A company that managed the intellectual property rights to characters developed by deceased animators Max and Dave Fleischer ("Fleischer Studios") could not pursue a trademark infringement action against an agency that licensed merchandise featuring the character "Betty Boop," in which Fleischer Studios claimed to hold trademark rights, the U.S. Court of Appeals in San Francisco has held. The defending agency was not using Betty Boop as a trademark, but rather as a functional product, in the court's view.

The Betty Boop character was a prominent feature of the merchandise the agency licensed so as to be visible to others when worn. The agency never designated the merchandise as "official" or otherwise indicated sponsorship by Fleischer Studios. Fleischer Studios presented no evidence of customers being misled about the origin, sponsorship, or endorsement of the agency's goods. The name Betty Boop and the character's appearance were functional aesthetic components of the product, not trademarks, the court concluded.

In addition, the U.S. Supreme Court, in Dastar Corp. v. Twentieth Century Fox Film Corp. (TRADEMARK LAW GUIDE ¶60,065), held that when a formerly copyrighted work has entered the public domain, a party may not assert a trademark infringement action if that action is essentially a substitute for a copyright infringement action. If Fleischer Studios were allowed to assert exclusive trademark rights over Betty Boop, the character would never enter the public domain, the court said.

Fleischer Studios, Inc., 9th Cir., ¶61,766.