Jackon's Estate Stopping Sales of Fake Merchandise

Published August 3, 2009

Down a crowded merchant-lined street in downtown Los Angeles called Santee Alley, a handful of vendors are selling Michael Jackson T-shirts. Two shirts memorialize his passing, but one gets the date of his death wrong. The other has no collar tag.

Martin Melendes, a store manager, looks askance at a reporter's questions about the $15 Jackson shirts worn by his mannequins. "You're not with the FBI?" he asks. Stepping away from his boss, he says excitedly, "We sold 2,000 T-shirts in the first week. We're still selling a lot."

Since the King of Pop died late last month, people around the world have mourned his passing. Others set out to make a quick buck. Now, as estate lawyers battle to secure his fortune in court, they are turning their attention to the hucksters flooding stores and street corners with unauthorized Jackson memorabilia.

This is not just about a T-shirt or two. At stake are tens of millions of dollars in annual merchandising royalties alone, estimates Mark Roesler, chief executive of CMG Worldwide, the business agent who handles licensing and collects revenue for the estates of Marilyn Monroe, James Dean and other deceased celebrities.

Elvis Presley's estate brought in nearly $55 million in revenue last year, 32 years after his death. That included $14 million from retail sales. Royalties from DVDs and TV projects and money from tours, exhibits, hotel rooms and events at the Graceland museum made up the rest. Monroe and Dean's estates took in nearly $5 million each.

Jackson may prove to be more popular than all of them.

The estate and AEG, the concert promoter behind Jackson's planned comeback, are selling Jackson T-shirts, mugs and other paraphernalia online through Universal Music Group's retailing arm, Bravado. Last week, the estate cut a deal with Harmony Books, a division of Random House Inc., to re-release his 1988 biography, "Moonwalk." Deals are in the works for a movie based on concert rehearsal footage — for which Sony bid $50 million to distribute worldwide — and a TV special based on his music and dance moves. There is even a section devoted to Jackson merchandise on QVC, the television and online retailer, which said it spent time vetting the legitimacy of each item.

Jackson's popularity also is providing plenty of opportunities for others to cash in.

"In the piracy and anti-counterfeiting world, this is as big as it gets," Roesler said. "It's a daunting task for the rights holders to get on top of this."

Already, a dozen vendors are hawking Michael Jackson T-shirts, fedoras, watches and buttons on Amazon.com, which removes merchandise it deems illegal but does not screen items beforehand. Five entities with no obvious link to the Jackson family have tried to trademark the phrase "King of Pop" on everything from drink umbrellas to juggling balls since the day he died.

Others, like street vendors and T-shirt shops from Los Angeles to New York are more brazen, openly flouting laws meant to ensure that the estate of the late singer gets its cut.

John Branca and John McClain, the estate's special administrators, told The Associated Press in a statement that the estate will take legal action to prevent the sale of unauthorized items.

"The sale of unauthorized Michael Jackson merchandise is illegal and provides nothing for the beneficiaries of his estate, namely his mother, his children and charitable causes that were important to him," they said.

The estate's concern is not just limited to memorabilia. Americans freely swapped 9.5 million of Jackson's songs, everything from "Thriller" to "Rock With You," using file-sharing software in the week ended July 16, according to tracking firm BigChampagne Media Measurement.

That alone represents about $24 million in lost revenue, based on what the swappers would have paid if they bought the songs from Apple Inc.'s iTunes.

Legitimate sales of Jackson's music are still booming, with about 3 million albums sold in the U.S. since his death, according to Nielsen SoundScan.

Experts say it will take a sophisticated legal and business team to succeed at securing Jackson's rights worldwide. Los Angeles police say they won't take action against suspect retailers or manufacturers unless a trademark owner appears in court to claim that the other items are fakes.

Girlytops.com, a New Jersey-based retailer which also sells items featuring American Idol runner-up David Archuleta and Britney Spears, has sold thousands of Jackson T-shirts online, said owner Pete Ray. He claimed the company purchased the designs from "licensed retailers," but wouldn't clarify which ones.

"There's been an amazing response by his fans to his death," Ray said by phone. "It's just countless. I haven't really sat down. We've been just too busy sending them out. As fast as they come in, they go out."

Complicating matters is that the phrase "King of Pop" was not actually registered to the singer, according to the U.S. Patent and Trademark Office, which has some of his applications on display in a free exhibit in Washington.

He registered "Michael Jackson" as a trademark, the office said, but only on sound recordings, videotapes and movies involving music and entertainment. Jackson owned a patent on a shoe that allowed the wearer to lean past his center of gravity, as he did in the "Smooth Criminal" video, but it expired in 2005 because he didn't pay a $2,480 maintenance fee.

That doesn't mean there is a free-for-all on certain products using his name and likeness, because common law can establish ownership of trademarks if they have been used in commercial ventures before, said Sharon Marsh, the USPTO's deputy commissioner for trademark policy.

An applicant can be denied if his or her trademark application creates a false association with a person or an institution, she said.

The quickest way for the estate to end unlicensed selling would be to seek a judge's temporary restraining order, which can take less than a week and requires little proof, said Alan Drewsen, executive director of the International Trademark Association.

The difficulty is tracking down all of the manufacturers that jump into the business and then bail when legal questions arise, he said.

"It's going to be very difficult for the estate to shut down every source of T-shirts," Drewsen said.

TUTM Entertainment, a New Jersey-based maker of party goods, said it applied for the trademark "King of Pop" on everything from cover artist CDs to buffet decorations, as a way to keep the party Jackson started going.

"The market's already flooded with tons of T-shirts and stuff," said TUTM's chief operating officer, Dianne Aronica. "We felt the smartest way to do it was obtain a trademark and do focused items that made sense. We typically like to do it right."

If history is any indicator, Jackson's earning power will last many years past his death and the estate still has time to overcome the sea of knockoffs.

"Elvis Presley's merchandise still sells extremely well," said Charles Riotto, president of the International Licensing Industry Merchandisers' Association. "Whether this would hold true for Michael Jackson, I don't know. There'll have to be a well-organized and cohesive licensing program to achieve that sales result."

Written by Associated Press

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