Commercialization of products which are based on major personality features (names, portraits, characteristic features) of real or fictional characters and/or materials appearing in a Film may be defined as character merchandising. Products which are promoted on the market via this method vary form games, toys, action figures to textile products and posters. As one of the best examples of character merchandising, today one can see Star Wars, Spiderman or Mickey Mouse related products at any shop he/she enters.

Character merchandising is a term originating from Walt Disney Studios' attempt in 1930 to set up a new department for licensing its fictional characters to be sold as tangible goods to consumers. This method which has developed rapidly in 20th century still continues to expand its coverage with new films.

When we look from Turkish Law perspective; products, which are produced and offered for sale with regards to character merchandising in Turkey, can be considered under protection of Turkish Law on Intellectual and Artistic Works ("LIAW"). All characters (both real and fictional) in Films are defined as "personifications" according to LIAW. The second work which is created by using or based on another original work is defined as "derivative work" according to same Law. Therefore the products defined above (e.g. toys) should be considered as "derivative work" and benefit from protection of LIAW.

Many countries and jurisdictions have been regulating specific and extensive legislation in this area and improving their case law. We also believe it is important to review this fast-growing sector.

Types of Character Merchandising & Author Rights

According to WIPO's publication No. 489 (E) dated 2004, there are two main categories and one mixed category to define merchandising types.

Fictional/Animation/Cartoon Character Based Merchandising

This is the oldest merchandising method arising from Walt Disney's attempt. In this type of merchandising, animation/cartoon character's essential personality features are used for marketing and advertising of products. Name, image, sound or dialogs of characters can be used for marketing. It is possible to (i) use relevant image as either two or three dimensional reproduction, so that personality features of the character are placed on the product (Popeye printed t-shirt); (ii) or to use the character itself as a product (R2D2 toy).

Personality (real person) Based MerchandisingM

This method uses personality features of a real person, independent of her/his role in a film, for marketing and advertising of products. Name, image, sound or other features of such person can be used for marketing. For success of this marketing technique, surely, this "real person" should be well known (celebrity) by majority of the public.

Image Based Merchandising (fictional characters played by real actors)

In this method, major personality features of fictional characters played by real actors are used for marketing and advertising of products. Purpose of this method is to draw the attention of public which is interested with both the "actor" who plays the character and the "character" itself. As a result, this type of merchandising is considered as a mixed type by WIPO.

Merchandising Rights

In order to identify the right holders, it is important to begin with identifying the "rights" first. While the rights in relation to fictional characters should be specified as financial rights and exploitation rights; the rights of real persons should be specified as personal rights.

In this context the right holders with the authority do decide on commercialization of products – for abovementioned three types of merchandising – should be defined as follows;

  • For fictional/animation/cartoon character based merchandising: character's copyright holder,
  • For personality based merchandising: person/celebrity himself,
  • For image based merchandising: film's copyright holder,

Certainly, the right holders can transfer or license their merchandising rights to third parties. The usual practice of right holders is to license these rights to third parties as they do not have the possibility to manufacture and sell these film-related products themselves. In return of the granted merchandising license, the right holder typically receives an advance payment and relative royalty payments for each product sold. In the event of the film failing to reach success and the products not selling, the manufacturer incurs the loss. It is, therefore, important to explicitly define the scope of license and relevant commercial terms in the process of licensing of merchandising rights.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.