Nasir and Matt talk about the lawsuit over items of flair from Office Space and answer a question on options in purchasing a business.
NASIR: Episode 26 of Legally Sound Smart Business!
This is Nasir Pasha.
MATT: And this is Matt Staub.
NASIR: And we’re ready to go. We’re going to talk about Office Space today – the movie. We tried to get it – at least The Office or Office Space or an episode of what else? Seinfeld and pizza.
Well, I was trying to think. I don’t know if we’ve discussed… Office Space is a pretty classic office-themed TV show or movie. I don’t think we’ve discussed it before, have we? Do you recall discussing it?
NASIR: I think, tangentially, we have. I mean, I think the show, The Office, is based upon a lot of the happenings in the Office Space.
MATT: I guess, for me, I’ve never really worked in an office environment like that. I did a little bit in college when I worked in this one place but, yeah, I guess I did for one summer. I had a cubicle-type setup, but it was a much different situation. I was much younger than everyone else that was working there and my boss was not like any of the bosses in this movie.
NASIR: I think you and I have been pretty lucky in our past job experience, but I know very well – through family members and so forth – that these kinds of places do exist, unfortunately – or fortunately, depending upon your sense of humor.
MATT: Let me get to the actual substance of this lawsuit here and it was a lawsuit and it’s Todd Duffee. Maybe some of you might remember him as the flair guy at Chotchkie’s – I think that’s it is, right? Yeah, Chotchkie’s.
NASIR: Yeah, Chotchkie’s.
MATT: So, there is a lawsuit. He’s suing 20th Century Fox or he did sue 20th Century Fox because I guess they came out with this game or something you could buy – some sort of product that had all these, basically, if you’d seen the movie – and, if you haven’t, go watch it because it is a good movie – he’s working at Chotchkie’s and they have all these items of flair so it’s all these buttons that they have to wear on their uniform. I guess 20th Century Fox has put out all these similar buttons. Basically, the buttons like they wear in the movie that you can wear. It’s your own personal items of flair.
Now, I don’t know why it took them fifteen years for them to put this out because the movie was in 1999. Were they just circling back around and it just dawned on them to do this? But, anyway, the actor who played the waiter at Chotchkie’s was suing 20th Century Fox because, you know, he was basically saying that they were improperly using his image for this product that they’re now selling.
NASIR: Well, I think it’s funny that he’s even suing at all – as if this product is making billions of dollars or something. I think it’s cool. I think it’s funny. But who actually buys this stuff? And what are you going to do – wear it maybe for Halloween or for a day and then that’s it pretty much? One-time use?
MATT: For an update, he did lose and I’m not sure at what stage he lost but he did lose. I don’t even know what grounds he really had to stand on in terms of why he even brought this lawsuit in the first place.
NASIR: Well, the assumption is use of likeness. But I think what Matt is saying is that, well, look, you sign up for a movie and they’re promoting the movie through these products. So, why wouldn’t they be allowed to? They had his provision in the contract agreement to be able to use his image for commercial purpose. When we ran film contracts through our firm, we basically have it so that the producers can use the likeness of the actors – pretty much any way they want – in connection to the actual project. And so, this would also apply – even though it’s some kind of board game – not a board game. It’s basically a box of buttons with his picture on it, you know?
NASIR: And it says “Office Space” on it and it says “A Box of Flair” and that’s pretty much it. it even has a guide to the flair which, again, seems like a silly product in itself. But that’s what happens!
If they didn’t have a contract or anything like that – then, of course, this is 20th Century Fox, I doubt they would not – then there might be an issue because using the likeness of a celebrity or an actor for commercial purposes – or any individual for that matter – is definitely a huge issue and something that actors in general go to great lengths to protect.
MATT: Looking at the lawsuit itself, he’s suing under these terms of this day player agreement for his claims of false endorsement and breach of contract in a claim for a declaratory judgment.
NASIR: Yeah, false endorsement is a good example. For example, as a business, if you have a commercial and you hire somebody – maybe a local celebrity and so forth – you’re going to want to make sure that you’re able to reuse that commercial in different ways and different capacities. Also, they’re going to limit you with how much they allow you to actually endorse. Are you going to be able to have a free-standing picture of the celebrity next to your product outside your store, for example? These little things. It should be always pre-negotiated.
MATT: Yeah, and I did say, “Why did he bring this lawsuit?” I might have a little bit of insight into it. I looked up some of his more recent roles. I don’t know why people don’t remember his roles as Guy #2, Beer Guy, Prom DJ, or Cult Member #1.
NASIR: Wow. We’re being a little rough, obviously. I mean, acting is hard. You know, I bet you, he’ll get a little attention here after this lawsuit. People will remember him. “Oh, yeah! You’re that guy! Let’s get that guy!”
MATT: Yeah. One more thing about this, it was kind of funny if you read through the actual opinion itself. I guess that he unpublished opinion. For those of you that don’t read a lot of opinions, and I don’t know why you would unless you’re an attorney, but they always cite cases in there. So, they cite all of these cases that kind of relate to issues that were in Office Space. One of them is a lawsuit against someone versus Michael Bolton. If you’ve seen the movie, you understand that reference.
MATT: Another one is Swingline versus Staple which I think the Swingline stapler was the stapler that was used in the movie. I think they basically looked at it said, “This is kind of a joke lawsuit. We’re going to have fun with some of the citations that we use.”
NASIR: That’s funny. I didn’t realize that.
NASIR: Well, the question is how many pieces of flair is enough?
The answer is you can never have enough flair. That’s from the movie.
MATT: That had to be one of Jennifer Aniston’s first movies too, I would think. I guess 99 Friends was still going on. I’m not sure the timeline of all that but now I have to go watch the movie again. It is a good movie.
NASIR: Yeah, it’s so happenstance but, literally, this morning, it was on and I watched five minutes of it.
NASIR: No doubt. Yeah, it just happened to be on.
MATT: Let’s get to the question of the day.
“I want to acquire another company. Should I buy the company outright or is there another avenue?”
This comes from a company in Houston, Texas.
NASIR: Oh, nice. Okay.
Another avenue? There are other avenues instead of paying cash outright and I think that’s the assumption is just like anything that you purchase, you can get financing both through a bank but also through the seller and I think that’s a good way to do it sometimes because it can manage your risk. It kind of depends upon the transaction. It’s a very difficult question to answer because sometimes maybe you want to meet certain milestones and make sure that the company that you’re purchasing is living up to the expectations based upon previous financials. So, there may be some milestones in that respect or because you don’t have the cash then the seller may agree to be paid in payments which is very normal.
MATT: We don’t have all the background of this question but I kind of looked at it from a different angle and saying, “How can I get something from this business?” Maybe it was an issue of if there’s some sort of asset that’s very valuable and the rest of the business isn’t that great, maybe you can just buy that asset. Or maybe they have a business that’s doing well and you want to use the name, for example. It’s something that you can probably set up some sort of licensing agreement with. I know we’ve discussed licensing agreements a ton on all these episodes but those are a couple of options that come to mind.
NASIR: That’s a great point. I didn’t even think about that angle – that maybe you don’t want to buy the entire company. I would identify first why are you buying it? and can you isolate that from items that are not as good? Maybe it’s the brand name? Maybe it’s the marketing sales team that you want? Their processes – that’s what you want to buy? Or maybe it’s the building that they’re in or what have you? Or maybe you do want everything so it makes more sense to buy the entire company.
MATT: Right, and maybe it’s the name. I know we’ve had that question come up before, too, I think multiple times of people wanting a specific name. There’s a lot of options out there. The real answer to the question will depend on exactly what you just said – you know, what’s the reason you want it and what part of the business is successful.
NASIR: Yeah, absolutely. I think we answered that question thoroughly. If not, they can always send it in again at email@example.com with some more details.
MATT: Well, we usually only give one shot so they kind of already had their opportunity.
NASIR: That’s true but just have them send it in anyway so we can ignore it.
MATT: That’s fine. I check the IP addresses. I’ll make sure if they do it.
NASIR: All right, that’s our episode. I hope you enjoyed our nice short and sweet episode.
MATT: Yeah, I’m still getting used to it but I think it’s going well.
NASIR: I agree. I think it’s a lot easier to listen to.
MATT: This is Episode 26. We’re going to come up with 27 and we’ve got something else coming up good on the way too about a couple of fast food companies and you might have already seen this but it’s a pretty funny thing that’s going on.
NASIR: Yeah, but we’re also going to talk about independent contractors and employees – again!
MATT: Oh, yeah.
NASIR: This issue has not been finalized yet.
MATT: It’s been a while.
NASIR: Yeah, it’s been a while but I guess we just have to cover it.
All right, well, have a good day!
Thanks for listening!
MATT: Keep it sound and keep it smart!