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A FREDDY KRUEGER BY ANY OTHER NAME IS STILL A FREDDY KRUEGER: WHY HAVEN’T HALLOWEEN STORES BEEN SUED FOR SELLING COSTUMES THAT MIMIC WELL-KNOWN FICTIONAL CHARACTERS?

By: Kristen Van Dyke

Halloween stores sell costumes that clearly mimic the appearance of well-known fictional characters. Profiting from consumers’ association of these costumes with the fictional characters they resemble potentially infringes trademark rights. So why haven’t these Halloween stores been sued yet? This blog explores how the uncertainty of fictional character trademark law and additional non-legal considerations may be tipping the scales away from litigation.


INTRODUCTION

Halloween costumes are a fun way to get creative, and people often dress up as their favorite fictional character for the holiday. To capitalize on this tradition, Halloween stores sell costumes that clearly mimic the appearance of well-known fictional characters. As shown in the pictures below, these costumes are given generic-sounding names, such as “Woodland Warrior” for a costume that closely resembles Link from the Legend of Zelda video game series, or “Gothic Doll” for a wig-and-dress combination that looks like Wednesday Addams from The Addams Family television show. While these costumes are a handy way to get the iconic look of a character, they also potentially infringe trademark rights. Why are there no cases of Halloween stores being sued for selling these “knock-off” costumes? 

Pictures above taken by Author

BACKGROUND

Trademark law has two main goals: (1) to protect consumers from being confused as to the source of goods or services; and (2) to protect the plaintiff’s infringed trademark as property,[1] including the goodwill associated with the mark.[2] Goodwill encapsulates “a bundle of commercial expectations that signifies the favorable reputation of a business, product or service” including the likelihood of repeat purchases from buyers who view that business, product, or service favorably.[3] Thus, protecting a plaintiff’s trademark involves preventing others from profiting off of the plaintiff’s goodwill. 

A trademark is “any word, name, symbol, or device, or any combination thereof” that is (1) used in commerce and (2) identifies to consumers the source of goods or services[4] by being either inherently distinctive (automatically identifying to a consumer the source of goods or services)[5]or having acquired secondary meaning (consumers have learned to recognize it as a source-identifier).[6] Trademark infringement requires that the plaintiff owns a valid trademark and that the defendant’s actions are “likely to cause confusion” [7] in the minds of consumers as to “the origin, sponsorship, or approval”[8] of the defendant’s goods. The federal circuits have factor-based tests for likelihood of confusion that vary from circuit to circuit.[9]

The Halloween costume industry is substantial. Consumers were estimated to spend $3.2 billion on their Halloween costumes in 2019.[10] Further, fictional characters are one of the most popular Halloween costume choices.[11] This means that a sizable chunk of that $3.2 billion was likely spent buying costumes that resembled fictional characters. 

There are currently no cases with trademark infringement claims against Halloween costume retailers; however, two cases provide some insight into how such a case might turn out. In Disney Enterprises, Inc. v. Sarelli, the defendant sold “themed entertainment party services,”[12] such as a party based on the Disney movie Frozen in which actors portrayed the characters Anna and Elsa and “s[a]ng [children’s] favorite songs.’’[13] The plaintiffs claimed that the defendant infringed their trademarks through its advertising materials and through its “live costumed actors portraying plaintiffs’ copyrighted and trademarked characters.”[14] In Conan Properties, Inc. v. Conans Pizza, Inc., the defendant owned a pizza restaurant with “menus, signs, promotional material, specialty items, and general decor feature[ing] a barbarian-like man who closely resembled [the plaintiff]’s CONAN character.”[15] Though only one of these cases involves costumes, both cases address trademark infringement of fictional characters. Thus, these cases help us understand how courts may analyze character-based-trademark claims against Halloween stores.

ANALYSIS

Before bringing suit, rights holders most likely consider: (1) whether their fictional character is a valid trademark; (2) if so, whether a court would find that a Halloween costume infringed their trademark; (3) whether the court’s remedies are worth the cost of litigation; and (4) whether the act of litigating this kind of case will damage the goodwill associated with the trademark at issue.[16]

To be a valid trademark, a fictional character must (1) be used in commerce; and (2) identify to consumers a single source of origin.[17] Fictional characters are likely to satisfy the first prong: use in commerce. Most characters that people wish to dress as for Halloween typically appear in movies, video games, or television shows that are sold to consumers. Further, they are often used to market other merchandise, such as T-shirts, stickers, coffee mugs, etc. Thus, the use-in-commerce requirement is unlikely to deter potential plaintiffs from asserting trademark rights in their characters. 

The second prong, the source-identification requirement, is more difficult for characters to satisfy.  Sometimes, consumers may be able to recognize an iconic character but unable to identify the original source of the character. Other times, “characters . . . are ineligible for protection because they are identified with multiple sources.”[18] For example, Iron Man can be associated with Marvel Studios, the Marvel comics, and the ultimate owner of the Marvel Cinematic Universe, the Walt Disney Company. Characters from movies tend to have this problem because they can be associated with the underlying work the movie is based on (such as a comic book), the studio who produced the movie, or the larger corporation that owns the studio. Thus, determining whether a particular character identifies a single source involves not only surveys of consumers to see what they associate a character with but also investigation into the actual source or sources of the goods featuring the character. 

Even if a fictional character is a valid trademark, determining whether a Halloween costume based on that fictional character infringes the trademark is difficult because the character would have to prevail in a court’s weighing of numerous likelihood-of-confusion factors that vary from circuit to circuit. For example, the Polaroid factors from the Second Circuit include: the strength of the mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap between the two products, actual consumer confusion, the defendant’s good faith in adopting its own mark, the quality of defendant’s product, and the sophistication of the buyers. [19] The complete absence of any cases that apply the likelihood-of-confusion factors to a Halloween costume also makes it hard for trademark rights holders to gauge their probability of success in an infringement suit. 

Disney Enterprises, Inc. v. Sarelli shows how courts might find against trademark rights holders. In Sarelli, the court found that there was no likelihood of confusion[20] and took special notice of the fact that the defendant’s costumed characters were “identified on [defendant]’s website using facetious names that [were] clearly distinct from plaintiffs’ marks.”[21] This is the same naming mechanism that Halloween stores use for their knock-off costumes and would also weigh in the Halloween store’s favor in a court’s analysis. 

In contrast, in Conan Properties, Inc. v. Conans Pizza, Inc., the Fifth Circuit upheld a finding that “Conan the Barbarian” was a protectible trademark and that the defendant pizza company infringed this trademark through its “menus, advertising material, specialty items, and general decor feature[ing] a character unmistakably similar if not identical to CONAN THE BARBARIAN.”[22] Thus, one can see how a Halloween costume that is “unmistakably similar”[23] to a character could likewise infringe that character’s trademark.

Further, a rights holder may be cognizant of the court’s limited ability to remedy this trademark infringement issue. While a court may enjoin a specific Halloween store from selling a particular knock-off costume, this does little to solve the underlying problem. A rights holder might have to sue every Halloween store chain that sells a knock-off version of its character, with varying results. Halloween stores could also easily adapt their knock-off costumes based upon the court’s rulings to try to skirt liability while continuing to reap profits from customers who want to look like that character.

Rights holders may also take into account considerations beyond their likelihood of prevailing in court. They may recognize that having fans dress up as their characters for Halloween is not only an important social custom but also solidifies the character’s image in the popular consciousness. If they were to litigate the issue, fans who would otherwise dress as these characters may be prevented from doing so, thus breeding resentment. The value of trademark rights in fictional characters is the goodwill fans have towards the source of those characters. Thus, a legal strategy that damages that goodwill would essentially undermine the very thing that rights holders are trying to protect.

CONCLUSION

Despite the substantial size of the industry, no rights holders have yet sued Halloween stores for selling knock-off costumes. They may be dissuaded by the initial difficulty of asserting trademark rights in their characters. Once this hurdle is crossed, rights holders may fear that litigation of Halloween costumes as trademark infringement is far too unpredictable to be worth the effort. This uncertainty coupled with the costs of litigation may outweigh any remedies that courts can provide. Further, even if a rights holder predicts they will prevail in court, they may ultimately conclude that this legal victory is outweighed by damage to the goodwill of their brand in the eyes of fans who wish to dress as their favorite character for Halloween. 


[1] J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 2:2 (5th ed. 2019).

[2] Id. at § 18:2.

[3] Id

[4] 15 U.S.C. § 1127.

[5] Barton Beebe & John M. Desmarais, Trademark Law: An Open-Source Casebook, 37, (Version 6.0, 2019).

[6] Id.

[7] 15 U.S.C. § 1125(a)(1)(A) (2018).

[8] Id.

[9] See McCarthy, supra note 2, at § 23:19.

[10] Social media influencing near-record Halloween spending, National Retail Federation (Sept. 25, 2019), https://nrf.com/media-center/press-releases/social-media-influencing-near-record-halloween-spending.

[11] Minions, “Star Wars” Characters Costumes Abound for Adults, Children and Pets This Halloween, National Retail Federation (Sept. 20, 2015), https://nrf.com/media-center/press-releases/minions-star-wars-characters-costumes-abound-adults-children-and-pets.

[12] Disney Enters., Inc. v. Sarelli, 322 F. Supp. 3d 413, 425 (S.D.N.Y. 2018).

[13] Id

[14] Id. at 426. 

[15] Conan Props., Inc. v. Conans Pizza, Inc., 752 F.2d 145, 148 (5th Cir. 1985).

[16] See McCarthy, supra note 2, at § 18:2. 

[17] 15 U.S.C. § 1127 (2018)

[18] David B. Feldman, Finding a Home for Fictional Characters: A Proposal for Change in Copyright Protection, 78 Ca. L. Rev. 687, 706, (1990).

[19] Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961).

[20] Disney Enters., Inc. v. Sarelli, 322 F. Supp. 3d 413, 438 (S.D.N.Y. 2018).

[21] Id. at 434. 

[22] Conan Props., Inc. v. Conans Pizza, Inc., 752 F.2d 145, 150 (5th Cir. 1985). 

[23] Id.

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