Star Wars - may the IP be with you
You must have been living in a different galaxy if you weren't somehow swept up in Star Wars mania over the Christmas holidays. The new Star Wars film, The Force Awakens, smashed box office records all over the world when it was released late in December 2015, with global ticket sales of $529m (£355m) in its debut weekend. It is also reported to have had the biggest opening day and Saturday receipts in UK and Ireland box office history. At the time of writing, total global sales since release are said to have reached a whopping $1.6bn.
And that is just the cinema! The entire Star Wars franchise is probably the most lucrative franchise in the world, generating in the region of $30 billion in revenue over the past 38 years. The Force Awakens is expected to be its biggest money spinner yet. Disney clearly knew it was on to a good thing when it acquired Lucasfilm (which included the entire Star Wars franchise), the company behind the Star Wars films, from founder George Lucas himself in 2012 for $4.05bn (£2.5bn) – a bargain it turns out when you consider the mind boggling revenue figures already associated with this film – and that's even before the DVD sales and published merchandise and licensing revenue.
This article looks at the types of intellectual property linked to the Star Wars brand and how these intellectual property rights have been exploited to create probably the most successful franchise of all time.
Intellectual property rights
All or a combination of copyright, trade marks, design rights and patents are relevant when considering the types of intellectual property relating to the Star Wars franchise.
UK copyright law protects original literary works, (works other than dramatic or musical works written, spoken or sung, so, text in Star Wars books (Disney Publishing announced a series of 20 books and e-books entitled "Journey to Star Wars: The Force Awakens" which were released before the film came out), magazines and lyrics in songs), dramatic works (plays, screen plays), musical works (music score in songs, excluding the lyrics), sound recordings (e.g. sound tracks), films (a feature film, such as The Force Awakens, or TV programmes) and artistic works. Artistic works would include graphics, logos, photographs, sculptures and of great relevance to the Star Wars franchise, images of a fictional character are protected as artistic works e.g. R2-D2, Yoda etc. Such fictional characters can then be reproduced on a mug or lunchbox, or clothing. Under UK law, artistic works also include 'works of artistic craftsmanship' but rather unhelpfully, the UK Copyright Designs and Copyright Act 1988 does not define these.
Interestingly, whether or not the Star Wars stormtrooper helmet could be considered an artistic work was the subject of the one of the most well-known copyright cases in legal history in 2011 (see our previous article here). The Supreme Court confirmed that the original iconic helmets used in the 1977 Star Wars film were not artistic works (in particular sculptures) and so could not be protected under copyright law (for 70 years plus the life of author), as their purpose was primarily utilitarian, namely as props for the film. They were therefore covered under design right but the period for protection for unregistered design right is much less than copyright and had expired. The prop designer, Andrew Ainsworth, who made the helmet, was therefore able to continue selling replicas on his own website.
It has also been reported in the press that Lucasfilm pursued a company which was manufacturing laser products, which, although were not being branded as relating to Star Wars lightsabers in any way, were being called 'real-life lightsabers'. It appears that Lucasfilm was also concerned that the handles of these laser products were too similar to the handles of the lightsabers in the films and so decided to sue for copyright infringement.
Film soundtracks are protected by copyright as part of the film when songs/music are incorporated in the film and broadcast in the cinema or on the television, but they are protected as a sound recording in other circumstances, such as when the recordings of the songs/music are played on the radio or on a CD.
In basic terms, trade marks can be registered for specific goods and services to distinguish one business from another and can take various forms, such as words, logos, slogans, shapes, colours and sounds. Global trade mark databases indicate that Lucasfilm owns thousands of trade marks in relation to Star Wars which are applied to an enormous range of products. Lucasfilm is renowned for being litigious, so think twice before using any Star Wars related words or images without a licence! Here are a few examples of just some of the marks registered by Lucasfilm:
- STAR WARS registered for an enormous range of products such as: DVDs, software, key chains, watches, clocks, jewellery, note books, trading cards, posters, stationery, luggage, school bags, umbrellas, brushes, hair accessories, toothbrushes, glassware, bowls, clothing, toys, games, jigsaws, electronic games, dolls, toy action figures, costumes, cookies and sweets, telecoms services, email, chat – the list goes on and on.
- The word mark 'Lightsaber' has also been registered as a trade mark for toys, games, puzzles, scooters, Christmas decorations, snowboards, arm bands and many more.
- Fictional character names (which cannot be protected under copyright) are registered such as Luke Skywalker, Yoda, The Jedi Master, Count Dooku, Stormtrooper, Darth Vader, Obi Wan Kenobi, Jar Jar Binks, Jabba The Hutt, Chewbacca, C-3PO and R2-D2 to name just a few.
- As well as C-3PO and R2-D2 being registered as word marks, (covering a wide range of products such as Halloween costumes, stationery and magazines) they also have graphic representations as shown below:
- Droid has also been registered as a trade mark for which Verizon Wireless have reportedly had to obtain a licence, despite the fact that they launched their Android phones, branded Droid, after registration by Lucasfilm.
- Neither film titles nor slogans attract copyright protection in the UK (although this may be up for debate following the Meltwater case). However, they can be registered as trade marks as can be seen by the trade mark registration for 'May The Force Be With You' which is often seen on clothing and toys.
- Film titles have also been registered as trade marks such as The Force Awakens and Revenge of The Sith.
In general, it is a relatively simple and inexpensive process to obtain UK registered design protection or Registered Community Design protection for the outward appearance of a product (or part of it) provided the designs are new, have individual character and are not dictated exclusively by their technical function. Unregistered Design Right also arises automatically upon the creation of an original (i.e. one that is not commonplace in the design field at the time of its creation) design (design being the shape or configuration) of objects.
Global searches indicate that Lucasfilm is the owner of various designs for example, toys C-3PO and R2-D2 as follows:
A patent provides 20 years of exclusivity to exploit an invention in return for the disclosure of information about the invention, which can then be freely used by the public when that patent expires. The justification for a patent exclusivity is that it encourages innovation by rewarding the inventor.
As an example, Disney Enterprise, Inc. owns the US patent for the drive system that controls the rotation of the sphero BB-8 droid – the highly sought after must-have Christmas gift of 2015, sold in the UK by a range of retailers including John Lewis, ASDA, and was the no. 1 best seller on Amazon. BB-8 is a droid that features in The Force Awakens. It has a ball shaped body which rolls independently from its head and the toy can be operated from a smartphone or tablet.
Sometimes the inventor(s) might be an employee of a company in which case, the invention, if created in the normal course of the inventor's employment, will belong to that company. In other cases however, where the inventor is not an employee of the company, the patent rights will need to be assigned, as appears to be the case for the BB-8 droid patent.
Licensing/merchandising of intellectual property rights
Merchandising of intellectual property rights can be incredibly lucrative for businesses. Merchandising refers to a wide range of activities that increase the visibility and accessibility of products, including window displays and shop floor layouts but this article will focus on the merchandising of IP rights.
Over the years, merchandising has switched from being useful, but not essential, to being a major contributor to the business strategy. George Lucas made a lucky decision back in the 1970s when he traded a rise in salary for future merchandising rights. It seemed like a good deal at the time for the film studio because merchandising did not carry the same value it does today. But no one could have predicted the unprecedented popularity and success of Star Wars.
Producers and distributors do not usually manufacture film-related products themselves. Typically they license the right to other companies (the "Licensee") to use names, characters, art work and music to produce spin off products such as toys, clothing, books and sound tracks. In most cases there is no risk to the producer or distributor (the "Licensor") because the licensee incurs all manufacturing and distribution expenses. The Licensor normally receives an advance payment for each product (it has been reported that Disney took enough down payments from exclusive brand partners to amply cover the $200m that it cost to make the film), as well as royalty payments, which are typically between five and 10 percent of the gross revenue from sales to retailers (the wholesale price). If the film is a flop and the products do not sell as well as expected, the manufacturer incurs the loss. Interestingly it has been reported that licensees are so keen to be part of the Star Wars merchandising phenomena that they are agreeing to royalty rates as high as 20%.
It has been reported that 40% of film merchandise is sold before the film is even released. Licensed products can generate billions, especially for films like The Force Awakens which appeals to both children (even though the film is rated as 12A), teenagers and adults alike. Merchandising strategies, however, must be carefully thought through in order to maximise the exploitation of the intellectual property rights. It is also difficult to predict whether demand will outstrip supply. For example, when Star Wars – The Phantom Menace was released, there was an overestimation of demand relating to this merchandise which led to one official licensee with a surplus of spin off books. On the other hand, Disney's box office hit Frozen was far more popular than anticipated and supply could not keep up with demand.
Perhaps having learnt its lesson from Frozen, Disney has been very clever with its marketing strategy for The Force Awakens. This time, Disney orchestrated a 'product preview' merchandising event on what became known as 'Force Friday' on 4 September 2015 and unveiled its new product range 3 months before the film was released. Details of product designs were not revealed until midnight on Force Friday, sparking record levels of excitement and interest. Disney streamed 18 hours of live footage unveiling its new products in 12 different countries and 15 different cities.
Products and licensees
There is more to successful merchandising than simply slapping branding on toys, mugs and clothing. Identifying and selecting a comprehensive list of products to sell and choosing suitable official merchandising partners (licensees) who will produce high quality products is of paramount importance. Quality of merchandise is key as it affects how the brand is perceived. It is also important to recognise the target audience – in this case the Star Wars brand appeals to both adults and children so there will be a myriad of products that could be sold whereas with Harry Potter for example, it would be inappropriate to sell Harry Potter branded alcohol whereas it appears you can buy Skywalker branded wines from Skywalker Vineyards (owned by George Lucas) should you be so inclined!
Disney will no doubt be exercising strict quality control over its licensees to ensure the Star Wars brand remains intact. Star Wars is already such a huge brand that it is hard to see how it can be tarnished. However, there are already a number of unusual products on the market (lightsaber stiletto shoes for example!)
Disney and licensees alike will be looking to negotiate beneficial contracts and licensees will be looking to capitalise on the association. Merchandisers can increase their exposure and enhance their brand's image which can open up new markets. Some of the official licensees vary from huge toy giants who are already well-known and have a huge reputation e.g. Hasbro, Mattel and the Lego Group, to smaller more low profile businesses. For example, the LA jeweller known as Han Cholo, has been licensed to create a special jewellery collection for the new film and this has obviously opened up many new avenues for the bespoke jeweller. The merchandising deal has also been particularly beneficial for low-profile US company Vandor Products which sells everyday items such as branded glassware and lunchboxes but now enjoys seeing its products, which feature Star Wars images, being sold just about everywhere. Such is the marketing power of Disney.
In addition to the merchandising deals that Disney has negotiated, it also produces its own bespoke, exclusive range of products available in Disney stores.
Film distribution rights
Merchandising sales have already been huge and that's even before the DVDs have gone on sale – at the time of writing, the DVD is available for pre-order and the release date is estimated to be May 2016. Fans will remember the famous 20th Century Fox drumroll and fanfare at the beginning of the Star Wars films but since Disney's acquisition of the Lucasfilm franchise, Walt Disney Studios are now the film distributors and have replaced this in the opening sequence in all of the films (apart from the original 1977 film (which became known as Star Wars Episode IV: A New Hope) for which 20th Century still appears to own the rights) with the Lucasfilm logo. There are box sets with a complete set of Star Wars feature films, old and new, so presumably 20th Century Fox and Walt Disney Studios must have come to an agreement in relation to the distribution.
Roll on 2017…..
The last Star Wars film was Revenge of the Sith in 2005 and as Disney rightly anticipated, there has been "substantial pent-up demand". This is evident when you look at the kinds of figures associated with The Force Awakens. It will be interesting to compare the figures after the release of Star Wars 8, expected in May 2017. In the meantime, The Force Awakens continues to pull in the crowds (it opened in China – the world's second biggest film market after the US – on 8 January 2016) and generate serious amounts of revenue.