Case Study 1: Property Law and Bargaining

EC 337: Economic Analysis of Legal Issues

Economics Department

Boston University

Dr. Ben Koskinen

1 Background

The case of Steven V. Whitmill (‘Whitmill’) vs. Warner Bros. Entertainment Inc. (‘WB’) looks at the

applicability of copyright laws to tattoos. This case has a heavy focus on a couple specific aspects of

copyright law, namely if tattoos are copyrightable, is human skin an applicable medium according to the

law, and the difference between parody and satire under ‘fair use’ doctrine (particularly satire, which is not

fair use, versus parody). The focus of this study is how to apply economic analysis to this particular case.

The legal questions that arise are not of the interest of this assignment.

Figure 1: Mike Tyson at the Synergy Global Forum ‖ Valery SharifulinTASS via Getty Images)

Whitmill is an award-winning tattoo artist whose most prominent work is the facial tattoo he designed

for Mike Tyson (figure 1). In the Warner Bros. comedy, The Hangover 2, a character gets a “virtually exact

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reproduction”1 of the tattoo. Whitmill sued WB for copyright violation.

Note that this case pertains to the reproduction of Tyson’s tattoo, not Tyson (and his tattoo) appearing

the film itself. The questions of joint-ownership of a tattoo, while interesting, are not part of this study.

Whitmill submitted evidence that Tyson signed a release form agreeing that the facial tattoo is property of

Whitmill’s tattoo studio (essentially a licensing agreement).

Whitmill filed his suit about one month prior to the film’s theatrical release.

2 Resources

This link: https://dockets.justia.com/docket/missouri/moedce/4:2011cv00752/113287 is the Justia portal

that contains all relevant court documents to this case. The ‘Proposed Order…’, ‘Verified Complaint…’, and

‘Verified Answer…’ documents on Blackboard are likely sufficient to get started and understand the facts of

the case, as presented by the plaintiff.

The David Cummings paper in the Illinois Law Review contains a summary of copyright law history

before specifically diving into how tattoos may or may not fit into existing copyright law as well as impacts

of ruling in cases like the Whitmill case. Discussion of the Whitmill case starts on page 294 (page 17 of the

PDF).

1[Proposed] Order Granting Plaintiffs’ Motion for Preliminary Injunction, Whitmill v. Warner Bros. Entm’t Inc., No.
4:11-cv-752 (E.D. Mo. April 28, 2011).

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3 Questions

1. Why did the plaintiff sue Warner Bros., and what remedy did he seek (note: there are two separate

filings with two different requests)? Summarize Warner Bros. main points of contention as to why

they should be found ‘not guilty.’ Do you believe Whitmill’s timing of the lawsuit is strategic; how

would it make a difference in bargaining theory had this lawsuit been filed earlier (more than a month

before the film’s release)? What did the trial court rule, and what did the judge say to motivate a

settlement? Be specific in your answers.

2. Why did WB not license the tattoo from Whitmill? Identify transaction costs involved in a hypothetical

bargain for the right to use the tattoo’s likeness prior to the release of the film’s promotional materials

(which may be different depending on who starts the bargaining process), and explain if you think

that WB and Whitmill could have come to a cooperative solution prior to filing the complaint. In

your estimation, if time (i.e. the movie’s release date) were not an issue, are these transaction costs

sufficiently high to have precluded bargaining?

3. In Whitmill’s complaint, legal counsel states “[the plaintiff] has suffered and will continue to suffer

damages in an amount not yet fully determined.”2 If you were to be hired as an expert economic

witness, how would you have evaluated what dollar amount in damages the defendant would owe

Whitmill? (N.B. you need not come up with an actual dollar amount, but rather what data and

information you would need, and how you would use these to calculate a dollar amount that would

make Whitmill indifferent to winning and never having his work disseminated.)

4. Had Whitmill been awarded the injunction, how would you evaluate the cost to Warner Bros. in

complying with the injunction? Provide evidence/research to determine an estimation of Warner

Bros.’s threat value.

5. We learned the economic rule: an injunction ought to be awarded when bargaining is possible (i.e.

number of parties is small). In this case bargaining is certainly possible, as they ultimately settled,

but the relative value of the property right is disproportionate. Model the bargaining (settlement)

game between Whitmill and WB under two scenarios: (1) had the injunction been awarded, and (2)

what actually took place: no injunction, judge strongly hinting out trial outcome. Use these models to

explain why an injunction would not have been the appropriate remedy in this case demonstrating the

following rule: an injunction should not be issued when it can be shown that the value of a nuisance

greatly exceeds the damages that it is imposing.

2[Proposed] Order Granting Plaintiffs’ Motion for Preliminary Injunction, Whitmill v. Warner Bros. Entm’t Inc., No.
4:11-cv-752 (E.D. Mo. April 28, 2011). Paragraph 10.

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4 References

Cummings, D. M. (2013). Creative Expression and the Human Canvas: An Examination of Tattoos as

Copyrightable Art Form. University of Illinois Law Review, 2013(1), 279-318.

Proposed Order Granting Plaintiffs’ Motion for Preliminary Injunction, Whitmill v. Warner Bros. Entm’t

Inc., No. 4:11-cv-752 (E.D. Mo. April 28, 2011).

Verified Answer to Verified Injunctive and Other Relief, Whitmill v. Warner Bros. Entm’t Inc., No. 4:11-

cv-752 (E.D. Mo. May 20, 2011).

Verified Complaint for Injunctive and Other Relief, Whitmill v. Warner Bros. Entm’t Inc., No. 4:11-cv-752

(E.D. Mo. Apr 28, 2011).

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