What is Character Merchandising?
Character merchandising is the business of turning fictional characters or famous personalities into products that can be sold. This includes toys, apparel, collectibles, and even digital goods. Imagine a cartoon character, a superhero, or a celebrity’s image appearing on T-shirts, mugs, or figurines—this is the essence of character merchandising.
For businesses, character merchandising is not just a fun way to make money. It’s a strategic revenue stream, especially if the character or celebrity already has a loyal fanbase. Merchandising can extend the life of a brand, create new revenue channels, and build a global audience.
Example: A popular streaming series creates a set of collectible action figures and posters of its characters. These items are licensed to manufacturers in the EU, Asia, and the US. Fans buy them worldwide, creating a significant secondary income for the series creators.
Copyright and Designs: Protecting Original Characters
One of the first steps in character merchandising is ensuring legal protection. Copyright law plays a critical role here:
-
Original drawings of characters are automatically protected under copyright, regardless of artistic quality.
-
Sculptures or figurines can also be protected if considered original works of art.
-
Copying or reproducing these works without permission is copyright infringement.
Case Insight: In the famous King Features v Kleeman case, Popeye dolls and brooches were considered infringing copies of comic strips. Even a three-dimensional reproduction of a two-dimensional drawing can be illegal.
However, copyright protects the expression of an idea, not the idea itself. For example, if a company creates a new design inspired by humanoid turtles, but it doesn’t copy the original drawings, copyright infringement may not apply.
When Copyright Isn’t Enough
There are cases where copyright may not help:
-
Names of films or celebrities: Copyright doesn’t cover a single word or name. For example, the name of a song or a trademarked term may not be protected.
-
Photographs: Copyright protects original photos, but not the underlying concept or make-up used in the photo. A portrait of a singer wearing certain makeup may not itself be protected.
This means that for merchandising, creators often rely on trademarks and licensing agreements to legally control the use of names, logos, or character likenesses.
Trademarks: Securing the Name and Image
Registering a trademark is a critical step for anyone starting in character merchandising:
-
A trademark can be a name, logo, or even a character’s likeness, depending on the rules in each country.
-
Trademarks give the owner the right to control how the name or image is used commercially.
-
However, registering a deceased celebrity’s name may be challenging because the public may see it as a form of tribute rather than a brand.
Example: A rock band wants to sell posters, T-shirts, and mugs with its name. Registering the band’s name as a trademark ensures that no other company can sell products using it without permission.
Trademarks can also be licensed to other companies. Licensing agreements allow a company to legally use a name, logo, or image while ensuring that the original brand owner maintains control over quality and authenticity.
Passing Off: Protecting Reputation Without a Trademark
Even without a registered trademark, businesses can protect their characters or celebrity images through passing off. This legal principle prevents others from misleading consumers into thinking a product is approved or endorsed by the original owner.
Example: A small clothing brand uses a cartoon character on a T-shirt without permission. Fans may believe the character was officially licensed. If the original creator has a recognizable brand, they can claim passing off and stop the sale of those T-shirts.
Passing off is especially useful for businesses that rely on the reputation of characters or personalities and want to prevent unauthorized exploitation that could harm their brand.
Sponsorship and Celebrity Endorsement
Another key aspect of character merchandising is endorsement. Using the name or image of a celebrity without consent can be considered passing off:
-
If a company sells products claiming a celebrity endorsed them, this can be illegal if the celebrity never agreed.
-
Courts now recognize that the public is aware of celebrity endorsements, which makes unauthorized use more likely to cause confusion.
Example: A retailer prints T-shirts with a famous singer’s image without permission. The singer’s management can take legal action to stop sales because the public might think the singer approved the merchandise.
Key Takeaways for Entrepreneurs Starting Character Merchandising
-
Always secure legal rights first – copyright, trademark, or licensing agreements are crucial.
-
Understand the limits of copyright – it protects expression, not ideas.
-
Consider passing off claims to protect reputation even without a registered trademark.
-
Carefully manage celebrity or character endorsements to avoid legal disputes.
Licensing: Turning Rights into Revenue
Once you have secured your trademark or copyright for a character or celebrity image, the next step is licensing. Licensing allows other companies to produce and sell merchandise while you maintain control over the brand.
-
Exclusive vs. non-exclusive licenses: An exclusive license grants one company the sole right to use the character or image, while non-exclusive licenses allow multiple companies to use it.
-
Partial licenses: You can license only specific product categories, regions, or distribution channels. For example, you might allow a company to produce toys but not apparel.
Example: A popular animated character is licensed exclusively to a Japanese toy manufacturer for action figures, while a European clothing company receives a non-exclusive license for T-shirts and backpacks. Both companies pay royalties, generating multiple revenue streams.
Licensing agreements must be in writing and signed by the rights holder. They often include provisions to allow sub-licensing, but only if explicitly permitted. It’s also important to register the license where required, as unregistered licenses can leave the licensee vulnerable to disputes.
Quality Control: Protecting Your Brand Reputation
One of the most important aspects of licensing is quality control. Maintaining consistent product quality ensures that the trademark continues to function as a symbol of reliability and origin.
-
Poor quality products can harm the reputation of the character or celebrity and reduce the value of licensing deals.
-
Licensing contracts typically require the licensee to submit product samples for approval or allow the licensor to inspect production facilities.
Example: A European coffee mug company licenses a famous cartoon character but must submit all designs for approval before production. If the mugs are poorly made, fans could associate the low quality with the character, decreasing demand for all merchandise.
Quality control also ensures compliance with laws in different regions, protecting the brand from potential consumer complaints or recalls, particularly important when selling across the EU, US, and Asia.
Global Strategy: Expanding Without Losing Control
When expanding character merchandising internationally, consider these key steps:
-
Adapt to local markets: Products may need to be modified for cultural preferences or legal requirements.
-
Monitor licensing partners: Regular checks prevent misuse or substandard products.
-
Protect intellectual property globally: Register trademarks in each target country when possible to prevent unauthorized exploitation.
Example: A Korean animation studio licenses character plush toys to distributors in Europe, North America, and Southeast Asia. Each distributor must follow local safety standards and submit marketing materials for approval to maintain consistency with the brand’s image.
Legal Pitfalls: Avoiding Common Mistakes
Even with proper licensing and quality control, businesses can face legal challenges:
-
Unauthorized use: If someone reproduces your character or uses a celebrity image without permission, you can pursue trademark infringement or passing off claims.
-
Promotional misuse: Simply using a character or celebrity for giveaways without proper licensing does not replace formal agreements. Courts may rule this is insufficient to protect your rights.
-
Endorsement confusion: If a public figure or celebrity’s name is used without consent, it can create legal liability, especially if the public believes the product is endorsed.
Example: A startup prints mugs with a celebrity chef’s likeness without a license. Fans may assume endorsement, giving the chef the right to pursue legal action for passing off and infringement.
Key Takeaways for Global Merchandisers
-
Secure trademarks and copyrights first – this is the foundation of legal protection.
-
Draft strong licensing agreements – specify scope, duration, territory, and quality obligations.
-
Implement quality control systems – protect the brand and ensure customer satisfaction.
-
Plan for global expansion carefully – adapt to local regulations, culture, and consumer expectations.
-
Monitor and enforce rights – regular audits and legal vigilance prevent misuse and maintain revenue streams.
Q1: Which of the following best describes character merchandising?
Turning fictional characters or celebrity images into products like toys, apparel, and collectibles for commercial sale Creating original comic books without selling any products Publishing a movie review blog using celebrity names
Q2: Which legal protections are commonly used in character merchandising?
Copyrights, trademarks, licensing agreements, and passing off claims Patents and trade secrets only Employment contracts and trade union agreements
Q3: What is a key reason to implement quality control in licensed character merchandising?
To protect the brand’s reputation and ensure products meet standards across all markets To reduce production costs regardless of product quality To avoid trademark registration
