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The Legal Implications & Benefits of Product Placement in Motion Pictures and Television

From its earliest beginnings, advertising, and in particular, product placement has played a major role in cinema. Naturally, if something is to be viewed by millions of people, it is going to catch the attention of marketers. Product placement, though, makes an especially harmonious marriage with cinema and television because they require props, and both industries are in somewhat of financial constraints.

In the past, (pre-1980s) most product placement deals were quid pro quo in nature, and the manufacturers of a product would furnish the necessary products for the production to take place in exchange for the resulting exposure. Though this type of trade is still practiced, thanks to the success stories of several cinema product placements and the financial constraints of the business, many of today’s product placement deals are paid advertisements.

Specifically, in the past ten to fifteen years paid product placements in television and film have been on the steady rise. In 2010 product placements accounted for a total of $34 million in revenue and in 2014 that number skyrocketed to $242 million.[1] In television, this phenomenon is primarily due to technological advances like the DVR and on-demand streaming that have virtually made commercials a thing of the past, and in film, piracy and the inherent nature of films as expensive, and sometimes financially risky endeavors, has made paid product placements a necessary evil. No matter who you talk to in Hollywood, the consensus is that it is more difficult to get a movie or television series made today than it has ever been. Yes, this is in part due to a business with large egos and the centralized and overwhelming power of major studios, but much of it comes down to finances. With that said, anyone producing or attempting to produce a motion picture or television series should highly consider how and where they can incorporate product placement into their project.

Production companies can look to use product placement in three different ways. They can seek compensation for the use of an easily exchangeable prop/product, for example the Reese’s Pieces made famous by the film E.T. Film companies can also seek to reduce the cost of a production, or increase the quality of a production by partnering with companies that can offer extremely expensive or hard to obtain props, such as the Chevy Camero used in the Transformer series. Finally, producers can look to popular manufacturers for cross-promotional deals or compensation in services. However, no matter what product a writer or creative wishes to use in their story, before they can look toward financial or other gains, it’s best to make sure that the desired use is legal.

When Can and Can’t a Product be Used?

Not all exposure is good exposure, so before mentioning or using a product in a production, it’s important to make sure that the use is legal and/or sanctioned. The primary concern for producers is whether the use of the product is a misuse of another’s trademark and a violation of the Lanham Act, specifically 15 U.S.C.A. § 1125(a)(1) which states:

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which–

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

In other words, producers should be careful of using any product in a way that might allege to viewers that the manufacturer approves of the products use in the production or in a way that showcases the product in a negative light or in a way that the manufacturer can argue “misrepresents the nature, characteristics, qualities” of a product. Both of these uses are very broad and should encourage producers to reach out to manufactures for permission whenever on the fence.

For example, two films with famous product placements that come to mind are Harold and Kumar Go to White Castle and Cast Away. In the former, the company’s trademarked name is in the actual title of the film. In this case the producers did have the permission of White Castle to use their trademark throughout the majority of the film, and although White Castle didn’t pay for the product placement, they did put some money into promoting the film.[2] However, had they not gotten permission, the producers could have easily found themselves in some legal trouble. In fact, another company, Krispy Kreme, was offered a spot in the film and turned the opportunity down, not wanting to be associated with the film’s image.[3]

In the case of Cast Away, two companies were featured prominently in the film, Fed Ex and Wilson. Both companies approved of the usage and neither Fed Ex[4] or Wilson[5] paid for the exposure. Again, however, had the producers not gotten permission, they could have left themselves open to liability. Fed Ex was leery about the idea because they didn’t want customers to think about one of their planes crashing, but warmed up to it after reading the entire script. They liked that the storyline portrayed the company as one with integrity and a can-do spirit.[6]

The “Artistic Relevance” Defense To the Lanham Act

Recently, one company even went as far as filing suit against a major studio for tarnishing and blurring the distinctiveness of their trademark by using a knockoff version of their product.[7] That company was the famous French handbag designer Louis Vuitton, and the motion picture in question was The Hangover: Part II. The defendant, Warner Brothers, relies heavily on Rogers v. Grimaldi, which is one of the most important cases for producers, or their council, to keep in mind when facing such disputes. Rogers states that the Lanham Act is inapplicable to “artistic works,” and therefore non-commercial, “as long as the defendant’s use of the mark is (1) “artistically relevant” to the work and (2) not “explicitly misleading” as to the source or content of the work.”[8] “The artistic relevance prong ensures that the defendant intended an artistic—i.e., noncommercial—association with the plaintiff’s mark, as opposed to one in which the defendant intends to associate with the mark to exploit the mark’s popularity and good will.”[9] The threshold for artistic relevance is relatively low and “the level of relevance merely must be above zero.”[10] Ultimately, the use of the mark must not be “arbitrarily chosen just to exploit the publicity value” of the trademark, but must have “genuine relevance to the film’s story”[11]

In this case the court found that Warner Bros.’ use of the bag had artistic relevance because reference to the bag and the character’s mispronunciation of the French “Louis” as “Lewis” helped portray the character as snobbish, “socially inept and comically misinformed.”[12] Louis Vuitton argues that whether use of the bag is artistically relevant is a matter of fact, but the court concluded that no further discovery was necessary since Louis Vuitton concedes that the scenes significance “relies on Alan’s bag—authentic or not—looking like a Louis Vuitton bag.”

Artistically Relevant Uses Can Still Be Unprotected if it is “Explicitly Misleading”

Use of a mark is “explicitly misleading” if it “induces members of the public to believe [the work] was prepared or otherwise authorized”[13] by the plaintiff. Generally, when an expressive work is in question a “particularly compelling finding of likelihood of confusion is needed to overcome any First Amendment interests.”[14] When it comes to this provision of the act, the courts are primarily trying to prevent instances of customer confusion where the defendant intends to “dupe[ ] consumers into buying a product they mistakenly believe is sponsored by the trademark owner.”[15] With that said, in the case above, it is not enough for Louis Vuitton to demonstrate that the use causes confusion as to whether Louis Vuitton approved of the trademark’s use.[16]  Instead, in order to overcome the protection afforded in Rogers, Louis Vuitton must demonstrate confusion as to Warner Bros.’ artistic work, and show “particularly compelling” evidence that a significant number of people watching the film would believe that “Warner Bros. used the bag in order to mislead consumers into believing that Louis Vuitton produced or endorsed the Film.”[17] Given that the handbag is only on screen for a matter of seconds and only included in one scene, it is highly unlikely that viewers would come to this conclusion.[18] The producers of Harold and Kumar go to White Castle might have had a more difficult time overcoming this argument had they faced litigation.

Common Roadblocks and General Concerns

Although making sure your use of trademarks is legal should always be a priority, the most common litigation that results from product placement is when one party believes that the other did not hold up their end of the deal. Whether the manufacturer of the product does not pay the required fee or more likely when a manufacturer is not pleased with the final product that they pay for, it is not uncommon for litigation to follow post production of a film with excessive product placement deals. A chronic misstep in film production is failing to overcome the common dilemma of having too many cooks in the kitchen. Often times, producers, directors, actors, and investors all have an idea of how a film should be shot, produced, and edited which often leads to a messy and garbled outcome. When paid product placement deals with creative constraints and expectations are added to the mix, it is no surprise that the outcome is not always to every party’s liking.

As product placement began to become more and more popular, marketing agencies naturally stepped in as the middleman introducing producers to companies looking to diversify their marketing strategies. This practice does bring about much more product placement deals, but it also complicates things and leads to miscommunications and resulting litigation. This is especially true in the international market which is growing rapidly, particularly  in China. Chinese companies’ main goals are usually too woo American consumers, but they have also found that product placement in major Hollywood productions is seen as prestigious at home, even though many of the productions they invest in don’t air on Chinese networks or in Chinese theaters which are often heavily censored.[19] One of the most obvious and famous examples of Chinese product placement came with the most recent films in the Transformer series, Transformers: Dark of the Moon, in which at least 10 Chinese companies paid for placement in the film. At least three of these companies threatened to or actually filed suit against Paramount for failing to highlight their products in the way that they agreed upon.[20]

Sometimes these negative outcomes are a matter of miscommunication and mistakes made by the production team such as believing that a sign written in Chinese was the company’s logo when in fact it wasn’t.[21] However, often the creative differences are so stark that a film just refuses to stick to the deal, such as the case of the film Jerry Maguire. The producers promised the athletic apparel company Reebok that they would be portrayed in a positive light.[22] Even though the protagonist would downgrade the company throughout the film, the plan was always to end the story with a positive outcome and bring the protagonist and the company together with an upbeat commercial at the end of the film. However, the commercial was chopped at the last minute by the director, even though Reebok stuck to its agreement of investing $1.5 million in merchandise and promotion for the movie.[23]

The Jerry Maguire debacle brings to light many of the problems that can result from product placement agreements if expectations are not set in the early stages. Film making can be a very turbulent business, especially for those not used to its inconsistencies. Debuts can be set back, scenes can be re-shot and cut, and sometimes green lit films are never made at all. With that said, one of the most important things for film producers to think about when contemplating or negotiating a product placement deal is knowing the exact terms of the deal and covering all bases. What is the company giving and what are they expecting in return? Are there creative constraints and do they mesh well with the theme and feel of the film?

Barring an unforeseen crackdown by the FCC, product placement in motion pictures and television is likely to rise in the coming years. Commercials are being seen less and less and the success stories of products like the Reese’s Pieces in E.T. or the Ray Bans in Top Gun are simply too exciting to ignore. If your producing a film or television series now or in the future you’re going to have to deal with product placement deals, and if you don’t have proper authority to use a trademark, or you enter into a product placement partnership with unaccounted-for details, there’s a high probability of post-production litigation.

If you would like assistance negotiating or litigating product placement deals, CONTACT US NOW!

[1] Lily Kuo, Transformers 4 and the Perils of Backfiring Product Placement, The Atlantic, July 10, 2014, found at https://www.theatlantic.com/entertainment/archive/2014/07/how-chinese-product-placement-blew-up-in-the-face-of-transformers/374236/

[2] Stacy Conradt, The Stories Behind 10 Famous Product Placements, The Week, December 11, 2012, found at https://theweek.com/articles/469629/stories-behind-10-famous-product-placements

[3] Id.

[4] Id.

[5] Michael Maynard & Megan Scala, Unpaid Advertising: A Case of Wilson the Volleyball in Cast Away, The Journal of Popular Culture, Vol 39 Issue 4, 2006

[6] Dave Hirschman, `Cast Away’ Delivers Goods For Fedex, Chicago Tribune, January 08, 2001, found at https://articles.chicagotribune.com/2001-01-08/features/0101080173_1_fedex-spokeswoman-product-placement-fedex-corp

[7] Louis Vuitton Malletier S.A. v. Warner Bros. Entm’t Inc., 868 F. Supp. 2d 172, 175 (S.D.N.Y. 2012)

[8] Id. at 177

[9] Id.

[10] E.S.S. Entm’t 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095, 1100 (9th Cir. 2008)

[11] Rogers v. Grimaldi, 875 F.2d 994, 997 (2d Cir. 1989)

[12] Louis Vuitton Malletier S.A. v. Warner Bros. Entm’t Inc., at 178 (2012)

[13] Twin Peaks Prods., Inc. v. Publications Int’l, Ltd., 996 F.2d 1366, 1378 (2d Cir. 1993)

[14] Louis Vuitton Malletier S.A. v. Warner Bros. Entm’t Inc., at 179 (2012)

[15] Rock Star Videos, Inc., at 1100 (2008)

[16] Louis Vuitton Malletier S.A. v. Warner Bros. Entm’t Inc., at 180-181 (2012)

[17] Id. at 181

[18] Gottlieb Dev. LLC v. Paramount Pictures Corp., 590 F. Supp. 2d 625, 633 (S.D.N.Y. 2008)

[19] Clarissa Sebag-Montefiore and Steven Zeitchik, Chinese Pay for Product Placement in Hollywood Movies, LA Times, September 11, 2012, found at https://articles.latimes.com/2012/sep/11/entertainment/la-et-ct-chinese-pay-for-product-placement-in-hollywood-movies-20120910

[20] See note 1

[21] Julie Makinen and Sean Silbert, Chinese Firm Sues Paramount in ‘Transformers’ Product-Placement Beef, LA Times, July 23, 2014, found at https://www.latimes.com/entertainment/envelope/cotown/la-et-ct-transformers-suit-paramount-pictures-20140723-story.html

[22] Stuart Elliott, Reebok’s Suit Over ‘Jerry Maguire’ Shows Risks of Product Placement, New York Times, February 7, 1997, found at https://www.nytimes.com/1997/02/07/business/reebok-s-suit-over-jerry-maguire-shows-risks-of-product-placement.html?pagewanted=all

[23] Id.

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