[NEohioPAL] corrected post from yesterday on the Velvet Underground case

[Mary Ellen Tomazic]

When Can a Picture in the Public Domain Be Protected As Intellectual
Property?

The Velvet Underground vs. The Andy Warhol Foundation for The Visual Arts,
Inc.



        The Andy Warhol Foundation for the Visual Arts owns many copyrights
on the deceased artists’ works, and in keeping with Andy Warhol’s own
statement that he would “endorse anything for money”, the Foundation has
licensed many Warhol creations for commercial products. However, when the
Foundation agreed to license the iconic banana image from the Velvet
Underground’s 1967 first album, “The Velvet Underground and Nico” to Apple
to use on iPhone and iPad cases, sleeves and bags, The Velvet Underground,
which licenses the banana image as its trademark, protested. The
Foundation, after receiving a cease and desist letter from the Velvet
Underground’s lawyers, responded that the Foundation “may have” a copyright
interest in the image that gave them a right to reproduce and license the
image. The Foundation lawyer in 2009 even went as far as to claim that the
Velvet Underground’s licensing activities infringed its copyright in the
banana image, although there is no copyright registration by the Foundation
for the image. The Foundation’s intellectual property counsel in 2011
boldly admitted in its correspondence with the Velvet Underground that “the
banana design has been a consistent and prominent part of the [Warhol]
Foundation’s licensing program for a number of years.” The Velvet
Underground then sued the Foundation in New York federal court after it
refused to stop licensing the banana image, claiming they should prevail
because the banana is not copyrightable as being in the public domain, but
is their trademark, and the Foundation is infringing their intellectual
property.

        The original image was taken from an advertisement and used by
Warhol and the members of the band as part of their collaboration together
at the time to create the album cover. The band split its $3000 advance
from MGM for the rights to the recording with Warhol, in part as
consideration for his furnishing the illustration for the album. No
copyright symbol was included on the image when it was published on the
album cover, and there was no deposit of it into the Copyright Office made
by Warhol or anyone else. After its release, the album was withdrawn and
rereleased with some changes to the back cover, which ironically contained
a photograph furnished by Warhol that was infringing. Again no copyright
symbol was affixed to the banana image, which, along with the deposit, was
a prerequisite to copyright protection at that time under the 1909
Copyright Act. Therefore, the banana image immediately went into the public
domain and was never able to be the subject of a copyright claim by Warhol
or the Velvet Underground. The Velvet Underground’s first claim for relief
urges the court to declare that the banana image is in the public domain
and there are no copyright rights in the design. The VU then claims that it
has used the iconic image in its licensed merchandising activity since at
least 1993, it is immediately recognizable as a symbol of the VU, and that
it has attained secondary and distinctive meaning under the trademark law
to purchasers of goods bearing the design.

         Even though the VU has not registered the banana symbol as its
trademark in the Patent and Trademark Office, it cites a number of
instances in the complaint of its use on goods to identify them as
originating with the Velvet Underground. One example was a 2001 license
granted to Absolut Vodka by the VU to use the banana design in an “Absolut
Underground” national advertisement. (It is interesting to note that the
Warhol Foundation also licensed one of its images to Absolut Vodka in 1994,
according to its registration of the ad design in the Copyright Office.)
The VU set out the elements of its claim to trademark protection:
continuous use in trade or commerce for over five years, the retention of
control over the use of the image to protect the buyers and to assure
themselves that the goods in question are of the quality and type that the
implied endorsement by the VU warrants. Consequently, the suit claims that
the Foundation’s use of the banana design is likely to cause consumer
confusion and lead to the belief that there is an affiliation or
association between the VU and the Foundation’s licensee, which would cause
the licensee to receive the benefit of the VU’s goodwill and reputation
established over many years. This unauthorized use by the Foundation is
claimed as a false designation of origin and unfair competition under §43
of the Lanham Act (15 U.S.C. § 1125) in Count II of the lawsuit, in which
the VU also requests an injunction against the defendant asserting any
right, title or interest in the mark, in addition to damages and profits
received by the defendant Foundation from the use of VU’s trademark.

        In its last claim for relief, the VU noted that the Foundation
licenses many of its Andy Warhol art images for a range of products from
stationery, clothing and watches to snowboards. The many images and designs
owned by the Foundation have a fair market value of $120 million, and the
licensing revenue earned from them is in excess of $2.5 million a year.
With that in mind, the VU, in its count for unfair competition under New
York common law, states that with all the lucrative images available for
licensing by the Foundation, there was no economic need to use the banana
design in its licensing activity. The complaint asserts that as an Andy
Warhol design, the banana design is “fungible” to the Foundation, which can
substitute any number of other Warhol designs it actually owns and which
are in high demand by licensees. To the VU, the design is “not merely the
graphic reproduction by Andy Warhol of a piece of fruit”; it is the
“iconic” Velvet Underground Banana. A claim of misappropriation under the
New York Common Law of the plaintiff’s benefits and property rights in the
mark and its potential earnings follows.

     This leads to a claim for exemplary damages from the Foundation as a
kind of “greedy corporation” sanction, a demand for the Foundation to
account for all monies and profits received so far for the licensing of the
banana design, with interest, and a request that the court award costs,
attorney fees and damages. For the Lanham Act violations, the VU also asks
for treble damages, an injunction under 15 U.S.C. § 1116 (§ 34 of the
Lanham Act) and an order under §1118 (§ 36 of the Lanham Act) that the
defendant destroy all copies of the infringing products in its possession,
custody or control, including products manufactured by defendant’s
licensee. That would presumably lead to an epic bonfire of iPhone and iPad
cases, sleeves and bags!

       The Velvet Underground spends a considerable amount of space in the
complaint reciting the history of the band, its legendary yet short lived
status, and its iconoclastic music, which caught the attention of many
young musicians. The album in question that contained the banana image was
not a big seller at the time of its release, but has been described as “the
most prophetic rock album ever made” by Rolling Stone, and twenty years
after its release was recognized as one of the great rock albums and the
Velvet Underground as one of the most influential bands of all time.
Ironically, the members, who were known for their rejection of commercial
values and their uncompromising attitude toward music, now earn income from
the licensing of the iconic banana image to supplement their royalty income
from their music. Even so, the Warhol Foundation’s appropriation of their
trademark to add to their multimillion dollar annual earnings is rightly
characterized as a usurpation of the band’s reputation and goodwill, one
that is hurting the market for their own trademarked goods. It is also
possible that the thought of losing millions of licensing dollars from
Apple to the Foundation rankles the Velvet Underground’s members, making
them think back to their anti-establishment days of the 60s when their
integrity was about all they had, and they would not let it be compromised
and stolen by a big corporation. Their continuous use of the iconic image
that represents their band over many years as a trademark on their own
products saved them from losing their goodwill and earnings to a much
bigger and richer entity.
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