been recognized as a crucial impetus to labor in Western political and social philosophy. This Part traces this recognition among theorists from Adam Smith to the modern academy, and finally to existing jurisprudence. Any proposed test should be guided by these rationales.

   1. Intellectual Foundations

      It is far from novel to suggest that protection of personal property is necessary to induce individuals to labor. Adam Smith argued that labor, and the fruits thereof, are the essence of property: "The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable." (8) Then, through the exchange of one man's surplus for that of another, "the society itself grows to be what is properly a commercial society." (9) Indeed, it is a commercial society that Smith famously suggested could, through market function, provide for the needs of its members. (10) That is, no one could specialize in a single field and develop excellence therein without the knowledge that he could later exchange the fruits of his labor with others. For instance, a sculptor's art on its own will not provide sustenance. Through exchange with the farmer, however, both can focus upon their chosen field. Modern theorists also have noted the vital role of property rights in an effective market economy. Professor Dani Rodrik, for instance, stated that as "many others have argued, the establishment of secure and stable property rights ha[s] been a key element in the rise of the West and the onset of modern economic growth." (11) A prerequisite, then, for a modern economy, and indeed a society of learning (since academic research and education as currently constituted would be impossible without a division of labor), is strong property rights.

      The logic underlying this protection is just as applicable to intellectual property as to physical property. Professor Rodrik correctly argues that property rights are necessary to induce individuals to labor because "an entrepreneur would not have the incentive to accumulate and innovate unless s/he has adequate control over the return to the assets that are thereby produced or improved." (12) Moreover, property rights are necessary to promote the entrepreneurial spirit that some have associated with the global successes of the United States. (13) Thus, much hinges on the right.

      As with physical property, intellectual property can have real value and require assiduous efforts to generate. According to the logic of Smith and Professor Rodrik, when someone creates something of value, it should, in the absence of other contractual arrangements, belong to the individual who generated the value. For instance, assume a final element can be added to a product, such as a car, to increase sales. The element positions the car as a "luxury" good and serves as a heuristic for the buyer that the automobile is worth the purchase price. This element adds value to the manufacturer, whether the element is leather seats or an endorsement by a trusted public figure. Because the value of an endorsement is real, it is socially beneficial for individuals to create such public images: The endorsement creates tax revenue both directly from income earned by the endorser and indirectly through economic activity generated by the endorsement.

      These valuable public images are just such a commodity. Such images do not occur through happenstance, but rather are often the result of careful planning undertaken by the public figure and a team of skilled advisors. For example, Arnold Palmer, the golfer, is still able to generate revenue from endorsements because of a concerted effort to brand himself not as a "winner," but rather as a man of integrity who came through in the clutch. Although it would have been easy to present him to the public as a "winner," his advisors counseled him otherwise. Palmer recalled that one advisor was adamant on this point: "Win ads' were about winning or losing, and his aim was never to position me as a 'winner' because there always comes a day when a winner no longer wins." (14) In fact, perhaps the best indicator of the value of celebrity endorsements is that many of the highest-paid athletes in professional sports nonetheless earn more from their endorsements and similar activities than from actually competing in the sport. (15)

   2. Legal Foundations

      Courts have previously recognized the real value and need for protection for this form of intellectual property. The seminal case, Haelan Laboratories, Inc. v. Topps Chewing Gum, Inc., focused on a dispute between rival companies, one of which had secured an exclusive right to depict athletes' likenesses on trading cards. (16) The U.S. Court of Appeals for the Second Circuit held that the athlete had a cognizable "right of publicity," (17) a decision that served as the turning point in judicial treatment of publicity rights. (18) The Second Circuit suggested that what it termed the "right of publicity" includes the right to exclusivity, because this right "would usually yield [celebrities] no money unless it could be made the subject of an exclusive grant which barred any other advertiser from using their pictures." (19) That is, consistent with Adam Smith, the right of publicity would otherwise have no value and celebrities would lack sufficient incentive to...