NBC Sued over Fall Season Advertising

NBC has been sued by The Font Bureau, Inc., over NBC's use of particular printing fonts in its fall season advertising.  Font Bureau is one of the world's premier designers and licensers of typographic fonts, listing such clients as Apple, The Wall Street Journal and American Express.  It claims that NBC has: 1) violated the license NBC signed with FB to use three particular fonts, and 2) in violating the license, has infringed both the trademarks and copyrights FB holds in said fonts. 

As trademarks and copyrights are matters of federal law, the federal courts have subject matter jurisdiction over these matters.  Font Bureau, correctly, brought the suit in the U.S. District Court, and in this case, the one located in the Eastern District of New York (Brooklyn, Queens and Long Island).  I find this choice interesting because a majority of intellectual property cases are brought in the Southern District of New York, as this District covers Manhattan, the location of the most and largest intellectual property holders, and, therefore, the court most experienced in these matters.  Despite this, FB (located in Boston) decided to bring the suit in the Eastern District, which is a proper venue because NBC certainly does business (broadcasting and afvertising) in the areas the court presides over.  I assume this was because NBC is such a big party in Manhattan (both in size and favorable outcomes), the judge and case law might be more favorable to FB out in Brooklyn, which does itself have a lot of experience in intellectual property matters.

Although Font Bureau claims its trademarks and copyrights have been infringed, the case really hinges on the simple contracts question of whether or not NBC has violated the license it had signed with FB.  The trademark and copyright issues themselves really only arise if NBC did act outside of its license, and would act as a damages add-on, of sorts.  However, it is these intellectual property issues that have allowed FB to pursue this suit in court at all!  The license NBC signed (which is available in the third document embedded at the CityFile article) states that the parties agreed that any lawsuit that has the license at issue, would be resolved in an arbitration.  Further, if there were issues that were, for whatever reason, unable to be handled by an arbitrator, then the lawsuit would be brought in a Massachusetts court, and governed by Massachusetts law.  Now, this is not, obviously, what happened.  Using the rules provided by the federal laws at play, FB highlighted the intellectual property issues and sued in federal court in New York; the contract issue is the tie-on.  NBC could, in theory, ask the court to remove the case to arbitration or transfer the case to the federal court in Massachusetts, as that is what the parties agreed to in the license.  Arbitration is a possibility, but I don't think NBC would want to go to Massachusetts: it's on home turf in New York where costs will be lower and there won't be a home-field advantage for FB.

On to the license itself.  It looks pretty iron-clad.  NBC agreed that the fonts and their software (as fonts are really just computer programs, the software is part and parcel of the actual artistic fonts themselves) could be copied on to one computer only.  Essentially, one graphic artist could receive the disk containing the fonts, dave them on her computer, and manipulate them on her machine only.  She could make one back-up disk (in case the original disk and her saved file became corrupt), but that's it: can't share it with a co-worker by saving the fonts on his computer, can't use the fonts on the website, can't embed the fonts into another format (like Flash, Photoshop, etc.).  All NBC could do was create a non-editable PDF file with the fonts on it for illustration purposes, meaning the designer could create a document that says "These are the fonts from Font Bureau we are interested in using," in all of the different fonts, and bring a printout of that document to a meeting, but that's it.  If NBC wanted to then use a particular font for any other purpose, including in advertising its programs, it would have to purchase an upgraded license.  Essentially, what NBC agreed to was a sample disk so they could show the creative team what their font options were.  If they wanted to use the fonts, they'd have to pay up.

What appears to be evident is that NBC took those fonts and used them in its fall advertising.  If so, it would have broken its contract and would be liable for, potentially, up to whatever revenues they made from those advertisements.  More likely, the award would be whatever the upgraded license would have cost, plus some penalty.  However, there are also the trademark and copyright violations.

Font Brueau is making two trademark claims: run-of-the-mill trademark infringement, and trademark dilution.  The purpose of a trademark is to inform customers as to who created the product.  There is infringement when Company XYZ creates a mark that is so similar to Company ABC, that a customer would think XYZ's product was being sold by ABC.  This is known as "customer confusion."  A court tests whether customer confusion exists by looking at a few factors (differing slightly by federal circuit court), including, but not limited to: the products being sold, the marketing of the product, price, the type of consumers to whom the product is aimed, even focus groups and surveys in the mall.  In this case, a primary question is, "Who is the customer?"  NBC would argue that the customer is an advertising creator who would be able to easily identify a Font Bureau font and know NBC didn't design it, for the product being sold is the font.  FB would argue that the customer is anyone seeing NBC's advertising, who would think that the cool fonts used in the advertising were created by NBC's advertising department.  Not that this factor is determinative, but this question could be the fulcrum for this issue.  Personally, I think the judge would side with FB's interpretation becuase the font is worth nothing unless it is used in advertising for the general public to see.  If the judge does agree with FB, it is hard to see NBC prevailing on this issue: I think it is perfectly reasonable to expect the public to think any NBC advertising was designed, down to the fonts, by NBC itself.

As far as the dilution claim is concerned, we covered this ground in the Jones Day post.  A threshhold question for dilution is whether or not a mark is famous, in that a majority of the public knows the mark and its creator.  I had never heard of Font Bureau before this case, and I'm a pretty-tuned in kind of guy.  We are not dealing with McDonald's or Coca-Cola here.  There is no way a judge would find Font Bureau's fonts to be famous marks, so the dilution claim will fail.

Font Bureau's copyright claims are also in two parts: run-of-the-mill copyright infringement and contributory infringement.  A copyright exists when an original work, with a modicum of creativity, is fixed.  That's a bunch of legalese, so I will try to explain.  A "work" is any expression of an idea: a poem, a song, a painting, a photo, a sandcastle, a speech, skywriting, etc.  The caveats are, however, that the expression must be original, not solely facts, and not be utilitarian.  A list of the presidents is not a work because the names of the presidents are facts.  However, there are times when the arrangement of facts can result in a copyright (think of a Billboard Top 10 of 2008 CD.  The top ten songs of a given year are facts, but arranging them in a different order on the CD is sufficient to have a copyright).  Similarly, a ladder cannot be copyrighted (in most cases) because it is functional.  Next, the work must be "creative."  Creativity means that the work must be at least slightly different than another work.  I can't rewrite and publish The Lost Symbol.  I can write another book based on the mysteries of the Masons though.  Lastly, the work msut be "fixed."  This just means that the work needs to be "permanent."  I put permanent in quotes because permanency is a realtive term.  Obviously, a book is permanent in that it will take hundreds, if not htousands of years, to disintegrate.  TV shows are permanent because they are embedded on film.  Even bits of information flowing through the internet or on your computer are sufficiently permanent under the law, even if they only exist for mere moments.  A live performance of an improv troupe, that is not recorded, however, is not fixed.  Nor is a poem written in the sand (as it will be washed or blown away).

In this case, the fonts are the new design works, expressed in original computer code, that are fixed on the disk provided to NBC.  Certainly sufficient for a copyright.  Now, a person who owns a copyright controls, among other things, the right to, well, make copies of the work!  That is the purpose of FB's license: it allowed NBC to make one copy of the computer code.  That's it.  FB was controlling the copies of its work.  If NBC then made additional copies of the work, either by downloading them permanently on to a nother worker's computer, or even sending the code through the internet or internal NBC network (case law says this is sufficient copying), NBC has made illegal copies in violation of FB's copyright.  Needless to say, actually printing out the fonts in advertising posters, or using the fonts on TV violate the copyright as well.  The contributory infringement claim is based on vicarious liaibility law that states even though a person may not actually be doing the illegal copying, if that person instructs, forces, or permits someone else to do the illegal copying, the person will also be held liable.  This is the basis for any liability found in file sharing lawsuits like the seminal Napster case.  Here, NBC would have caused whomever printed their posters, and the local non-NBC-owned affiliates to infringe FB's copyright by playing and printing the fonts.  If the license is found to be controlling here, and NBC really did only have persmission for one copy, I don't see how they avoid liability on these issues.

Of course, there are always exceptions and defenses to these laws.  From the fair use doctrine to time-shifting, there are times copying works or using trademarks without the owner's permission are allowed.  I don't see how any of these defense are available to NBC, though, if all of FB's allegations are true.  Personally, I think NBC would be crazy not to settle this case.  FB is seeking at least $2 million in damages, which may be chump change to NBC, but is still not the type of judgment one wants against him.  This is, after all, really a licensing agreement case.  If NBC determines that it was, indeed, in violation of the agreement, it will probably settle for a smaller sum thatn the two million, and enter an upgraded licensing deal with Font Bureau.  There doesn't appear to be any great upside here for NBC; it's best for them to make it go away.  It does prove, however, that huge companies need to be very careful about the details because the difference between THIS and THIS, can cost you a whole bunch of money.

Sorry for the long post.  These basics on trademark and copyright law are very important, and will probably form the basis of a lot of the posts here, so I wanted to make sure I explained them sufficiently.  In the future, I will probably just reference back to this post for the basics, and then furhter detail any nucnces that arise in future situations.  If you have any questions or comments, please leave them below in the Comments section. 

Thanks for reading.