Celebrity Endorsements and Morals Clauses: What To Do When Good Deals Go Bad
Though celebrity endorsements have always been a popular means of advertising products, recently there has been an uptick in celebrity endorsements of video games. Here are two of my favorite examples:
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By appearing in ads, celebrities are aligning themselves with your brand, and conversely, your brand becomes aligned with the celebrities. Many times, this is a good thing.
Sometimes, however, the brand and the celebrity drift apart. This may be caused by a scandal, by some statements some feel are inappropriate, or simply by a difference of opinion in political or religious belief. Such is the case with the recent lawsuit filed by Ben Stein (yes, that Ben Stein) against electronics maker Kyocera.
Stein claims that Kyocera backed out of hiring him as a celebrity endorser because of his views on global warming. Stein is seeking $300,000 for, among other things, breach of contract (which in this case would likely be an oral contract as there does not appear to have been a signed agreement).
Assuming for our purposes that there is an enforceable agreement between Stein and Kyocera, what could Kyocera have done to protect itself from this kind of situation? More importantly, as games companies become more and more interested in hiring celebrity talent to appear in commercials, what can video game companies learn from this?
Thoughts after the jump.
First and foremost, any company looking to hire celebrity talent as an endorser should do some due diligence (lawyerspeak for research). Figure out what the celebrity is known for, and consider whether that celebrity is the right person for your brand or message. Go further than just "why is this person famous." Consider the public statements the celebrity has said, or whether there are aspects of the celebrity that may ultimately become controversial for you. It always pays to spend a little time and money on the front end to get a good sense of who you are looking to bring onboard.
If something turns up that may be controversial for you (e.g., a political opinion your company doesn't share), consider whether the celeb is the right person for the job. If s/he is, then consider whether the impact of those opinions on your company can be minimized using a properly structured morals clause. A morals clause is a standard industry provision which basically says "if the celebrity gets into trouble, the brand can terminate the agreement." The key point to understand is that "trouble" can be defined to include whatever you want.
Unfortunately, this is an area of practice that is often overlooked. I'm regularly sent agreements to review that have a "standard" morals clause, which generally reads something like:
Advertiser may terminate this Agreement immediately upon notice to Artist if Artist is: (a) charged with a felony or a crime involving moral turpitude; (b) found to have used any type of illegal drug, or misused prescription or over-the-counter drugs, or is found to have an alcohol dependency; or (c) engages in any conduct which brings or might bring Advertiser into public disrepute, contempt, scandal or ridicule, as determined by Advertiser in the exercise of reasonable discretion.
Taking the Stein situation (again assuming there is a contract), I'm not convinced that such a morals clause would have allowed Kyocera to back out of the deal. Stein was not charged with a crime, nor was he found to have any kind of dependency issue. The only possible argument is that Stein's political/religious beliefs on the subject of global warming could cause the public to ridicule Kyocera. However, according to a Yale study on American opinions on global warming (PDF), roughly 30% of Americans believe man is not responsible whatsoever for global warming. Even if just 30% of Americans agree with Stein (and for the record, I'm not sure exactly what Stein's full opinion on global warming is), that's not likely to be enough to cause ridicule.
What could have happened in this case is Kyocera could have expanded upon the morals clause to a greater degree. For example, here's a model morals clause often using in film and television work that speaks to the issue of future "racy" acting roles:
If at any time while Artist is rendering or obligated to render on-camera services for the program hereunder, Artist (i) commits, or is indicted for any civil or criminal offense under federal, state, or local laws, or (ii) is involved in any situation or occurrence which subjects Artist to public scandal, disrepute, widespread contempt, public ridicule, or which is widely deemed by members of the general public, to embarrass, offend, insult or denigrate individuals or groups, then Producer shall have the right, in its sole discretion, to take any action it deems appropriate, including but not limited to terminating the production of the program (and such termination shall be deemed caused by an event of force majeure). Notwithstanding the foregoing, during the aforesaid period, Artist shall never (a) provide services in an ‘adult-themed’ film or video program or perform onscreen services for any film or video program that is pornographic, involves nudity or graphic violence or contains material derogatory of any race, nationality, ethnic identity, gender or sexual orientation; (b) perform in any sexually explicit plays, musicals or stage shows (including strip tease acts); or (c) pose as a model for any pornographic or sexually suggestive publication; furthermore, Artist represents and warrants that Artist has never participated or been a part of any activity that would fall within the scope of (a), (b) or (c). For the avoidance of doubt: (i) this provision shall not apply to prior acts of Artist already known to Producer or the general public prior to the date of execution of this Agreement; and (ii) any such termination as set forth above shall not void or diminish any of the rights granted by Artist to Producer as set forth elsewhere in this Agreement.
This is just one particular issue - "adult"-oriented roles. Similar provisions could be built to reduce the impact of other activities that you may find objectionable, but would not necessarily be ridicule-inducing. For the Stein situation, a morals clause could have been used to limit future speech on the issue of global warming. Of course, I'm not sure that any morals clause, regardless of how it's drafted, could minimize the impact of prior, publicly known political speech. If the public already knows about what you think is objectionable, then the damage has already been done. That's why your up-front research is so important.
Bottom Line: For games companies looking to hire celebrity talent for advertising purposes, do your research. If you turn up anything that may be objectionable, consider whether it can be dealt with using a properly worded morals clause, or whether it makes more sense to move in another direction. A properly drafted morals clause can save your company a lot of money, so don't ignore it or think that anything negative can lead to ridicule.
If you'd like to learn more about advertising, and celebrity contracts in particular (and trust me, there's a lot to learn), take a look at AdLawByRequest, sister blog to DevelopingConcerns. You'll find a great amount of insight, knowledge, and opinion on the advertising industry and the legal issues thereof.
