The estate of Michael Jackson is at odds with the IRS over the value of the pop star’s right of publicity, a form of intellectual property that covers an individual’s name and likeness (see prior coverage). Of course, there could be a great deal of value when it comes to a celebrity, but you don’t have to have a famous face to generate value.
New case: A woman is suing the Chipotle restaurant chain for using her photograph without her permission for advertising purposes. She is suing for $2.2 billion, which represents the chain’s entire profits for a 10-year period, according to a blog post on Lexology. As the article points out, it will be difficult to convince the court that all of the profits are attributable to the use of the photo.
A notable right of publicity case involving a noncelebrity was a kindergarten teacher who sued Nestle over the unauthorized use of his image on labels of Taster’s Choice coffee. A jury awarded him $15.6 million, which represented 5% of the profits on the coffee plus lost licensing fees (the decision was reversed, and the parties later settled).
In the U.S., the right of publicity is a state-based right. Currently, 22 states have some form of right of publicity statute on the books and 38 states have common law precedent, according to an interactive map on a website maintained by Jonathan Faber, founder of the Luminary Group and an expert in this area. Faber says that valuation analysts will come upon the right of publicity issue primarily in three contexts: (1) estate valuation and planning; (2) divorce; and (3) infringement due to unauthorized use. But the issue often fails to surface at all because of a lack of awareness.
The valuation involves techniques and methods common to the valuation of other IP assets, such as determining royalty rates, examining cash forecasts, choosing a discount rate, and so on. But the “application of those common methods really requires the judgment of someone who works with the right of publicity on a regular basis,” says Faber. “Those who may be experts in other areas of IP valuation should not assume he or she can jump into a right of publicity analysis and perform a defensible valuation,” Faber said.
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