Haelan Laboratories, Inc. v. Topps Chewing Gum, Inc. Case Notes

Haelan Laboratories and Topps Chewing Gum were competing chewing gum manufacturers.
Haelan secured contracts with baseball players, granting them exclusive rights to use the players' photographs in connection with gum sales. These contracts contained clauses preventing players from granting similar rights to other gum manufacturers during the contract period. Haelan also held options to extend these contracts.
Topps, aware of Haelan's existing contracts, actively induced the baseball players to authorize Topps to use their photographs. These authorizations occurred either during the original term or the extended term of Haelan's contracts.

Topps contended that the contracts between Haelan and the baseball players were merely releases of liability. According to Topps, without these releases, Haelan would be liable for violating the ballplayers' right to privacy as protected under Sections 50 and 51 of the New York Civil Rights Law.
Topps further argued that the statutory right of privacy is personal and cannot be assigned. Consequently, Haelan's contracts did not establish any "property" right or other legally protectable interest that Topps could have invaded.

The court acknowledged that, under New York law, if the contract between Haelan and the baseball player solely authorized Haelan to use the player's photograph, it would only create a release of liability.
However, the court emphasized that the ballplayer also promised not to grant similar releases to other parties. Therefore, by inducing the ballplayer to breach this promise, Topps engaged in tortious behavior.
The court cited Hornstein v. Podwitz, 254 N.Y. 443, 173 N.E. 674, 84 A.L.R. 1 and 6 Corbin, Contracts (1951) Sec. 1470 to bolster this argument, asserting that inducing a breach of contract is a recognized legal wrong.
The court differentiated between breaches induced directly by Topps or through its agent, Players Enterprise, Inc., and breaches induced by Russell Publishing Co., which was considered an independent entity.
Topps was held liable for breaches induced by Players Enterprise, Inc., because of their agency relationship. However, Topps was not liable for breaches induced by Russell, unless Topps knowingly used a player’s photograph without consent during Haelan’s exclusive contract period.

The court dismissed the argument that Haelan's contracts merely provided a release of liability, asserting that individuals possess more than just a right to privacy regarding their image. It affirmed that a person has a right to the publicity value of their photograph.
This "right of publicity" allows individuals to exclusively grant the privilege of publishing their picture, which can be done "in gross," meaning without transferring any accompanying business or services.
The court defined this right as a "right of publicity," observing that prominent figures often receive compensation for allowing advertisers to use their likenesses.
The court asserted that New York decisions recognize this right, citing Wood v. Lucy, Lady Duff Gordon, 222 N.Y. 88, 118 N.E. 214, and Madison Square Garden Corp. v. Universal Pictures Co., 255 App.Div. 459, 465, 7 N.Y.S.2d 845 as examples where similar rights were acknowledged.
The court distinguished Pekas Co., Inc. v. Leslie, 52 N.Y.L.J.1864, which was decided in 1915, noting that the judge's focus was exclusively on Sections 50 and 51 of the New York statute, and the concept of a separate right of publicity was not considered.
The court explicitly disagreed with Hanna Mfg. Co. v. Hillerich & Bradsby Co., 5 Cir., 78 F.2d 763, 101 A.L.R. 484, and highlighted adverse comments on that decision found in legal reviews, underscoring the evolving understanding of publicity rights.

The court determined that Haelan, as the exclusive grantee of a player's "right of publicity," had a valid claim against Topps if Topps used that player's photograph during the term of Haelan's grant, knowing about the exclusive agreement.
It emphasized that it was not a valid defense for Topps to argue that they were assigned a subsequent contract between the player and Russell. The court held that the prior grant to Haelan invalidated any subsequent grant during the term of Haelan's agreement, including any exercised option to renew.

Judge Swan concurred with the decision to reverse and remand the case, agreeing with the portion of the opinion that addressed the defendant’s liability for intentionally inducing a ballplayer to breach a contract, thereby infringing on Haelan's exclusive right to use the player's picture.

The court clarified that if Haelan induced breaches of exclusive agreements that Topps had with ballplayers, Topps was entitled to relief against Haelan. Accordingly, the mandate was modified to include determining:
- The dates and contents of each of Topps’ contracts under which Topps claimed rights, and whether Topps had exercised its option to renew those contracts.
- Haelan’s specific conduct concerning each of Topps' contracts to assess potential tortious interference by Haelan.
Specifically:
- The court clarified that the validity of one party’s contracts beyond the expiration date of prior exclusive rights granted to the other party would depend on the district court's findings of fact concerning the considerations highlighted.

The court denied Haelan’s motion for a temporary stay.
The court directed that the mandate be issued immediately so the trial court could entertain motions for temporary injunctions from either party without delay.

The court denied the motion to stay the mandate and directed the Clerk of the Court to issue the mandate immediately.
The court awarded appellate costs to the plaintiff-appellant, except for the full cost of printing the Transcript of Record, of which only half the cost was awarded.