• Consequences for Painting Lipstick on a Pig With Borrowed Lipstick
  • January 16, 2012 | Author: Dan Nabel
  • Law Firm: Greenberg Glusker Fields Claman & Machtinger LLP - Los Angeles Office
  • The famous Czech writer Milan Kundera once wrote that “business has only two functions — marketing and innovation.”  But some industries — like the alcohol industry — have pretty much hit the limit on innovation (unless you consider things like a tequila bottle top which doubles as a shot glass “innovative”).  This means that the entire business is marketing.  Which is probably why I enjoy drinking the same beer as the most interesting man in the world and think Guinness is good for me.  Just kidding.  But seriously, I do prefer those beers.

    As we all know, marketing plans can go awry.  For example, in 2008, a Tustin-based alcohol importer called Sans Wine & Spirits Co. decided to rebrand its tequila “to position it as a luxury brand.”  The “brand enhancement” plan required the Mexican distiller to “use an industrial hand-blown bottle for the tequila,” “a wooden bottle stopper with cork veneer to match other luxury brands of tequila,” and to have a bottle-maker mold an image of an agave agricultural worker into the back of the bottle.  Lastly, Sans Wine & Spirits hired a Mexican design firm to upgrade the label design that the distiller had been using since 2004.  Unfortunately for Sans Wine & Spirits, it turned out that the original label design and the new label design both copied a José-Pablo Fernández photograph sin permiso.  Mr. Fernández was muy malestar (upset) when he found out and sent Sans Wine & Spirits a cease-and-desist letter.

    Now, Sans Wine & Spirits is suing Fernández, preemptively, for a declaratory judgment that the label design is not infringing, and more importantly, if it is infringing, then for a declaration that Sans Wine & Spirits was an “innocent infringer.”

    Let’s break down the “innocent infringer” defense.

    The Infringing Labels

    Zoinks!  If you just take a look at Fernández’s cease-and-desist letter, you won’t have to be a Photoshop expert to see that Fernández’s photograph was cut-and-pasted directly into these labels.  Unless there is a reason why Fernández’s photograph does not have copyright protection in the first place, it is hard to see how a reasonable jury could conclude that this is not copyright infringement.  (And definitely no fair use defense here:  the image is copied in whole, for a purely commercial use, and sorry, these days, running something through a basic Photoshop sepia filter doesn’t qualify as “transformation.”)

    So what about the “innocent infringement” defense?

    Innocent Infringers and Copyright Damages 101

    Innocent infringement is not actually a defense to copyright infringement.  But it can affect the amount of damages awarded.  Copyright holders who prove infringement have a choice:  they can elect to receive their “actual damages” plus the infringer’s profits attributable to infringement; or (assuming the work is registered) they can elect to receive “statutory damages.”  For statutory damages, courts have discretion to award damages of any amount between $750 and $30,000 for each copyright infringed.  (Discretion means that the court looks at what is “just” in a particular case, considering the nature of the copyright, the circumstances of the infringement and the like, and, if we’re being honest with ourselves here, how good a mood the judge was in based on the quality of that morning’s breakfast and the previous day’s round of golf.)  However, if the copyright holder proves that the infringement was “willful,” the statutory damages ceiling rises to $150,000 for each copyright infringed.  Conversely, if the defendant establishes that infringement is “innocent,” the statutory damages floor falls to $200 and the maximum stays at $30,000.

    Thus, it appears that what Sans Wine & Spirits is trying to do in this case is set up a framework for limiting its liability.  The court will probably ultimately decide that, in trying to enhance its brand, Sans has painted lipstick on its pig (i.e., its tequila) with borrowed lipstick (i.e., by using Fernández’s photograph).  The question then, is whether Sans knew that the lipstick was borrowed or whether it acted in good faith — i.e., did Sans know that the image on the label that the distiller created and the design firm improved upon was copied without permission?  This is a question of fact that will probably have to be resolved at trial.  On the one hand, you don’t have to be Albert Einstein to realize that a photograph is generally a copyrightable work, and therefore, you need to clear the right to use it.  On the other hand, companies are often burned — say, by using Albert Einstein’s famous face without permission — by relying on third-party advertising vendors who are supposed to clear all rights on their behalf (although in this case, Sans’ use of the photograph apparently predated its recent design revamp).

    The takeaway is simple, but important:  when you hire someone else to put lipstick on your pig, make sure your swine cosmetician agrees to indemnify you in case someone else later claims ownership of the lipstick.  Otherwise, your fancy new hog could be a lot more expensive than you planned for.