Phillies get the Best of Phanatic Creators – for Now

Sep 10, 2021 | Intellectual Property

Score one for the Philadelphia Phillies in its long-simmering battle with the creators of the Phillie Phanatic mascot after a federal magistrate judge ruled in August that the changes the Phillies made to the mascot were sufficient to allow the continued use of the mascot by the club.

Unfortunately for the club, the 91-page opinion may not be the final out as the original creators of the Phanatic, Harrison/Erickson (H/E), have all but promised an appeal.

At the center of the court’s decision was its conclusion was that the Phillies had made enough changes to the mascot of the Phanatic “that it would no longer be recognizable as the Phanatic.” In sum, it “would not be a derivative of the Phanatic, and instead would be a completely different mascot,” the court wrote in relying heavily on the 1991 U.S. Supreme Court decision, Feist Publications Inc. v. Rural Telephone Service Company Inc.

“To be sure, the changes to the structural shape of the Phanatic are no great strokes of brilliance,” according to the court. “But as the Supreme Court has already noted, a compilation of minimally creative elements, ‘no matter how crude, humble or obvious,’ can render a work a derivative.”

Long-time contributor to Hackney Publications Jordan Kobritz wrote about the case in 2019 in which he provided a timeline.

“According to a complaint filed in United States District Court for the Southern District of New York in February of 1978, Bill Giles, who was the Executive Vice President of the Phillies, decided to develop a mascot for his team. Giles had a vision for the team mascot — “he would be green, fat, furry, big-nosed and instantly accessible to children.”
 
“To help him develop a costume, Giles sought the assistance of H/E, a design and marketing company in New York City.
 
“On March 17, 1978, the Phillies and H/E entered into an agreement whereby H/E would provide a design and construct a costume based on Giles’ specifications for $3,900, plus expenses. In exchange, the Phillies were granted the right to use the costume on TV, in commercials and personal appearances to promote the team.
 
“The Phanatic, brought to life by Dave Raymond, an intern in the Phillies’ marketing department, debuted on April 25, 1978 and was an instant hit, thanks to his playful routines that poked fun at anyone in the ballpark.
 
“In case you’re not familiar with the Phanatic, his biography describes him as standing 6-foot-6, boasting a 90-inch waistline and a slight case of body odor. He allegedly hails from the Galapagos Islands and his diet consists of cheesesteaks, soft pretzels, hoagies, scrapple and Tastykakes. His favorite movie is Rocky.
 
“The Phanatic was so well received, the Phillies decided to develop Phanatic-related promotional items like key chains, pennants, t-shirts and a Phanatic doll to be given away to fans. In order to do that, they entered into a second agreement with H/E on July 15, 1978. The team was given exclusive rights to make reproductions of the costume on souvenir items and agreed to pay H/E $5,000 per year plus 7% of the greater of the manufacturing cost or retail selling price of the licensed items.
 
“Less than a year later, H/E was back for more. In May 1979, they sued the Phillies over the extent to which H/E’s approval was needed on promotional and merchandising items. Apparently unbeknownst to the Phillies, H/E had obtained a copyright on the Phanatic, claiming in their application to the Copyright Office that the Phanatic was an “artistic sculpture,” rather than a ‘costume.’ The distinction may have been relevant had the matter gone to trial. What H/E had created, with substantial assistance from the Phillies, was a costume; it wasn’t a true sculpture without someone inside it. Had H/E been fully transparent in their application, they may not have been able to copyright the costume.
 
“The parties settled the litigation in November 1979 by renegotiating their agreement. The Phillies received exclusive rights to use the Phanatic costume and make certain reproductions. In return, they agreed to pay H/E a lump sum of $115,000 plus $5,000 annually, increasing by $1,000 per year.
 
“Thanks to the growing popularity of the Phanatic, H/E’s desire for a piece of his ever-growing merchandise sales remained unsatiated. In 1984, the parties renegotiated yet again. This time, the Phillies, no doubt fed up with H/E’s greed, insisted that H/E convey its rights to the Phanatic ‘forever.’ In exchange for the sum of $215,000, which the Phillies paid in three installments, H/E agreed to convey whatever rights it had in the ‘artistic sculpture known as the Phillie Phanatic.’
 
“The exact language reads: ‘H/E hereby sells, assigns, and transfers to the PHILLIES, its successors and assigns, all of HE’s right, title and interest in and to (a) the copyright in the artistic sculpture (Phanatic) and all renewals and extensions thereof and (b) any and all causes of action heretofore accrued in HE’s favor for infringement of said copyright.’
 
“The Phillies allege that had they understood the 1984 agreement would not be an assignment ‘forever,’ they would have paid less than $215,000.
 
“H/E has a different interpretation of the 1984 agreement. Last year the design firm sent the Phillies a termination letter under the provisions of the U.S. Copyright Law that allows an author to reclaim rights after 35 years. If H/E can terminate the 1984 agreement, the Phillies could lose exclusive control of the mascot after June 15, 2020, making him a free agent and licensable to another sports team.
 
“The Phillies claim that due to their contribution to the origination of the Phanatic and their significant investment in the mascot over the past four decades — the team holds eight trademarks related to the Phanatic — his name and image have come to be strongly associated with the team’s identity.
 
“Like most disputes and lawsuits, this one is about money, gobs of it. Unlike the three prior renegotiations with H/E, the Phillies are unwilling — at least for the present – to accede to the firm’s demands. Unlike the prior renegotiations, there’s a lot more at stake, for both parties. If the Phillies win, H/E stands to lose potentially millions of dollars. If H/E is successful, the Phillies could lose their iconic mascot, or as the team claims, their very identity.
 
“The lawsuit involves authorship and intellectual property along with issues related to contract law. Regardless of the outcome, there are broad implications for the entertainment industry, which means lawyers who specialize in that realm are paying attention as a matter of professional interest. Phillies fans, on the other hand, are on edge hoping their furry mascot doesn’t become a free agent, which would allow him to root for another team.
 
“If H/E can prove authorship of valid copyrighted material, the court may decide the firm’s termination of a license is effective notwithstanding a ‘forever’ agreement to the contrary.”
 
Picking up where Kobritz left off, the Phillies were forced to come up with a substantially new mascot, which the magistrate judge validated.

Appeal May be Forthcoming

However, H/E’s attorneys – Paul Montclare, Matthew Williams, Leo Lichtman, Eric Schwartz, and Elaine Nguyen, all of Mitchell Silberberg & Knupp LLP – were putting a different spin on things in a press release, suggesting that the judge “categorically rejected the Phillies’ claim that they had in any way contributed under copyright law to the creation of the Phanatic or its character. This decision rightfully found that (the defendants) were the sole copyright creators of the iconic Phanatic.”

Further, “our clients are gratified that the decision confirmed the undeniable truth: that they alone created and originally owned the Phanatic—baseball’s most famous and enduring mascot who is enshrined in the Baseball Hall of Fame in Cooperstown.”

They added that the court “also rejected the Phillies’ empty argument that the Phanatic was not properly registered with the U.S. Copyright Office, instead finding the registration made in 1979 to be valid. The Phillies’ attack on the validity of the registration by Bonnie and Wayde, and their ownership of the Phanatic, rang particularly hollow given that The Phillies organization has acknowledged Bonnie and Wayde’s authorship and original ownership for more than four decades, including doing so explicitly in the 1984 agreement with their business entity Harrison/Erickson.

“Perhaps most significantly, the magistrate judge recognized that as the original authors and copyright owners, Bonnie and Wayde had the absolute right under U.S. copyright law to terminate the 1984 Phanatic copyright assignment to the Phillies, and properly did so on June 15, 2020. Thus, all rights to the original Phanatic were properly recaptured by Bonnie and Wayde in 2020, and his use by the Phillies after June 2020 requires a new license.”

The attorneys, however, acknowledged an area of disagreement, or the court’s findings “that very minor changes to the Phanatic made by the Phillies (characterized even by the judge as ‘no great strokes of brilliance’) were sufficient to create a 2.0 derivative Phanatic that the Phillies can use (but with significant limitations) going forward. We maintain that none of the trivial changes made by The Phillies—which debuted four months before their rights in the original Phanatic expired—are original artistic expression, and do not individually or collectively constitute a copyrightable derivative work.

“If left uncorrected this low bar for a derivative work will thwart the very purpose and intent of the copyright termination provisions established by Congress to fairly compensate original creators for their works 35 years after they have licensed or granted rights in their creations, as Bonnie and Wayde did in 1984.

“The fight of the original creators for their just due will continue.”

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