9 Jun

Chipotle’s $2.2 billion lawsuit: 5 ways you can avoid the risk of asset rights litigation


This article by Tarek Fadel was featured in The Business Journals, focused on bringing local business news to business leaders. You can read the article here and below:

In January 2017, a California woman filed a lawsuit against Chipotle Mexican Grill, its founder and CEO Steve Ells, and photographer Steve Adams in the amount of $2,237,633,000 for unauthorized use of her image in their advertising.

Plaintiff Leah Caldwell was dining in a Chipotle in Denver in 2006 when Adams took her photograph and approached her to sign a release, which Caldwell declined. In December 2015, Caldwell encountered her image in an ad on the wall of a Chipotle in Orlando, Florida, and three months later, in two California locations.

The whopping and most likely unattainable $2.2 billion claim represents the chain’s total profits from 2006 to 2015, a number Caldwell and her attorney plan to up once the company announces its 2016 profits.

While it is unclear whether Chipotle and Ells were aware that the photo they were using did not carry a proper talent release, the negative press and the legal battle will cost the company, regardless of the amount of the settlement. And while this case generated massive attention, it’s a situation that happens almost daily, biting everyone from major brands like Skechers to the chart-topping band Vampire Weekend, which settled a lawsuit with for the unlicensed use of a model’s shot on the cover of its album “Contra.”

These stories are not limited to large corporations, but can impact small businesses as well. It’s also a danger to any small business such as the photographer in the Chipotle suit or any size company that invests in advertising and promotion.

If you use owned content like photos, videos and music in print ads, on a website and for the spiraling array of social platforms to market your brand or service, you have to be mindful that you are using content that is properly licensed.

Here are five things you can do to protect yourself against such a lawsuit for unauthorized use of intellectual property (IP):

1. Create a process for contracted content

Whether you are working with an ad agency or purchasing usage rights directly from an artist or distributor, you should have a process for documentation verification in place to ensure licensed content is free and clear of any encumbrances. Part of this process should include identifying all of the contractual parties involved for each asset, for example talent, photographer and licensed brands, and create a checklist to ensure each IP property has been properly cleared with all participating parties.

2. Use a digital asset manager (DAM)

Housing all digital assets in a single, central system allows for better oversight, more control, and greater visibility into asset inventory. This gives you the ability to better use and reuse your investments.

3. Create an enforceable compliance workflow

Having a gatekeeper that is responsible for verifying digital assets against legal contract terms and documenting restrictions helps ensure DAMs are loaded only with available assets.

4. Link digital assets with contractual rights

Many organizations use the metadata fields in their DAMs to notate asset rights, but with the ever-growing complexity of usage terms, this is becoming less and less viable. A scalable system built specifically for rights management is the most advisable course to pursue

5. Expose asset rights to creative teams

Make your creative teams more efficient and less reliant on business affairs by giving them rights information at their fingertips. Allow them to check real-time if an asset has the rights without having to call legal, track down the original purchaser, or sift through lengthy contracts.

Often creative teams are vast and distributed, from internal marketing and advertising to contracted agencies. Use a solution that gives you the ability to seamlessly integrate rights clearance with your DAM, and that can also be used as a standalone system to allow internal marketing teams, other departments within your organization, advertising teams and ad agencies to check asset availability without having to purchase additional licenses for your DAM.

Categories associated with this post: Advertising, Asset Rights Clearance
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Tarek Fadel
As CEO, Tarek Fadel is responsible for the overall management and performance of FADEL, driving its long term strategic plan as well as overseeing the day-to-day management of the corporation. Prior to founding FADEL in 2003, Tarek was a Director of Consulting at Oracle Corporation with over 20 years of experience building, selling and implementing enterprise software applications. He managed a consulting practice for Oracle responsible for the success of several large client implementations, and held the position of Director of Product Management releasing several Oracle CRM products. Tarek also worked at Cambridge Technology Group and played a major role in deploying its enterprise application server products to the market. Tarek holds a technology patent for his work on Method and Apparatus for e-Commerce Integration Architecture and Process. He has a bachelor’s degree in Computer and Information Science from the City University of New York and an MBA from Columbia University.

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