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Disney’s Rap as Trademark Bully Revived in Baby Yoda Crackdown

Feb. 11, 2020, 11:00 AM

Re-naming crocheted Baby Yoda dolls “Baby Alien” may remove Walt Disney Co.’s Yoda trademark. Whether it puts them in the clear legally is another matter.

Searching “Baby Alien” on the crafters’ online marketplace platform Etsy turns up more than 1,500 products. The vast majority of them appear to feature “The Child,” the tiny Yoda-esque sensation from Disney’s Star Wars spin-off series, “The Mandalorian.” Many of the listings popped up after Etsy removed numerous dolls in late January and early February following trademark complaints by Disney -- which didn’t begin selling its own merchandise until after the series debuted.

Disney’s enforcement efforts have revived longstanding disputes over the boundaries of infringement and intellectual-property bullying of small sellers, including ones operating in gray areas. They also highlight the whack-a-mole nature of policing products across various online platforms by countless users from around the world.

Brand owners like Disney have every right, and several reasons, to vigorously enforce copyrights and trademark rights against crafters of goods not labeled with registered marks, said attorney Monica Riva Talley of Sterne, Kessler, Goldstein & Fox PLLC.

“I hate it when the conversation gets turned to make Disney look like a bully,” said Talley, who helps clients enforce trademarks. “There are implications way beyond trademark rights and brand value when people get hurt or sick from fake goods, or when goods are made by child labor or fund terrorism.”

But intellectual property professor Ann Bartow of the University of New Hampshire called Disney “myopic” for coming down on crafters—whose infringement, she said, isn’t as clear-cut as some attorneys suggest.

“Such overkill. Such painful overkill,” Bartow said. “I just wish Disney would back off a little and let the crafters breathe.”

Disney officials didn’t respond to requests for comment.

Implicit Marks

The Disney store is now flush with Baby Yoda plush dolls, clothes, figurines and phone cases. But Disney didn’t have the products ready when the TV series came out, possibly to avoid revealing the soon-to-be-breakthrough character.

That left a particularly appealing vacuum, said intellectual property professor Ashley Dobbs of the University of Richmond.

“Disney didn’t have their own products ready to go, so people were stepping in the breech,” Dobbs said.

“Baby Yoda” infringes on Disney’s Yoda trademark on the character from the original Star Wars movies—even though no Baby Yoda mark has yet been registered, Dobbs said. A visual depiction of the character labeled “Baby Alien” likely infringes Disney’s copyright, she said. Copyright law bars unlicensed use of derivatives of creations, and case law has extended that to characters.

Bartow questioned whether the dolls met specific requirements of being derivative or whether items like crocheted dolls might qualify as fair use. She noted many significantly differ from Disney’s offerings as craftier, homemade-looking items. The effect on the original’s market is a factor in deciding whether something is fair use. She also said there have been cases where copyright protected work with minimal alterations has been deemed transformative and non-infringing, and courts don’t draw consistent lines.

But most attorneys interviewed said the Baby Yoda merchandise, barring parody or commentary on Disney’s work, probably represents derivatives that infringe Disney’s copyright on the character it created. Even if Disney hasn’t started selling crochet dolls, the possibility that it could creates liability for crafters, intellectual property attorney Jordan Matthews said.

Copyright infringers, like trademark infringers, are liable for actual damages to the rightsholder, though they’re often difficult to prove. Copyright owners of works registered before infringement can also elect statutory damages of $750 to $30,000 per work infringed, and up to $150,000 per work if found willful.

“I don’t know what they think they’re doing. Maybe they think from a business perspective they think they’re going to make some quick money, and don’t care if they get a notice from Disney,” said Matthews of Weinberg Gonser LLP. “And if they do they kill the product.”

The trademark question of a “Baby Alien” doll presents different questions. Trademark infringement requires the showing of a likelihood of confusion, and while some people might assume an Etsy crochet doll had Disney’s blessing, most probably wouldn’t, Matthews said. Dobbs also noted the sellers weren’t using any Disney trademarks.

But Talley said that it doesn’t matter: Seeing an image of “a beloved Disney character” makes people think of Disney.

“Even if you do not register it, the image of Yoda is recognizable,” Talley said. “That’s the hallmark: When someone sees an image, hears a sound or smells a smell, and think that comes from you, that’s a trademark.”

Policing Anarchy

A decision on whether goods infringe may be of little solace to either Disney or the alleged infringers. Both sides have to deal with the expense of policing and of getting an enforceable ruling one way or the other.

Laws generally don’t leave platforms liable for every user’s actions if they respond to infringement allegations. That leaves it to brand owners to find and police bad actors—possibly outside the U.S. —often only to have them pop back up under new names.

And while Etsy brands itself as a place to buy homemade goods from individuals and small businesses, Talley said the platform hosts the same kinds of infringers and knock-off vendors as other online marketplaces.

“It’s hard to paint it with this broad brush, ‘oh it’s small crafts’ when it has this dark underbelly,” said Talley, who said she’s worked on enforcement efforts against sellers using the platform. “If you’re Etsy and want people to be confident in what they’re buying, and to know you aren’t buying child labor in China, you want to clean this up.”

An Etsy spokesperson declined to comment.

While small vendors and craft sellers may have limited safety in numbers, they have little recourse when a company like Disney decides to act against them, even if they believe their products represent fair use. Matthews said attorneys may have to tell a client “it’s not a good idea to spend millions of dollars going up against Disney.”

But decency and the threat of bad press should prompt companies like Disney to restrain themselves from going after every perceived infringement, Bartow said. She pointed to incidents like one from late January, when Disney’s licensing agency informed a California elementary school it owed a $250 public performance license fee for showing the 2019 movie “The Lion King” as a fundraiser.

Movie showings to an audience beyond friends and family, except as an educational activity at schools, requires copyright holder permission. Still, Disney CEO Robert Iger apologized on Twitter and said he’d donate to the school after media reports drew criticism.

“I just think there should be more room for fair use,” Bartow said. “It’s not like Disney is hemorrhaging money over this.”

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editor responsible for this story: Bernard Kohn at bkohn@bloomberglaw.com; Keith Perine at kperine@bloomberglaw.com

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