Disney Fights Unlicensed 'Star Wars,' 'Frozen' Characters at Children's Birthday Parties

Darth Vader Luke Skywalker Lightsaber - H 2011
Courtesy Everett Collection

Darth Vader Luke Skywalker Lightsaber - H 2011

Yes, Hollywood studios tend to be fiercely protective of their intellectual property. These studios will often sue over unlicensed merchandise in the marketplace. Usually, these cases go away quickly and quietly. The defendants tend not to have the resources to fight back. Settlements and stipulated judgments are the norm. Well, not this time.

On Friday, summary judgment papers came in a lawsuit that Disney has filed in New York against Nick Sarelli, who runs an operation called Characters for Hire, LLC.

Disney alleges that Sarelli has a "knock-off business ... built upon the infringement of Plaintiffs' highly valuable intellectual property rights," including the fictional characters Darth Vader, Iron Man and Elsa and Anna from Frozen. Disney is upset how this company "provides unlicensed and poor quality appearances and performances" by actors dressed as "iconic characters for themed events, such as children's parties."

The lawsuit claims that the costumed actors appearing at these events and the advertising associated with this enterprise represent a violation of both its copyrights and trademark rights.

Anyone who has ever visited Times Square in New York City might wonder about the costumed characters taking pictures with tourists for money. The New York Police Department once even tried to get Disney to crack down. Disney didn't take the bait, but for whatever reason, Mickey Mouse has put its foot down for Characters for Hire.

Characters for Hire tried using disclaimers how these characters weren't associated with Disney, Marvel or Lucasfilm. That didn't work. Not even attempts by defendants to use fake names in lieu of real ones have appeased Disney.

"Specifically," states Disney's summary judgment memo (here), "Defendants have admitted to changing at least the following names and titles in their customers' reviews: 'Luke/Darth experience' to 'Star Battle,' "Star Wars storyline' to 'Star Battles story line,' 'Darth Vader' to 'Dark Lord,' 'Star Wars' to 'Star Battle(s),' 'Darth Maul' to 'Mauler,' 'Princess Leia' to 'the Princess,' and 'Chewbacca' to 'Big Hairy Guy.'"

Disney has the giant law firm of Arnold & Porter Kaye Scholer by its side, but attorneys at Feldman Law Group — representing Sarelli — don't appear to be pushovers.

In addressing the copyright claims, the defendants say that Disney's presentation of copyright registrations is not enough.

"Plaintiffs assert that Defendants’ advertisements and promotional materials somehow infringe specified copyright registrations identified in the Complaint," states the defendants' summary judgment memo. "But, CFH’s advertising and promotional materials do not copy, reproduce, distribute or display any of the two-dimensional artwork that is the subject of those copyright registrations."

Plus, Characters for Hire is wondering whether Disney really controls all the rights to which it is asserting.

"Here," continues the brief (here), "CFH’s use of characters from Norse mythology, such as Thor and Loki, or centuries-old fairy tales and folk tales, like Cinderella, Snow White, Rapunzel, Aladdin and Princess Aurora do not infringe upon any original expression added by Plaintiffs to these public domain characters."

Then, there are trademark rights.

Copyright law protects works of authorship while trademark law protects the sourcing of goods and services. (Put another way, copyright is to artistic expression as trademarks are to branding.)

According to defendants, "Each of [Disney's trademark] claims fail for essentially the same reason — there is simply no likelihood of confusion that arises from CFH’s activities as to the source or sponsorship of the costumed entertainment services that CFH provides."

Sarelli's lawyers add that they are allowed descriptive uses of a mark before nodding to a case concerning a famous costumed character.

That would be The Naked Cowboy, the Times Square busker played by Robert Burck.

Burck once tried to sue CBS for trademark violations after the soap, The Bold and the Beautiful, featured a character who for several seconds during one episode also played guitar only in his briefs and a cowboy hat. CBS posted a clip of this episode on YouTube under the title, "The Bold and the Beautiful — Naked Cowboy."

A judge later rejected the lawsuit with word that the fair use defense permits use of protected marks in descriptive ways. "Here, the challenged phrase 'Naked Cowboy' is an example of non-trademark use," wrote the judge. "It is clear that CBS used the phrase in an effort to describe the contents of the video clip, not as a mark to identify the source of the video clips."

Sarelli hopes the same thing goes for him.

"Similarly, to the extent CFH uses the names of princesses or other fictional personas that are the subject of Plaintiffs’ trademark registrations, CFH merely uses them to describe the costumed entertainment services that CFH provides," his court papers state.

Disney sees it differently and has their own case law for support. In particular, there's a 1991 ruling concerning a fake Oscar statuette that provoked a lawsuit from the Academy of Motion Picture Arts & Sciences. The 9th Circuit affirmed that the Academy's mark was being tarnished by holding, "If the Star Award looks cheap or shoddy, or is disseminated without regard to the ultimate recipient, the Oscar's distinctive quality as a coveted symbol of excellence, which cannot be purchased from the Academy at any price, is threatened."

And so Disney proclaims, "CFH's provision of its knock-off characters is thus likely to damage customers' positive associations with Plaintiffs' marks (and those of their children)."