Photo: Waldemar Brandt / Unsplash
What started out as character drawings in a sketchpad have grown to become some of the biggest comic book series that we know and love. The Avengers, Captain America, Black Widow and the Hulk have even evolved beyond the comic books themselves to become hugely successful franchises with top grossing movies and video games.
While these characters and their stories are copyrighted to protect the work of their creators, many times the characters are also registered as trademarks under the auspices of the character’s brand and advertising. When this is the case, the intellectual property rights can be considered as ‘overlapping’.
Our research sheds light on how creative reuse of comic characters is affected by overlapping rights and what implications this has for revenue generation.
Does granting additional trademark rights increase or limit the franchise use of comic characters in other media? How do overlapping rights affect franchise revenues? What does this mean for our legal policies?
Activate your x-ray vision and let’s take a closer look.
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Given that copyright and trademarks differ in purpose and function, in the case of comic characters’ overlapping rights we could imagine two scenarios, with opposite outcomes.
On the one hand, the need to negotiate multiple rights and licenses around characters from one (or various) rights holders will increase the costs for those producing new films and games. The cost of these transactions might be a barrier and mean that trademarked characters are utilized less often in franchises than their counterparts who are only copyright protected.
On the other hand, trademarks can help build a strong brand around a comic character, increase the character’s merchandising value and help consumers verify authentic products. As registering a trademark helps to promote the character and raise returns on advertising, it may also encourage more media franchises.
How do overlapping rights actually affect a comic character’s use in media franchises? Are characters with trademarks being utilized more or less frequently?
As well as the number of media franchises, it is equally as important to consider the overall revenues these generate. Even if a specific comic character appears in fewer films or video games, it might still be possible for these franchises to generate higher sales. This could happen, for example, if franchise producers demand higher prices from film and game audiences who have less choice over where to find their comic character.
How well do these character media franchises pay off at the box office and elsewhere? Do comic characters with particular rights frameworks tend to have higher earnings?
Drawing on extensive crowdsourced data from the Grand Comics and TM Link databases, we tracked almost 2,000 copyright-protected comic characters over the past 40 years. We looked at whether their additional U.S. trademark registration helped or hampered any corresponding media franchising.
We found that the effects of trademark registration in addition to copyright protection differ based on the type of franchise. For movies, the number of franchises increases after registration while for video games it does not.
Trademark registration encourages additional movie franchises for the same character by up to 15 percent per year.
This increase in the number of franchises can likely be attributed to the trademark protection allowing for more effective branding and merchandising, alongside the growing popularity of franchise characters. These additional rights may also allow for new financing opportunities as they can sometimes be used to back investments in new movie franchises.
In the case of video games, however, overlapping rights deter some comic characters from being utilized for new video game franchises and reduce the variety of different characters that appear on gaming screens. This could possibly be due to higher licensing and transaction costs, especially if licensing copyright or trademarks takes up a bigger portion of the total production costs when compared to movies.
Obi Wan Kenobi
While trademark registration increases the number of movie franchises, our research shows that it’s video games which benefit from trademark registration when it comes to increasing sales and brand popularity.
For video games, our data predicts an average 75 percent increase in sales revenue once a character’s trademark is registered.
Based on this expected increase, if we consider that an average game franchise generates sales of around USD 2.45 million in North American markets, then a trademark registration could boost that revenue to an estimated USD 4.31 million.
Although this correlation exists between trademark registration and increased sales, it could be argued that only the more popular and higher-selling characters are the ones that are trademarked in the first place. We factored in this possibility and confirmed that franchise games generate more revenue when they’re registered as a trademark, regardless of whether the character is well known or not.
In the case of copyright and trademarks, overlapping rights may in fact be economically beneficial for certain types of franchises around comic characters.
Copyright helps to protect the economic interest of the creators and publishers, while trademarks help consumers to verify authentic products and for franchises to build popular brands around their original creations. From this economic perspective, having access to both types of rights frameworks can help markets to better function.
If we look at it from a legal perspective, however, there is still the possibility of legal regime ‘clashes’ between inconsistent and contradictory sets of rules in copyright and trademark frameworks, and overprotection via these overlapping rights.
There are also questions surrounding consecutive rights which our study reveals: many of the comic characters in our data will soon lose their copyright protection, but might still be protected under trademark law.
These legal questions around the public domain and blurry boundaries between rights frameworks may have economic consequences that will need further research.
Some industry stakeholders argue that there are too few opportunities to negotiate and transfer rights around characters at cross-media and international trade fairs. Because franchises involve different industries and territories, the next generation of characters might not be showcased enough across business networks and thus be insufficiently visible for those potentially interested in the content and their rights.
Our research confirms that intuition. It suggests that active and transparent markets for rights can help to encourage additional franchises and further media convergence.
It also highlights the risk that legal uncertainty around rights in these markets might effectively reduce the use of characters in franchises.
As our research has shown, overlapping copyright and trademark rights can block some characters from appearing in franchise video games, while at the same time franchises around fewer characters are generating higher sales.
If competition between new franchises is limited, there is a risk that sales and rights become increasingly monopolized. Some rights holders might strategically consider not licensing exclusive rights around their characters, and ultimately sellers may have excessive control over the prices of their franchise products.
Copyright and trademark policies that prioritize content variety could help to encourage more competition.
One could also imagine waiving licensing requirements in legal frameworks for either copyright or trademark when characters are entering media franchises for the first time. This could lower the barriers to entry for some characters during their copyright term while at the same time maintaining the economic benefits of overlapping rights when additional trademarks are registered.
Four insights and considerations for policymakers