Pixel Perfect: The Legal Implications of Virtual Influencers and Supermodels

Summer 2019

Is traditional advertising dying in the Digital Era? Not only is offline marketing facing a slow death (goodbye, classifieds!), but companies are realizing that traditional onlineadvertising may be losing its power. In fact, it has been reported that more than 70 million internet users block ads. Today, consumers crave authenticity and relatability, forcing companies to work even harder to grab their target audience’s attention. So, what does this mean for brand survival? Hello influencers!

Influencers, once a niche group, are now everywhere. Indeed, some argue that traditional influencers are losing their influence as their numbers become more widespread. For example, Instagram is starting to hide “likes,” and sponsored posts’ engagement numbers have fallen. Human influencers have been around for a while and certainly provide a good channel for brand promotion and marketing, but virtual influencers are now taking the limelight and are set to completely transform the current influencer industry.

If you have never heard of virtual influencers, think of them as young, beautiful, and perfect, with a lot of social media followers – basically your typical “it” girls (or guys). But don’t be fooled. Virtual influencers are completely fictional. They are computer-generated imagery (CGI). This may seem to be a crazy concept, but, if you consider the risks that come with their human counterparts (e.g., Kim Kardashian, Scott Disick, and Logan Paul, just to name a few), virtual influencers aren’t such a bad idea. After all, companies can now design their own influencers to reflect the desired look and aesthetic of their brand.

Miquela Sousa a/k/a “Lil Miquela” is arguably the most famous virtual influencer to date. She is a 19-year-old “average” girl with over 1.6 million Instagram followers. Miquela appears so lifelike that many of her fans thought she was human – that was until her creator, an L.A.–based start-up called “Brud” set up a publicity stunt to reveal her true origin. As evidenced by her Instagram, Miquela has modeled for Calvin Klein, Supreme, Vetements, Chanel, and Prada. She markets herself as a musician and has released several singles that are available on Spotify and YouTube. Lil Miquela even uses her influence to support social causes such as, but not limited to, Black Lives Matter, Campaign for Youth Justice, and the Los Angeles LGBT Center. She was named in TIME magazine’s The 25 Most Influential People on the Internet (2018), and she has a “net worth” of at least $125 million.

Shudu Gram is another virtual influencer and is considered “The World’s First Digital Supermodel.” She has been featured by Fenty Beauty, shot a campaign with Balmain, and even “walked” the red carpet at the BAFTA Awards. Shudu was created by London-based fashion photographer Cameron-James Wilson, who was inspired by the Princess of South Africa Barbie doll. Wilson stated that his intent was for Shudu to be a “beacon of inspiring beauty and creativity.”

According to Business Insider, the influencer marketing industry as a whole is on track to be worth up to $15 billion by 2022, making it crucial for the creators and inventors of virtual influencers and supermodels to consider the business and legal issues that come along with their creations – among other things, these include intellectual property rights, social issues and morals clauses, and advertising regulations.

Intellectual Property Rights

Virtual influencers, as names, images, and “people,” may function as various types of intellectual property. While this is good news, creators must be diligent in registering, maintaining, and clearing their intellectual property.

Trademark

As an initial matter, creators may register the name of their virtual influencers as a trademark if they use the name or intend to use it to identify and distinguish the goods and services of a seller or provider. That is, the name may qualify for trademark protection if it is used to indicate the source of the creator’s goods and services. Human celebrities and influencers alike, including various members of the Kardashian and Jenner families, have registered their names with the U.S. Patent and Trademark Office (USPTO) for beauty, entertainment, and fashion-related goods and services. As for virtual influencers, Brud filed a trademark application for the mark MIQUELA on April 26, 2019, for, among other things, “entertainment services, namely, internet appearances by a CGI social media influencer.”

The visual appearance of a virtual influencer or supermodel may also qualify for trademark protection if their image also functions as a source identifying mark for their creator’s goods and services. Indeed, the image of a “person” or character can be trademarked if it functions as an individual’s or company’s logo – think Mickey Mouse, the “Quaker Man,” and the Pillsbury Doughboy.

By registering and maintaining a virtual influencer or supermodel as a trademark, competitors may be prevented from using their name or image to advertise goods and services. Although a trademark registration is not required to file a lawsuit for trademark infringement, a trademark registration with the USPTO grants additional protections, including nationwide protection and a presumption of validity. Indeed, the general recommendation is always for individuals and entities to federally register their trademarks in one or more classes of goods and services for which the creator uses, or intends to use, the mark.

Creators, however, must remember that, before applying for a trademark, it is important to conduct a clearance search to avoid the possibility of infringing others’ trademarks.

Copyright

Virtual influencers may also be protected by copyright law. Copyrights protect expressions of ideas, not the idea itself. Copyrights attach to original works like animations, photographs, and audiovisual material once they are fixed in a tangible medium of expression. That is, a work is automatically protected by copyright when it is created. Unlike trademarks, however, a copyright registration is required in order to file suit for copyright infringement.

Note, if a work is made for hire, an employer is considered the author even if an employee actually created the work. A work made for hire is “a work prepared by an employee within the scope of his or her employment,” or “a work specifically ordered or commissioned for use” with a signed writing stating “that the work shall be considered a work made for hire.” For example, if an employee of Brud created a picture of Lil Miquela, Brud would still be considered the author of that image. And, even if a work does not fit in the above scenario, an individual or entity may nevertheless own the work if the author assigns all right, title, and interest in and to the work.

Right of Publicity

While entitled to trademark and copyright protection, virtual influencers may actually be liable under various states’ right of publicity laws for misappropriation. The right of publicity is the legal right of an individual to control the commercial use of their name, image, likeness, and other unequivocal identifiers. How, though, could a virtual influencer violate a human’s right of publicity? Despite the relative novelty of virtual influencers and supermodels, case law over the past few decades cautions the creators of such CGI to avoid references to the name, image, and likeness of famous and well-known individuals. The following cases provide such guidance:

Davis v. Electronic Arts Inc., No. 3:10-cv-03328 (N.D. Cal.). In 2010, three former NFL players accused Electronic Arts Inc. (“EA”), on their own behalf and on the behalf of nearly 6,000 other former NFL players, of using their likenesses in the Madden video games. Although EA pays the NFL players union to display the names and likenesses of current players, it did not seek out the same authorization for former players. The case was scheduled to go to trial this September, but, after the court repeatedly rejected EA’s defenses for unlicensed use of the players’ likenesses, the parties entered into a confidential settlement earlier this year. The company was previously sued for using the likenesses of players from the NCAA without permission, eventually resulting in the company stopping production of college sports games.

White v. Samsung Elecs. Am., Inc., No. 90-55840, 1992 U.S. App. LEXIS 19253 (9th Cir. Aug. 19, 1992). Vanna White provides another right of publicity example, dating all the way back to the early 1990s. The “Wheel of Fortune” hostess won a judgement against Samsung Electronics America, Inc. after the company ran a series of television commercials using a female-shaped robot turning letters on a game-board and wearing a long gown, blond wig, and large jewelry that White claimed strongly resembled her likeness. In finding that defendant violated White’s right of publicity, the Ninth Circuit Court of Appeals held that “[t]he law protects the celebrity’s sole right to exploit [celebrity] value whether the celebrity has achieved her fame out of rare ability, dumb luck, or a combination thereof.”

Lohan v. Take-Two Interactive Software, Inc., 31 N.Y.3d 111 (2018). Over 25 years later, in a similar case, but without similar success, Lindsay Lohan sued the creators of the Grand Theft Auto video games, alleging that they used her likeness for two images and for the character Lacey Jonas. Specifically, Lohan alleged that defendants purposefully used her “bikini, shoulder-length blonde hair, jewelry, cell phone, and ‘signature peace sign pose’” in one image, and used her “facial features, body type, physical appearance, hair, hat, sunglasses, jean shorts, and loose white top” in another. Moreover, Lohan alleged that the Jonas character, who describes herself as an “actress slash singer” and is recognized as having “starred in romantic comedies and a cheerleader dance-off movie,” was her “look-a-like” and misappropriated her “portrait” and “voice.” The New York Supreme Court ruled against Lohan, and, on appeal, the Appellate Division affirmed, finding that the video game’s “unique story, characters, dialogue, and environment, combined with the player’s ability to choose how to proceed in the game, render it a work of fiction and satire.” Lohan appealed again, and the Court of Appeals affirmed, finding that Jonas was a “generic artistic depiction of a ‘twenty something’ woman without any particular identifying physical characteristics.”

The foregoing cases instruct creators that they should be cautious and avoid overt references to actual human celebrities, influencers, and supermodels in order to avoid claims for right of publicity and misappropriation.

On the other hand, New York’s right of publicity statute, for example, extends only to a “living person,” so creators should not count on such intellectual property rights to protect their own virtual influencers and supermodels – at least not for right now.

Social Issues and Morals Clauses

Theoretically, virtual influencers and supermodels offer a certain degree of control to many companies and brands. Unlike their human counterparts, virtual influencers can be created, directed, and programmed to avoid certain topics, say certain words, or associate with specific brands and issues. Despite the level of control creators exercise over CGI, they are still human and fallible. The following two examples illustrate social missteps concerning the use of virtual influencers and supermodels:

Cultural appropriation. In an interview with Harper’s Bazaar, Shudu’s creator, Cameron-James Wilson, explained: “There’s a big kind of movement with dark skin models, so she represents them and is inspired by them.” Wilson’s comments concerning Shudu quickly fueled criticism sounding in cultural appropriation. And his status as a 20-something-year-old white male profiting off the image of a black woman – without actually paying one – only exacerbated the criticism. Furthermore, Wilson stated that Duckie Thot – a well-known Australian model recognized for her dark complexion – was also an inspiration for Shudu. This begs the questions: Did Wilson misappropriate Thot’s likeness? And, is Wilson taking away opportunities from Duckie and other black models?

Queerbaiting. This May, Calvin Klein released a video as part of its #MYTRUTH campaign in which Bella Hadid and Lil Miquela appeared to be kissing each other in a romantic way. Critics immediately accused Calvin Klein of “queerbaiting” – the act of hinting at, but then not actually depicting, same-sex relationships. Calvin Klein acknowledged that featuring Hadid, “someone who identifies as heterosexual,” in a “same-sex kiss” could be interpreted as queerbaiting. The brand further responded to the criticism by stating: “The concept for our latest #MYCALVINS campaign is to promote freedom of expression for a wide range of identities, including a spectrum of gender and sexual identities. This specific campaign was created to challenge conventional norms and stereotypes in advertising. In this particular video, we explored the blurred lines between reality and imagination.” The problem is, Calvin Klein treated the act of two women kissing – one human and one CGI – as surreal. Perhaps a better option would have been for Calvin Klein to cast an actual (or even virtual) person who publicly identifies as LGBTQ+ for the ad.

As indicated by the previous examples, virtual influencers and supermodels bring their own set of public relation challenges. While it is important that diversity initiatives are implemented in the virtual world, virtual diversity should not replace actual diversity.

Moreover, sponsorship contracts often include morals clauses, which may cover not only virtual influencers and supermodels but also their creators (whether or not they have been publicly identified). Among other things, these clauses help provide protection and recourse related to public relations issues (i.e., nightmares) concerning reputation, appropriation, and authenticity. Brud and Wilson may try to hide behind Lil Miquela and Shudu, respectively, but they (and other creators) need to consider their own actions as well.

Advertising Regulations

The Federal Trade Commission’s (FTC’s) Endorsement Guides provide instruction for how influencers and brands should disclose their partnerships to prevent fraudulent, deceptive, and unfair business practices in violation of Section 5 of the FTC Act (15 U.S.C. § 45). The FTC’s Endorsement Guides are straightforward: “When there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), such connection must be fully disclosed.” Among other things, an influencer must use a #ad or #sponsored hashtag to indicate that a social media post is sponsored, and the hashtag must be “easily noticed and understood” – that is, these hashtags should be placed at the beginning of a post and not combined with other words. For a more detailed explanation of case studies and best practices for sponsored social media posts, see the article #Sponsored: Fyre, Floyd, Flat Tummy Tea, and Fraud in the Spring 2019 edition of REAL TALK.

Although these guidelines were likely intended for human influencers, an FTC spokesperson indicated that virtual influencers are bound by the same regulations and should follow the FTC’s Endorsement Guides, stating: “The FTC doesn’t have specific guidance on CGI influencers, but advertisers using CGI influencer posts should ensure that the posts are clearly identifiable as advertising.” The influencer industry remains largely unregulated, with the FTC merely sending warning letters to date, but as influencer marketing continues to grow and expand, it is only a matter of time before the FTC takes on influencers and maybe even implements virtual influencer-specific guidelines.

The influencer marketing industry is growing at an unprecedented and exponential rate. As previously stated, the industry is on track to be worth up to $15 billion by 2022 – up from as much as $8 billion in 2019. In light of the risks, and the brand dollars at stake, creators and investors of virtual influencers and supermodels should obtain appropriate intellectual property registrations, assignments, and clearances; account for and clear social and moral issues and implications; and comply with the FTC’s Endorsement Guides. At the end of the day, until there are specific laws and regulations for such CGI, virtual influencers and supermodels like Lil Miquela and Shudu are really no different than their human counterparts such as Arielle Charnas, Lo Bosworth, and Gigi Hadid. The existing laws and regulations generally apply to all – human or not.

1 https://www.emarketer.com/content/demanding-a-better-ad-experience.
2 See, e.g.,https://www.refinery29.com/en-gb/2019/07/237774/instagram-engagement-nears-low; https://www.business.com/articles/influencer-marketing-losing-influence/.
3 https://www.instagram.com/lilmiquela/.
4 https://time.com/5324130/most-influential-internet/.
5 https://techcrunch.com/2019/01/14/more-investors-are-betting-on-virtual-influencers-like-lil-miquela/ (“Brud, the company behind the virtual celebrity Lil Miquela, is now worth at least $125 million thanks to a new round of financing the company is currently closing.”).
6 https://www.instagram.com/shudu.gram/.
7 https://www.harpersbazaar.com/beauty/makeup/a16810663/shudu-gram-fenty-model-fake/.
8 Id.
9 https://www.businessinsider.com/the-2019-influencer-marketing-report-2019-7.
10 See U.S. Trademark Serial No. 88/405,039.
11 See, e.g., U.S. Trademark Registration Nos. 3,598,848, 5,782,293, and 0,852,847.
12 https://www.uspto.gov/trademark/laws-regulations/how-satisfy-requirements-multiple-class-application-or-multiple-class (“If you intend to register your mark for goods or services in more than one class, you will need to file a multiple-class application or AAU.” There is an extra fee for each additional class indicated in a trademark application, which can become costly.).
13 The U.S. Supreme Court recently held that a copyright registration must be obtained before a copyright infringement claim is even filed. In other words, plaintiffs can no longer file a copyright infringement claim on the basis of a pending copyright application. See Fourth Estate Pub. Ben. Corp. v. Wall-Street.com, LLC, No. 17-571, 586 U.S. ___ (2019).
14 See 17 U.S.C. § 101.
15 See O’Bannon, Jr. v. National Collegiate Athletic Association et al., No. 4:09-cv-03329 (N.D. Cal.) (EA and co-defendants Collegiate Licensing Company were deconsolidated from the case after finalizing a $40 million settlement for as many as 100,000 current and former NCAA athletes whose likeness appeared in EA college sports games since 2003).
16 Gravano v. Take-Two Interactive Software, Inc., 142 A.D.3d 776 (1st Dept. 2016), affirmed.
17 See also Ribeiro v. Epic Games, Inc. et al., No. 2:18-cv-10412 (C.D. Cal.); Ribeiro v. Take-Two Interactive Software, Inc. et al., No. 2:18-cv-10417 (C.D. Cal.). Although no final decision has been made in these cases, they are worth noting. Last December, Alfonso Ribeiro (best known as Carlton Banks on “The Fresh Prince of Bel-Air”) filed lawsuits against Fortnite (Epic Games, Inc.) and NBA 2K (Take-Two Interactive Software, Inc.), alleging violation of his right of publicity and copyright infringement for the games’ use of the “Carlton Dance.” Ribeiro claimed that the “[Carlton Dance] is a part of [his] identity and [t]he [d]ance’s unique movements readily evoke a connection to [him].” In light of Fourth Estate, Ribeiro voluntarily dismissed his claims against the two entities in February without prejudice after the U.S. Copyright Office declined to register the “Carlton Dance.” Regardless of how Riberio’s counsel decides to handle the lack of copyright registration, he may still have a colorable right of publicity claim.
18 See N.Y. Civ. Rights Law §50. And while California’s statute provides for post-mortem right of publicity available seventy (70) years after death, it still does not protect fictional persons. See Cal. Civ. Code § 3344.1.
19 https://www.harpersbazaar.com/beauty/makeup/a16810663/shudu-gram-fenty-model-fake/.
20 Id.
21 https://www.youtube.com/watch?v=h2jdb3o2UtE.
22 https://twitter.com/CalvinKlein/status/1129521041309614085.
23 Id.
24 It is the authors’ understanding that Lil Miquela does not identify as LGBTQ+.
25 16 CFR § 255.5.
26 https://www.ftc.gov/tips-advice/business-center/guidance/ftcs-endorsement-guides-what-people-are-asking; https://www.ftc.gov/news-events/press-releases/2017/04/ftc-staff-reminds-influencers-brands-clearly-disclose.
27 https://money.cnn.com/2018/06/25/technology/lil-miquela-social-media-influencer-cgi/index.html.
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