Alen Yen's ToyboxDX

	April 27, 2002


CURRENT RUMBLE

armony Gold, the company which claims to hold the license for the Macross franchise outside of Japan, has recently shocked and angered fans of the series by sending threatening letters to retailers in the USA selling Macross merchandise imported from Japan. The letters claim that sales of such merchandise violate their copyright on the Macross name, and demand an end these sales as well as the surrender of all such merchandise to themselves. What is particularly frustrating to most fans is that the merchandise in question is not even being supplied by Harmony Gold ("HG") through any "official" route.

Over the past 18 months, a huge flood of new and reissued Macross items have come pouring out of Japan as manufacturers realized finally that there was still significant pent-up demand both in Japan and abroad for Valkyries and other goodies from the show. This fact makes HG's actions all the more reprehensible to fans who simply want to get the latest Valkyrie toy or model.

Can They Do That?

The first question that comes to mind is, of course, whether HG has the right to demand an end to unauthorized imports and the surrender of stocks already in the country, as suggested in their letters. Assuming that HG does, in fact, have a valid license to the Macross property, the answer to this question can be found easily by taking a look at Section 602 of the US Copyright Act (complete text at www.findlaw.com). Regarding their rights to control imports, it states:

Importation into the United States, without the authority of the owner of copyright under this title [17 USCS Sects. 101 et seq.], of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords under section 106 [17 USCS Sect. 106], actionable under section 501.

And on the matter of the surrender of the unauthorized merchandise, Section 503 of the Act says:

At any time while an action under this title [17 USCS Sects. 101 et seq.] is pending, the court may order the impounding, on such terms as it may deem reasonable, of all copies or phonorecords claimed to have been made or used in violation of the copyright owner's exclusive rights, and of all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be reproduced.

So the simple answer is yes, they have a legal basis to make these demands, though actual implementation would require a court order. Again, this assumes that they do have a valid license for Macross. It is on this issue where things become more complicated, however.

What about Direct Imports?

This is another matter on which the Copyright Act is quite clear. Individuals who are purchasing a single copy of an item for their own use (i.e. not for resale), be it through a mail-order service like HobbyLink Japan, or by traveling to Japan and purchasing an item directly, are specifically permitted to make such purchases:

This subsection (602) does not apply to...importation, for the private use of the importer and not for distribution, by any person with respect to no more than one copy or phonorecord of any one work at any one time, or by any person arriving from outside the United States with respect to copies or phonorecords forming part of such person's personal baggage;

So HG cannot control these imports regardless of the validity of their license.

Does Harmony Gold have a valid Macross license?

A recent Japanese court decision throws significant doubt on the question of whether HG's license for Macross is even valid at all. In order to understand the court's decision, you need to understand some background on how Macross was created and licensed to HG in the first place.

Macross was originally the brainchild of three men working for a small creative company called Studio Nue (pronounced new-eh). There, the original sketches for the Macross mother ship itself, Valkyries and other machines as well as principal characters were created in various forms between 1980 and 82. Nue naturally wanted to sell the idea for TV broadcast, but lacked the know-how to negotiate with broadcasters, merchandisers, sponsors, etc. to make it all come about. So in 1981, they turned to a company called Big West which was more experienced in the business part of animation, and it was Big West who eventually sold the idea for Macross to Mainichi Broadcasting and various toy and model makers later that year.

Once the project was approved and a broadcast slot obtained, it became clear to Big West and Nue that their animator contacts lacked enough production power to create the many thousands of cels that would be necessary in the time remaining before broadcasts were to begin. So in April 1982 they turned to Tatsunoko Productions (Gatchaman, Speed Racer, Mospeada, etc.), at the time one of Japan's top animation powerhouses, to do the actual artistic grunt work through their affiliates. The three parties worked out a payment agreement, and Tatsunoko went to work creating the show. Broadcasts began in October 1982 and ran for 36 episodes until June 1983.

During production, it became apparent to Tatsunoko that the agreed-upon payments would not cover their production expenses. The parties met again in October of 1982 and a "memorandum" regarding royalty income was negotiated. Part of this memorandum granted Tatsunoko overseas broadcast and merchandising rights for Macross.

Based on these rights, Tatsunoko Productions licensed Macross to Harmony Gold in 1984. The terms of this contract, including period and precisely what rights and responsibilities are imposed upon HG in their handling of the franchise are not known, nor is HG currently willing to reveal anything about them.

In response to Harmony Gold's threat of legal action, the lawyer for one retail store has asked HG to document their claim to the rights for Macross. HG's legal counsel refused to disclose these terms or any part of their contract, so HG is essentially telling stores "we have the rights to this show, but you'll have to take our word for it." Since they're demanding that stores hand over the "offending" merchandise, one would think that they would at least document their claim if they actually expect anyone to honor it. Should they attempt to sue a retailer for damages or impound their merchandise via a court order, HG will have to document their claim to the courts, so these details will probably become clear at some point. In addition, if they wish to block imports of such merchandise with the help of the US Customs Service, they will also need to thoroughly document their rights to the property first, as set forth in Section 603 of the Copyright Act.

Enter the Courts

In February of 2001, Big West and Studio Nue sued Tatsunoko Productions over the copyright to Macross. They asked the Japanese courts to establish that they held the copyright to the show, and also asked the court to grant a restraining order forbidding Tatsunoko from any further creation of Macross-related media, or licensing to third parties. Keep this point it mind; it is crucial to understanding HG's current legal position.

So why did Big West & Nue sue Tatsunoko? Unfortunately, the companies will not comment officially on the current litigation, as it is ongoing, but we can make some educated guesses. First, Big West sued Tatsunoko over copyright despite the fact that there is no question that they hold copyright to the show here in Japan. Merchandise related to Macross in Japan has "copyright Big West" plastered all over it. Tatsunoko's web site makes no reference to Macross in their list of creations. This leads one to speculate that if the conflict is not about the domestic market, it must be over the international one.

Individuals close to Big West have commented off-the-record that Big West is furious with Tatsunoko and Harmony Gold's handling of the property internationally. Not only is Big West earning no royalties from the show's international marketing, but HG has never consulted Big West about creative or editorial matters related to the show. In other words, all of the editing and changes made to turn Macross into "Robotech" were done without the permission of the show's original creators. The same goes for HG's "Toynami" merchandise -- none of which was approved by Big West (or by Kaiyodo, the Japanese model company whose Valkyrie sculpt appears to have been stolen for the Toynami Valkyrie items).

Again, although we cannot be certain, even if Big West did grant the rights for the international market to Tatsunoko, which in turn passed them on to HG, it is almost unheard of for a creator to relinquish the right to approve changes to their work, or new products related to it. For these reasons, we believe that the entire point of Big West's lawsuit was to ultimately regain the ability to control the property in the international market.

HG would have you believe otherwise, of course. The following is excerpted from their Robotech.com website's news section:

The litigation in Japan involving Tatsunoko, Big West and Studio Nue does not affect Harmony Gold or its licensees. Harmony Gold is not a party to any legal proceedings. Furthermore, the lawsuit, which was tried in front of a Japanese court, only relates to rights in Japan. Since Harmony Gold's worldwide rights to Macross exclude Japan, a Japanese judgment does not apply to us.

Indeed, this statement is correct insofar as it says the Japanese verdict only related to "rights in Japan." However, what HG fails to note here is the crucial fact that one of the "rights in Japan" is the right of the show's copyright holder to license Macross to an overseas agent of their choice. So the above statement is at best little more than wishful thinking on HG's part and at worse, insulting to the intelligence of an informed observer.

And the Verdict Is...

On February 25, 2002, the Tokyo District Court issued a judgment that the copyright for Macross lies with Studio Nue and Big West. Tatsunoko had attempted to argue that they also held copyright because concept materials brought to them originally by the other two parties were simply "rough sketches" that were significantly different from the final product, and it was they who had fleshed out these concepts into their final form. The judge rejected these arguments. Unfortunately, the verdict does not comment on the validity of the previous "memorandum" between the three parties granting international rights to Tatsunoko.

In addition, the court denied Big West's request for a restraining order on further Macross production or licensing by Tatsunoko saying, "there is no reason to grant the request as we determine there is no risk of the defendant creating new Macross movies or licensing third parties to do so." This point is crucial.

If Tatsunoko is not currently licensing the property, or cannot carry out future licensing, this implies that HG's "rights" to Macross may already be invalid, or at least they will not be able to extend their license when the current one expires. Again, as they won't disclose the terms of their license, we don't have the answers to these crucial questions now. However, their refusal to disclose these details suggests that their position is not a strong one.

What's more, the Japanese court's verdict was not a complete one. There are other outstanding issues in the original lawsuit on which the court has yet to rule, such as whether certain statements by Studio Nue to Tatsunoko regarding production constituted an agreement to grant part of the copyright to Tatsunoko or not, how Tatsunoko's payment of some of Nue's staff's salaries affect the matter, and ultimately whether Tatsunoko has any copyright to Macross at all (the current verdict affirms Big West and Nue's copyright, but does not yet deny outright Tatsunoko's claim to share certain parts of it). The situation will no doubt be cleared up better when the court has completed judgment on all aspects of the case. This will probably be within a year, as Japanese courts have recently worked to speed up their handling of copyright cases.

The Real Mystery

Perhaps the most perplexing part of this entire issue is why Harmony Gold, especially in the wake of the Japanese court's verdict, feels that alienating Macross fans and threatening legal action against the very stores that also buy Toynami products is the best way to protect their interests. Their legal counsel has attempted to explain their actions to one retail store as follows:

"As Harmony Gold has spent significant resources building the Macross franchise, and as Harmony Gold intends to expand that franchise, Harmony Gold must protect its rights. Toynami is currently Harmony Gold's sole licensee for the manufacture of Macross toys. All of Toynami's toys are marked clearly with Harmony Gold's logo. None of Bandai, Yamato, and Hasegawa has a right to distribute Macross toys outside of Japan."

The last sentence about Bandai, et.al., while correct, is irrelevant since those firms are not doing any distribution outside of Japan themselves. Their products are being moved into other markets by third parties. The note concludes:

"Continuation of parallel importation will undermine future licensing and official importation opportunities in the future. Therefore, in the mutual interest of Harmony Gold and Macross fans, Harmony Gold will continue to protect its rights."

Did you hear that, Macross fans? HG says they're acting in your interests when they attempt to deny you the opportunity to buy imported Macross merchandise!

The company is wise, however, to express concern about the future, because theirs is filled with danger. Their focus at this point should not be on whether Bandai and Yamato products are washing up on US shores, but about whether their license to the franchise will even be legally recognized or renewable. In particular, now that the Japanese court has conclusively awarded the rights to Big West and Nue, it appears that there would be no legal obstacle to Big West's choosing to license the overseas rights to a completely different firm, unrelated to HG.

Certainly HG doesn't want that to happen, so why don't they approach Big West directly at this point to secure their place as the overseas licensee with the true copyright holder? Individuals close to Big West have commented privately that the company would love to sit down and talk with HG, but that they are not willing to make the first move. If Harmony Gold hopes to ever be the official importers of all the Bandai, Yamato, Hasegawa and other Macross merchandise they are currently attempting to shut out of the market, they'll need to do so anyway, as all these products have been licensed through Big West.

Here's hoping that HG soon understands that "controlling" a market (what they're trying to do) and "exploiting" a market (what they should be doing) are two different things. Either that, or that the courts in both nations work to quickly erase the last of the uncertainties surrounding this issue. Ichijo, Minmei and the rest of the gang deserve better than this.

References:

The US Copyright Act and other parts of the US Code can be found online in numerous places, including Cornell and Findlaw.com.
The text (in Japanese) of the Tokyo District Court's decision can be found Here.
All information in this article is from the above two sources (translations mine), or from conversations with individuals who are party to the proceedings described. All opinions and speculation are mine alone.

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