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Investments That Depend on Existing Creative Works Can Be Risky

By Stephanie Robinson

Businesses often use famous creative works as source material for new marketing campaigns, construction projects or other investments. The Mona Lisa might serve as the subject of a new ad campaign for an printer manufacturer, or a cartoon character may be used to promote a new family-themed restaurant. However, while the payoff from such investments may be worth the price of entry (often in the form of licensing agreements with the owners of the pre-existing works), businesses that fail to exercise due diligence prior to incurring new costs can find themselves in the position of seeing their money wasted and their bottom lines exposed to legal liability. For example, in a lawsuit filed on February 16, 2011, the Board of Regents of the University of Texas alleged that an Austin-area car wash business? replica of the iconic UT tower constitutes an infringement of UT?s rights in three trademarks consisting of various depictions of the tower. (A copy of the complaint, with pictures, is available here.) The car wash owner reportedly spent approximately $3 million designing and building his 60-foot replica of the famous 300-foot tower, but he apparently did not expect that undertaking would implicate intellectual property rights held by UT. The lesson to be learned here is that trademark disputes can arise from unexpected sources. High-value projects incorporating pre-existing works in any form need to be accompanied by some measure of due diligence regarding third-party rights. In this case, UT?s likelihood-of-confusion claims seem to be somewhat misplaced, in light of the fact that it is doubtful the defendant is offering educational services at the car wash, and it will be interesting to see if the university amends its complaint to emphasize a trademark-dilution theory of liability. However, before sinking $3 million on any high-visibility investment for PR purposes, a business owner needs to be prepared to include an appropriate legal review at a very early stage in the process to help ensure that an aggrieved IP owner does not come knocking after the project is complete.

Full post as published by Business and Technology Law on March 18, 2011 (boomark / email).