Tomorrow, immortality comes to Californians. A new law goes into effect that promises citizens of the Golden State that, while they may not be able to take their fame or notoriety with them, they at least can leave it to whomever they choose. A lot of business executives are worried about how they are going to have to change operations -- or open up their checkbooks -- to cope with the new statute.
The change comes in the way the state will handle what lawyers call"the commercial appropriations of the right of privacy." This is, essentially, the right of any individual to keep others from using his or her name or person to make a few bucks. Not even recognized by the courts until a 1953 Supreme Court ruling upheld exclusive contracts for the use of baseball players' pictures on bubble gum cards, this "right of publicity" has mushroomed into a huge industry.
The issue is not endorsements per se -- movie stars always got paid to plump for one brand of soap or another -- but all those other things that sell because they bear a famous phiz, from the posters that made Burt Reynolds famous to the souvenir mugs that make esthetes cringe. Celebrities license the right to use their image -- and go to court to stop unlicensed products from being sold.
But, throughout the United States, the right to collect generally died when the celebrity did. The Martin Luther King Jr. Center for Social Change in 1981 persuaded a federal court in Atlanta to halt unauthorized sales of plastic busts of the civil rights leader, and some scattered statutes in Nebraska, Utah, Oklahoma and a few other jurisdictions suggest that persons can bequeath the right to exploit their fame. But those are the exceptions. Mostly, the way was clear for any huckster who wanted to market booze in a ceramic likeness of W. C. Fields or sell T-shirts emblazoned with Elvis Presley's picture.
But the tide is shifting. Tennessee, home to so many of the greats of country music, earlier this year passed a new law that lets heirs control publicity rights for 10 years after a person who garnered the fame dies. But that development pales beside the California statute that goes into effect tomorrow. Not only is California law probably the most important in the nation in defining the rights of celebrities, but the California rules let an heir collect for the use of a deceased personality's name, likeness, or signature for a full 50 years. If a half-century isn't immortality, it is closer than the law has ever before envisioned.
Under the new law, heirs who claim ownership of valuable exploitation rights must register that claim with the California Secretary of State. The fee: $10. There seems to be little doubt that the families of celebrities who are gone but not forgotten will move quickly to make use of the new law: Heirs of John Wayne and Groucho Marx were among those who worked hardest to get the new legislation through.
Manufacturers of memorabilia and those trying to capitalize on the fame of deceased celebrities in various sales promotion schemes had better "establish a system of frequently checking registrations in Sacramento, in order to avoid potential liability," Los Angeles lawyer Kenneth E. Kulzick warned a recent Washington meeting of the American Advertising Federtion. "No doubt a plethora of plaintiffs' lawyers will test the reach of the new statutes. Clear copy crefully. Be prepared -- and have your attorney's hot-line handy."
The new California law clearly is aimed at commercial exploitation, and it is careful to steer away from covering anything that might be protected by the First Amendment. Any material deemed to be newsworthy or of political import is specifically exempted from the new law, and so are all books, magazines, newspapers, movies and television shows. An artist can paint and sell a portrait of Marilyn Monroe without having to pay a license fee, but is likely to run into trouble selling reproductions of that painting.
The news media may not have won blanket protection, however. Last year, Clint Eastwood managed to convince a California appellate court that his picture on the front of an issue of the National Enquirer, promoting a story ballyhooed as "Clint Eastwood in Love Triangle with Tanya Tucker," was really an advertisement for the magazine, and that the publication had no right to use the picture without Eastwood's consent. The judicial rationale: Taking at face value Eastwood's contention that the story was untrue, there was no protection of the sales-garnering impact of the picture as news. The state high court in March refused to review the ruling, and Tom Selleck now has a similar case pending against the checkout-lane tabloid. Attorney Kulzick suggested that under the new law, Duke Wayne's heirs might have the legal clout to mount an attack on a magazine cover featuring a dubious tale about the Western movie idol.
There are other uncertainties, too. While commemorative plates churned out to take advantage of the after-death adulation of a star are covered by the law, it is not clear whether the statute also covers, for instance, the sale of photos autographed by the star during his or her lifetime. And the owner of the image may not be an heir but, say, a movie company for whom the star worked, so that Judy Garland's family might own the image of Judy as Judy, but MGM could register with the Secretary of State to keep the rights to Judy as Dorothy.
What is clear, however, is that the new law will set off a wave of litigation -- and probably lobbying -- to get similar measures on the books in other jurisdictions.
In other recent cases, courts ruled that:
* Business practices that are unfair are not necessarily unfair trade practices. The North Carolina Court of Appeals earlier this month made the distinction, saving a home builder close to $3,000, and providing other companies with a good weapon to fight unfair-practice litigation in the future. The case involved a drainage problem in a new house, which the builder declined to fix. The owner paid a landscape contractor $1,474 for a retaining wall and plantings to correct the problem, then sued. The trial court ruled that the builder breached his warranty and it awarded three times the actual damages, under the state unfair trade practice law. But the appellate court approved only the breach of contract award, not the trebling of damages. While the judges agreed that it is not fair for a company to ignore its warranty, they said that to rise to a level of consumer injury covered by the statute, the practice in question had to be immoral or oppressive. Leaving the homeowner with a $1,474 bill just wasn't that heinous, the court ruled. (Coble v. Richardson Corp., Dec. 4)
* Government inspectors can snoop on a business from the air without getting a warrant. The U.S. Court of Appeals in Cincinnati recently overturned a trial court and decreed there was nothing wrong with Environmental Protection Agency overflights of a 2,000-acre chemical facility to take detailed photographs of the layout and of smokestack emissions. A warrantless intrusion into private areas is unconstitutional only if a person or company expects the area to be private, and it is not reasonable to expect such a big installation, in the approach path to a commercial airport, to be free of surveillance, the appellate judges ruled. Even though EPA's sophisticated picture-taking revealed far more than could be seen by the naked eye, that presented no constitutional problems to the judges, as long as the pictures were of the outsides of the buildings and did not show details from inside offices or factories. (Dow Chemical v. U.S., Dec. 9)
* The Internal Revenue Service has to change the way it figures debt-equity ratios. The ruling from the U.S. Court of Appeals in San Francisco, rejecting the methods used by the Tax Court as well as the IRS, came in a dispute over whether monies paid into a company by its two shareholders were contributions to capital, or, as the executives involved insisted, loans. It was the position of the tax collectors that the interest payments made on the loans were not really deductible interest payments, but taxable dividends. The IRS's major proof: the lopsided 92-to-1 debt-equity ratio the business would have if the amounts were treated as loans. But the appellate judges told the IRS to consider as equity not just the paid-in capital, but also retained earnings. That reduced the debt-equity ratio to a tolerable 3.6-to-1, supporting the argument that what the owners called loans really were.(Bauer v. Commissioner, Dec. 7)