Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Sony’s use of VIRAG mark did not violate Lanham Act, (Aug 27, 2015)

By Cheryl Beise, J.D.

Inclusion of Italian flooring company VIRAG’s trademark on a bridge in the simulated Monza racetrack in Sony’s Gran Turismo 5 and 6 video games did not violate the Lanham Act, but could violate Mirco Virag’s common law right of publicity, the federal district court in San Francisco has ruled. As a corporation, VIRAG could not assert a right of publicity claim and its trademark infringement and false designation of origin claims were barred by the First Amendment. However, a publicity rights claim brought by company owner Mirco Virag survived dismissal because he adequately alleged that his identity was closely associated with VIRAG’s trademark (Virag, S.R.L. v. Sony Computer Entertainment America LLC, August 21, 2015, Beeler, L.).

Background. VIRAG, S.R.L. (“VIRAG”) is an Italian company in the commercial flooring business. VIRAG owns a federal trademark registration for its VIRAG® mark. Since 2004, VIRAG has sponsored the Rally of Monza at the Autodromo Nazionale Monza (the “Monza Track”), a racetrack located in Monza, Italy, where the Formula One Italian Grand Prix has been held since 1948. As part of the sponsorship, in 2006, VIRAG’s name and trademark began being displayed on a bridge over the Monza track for each Rally of Monza race.

Mirco Virag is one of VIRAG’s owners and a professional racing driver. Since his rally racing debut in 2001, he has become one of the premier drivers on the European Rally Circuit. He also has competed in the Rally of Monza, and VIRAG has sponsored a car for him. In the international racing world, the VIRAG® mark has become a “personification” of Mirco Virag.

VIRAG and Mirco Virag filed suit against Sony Computer Entertainment America LLC and Sony Computer Entertainment, Inc. (collectively, “Sony”), asserting that the inclusion of VIRAG’s trademark in their simulated racing video games, Gran Turismo 5 and Gran Turismo 6, violated their common law publicity rights under California law and constituted trademark infringement and false designation of origin under the Lanham Act. The accused video games included a simulated version of the Monza Track and VIRAG’s trademark appeared on a bridge over the track.

Before the court was the defendants’ motion to dismiss the plaintiffs’ claims.

Lanham Act Claims

VIRAG claimed Sony infringed the VIRAG® mark in violation of 15 U.S.C. § 1114, and that Sony falsely designated the origin of Gran Turismo 5 and Gran Turismo 6 in violation of 15 U.S.C. § 1125(a). Sony argued that both claims failed as a matter of law because their use of the VIRAG® mark was protected by the First Amendment. The court sided with Sony.

First Amendment. The Supreme Court has made it clear that “video games qualify for First Amendment protection.” Brown v. Entm’t Merchants Assoc., 131 S. Ct. 2729, 2733 (2011). VIRAG argued that Gran Turismo 5 and Gran Turismo 6 are driving simulator games that have “no plot, no characters, no dialog, and no meaningful interaction between the game player and the virtual world.”

The court disagreed. “Gran Turismo 5 and Gran Turismo 6 have characters (the race car drivers), plot (the drama of the races), and music,” the court said. “And there certainly is meaningful interaction between the game player and the virtual world: how else would a game player play the games?” In Brown, the Madden NFL video games—which were presented as realistic simulations of American football games—were found to be expressive works. The court saw no meaningful difference in the expressiveness of the Madden NFL video games and the Gran Turismo video games.

Rogers test. Because Gran Turismo 5 and Gran Turismo 6 qualified as expressive works, the court applied the Rogers test, which was first articulated by the Second Circuit in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), and adopted by the Ninth Circuit. Rogers balances the public interest in avoiding consumer confusion with the public interest in free expression. Contrary to VIRAG’s contention, the Rogers test was not “procedurally inapplicable at the motion to dismiss stage.”

Under the two-pronged Rogers test, the Lanham Act should not be applied to expressive works (1) unless the use of the trademark or other identifying material has no artistic relevance to the underlying work whatsoever; or, (2) if it has some artistic relevance, unless the trademark or other identifying material explicitly misleads as to the source or the content of the work.

Based on VIRAG’s allegations about the nature of Sony’s games, and given the central role of realism that was apparent in Gran Turismo 5 and 6, the court concluded that Sony’s use of the VIRAG® mark had at least some (i.e., more than zero) artistic relevance to Gran Turismo 5 and Gran Turismo 6.

The second prong of the Rogers test considers whether a defendant explicitly misleads consumers as to the source or content of a work. VIRAG did not allege or even suggest that Sony explicitly indicated, claimed, or misstated that VIRAG either was a source of content for Gran Turismo 5 and 6, or sponsored Gran Turismo 5 and 6. Instead, VIRAG alleged only that Sony used the VIRAG® mark. However, the mere use of a trademark alone could not suffice to make such use explicitly misleading. Sony’s use of the VIRAG® mark “comes nowhere close to an explicit misstatement as to source or content,” the court said. VIRAG’s Lanham Act claims were dismissed with prejudice.

Right of Publicity Claims

California’s right of publicity is derived from the common law right of privacy that protects a plaintiff's name or likeness from unauthorized appropriation for commercial advantage. In California, a plaintiff may plead a claim for violation of the common-law right of publicity by alleging: (1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of plaintiff’s name or likeness to defendant’s advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury. Eastwood v. Superior Court, 149 Cal. App. 3d 409 (Cal. Ct. App. 1983).

VIRAG’s right of publicity. Sony argued that VIRAG’s right of publicity claim had to be dismissed with prejudice because a corporation does not have a right of publicity under California law. The court agreed. First, no court has held or even suggested that the right of publicity extends to non-human beings; and the few courts that have addressed this argument have rejected it.

The plaintiffs cited several opinions where courts have either determined or assumed that a group of human beings has a right of publicity as a group. However, to the extent that a corporate plaintiff in the cited cases was allowed to assert the right of publicity, it was because a human being or group of human beings transferred or assigned his or their right of publicity to the corporate plaintiff, the court explained. No real human being was identified in the VIRAG mark Sony used in the video games.

Mirco Virag’s right of publicity. Sony argued for dismissal because there was no allegation that Mirco Virag’s name or likeness appeared in Gran Turismo 5 or Gran Turismo 6, or that a car purportedly being driven by Mirco Virag or featuring the VIRAG® mark appeared in either game. However, it was possible for a plaintiff’s identity to be appropriated without the use of the plaintiff’s name or likeness, the court said.

The plaintiffs maintained that Sony used Mirco Virag’s name—in the form of the VIRAG® mark—in the games. The plaintiffs also alleged that, in the international racing world, the VIRAG® mark has become a “personification” of Mirco Virag. For example, VIRAG published and distributed limited editions of a racing book titled, VIRAG Vincenti Sempre (VIRAG Always Winning), to select clients, architects, and builders, allegedly in order to capitalize upon the duality of Mirco Virag’s management of VIRAG and his participation in road rallies. The court found that Mirco Virag’s allegations connecting his identity to the VIRAG® mark were sufficient to defeat Sony’s motion to dismiss.

The court also denied Sony’s motion to dismiss the plaintiffs’ claim for punitive damages under California Civil Code § 3294 as to Mirco Virag’s surviving claim. In federal court, a plaintiff may include a “short and plain” prayer for punitive damages that relies entirely on unsupported and conclusory averments of malice or fraudulent intent, the court said.

The case is No. 3:15-cv-01729-LB.

Attorneys: James T. Kim (Cole, Schotz, Meisel, Forman & Leonard, PA) for Virag, SRL. Grace Lorraine Pan (Orrick, Herrington & Sutcliffe LLP) for Sony Computer Entertainment America LLC, and Sony Computer Entertainment Inc.

Companies: Virag, SRL; Sony Computer Entertainment America LLC; Sony Computer Entertainment Inc.

Cases: Advertising CaliforniaNews