Who owns your gimmick?

March 30, 2017

The subject of who owns a wrestling character’s gimmick came up earlier this month when Matt and Jeff Hardy left Impact Wrestling and appeared to take their characters they developed in the organization with them.

It was reported by Ryan Satin’s The Wrestling Sheet and Dave Meltzer that Impact Wrestling’s lawyers sent a cease and desist letters to independent wrestling promotion Ring of Honor and its distributors to prevent the Hardys to use their gimmicks developed and used in Impact Wrestling on a Ring of Honor PPV.  As a result, Matt and Jeff Hardy did not use their characters on the ROH PPV.  Rather, they were generic versions of the Hardy

Prior to the ROH PPV, the Hardys made a “surprise” appearance at a ROH show which may have tipped off Impact Wrestling that the two were going forward in using the gimmicks in another organization.  Impact Wrestling’s Ed Nordholm stated that the “Broken Universe” character(s) were created by the company’s creative team which would mean that the organization would have ownership rights.

Notably, Matt Hardy applied for the trademark rights to his character he used in TNA, Broken Matt Hardy on March 1, 2017.  The process for obtaining a trademark takes 8-10 months if there are no issues.

Still, the question is whether or not the Hardys can use the gimmick without repercussions from Impact Wrestling lawyers.

There are a number of scenarios to consider.

The first is what does the contract say.  One would think that the terms of their contract with Impact Wrestling would dictate who has control of the intellectual property, then again, TNA did not secure its right to the intellectual property rights by not filing for the trademark.  Since Hardy filed for the trademark, one would think that he might be in breach of his contract by attempting to assert his rights when/if they contracted with TNA.

But trademarks are just one issue to discuss.  Trademarks protect items that help define a company brand, or in this case, performers.  With a trademark, the Hardys can monetize the Broken Matt Hardy brand through selling t-shirts or other merchandise.

There is also the issue of copyright protection for the Matt Hardy gimmick.  A copyright protects “original works of authorships.”  For the most part, a copyright would protect the use of characters.  In this case, a copyright would be created through the Hardys’ gimmicks of Broken Matt Hardy and Brother Nero.

With respect to the copyrighted material, we assume like most professional wrestlers, they were classified as an independent contractor.  Thus, a “work for hire” scenario in which TNA would own the characters since the creation occurred during the Hardys employment would not apply.  Under the theory of “work for hire” an employee’s invention or creation would be owned by the employer considering that it was within the scope of employment.  Going back to the terms of the contract, usually, even if a worker is considered an independent contractor, the contractor would include a provision that would assignment of the intellectual property would fall in favor of the contractor.  In this case, TNA.

We note that a Copyright search, as of March 30, 2017, of “Matt Hardy” reveals Copyrights owned by the WWE in 2011.  A search for “Broken Matt Hardy” yielded nothing.  A search for Brother Nero (Jeff Hardy’s character, revealed no Copyright licenses.

The character issue is similar in nature to what occurred with the character Stephen Colbert when the individual Stephen Colbert left Comedy Central to replace David Letterman as the host of The Late Show on CBS.  Courts have found cartoon or fictional characters to be protected by copyright if they are sufficiently distinct and unique.  For instance, as this article points out Superman, Mickey Mouse and Tarzan are all protected under copyright law.

In comparison, the WWE tends to trademark its characters currently under contract.  It also trademarks phrases that it might market (i.e., make into t-shirts).  Notably, at Wrestlemania 29, held on March 29, 2015, Brock Lesnar used the phrase “Suplex City” during his match.  The next day, March 30, WWE filed for the trademark.  The WWE had trademarks for the Hardys WWE gimmick but let it lapse when they left the company.

As stated, the WWE holds some copyright licenses over Matt Hardy, but nothing related to the “Broken” gimmick he developed in Impact Wrestling.

Impact Wrestling “wrote off” the Hardys gimmick in an episode after the duo were released from their contract.

In response, on Matt Hardy’s YouTube page, the Hardys recreated their Impact Wrestling characters to give their own ending of their stint at Impact Wrestling.  Will Impact Wrestling take legal action for the Hardys’ latest reincarnation of their characters?  Probably not, although if this continues, you might see them flexing legal muscle.

While many might think this exercise in examination is ridiculous, it really is entertainment and intellectual property law wrapped up in the world of professional wrestling.  It does have serious legal repercussions when you think of the right to make money off the characters.  Will Impact Wrestling seek a cut of the Hardys future use of the gimmick if they go to WWE? Think about the independent wrestling shows and autograph shows in which they are paid a fee to attend.  Would Impact Wrestling want a cut of their appearance fees?  Will the WWE seek to acquire the gimmick if the Hardys make a return?  Does the loss of the gimmick hurt the future employment of the Hardys?  There are a lot of issues in the business-side in the creation of a gimmick.

Judge angered by WWE and Plaintiffs disregard for brief rules

March 29, 2017

A federal judge in Connecticut has issued a written smackdown of the litigation between the WWE and former wrestlers in a contentious lawsuit claiming that the company knew of information concerning a link between repeated head trauma and permanent neurological conditions that it exposed to its wrestlers.

The lawsuit involves former pro wrestlers Evan Singleton and Vito LoGrasso and World Wrestling Entertainment.  The Plaintiffs originally filed their lawsuit in Pennsylvania in January 2015.  They were among several former wrestlers that filed suit which were represented by the same lawyer and law firm.  The WWE successfully moved the case to Connecticut where the company is headquartered.  Judge Vanessa L. Bryant issued an order denying a motion for summary judgment from the WWE on the issue of fraud by omission claim brought by the wrestlers.

As part of the summary judgment motion, the parties must submit a statement of undisputed material facts (“SUF”) .  The party opposing the motion, has the opportunity to admit or deny the facts submitted by the moving party and then assert its own SUF.

The judge chastised both sides for submitting briefs that were longer than the rules allowed.  “[T]he parties have buried the Court in extraneous information, a substantial portion of which is argument and not fact.

The Court allows briefs for Motions for Summary Judgment to have a maximum limit of 46 pages.  However, WWE’s brief was 60 pages.  Plaintiffs submitted a 125-page statement in response to the WWE’s overlong brief.

As a result, the Court determined that the parties should refile its statements as they were “unnecessarily long and argumentative, and reviewing them in full would be wasteful of the Court’s scarce resources.”

The Court order both parties to submit revised Statement of Facts with a limit of 30 pages for the WWE and Plaintiffs to file a short response admitting or denying Defendant’s SUF and then filing 30 pages with its own disputed issues of material fact.

Order Denying Defendant’s MSJ by JASONCRUZ206 on Scribd

Payout Perspective:

The venom between the lawyers in this lawsuit is exemplified by the overlong briefs as they cannot agree on even the undisputed facts of this case.  As a requisite part of the filing, a concise statement is required.  Here, long does not necessarily mean effective.  Moreover, the order issued by the Judge shows she is not happy with either side.

Singelton and LoGrasso are the last WWE wrestlers standing as Judge Bryant dismissed similar claims brought by Russ McCullough, Ryan Sakoda, Matthew Wiese and William Albert Haynes, III as the Court concluded they didn’t wrestle with WWE after the company allegedly learned of a link between concussions and degenerative neurological diseases in 2015.

Gawker-Hogan talk settlement of jury award

August 8, 2016

The Wall Street Journal reports that Gawker and Hulk Hogan are in settlement discussions over Hogan’s huge trial victory which caused the personal bankruptcy of Nick Denton.

It was anticipated that A.J. Daulerio was to file for personal bankruptcy as well.

In March, a Florida jury awarded Hogan $140.1 million including $25.1 million in punitive damages.  Despite the fact that the judge presiding over the jury trial advised the jury to not award punitive damages that would bankrupt the defendants.  Nevertheless, the jury awarded the damages to the former pro-wrestler.  The court determined that Gawker had $48.7 million in gross revenues las year and a net worth of $83 million.

Although Gawker is appealing the trial court decision, that would not stop Gawker’s Chapter 11 bankruptcy proceeding.  The company filed for protection when the trial court judge upheld the jury verdict this past May.

Denton listed his stake in Gawker and his apartment in Manhattan as his only two assets.  The combined value he estimates is less than $50 million.

Payout Perspective:

While the settlement discussions have been ongoing, they have led to nowhere.  One would think that Hogan might take less than the jury award to cut off the constant waterfall of legal fees that he will surely have to pay at some point.  For Gawker, settlement would not stop a bankruptcy auction of the company.  But, it could mean that they would have money left over after the sale.

Lawsuit over WWE Network royalties promptly dropped by former wrestler

April 12, 2016

Former WWE wrestler Rene Goguen (fka Rene Dupree) has voluntarily dismissed his lawsuit against World Wrestling Entertainment.  The news comes just days after announcing it filed a class action lawsuit against the company for unpaid royalties related to the WWE Network and Netflix.

Goguen claimed breach of contract, breach of fiduciary duty, unjust enrichment and violation of the Connecticut Unfair Trade Practices Act.  The dispute arose out of what Goguen and his attorneys believed were a part of his Booking Contract that he was due royalties for “technology not yet created.”

WWE attorney Jerry McDevitt stated that Goguen signed a contract in 2011 “that destroys his ability to bring these types of claims” according to The Hollywood Reporter.  Aside from the contract, THR pointed to a case which states that state-based rights of publicity are trumped by the federal copyright act.

Goguen Dismissal

Payout Perspective:

The voluntary dismissal obviously means that Goguen’s attorney realized that they did not have a legal shot at surviving a motion to dismiss.  This probably stems from the contract alluded to by McDevitt.  It likely was a waiver of claims related to the WWE Network and Netflix.  One might infer that when the WWE contemplated the Network, ensuring that all performers under contract pre-network would not be able to claim royalties was a necessity to mitigate these types of claims.  The WWE’s lawyers are very aggressive when it comes to legal strategy and one might surmise that the WWE would have sought legal fees from plaintiffs’ attorneys.

Former WWE wrestler sues over royalties from WWE Network

April 8, 2016

Former WWE wrestler Rene Goguen (wrestling under the name Rene Dupree) sued the WWE Wednesday in a class action lawsuit filed in Connecticut federal court.   The former WWE superstar is claiming he is owed royalties from the WWE Network and Netflix due to a clause in his contract which pre-dated the over the top platforms but stated he was entitled to royalties of “technology not yet created.”

Goguen is claiming breach of contract for failing to pay royalties, breach of fiduciary duty, unjust enrichment and violation of Connecticut Unfair Trade Practices Act.

Goguen believes his Booking Contract, which was attached to his Complaint, entitled him to WWE Network and Netflix licensee sales of WWE Video Products due to a vague clause which left open for him to be entitled to royalties for “technology not yet created.”  He claims he was not paid these royalties.

The WWE told the Hollywood Reporter that Goguen signed a contract in 2011 that negates his ability to bring his claims.

Payout Perspective:

In all likelihood, the WWE will attempt to dismiss this case.  If the WWE is correct, we might assume that Goguen signed an agreement that precluded him from filing this type of lawsuit as the WWE probably contemplated the clause might open itself up to royalties.  The 2011 contract referred to by the WWE likely indicated he would not be entitled to any network royalties or any from WWE content on Netflix.  The bigger issue might be how the WWE splits royalties among its current roster for the network.  When C.M. Punk left, he claimed that many wrestlers did not know how the WWE would address royalties in light of the fact that some wrestlers made points off of PPV buys.  With the almost extinction of PPV, its clear that royalties from the WWE would be big for wrestlers.  We will see how Goguen’s case is handled and whether this raises any issues for WWE contracts moving forward.

WWE Network subscriptions set records for WM 32

April 4, 2016

The WWE announced a couple records related to Wrestlemania 32 Sunday.  On Monday, it announced that the WWE Network reached 1.82 million total network subscribers according to a telephone conference held by the company.

WWE Network reached 1.39 million total domestic subscribers and 434,000 international subscribers.  The gains over last year at this time (the day after Wrestlemania) improved by 39% and a gain of 1.3 million subscribers at the end of the fourth quarter of 2015.

In addition, the WWE announced that Wrestlemania 32 set a new attendance record of 101,763 at AT&T Stadium in Dallas.  The previous Wrestlemania record was at the famous Wrestlemania 3 in 1987 which drew 93,173 for Andre the Giant vs. Hulk Hogan.  Obviously, there is some skepticism about these numbers.

While stock shares were up slightly on Monday, there was a sharp decrease in shares with the stock down 7.3% at one time after the WWE telephone conference announcing the subscription number Monday afternoon.

During the telephone conference, a question was asked about subscriber “churn” with the network.  The response was that more content would help with retention of subscribers.  Although questioned, the WWE did not comment on the conversion rate of its free trial promotions.  The company had released retention rates for its first two trials but have not provided information since.

Payout Take:

It’s important to note that the 1.82 million subscribers announced includes paid and those on a free trial.  The actual total paid is 1.454 million.  The company has embraced the free month models for a variety of reasons although it has its obvious risks.  The paid subscription numbers must have disappointed investors (or people selling off the stock) as WWE shares were down after the telephone conference.  It did rebound in after-hours training.  We will see how the stock does in the next couple days.

Jury awards Hogan additional $25.1 million in punitive damages

March 22, 2016

On Monday, Florida jury tacked on an additional $25.1 million punitive damages award for Hulk Hogan.  This amounts to a total of $140.1 million awarded to the former pro wrestler after the jury found in his favor and awarded him $115 million this past Friday.

Gawker Media was ordered to pay $15 million while Nick Denton was assessed $10 million and Gawker’s former editor in chief, Albert J. (“AJ”) Daulerio $100,000.  Punitive damages are awarded in addition to the actual damages at trial.  They are meant to reform or deter the defendant and others from engaging in similar conduct.  Not every state awards punitive damages.

According this report, the trial court judge told the jury that they could not award punitive damages that would bankrupt the defendants.

The net worth was determined by the court (via www.capitalnewyork.com):

The court determined that Gawker Media, a U.S. subsidiary of Cayman Islands-based Gawker Media Group Inc., had $48.7 million in gross revenues last year and a net worth of just $83 million. It determined Denton’s net worth to be $121 million — $117 million of which is tied up in stock in Gawker Media Group, Inc., which is valued at $276 million. The court determined that Daulerio’s net worth was negative $27,000, since he has no material assets but $27,000 in student loans.

Gawker, et al. indicated that it would appeal the jury findings and the damages awarded in hopes of either overturning the decision and/or reducing the monetary award.

Payout Perspective:

The moral of the story for AJ Daulerio is not to mess around at a deposition as it was his flippant answer to a question that seemed to have annoyed the jurors.  Even though the court advised that it was not to bankrupt the parties in awarding punitive damages, it seems like the award would do so for Daulerio.  One has to conclude that based on the monetary award, that Gawker will most certainly appeal.

The Wrestling Post – Ross replaces Ranallo as New Japan announcer

January 21, 2016

AXS TV announced that former WWE announcer Jim Ross will join AXS TV’s “New Japan Pro Wrestling” as its play-by-play commentator.  Ross will join former UFC Heavyweight Champion Josh Barnett to call the action starting Friday, March 4th.

Via the AXS TV press release:

A WWE Hall of Famer, Ross was known as the voice of WWE for nearly two decades, bringing his incomparable broadcasting talent to hundreds of TV and pay-per-view broadcasts for the organization. No stranger to New Japan Pro Wrestling, Oklahoma native Ross also called the first-ever, live English-language broadcast of NJPW with Wrestle Kingdom 9 in 2015.

“I’m excited to join the AXS TV team in presenting the amazing athletes of the New Japan Pro Wrestling brand,” said Ross. “I’m a major fan of NJPW and look forward to joining Josh Barnett to form the best broadcast team in the genre. Business just picked up!”

Ross replaces Mauro Ranallo who departed the broadcast team to join the WWE and its Smackdown broadcast team as it moved to the USA Network from SyFy.

Payout Take:  You may recall that Ross was dismissed by the WWE after an incident during a sponsored panel talk at Summerslam in 2013.  Ross was the fall guy for an obvious inebriated Ric Flair during a panel discussion for WWE 2k14.  The WWE announced that Ross was retiring but its clear that that was not the real reason.  Since then, Ross has started his own podcast, called an MMA event with Chael Sonnen as well as Wrestle Kingdom 9 in 2015.  Ross should be a very good addition to the popular show which airs on Friday nights.

2015: The year in pro wrestling

January 9, 2016

We leave the last review of 2015 to that of professional wrestling.

Let’s do some quick hits before we get to the high spots.

  • New Japan debuted on AXS TV to rave reviews. Mauro Ranallo and Josh Barnett served as the English commentators for the shows.
  • Ranallo recently made the move from New Japan and commentating boxing events to being the voice for WWE’s Smackdown. He debuted as the new voice as it the Smackdown brand moved from USA to SyFy this year.
  • Lucha Underground on the El Rey Network was the most-talked about independent hit. The mix of telenovela and independent wrestling action served as something different for wrestling fans.  The second season of the show was in peril as it lacked the necessary funding and a television deal.  However, news surfaced late in the year that it would return to the El Rey Network for a second season starting in January.
  • ESPN and the WWE entered into a partnership in which the sports cable network will feature a weekly segment with WWE wrestlers. 2015 saw ESPN expand a little more into the world of entertainment which included covering Summerslam (which was in Brooklyn, NY this year) and the announcement of Brock Lesnar’s re-signing with the WWE.
  • Lesnar’s signing in early 2015 was big news as it seemed as though he was going to head back to the UFC. He was in attendance at UFC 184 in Los Angeles. He re-signed with Vince McMahon in LA as the WWE was at the Staples Center at the time.  Also in LA at about the same time was Dana White who was promoting the Aldo-McGregor fight.
  • The much maligned TNA Wrestling organization was dropped by SpikeTV and then picked up by Destination America.  Soon thereafter, Ring of Honor was added to Destination America as a syndicated show for the network.  However, it has since moved once again to POP TV.
  • Ronda Rousey appeared with The Rock at WrestleMania in Santa Clara, California. The annual event drew in $139 million in economic impact for the Santa Clara/San Francisco region.
  • The WWE and TapouT announced a joint venture in which performers would wear the former MMA brand which revamped itself into an athletic performance brand.
  • The WWE was one of the many sports leagues to announces a deal with a fantasy sports operator as it announced a deal with DraftKings.

Hulk Hogan banished from WWE as a results of racist comments

Hulk Hogan was terminated by the WWE this past July after audio of a racist rant surfaced.  The audio relates to racist remarks he made 9 years ago.  It appears that the discovery was made as a result of an ongoing Gawker lawsuit in which the former pro wrestler sued the media outlet for publishing a sex tape.  Hogan’s Gawker lawsuit continues into this year as a trial date last summer was continued.

CM Punk sued by WWE physician

UFC contracted fighter CM Punk was sued by a WWE physician for libel.  The lawsuit stems from comments Punk made on Colt Cabana’s podcast about the type of medical treatment he received from the doctor while with the company.  The podcast was one of the most listened to podcasts from Cabana, who was also named in the lawsuit.  A motion to dismiss the case by Punk and Cabana’s lawyers was denied and the lawsuit continues.

More head injury lawsuits filed

The estate of former WWE performer Nelson Lee Frazier sued the WWE for wrongful death as a result of multiple head injuries/concussions while a wrestler with the WWE.  Matt Osborne’s estate filed a similar lawsuit.  In addition, Billy Jack Haynes,, Vito LoGrasso and Evan Singleton also filed lawsuits related head injuries they claimed they suffered while working in the WWE.  The WWE is aggressively defending these lawsuits claiming that they were filed by “ambulance chasing” lawyers.  The WWE file motion to transfer the lawsuits to the company’s home state of Connecticut.

In a unique strategy, the WWE filed a lawsuit against several former WWE stars seeking a declaratory judgment against them. The lawsuit would seek a ruling that any allegations of head trauma are “time-barred” by the statute of limitations.

Via our July post:

The WWE strategy is a result of the growing swell of lawsuits filed by former WWE performers claiming that the company knew or should have known about the risks of head trauma and that they suffered injury as a result.  Although not a named defendant in the lawsuit, the WWE names (and blames) plaintiff attorney Konstantine Kyros for the litigation.  It identifies several notice letters (below) which request that the WWE not destroy any information it may have.  The lawsuit identifies the existing lawsuits Kyros has filed on behalf of former WWE stars including Billy Jack Haynes.

The lawsuit requests a court ruling indicating that the defendants’ claims are time-barred by the statutes of limitations/repose under Connecticut law.  Essentially, the defendants did not file their claims on time.  This is always a very hard issue to consider as most of the claims that wrestlers could make occur when they are still contracted by the company.

The WWE Network

What was once thought as a foolish idea, now reveals that the WWE Network was ahead of the curve with it’s over the top platform.  With UFC Fight Pass making efforts to produce more content for its network reflects the fact that digital platforms are not going anywhere.  Of course, we don’t think the UFC is going away from its PPV business but its digital service is becoming more of an economic driver for the company.

The WWE Network has kept its strategy of offering a free month for new subscribers in growing its current paid subscribers.  Further, the expansion of the network to other countries has helped its subscriber base grow.  In January 2015, it surpassed 1 million subscribers.

Q1: 918,000

Q2: 1,156,000

Q3: 1,173,000

The fourth quarter has yet to be reported, but through September 2015, the WWE has brought in almost 2.3 million unique subscribers and half of those were active as of September 2015.

Judge denies motion to dismiss in Punk libel lawsuit

July 22, 2015

The Washington Post reports that the lawsuit between WWE doctor Chris Amman and CM Punk and Colt Cabana will continue after a Cook County (IL) Circuit Court judge denied defendants’ motion to dismiss the case.

As a result of the court’s denial to dismiss the case, CM Punk and Colt Cabana must answer Amann’s complaint claiming that the two libeled the WWE doctor during an episode of Cabana’s podcast.

On the Art of Wrestling podcast, Punk called into question Dr. Amann’s treatment of his concussion and an injury on his back with was diagnosed as a MRSA staph infection.  Cabana is being implicated for being the host of the podcast.  He is also a good friend of the now UFC fighter.

The WWE aided Dr. Amann despite not being a party to the lawsuit as it sent out a statement regarding the lawsuit and providing video purported evidence that Punk did not have a lump on his back.

Payout Perspective:

Procedurally, a motion to dismiss the lawsuit prior to answering the claims in a complaint is necessary and occurs when the one being sued believes that there is no merit to the claims.  Here, Punk and Cabana took their shot at dismissing the lawsuit.  But, there was a sufficient amount of information pled by Dr. Amman according to the court.  Its likely Punk and Cabana will deny the allegations in the Complaint when they file an Answer and we may see prolonged litigation.

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