Festivals Are Hot, but Don't Get Burned by a Trademark Lawsuit This Summer

The Sundance Film Festival, South by Southwest (better known as SXSW), and The Coachella Valley Music and Arts Festival all present amazing opportunities for brands to connect with a coveted demographic: plugged-in 18-30 year-olds with disposable income, who are generally perceived as tastemakers among their peers.  The safest way for a brand to capitalize on the popularity of these events is through official sponsorship, but if that's not in this year's marketing budget, how can brands engage with the participants and social media followers of these events without infringing on the trademark rights of the festivals?

First and foremost, brands need to know whether the organizers of the festival have registered their trademark in the festival's home state or country.  If the trademark is registered, they should then look to see the specific categories of products or services protected under that registration.  Brands should get advice about the local law, including exceptions to the rules regarding trademark infringement. 

For example, SUNDANCE FILM FESTIVAL®, SXSW® and COACHELLA® are all trademarks that have been registered with the United States Patent and Trademark Office.  From a brand perspective, it's worth noting that not only are these trademarks protected in connection with hosting events, but, in the case of SXSW and COACHELLA, they are also protected in connection with the sale of certain merchandise.  In the U.S., even if the marks are not registered, they may still acquire protection through consistent use. 

Once a mark gains protected status, whether through official registration or use, it cannot be used by others if that use would result in consumer confusion.  One avenue for potential confusion when using marks like COACHELLA in connection with a brand's marketing arises when the brand uses those trademarks in a way that suggests that the festival is endorsing the brand.  Let's consider some examples.

One common way that brands look to capitalize on the popularity of a festival is by throwing satellite parties or hosting events.  During SXSW, many brands that are not official sponsors host parties in Austin at the same time as the festival.  These brands can get themselves into trouble if they advertise their parties in a way that creates confusion as to who is sponsoring the event.  In a 2011 case, SXSW, Inc. sued Joseph Gingerella, alleging that he organized "battle of the bands" events in multiple states using the name "Road to South By", and then organized and promoted a concert for the winner at a venue in Austin that deliberately coincided with the SXSW festival.

The court decided that Gingerella's actions created confusion as to the origin, sponsorship or approval of Gingerella's events. As a result, Gingerella was prohibited from organizing any future events that would create confusion and was ordered to pay SXSW $150,000 in attorney fees and costs.  The takeaway for brands is that you should not use the name of the actual festival or any related trademark in your advertising, nor should you market your brand's event in a way that implies the event is affiliated with the festival.  Doing so may create confusion as to who is hosting or endorsing the event and could result in a trademark infringement lawsuit being filed against the brand.

A satellite event is likely only the tip of your brand's marketing strategy to connect with the festival-going demographic.  No doubt your brand's social media team wants to run a Pinterest and Instagram campaign showcasing the best glam-hippie inspired pieces from this year's summer line during Coachella.

Can your marketing team create a "Coachella" inspiration board on Pinterest and then upload picture after picture of models in white lace embellished dresses wearing flower crowns in a sun-drenched background? As alluring and innocuous as such a social media campaign may sound, your brand runs the risk of receiving a cease and desist letter from the producer of Coachella for using its trademark for your brand's own commercial purposes without permission.  Why?

Remember those "extra" COACHELLA registrations for merchandise that we discussed earlier?  Well, they specifically include select items of clothing.  What's more, the festival could further allege that that your brand was attempting to imply some sort of sponsorship or endorsement from the festival.  Yes, there are defenses your brand could make; however, as is often the case with social media, much of this is unchartered water. The safer course of action would be to instead give the Pinterest board a descriptive name, such as "Summer Festival Wear!"

One reason we are not seeing a proliferation of lawsuits regarding use of third-party trademarks on social media is likely that such promotion is beneficial to the festival.  If your brand is using their trademark to publicize their own event, your brand is just generating added buzz for them.  Suing for getting free advertising would be pretty short-sighted. 

Regardless of whether festival producers will sue, your brand and your employees should be aware that using someone else's trademark may lead to liability for trademark infringement.  While there may be situations where your brand can claim a "fair use" exception, your brand may never legally use another's trademark in way that creates a false impression of sponsorship, endorsement, or affiliation. 

Before embarking on any advertising campaign in connection with Sundance, SXSW, Coachella or similar events, you should consult with an attorney and go over your marketing strategies.  A competent attorney will provide guidance about which ones are permissible and, where the answer is not yet clear, help you to make an informed decision based on your brand's threshold for risk.  Also consider taking preventative steps by asking your attorney about a training program to ensure that the marketing employees responsible for executing these campaigns understand the rules and don't inadvertently place your brand at risk.

Megan Ellinghaus and James L. Gannon, II, are associates in the business department of Montgomery McCracken Walker & Rhoads LLP. Ellinghaus has experience working within the fashion and luxury industries, and has negotiated advertising service agreements, media buying contracts, and intellectual property licensing agreements, including agreements with talent and artists. Gannon focuses his practice on intellectual property matters, including the drafting and prosecuting of applications for patents, trademarks, and copyrights, both domestically and abroad. They can be reached at [email protected] and [email protected].
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