IP Law Daily, PUBLICITY RIGHTS—D. Haw.: Hawaii Publicity Rights Act does not apply retrospectively, (Jul 21, 2020)

By Randall Holbrook, J.D.

Heirs’ claim to "Sailor Jerry" intellectual property was dismissed because the statutory rights they sought could not be applied retrospectively and because they failed to plead unjust enrichment as a result of an injury to them.

In a dispute over the name, likeness, and other intellectual property related to "Sailor Jerry," a tattoo artist who died in 1973, an entity formed by the artist’s heirs failed to plead claims under the Hawaii Publicity Rights Act, the federal district court in Honolulu has ruled. The court dismissed the heirs’ claim under the 2009 Hawaii Publicity Rights Act because that statute could not be applied retrospectively. The court also dismissed an unjust enrichment claim because the heirs did not allege they had suffered a loss in connection with the defendant’s unjust gain. Finally, the court held that laches likely applied to all surviving claims, but granted the plaintiffs additional time to conduct discovery in order to ascertain whether an unclean hands defense existed (N.K. Collins, LLCv.William Grant & Sons, Inc., July 17, 2020, Kay, A.).

The plaintiff, N.K. Collins, LLC., was an entity formed by the tattoo artists’ heirs. N.K. Collins claimed that it held had an exclusive legal interest in the "Sailor Jerry" intellectual property under the 2009 Hawaii Publicity Rights Act and under the common law. The defendants—companies that sold, among other things, "Sailor Jerry Rum"—claimed to be the assignees of intellectual property rights sold shortly after the decedent’s estate was probated in 1973.

Hawaii Publicity Rights Act of 2009. Judicial estoppel did not apply, the court first decided. It was not inconsistent for the defending companies to claim they owned the Sailor Jerry brand under common law and also to claim that there was no statutory Sailor Jerry brand created by the statute, which was not enacted until decades after Sailor Jerry himself had died. The court considered certifying to the Hawaii Supreme Court the question of whether the Publicity Rights Act (HPRA) could apply retrospectively, but held that this was unnecessary because Hawaii law is clear that a statute may be applied retrospectively only when it is clear from the text of the statute or from the legislative history that the statute was intended to apply retrospectively. The court found that the language of the statute was ambiguous in that regard. The court then considered the legislative history and concluded that the legislative history was also ambiguous. Applying the statute retrospectively would functionally divest the defending companies of the substantial existing rights in the Sailor Jerry brand that existed prior to the enactment of the statute, and any rights those companies legally obtained under existing laws prior to enactment of the HPRA could not be displaced by the subsequent retrospective operation of the statute.

Unjust enrichment. Unjust enrichment does not lie unless the plaintiff has suffered a loss, and the court held that N.K. Collins had not pleaded that it suffered a cognizable loss. N.K. Collins had done nothing with the intellectual property rights it claimed, and it had lost no business to the defending companies. The court did grant leave to amend the complaint as to this count.

Laches. N.K. Collins unreasonably delayed in bringing the case because it became aware of the allegedly infringing conduct in 2009 and did not file suit until 2019, while analogous actions at law would be subject to either two- or six-year statutes of limitations. The court also found that the defending companies had suffered considerable expectations-based prejudice as a result of the delay, because they invested heavily in the "Sailor Jerry" brand during the period of delay. There was also limited evidence-based prejudice because potentially important witnesses had become harder to obtain over time.

Unclean hands. N.K. Collins alleged that the defending companies had unclean hands, which would close the doors of an equitable defense such as laches. N.K. Collins was unable to produce evidence of that unclean hands defense, but the court found that this lack of evidence was due to the stay of discovery issued shortly after the filing of the motion for judgment on the pleadings. The court granted N.K. Collins time to conduct discovery directed at the unclean hands issue, and declined to enter judgement on the laches question until that discovery is complete.

This case is No. 1:19-cv-00386-ACK-RT.

Attorneys: Julia Kimie Brotman (Settle Meyer Law LLLC) for N.K. Collins, LLC. Erika Susan Gustin (Carlsmith Ball LLP) for William Grant & Sons, Inc. and William Grant & Sons Ltd.

Companies: N.K. Collins, LLC; William Grant & Sons, Inc.; William Grant & Sons Ltd.

Cases: PublicityRights HawaiiNews