One of the most memorable lines from Mel Brooks’ comedy Spaceballs comes from Yogurt, the wise sage who teaches the protagonists about the Schwartz. He says, “Merchandising! That’s where the real money from the movie is made.” While the movie is a spoof, this line hits the nail on the head.
The Power of Merchandising
Take George Lucas, for example. When Star Wars was released, he famously passed on a $500,000 director’s salary in exchange for the rights to merchandise the franchise. That decision led to a multi-billion-dollar empire, proving that merchandise can be more lucrative than the original product. In fact, Star Wars became one of the top licensed toy brands and was sold to Disney for over $4 billion.
Broadcast Companies and Licensing
In the entertainment industry, licensed merchandise is a significant part of a brand’s value. When I worked as an attorney for 20th Century Fox, our trademark team would file applications to register a wide range of products for each new project—everything from calendars and toys to clothing and video games. The goal was always to sell branded merchandise that would resonate with audiences and promote the film or TV show.
But What About Your Business?
If you’re not a big broadcaster, you might wonder if you need to register your mark for merchandising. Most businesses use their mark on apparel for staff or on items like tote bags, keychains, or water bottles to give away to potential customers. These are known as promotional goods. Even when sold, these items often fall under “ornamental use,” which typically doesn’t qualify for trademark protection.
Ornamental vs. Trademark Use
If your design is only used ornamentally—like a logo on the front of a t-shirt—it’s not considered a trademark and doesn’t need to be registered. However, it’s important to understand that this kind of use doesn’t establish common law rights in your mark.
Protecting Your Mark
The technical distinctions between “promotional use” and “use as a trademark” can be confusing but are crucial in trademark law. Misusing a mark can prevent you from obtaining registration or even lead to the loss of rights. If you want to protect your brand and ensure it’s used correctly on goods or services, consulting with an experienced attorney is essential.
With over 25 years of experience in trademark law, including licensing, we’re here to help. Contact us with any questions about protecting your mark and maximizing its value through merchandising.