Peugeot Can’t Outrun Alcon Entertainment

Last week, Alcon Entertainment (“Alcon”) sued French car manufacturer Peugeot in California federal court for breach of contract, breach of duty to negotiate in good faith, and fraud among other claims. The lawsuit stems from an alleged agreement between Alcon and Peugeot for product placement in Alcon’s 2017 worldwide hit motion picture, Blade Runner 2049 ("Blade Runner").

Product placement in motion pictures and television is a lucrative business. From Reese’s Pieces and E.T. and Pepsi and Back To The Future during the 1980’s, to Pizza Hut and Wayne’s World in the 1990’s, to Coca-Cola and American Idol in the 2000’s, to Audi and James Bond Skyfall in 2012, branding and product placement plays an important role in marketing and promoting both products and entertainment franchises. Like with Audi and James Bond, where 007 drove a powerful Audi sports car, Peugeot likely saw the benefit of having its logo featured on a flying vehicle known as a “spinner” in Blade Runner that was to be navigated by the film’s star, Ryan Gosling.

Alcon started accepting product placement bids for Blade Runner a few years prior to the film’s release date. The studio alleges the opportunity for the French automotive manufacturer to attach the Peugeot logo and trade dress to Gosling’s spinner vehicle was too great of an opportunity to pass on, and it ultimately secured its winning bid with Alcon by offering the studio a product placement fee of $500,000.00 and an additional $30 million earmarked for advertisements marketing the film and brand together. However, in the end, Peugeot never paid its fees and never promoted the movie.

After being chosen as the automotive partner for the film, Peugeot and Alcon had a multitude of meetings on how the Peugeot logo would appear on screen. Ultimately the placement of Peugeot was incorporated into the film per mutually agreeable specifications and requirements. At some point, the deal between the parties began to fall apart. The studio claims that by the time it realized its deal and relationship with Peugeot was in trouble, making changes to the product placement would have been too expensive to undo or change, and finding a new partner an impossibility. Alcon alleges Peugeot took the position that because it never formally signed the agreement, there was no contract between the parties. It should be noted that under contract law, an agreement does not necessarily have to be signed to be valid.

Alcon further asserts that Peugeot, having been largely inactive in the United States market for three decades, was using the product placement in the Blade Runner franchise as a way to reintroduce its brand to the public, which it accomplished when tens of millions people saw the film. The studio also claims the product placement benefit will be ongoing and relevant for years to come because the film will be viewed and revered for decades, particularly because the product is prominently placed. And while the film grossed nearly $260 million worldwide, the studio claims it still missed out on the promised $30 million of additional marketing by the French automotive manufacturer. Up to this point, Peugeot has not paid Alcon a dime.

This litigation has just commenced, and Peugeot has not yet filed an answer or made a public statement presenting its side of the story. Nevertheless, this is a case worth keeping an eye on because in an era where product placement and cross-promotion between products and entertainment franchises is so common, it will be interesting to see how a trier-of-fact determines whether there was a valid contract between these two parties and if Peugeot will continue to receive a promotional benefit that it did not pay for.

Categories: Business Law

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