The names and images of charities, hospitals and other not-for-profit institutions often represent an invaluable reputation built up over years of service to the public.  Unfortunately, there are always those who wish to profit from the hard work of others. After the tragedy of 9/11, unscrupulous con artists sought to exploit the outpouring of aid offered to the victims of the terrorist attack on the World Trade Center.  One way this was done was using the emblems of the police and fire departments or charitable institutions in connection with the solicitation over the Internet of donations that never found their way to the victims the public wished to help.

There is a little known provision of the New York Business Law, Section 397, which was expressly designed to protect the right of a not-for-profit institution to prevent its commercial image from being misused, if it so chooses.  Unlike trademark and other unfair competition statutes, Section 397, which is entitled "Unlawful Use of Name or Other Identification of Certain Non-Profit Organizations," does not contain a requirement that the unauthorized use complained of actually be deceptive. Rather, the law is designed to prevent the unauthorized commercial exploitation of a not for profit institution's good name for purposes of advertising or trade, including the misuse of a not-for-profit's name or image on a Website. The legislative history shows that Section 397 was aimed at expanding existing New York law, which, before passage of Section 397, was keyed to proof of deception of the p ublic (Bill Jacket, at 2-3). The aim of the new law included the prevention of third parties from illicitly exploiting an institution's reputation and good will in order to gain personal profit.

One early decision may have discouraged use of Section 397. In Girl Scouts of the United States of America v. Publicity Posters Manufacturing Co., Inc., the Girl Scouts sued to enjoin sale of a poster depicting a pregnant girl scout in uniform with the slogan "Be Prepared." The court denied trademark and unfair competition claims based on the Girl Scouts' failure to demonstrate likely consumer confusion. Then, for the sake of completeness, the court went on to address Section 397, although such a claim had not been pleaded in the complaint. Perhaps misled by an excerpt from the legislative history concerning the advertising prong of the statute, the court found B' 397 was primarily concerned with the unauthorized use of a charitable institution's name to solicit purchasers for collateral goods or services.  The court then held that since the offending poster was not passed off as a prod uct of the Girl Scouts, defendantbs acts were not within the purview of the statute.

This was a clear error as it had long been settled under Sections 50b51 of the Civil Rights Law, which deals with an individual's right of publicity, that the sale of posters displaying a celebrity's name or likeness, including posters with satirical comments, was itself a use for purposes of trade. The Legislature, in repeating the language of Sections 50b51 in Section 397, plainly intended to give claimants under Section 397 the benefit of the case law under the prior enactment. Consequently, the Girl Scouts were not required to show passing off or a likelihood of consumer deception as the legislative history of Section 397 had made clear.

The relief available to a charitable institution in a civil action brought under Section 397 includes:  (1) an injunction, (2) compensatory damages, and (3) exemplary damages.  Although violation of Section 397 of the General Business Law may also be a misdemeanor, no one has ever been successfully prosecuted under this statute for a criminal violation.  The injunctive relief provision in Section 397 establishes that once a violation has been proved or conceded, the charitable institution has an absolute right to a permanent injunction against the offending party's use of its name or image without a court balancing the relative harm to the parties. Section 397 further provides that an individual or a not for profit institution whose name, likeness or identification is misappropriated for trade, advertising, or soliciting purposes (online or offline) may sue and recover damages for any injuries suffered because of such unauthorized use.

The injury may take the form of lost profits on sales or revenues lost on licensing if the unauthorized use competes with the charitable institution's own use of its name and image on advertising materials, including its Website. The commercial value of the charitable institution's publicity right might also have been lessened. The costs to refurbish that image should be recoverable damages.

Good faith or lack of knowledge that the use was unauthorized is no defense to compensatory damages, as one court explained: "the statute imposes strict liability for compensatory damages, thus placing the burden on the user of a picture to determine whether such use is authorized."
 
While comparatively few cases have even been brought under Section 397, this statute, nonetheless, provides a powerful tool to non profit institutions seeking to protect their goodwill, online as well as offline, and its use should expand as non profit institutions recognize its advantages.

William R. Golden, Jr. is the head of the Intellectual Property and Technology Litigation Practice Group of Kelley Drye & Warren, LLP, an international law firm with headquarters in New York. He can be reached at WGolden@KelleyDrye.com