I bought a T shirt with a quote from a movie. I assume they would have to pay a royalty for each shirt sold?
the quote is “Now go get your f*king shine box”. I think most people know what movie that is from.
There are two different kinds of intellectual property law that might be relevant here, copyright and trademark.
Brief excerpts from a copyrighted work are acceptable under fair use. What exactly counts as a “brief except” is left vague, but a single quote, in text form, from a two-hour movie almost certainly qualifies.
If the quote is so strongly associated with the movie that it can be used as an identifier for the movie, and the owners of the movie regularly use it as such, then it could be a trademark. But trademarks are domain-specific, so the only way it’d be a problem on a t-shirt made by a third party would be if the movie’s owners were also making their own t-shirts, and using the quote to indicate that they’re official movie tie-in shirts.
In addition to what Chronos said, you have to keep in mind that even if they ‘have to’ pay a royalty, it certainly doesn’t mean that they did or will. I’m sure there’s plenty of shirts an and posters out there with quotes and pictures on them where they should have paid but didn’t. Either they plan to wait until they get noticed to deal with it, or they do a limited run and leave all their branding info off the merch to make it harder to trace back to them.
There used to be a bar near me called Mr Bills. Complete with a picture of Mr Bill and “Ohhhh Nooooo” word bubble. I happened to bump into the owner and asked how they managed to get that name, considering it’s owned by SNL/NBC. He said they didn’t get any permission. They’re just working on the assumption that no one (or any importance to the matter) is likely to notice/know about a tiny corner bar hidden away in a small blue collar city. If they get caught, they’ll go from there.
That bar was around for a long time and nothing ever became of it.
They have other quotes from Goodfellas on shirts. I assume they have them for other movies too. They have several with “Funny How?” and one also has a picture of Joe Pesci. I assume using his picture is probably not OK without paying him?
Not in this case. Fair Use only applies when using the quote for purposes such as criticism, news reporting, teaching, and research.
Speaking as one of the “few” who didn’t know the quote, I had to look it up. OP omitted two words: “Now go home and get your f***ing shine box”
I do not believe that is correct. Fair use is intended to allow people to use small portions of the original work for purposes of review or criticism. It does not allow someone to profit from copying a small part of someone else’s work.
The most important factor in considering fair use is whether it would potentially reduce the copyright holder’s ability to profit from the work. In this case if people are selling T-shirts with quotes from the movie, then it reduces the market for Warner Brothers to sell T-shirts with quotes from the movie.
To answer the OP’s question:
I understand the way it works is that they purchase a license at a fixed fee. This gives them the right to sell an unlimited number of items. The terms of the license may have limits, such as US market only, or be time-limited after which they can renew the license.
Fair Use does not require that the use be for review or criticism. That’s one of the criteria relevant for determining whether a use is Fair Use, but the law isn’t so specific as to say “At least 5 of these 7 criteria”, or whatever, just that all of the criteria can be used to determine what’s fair use. And a written quote is a very small portion of the full work.
Correct.
There are four main criteria: 1. purpose of the use, 2. the nature of the word, 3. the amount of the work, and 4. effect on the market of the work.
Three and four would both apply to a t-shirt: only a tiny portion of the work is being used, and it has no effect on the market for the copyrighted work (the movie). It’s not worth suing over this because the copyright holder doesn’t really have a case on those two.
Bars, restaurants, etc. who play recorded music have to pay an annual license fee to BMI and ASCAP and I’ve heard they are pretty strict about making places pay.
Last year I read an article that said something like “It’s not like he told him to go get his shine box” 
At least in the USA, there is no way a quote and the image of Joe Pesci to sell T-shirts is within fair use. While there is more to fair use than just reviews and critique, making money off the quote is a great example of what fair use isn’t; it is neither transformative nor for the sake of a noncommercial purpose.
It is also worth noting that the amount you take from a copyrighted work can affect whether or not it’s fair use, but it’s not totally determinative. It is quite possible for a snippet of a work to be a copyright violation, and it’s quite possible for an entire work to be copied and be fair use.
The use of Joe Pesci’s likeness is an entirely different matter. Generally speaking, that is something Pesci could use them over, unless he gave them permission. There are exceptions to “right of celebrity” but I can’t see how this is one. Celebrities have successfully sued businesses just for using photographs of them in social media.
The quote together with an image of the actor is a larger portion of the work than just the quote. I didn’t address that question in part because I know that images of celebrities are a more complicated area of law.
Another Goodfellas shirt says “No more shines Billy” Also they have “I’m gonna get the papers, get the papers”
I’m going to leave the Pesci image out of this, because as you note, that’s a different issue.
But while you’re correct that the amount you take is not totally determinative, a single seven-word quotation from a 150-minute movie (a 25,000-word script) would, under almost any circumstance, pass the “amount and substantiality” test. And nor is the simple fact that you make money from the enterprise completely determinative in the question of fair use. Plenty of artworks that make fair use of copyright material do so in order to make money.
Not only that, but the test regarding money isn’t “Does the person want to make money from using the line?” The test is: “What effect does the use of the line have on the potential market for the original work?” It would be almost literally impossible to make a compelling argument that a t-shirt with one line of dialog printed on it would adversely effect, even by a single dollar, the potential market for the movie Goodfellas. That doesn’t mean that a court would rule that it’s Fair Use, because, as noted in more detail below, courts can be pretty idiosyncractic about how they apply the factors in the Fair Use test.
Something worth noting is that a single line from such a long piece might seem to fall under the de minimis defense, whereby exceedingly small excerpts don’t even require an evaluation of the Fair Use criteria. This entertainment lawyer agrees, arguing that “a subsequent use of a single line found within a film is likely to be held a de minimus use, and therefore not an infringement.”
This article (PDF) by Rebecca Shaw, deals with the whole issue in much more depth. It’s titled “Show Me The Money: Movie Quotes as Intellectual Property” (Washington College of Law Intellectual Property Brief, Volume 4, Issue 3: 2013).
Shaw notes, early in her piece, that the Copyright Office itself has a “longstanding policy of barring registration of single words and short phrases,” and that the Copyright Office has even asked the Department of Justice to intervene and request en banc hearings when courts have (erroneously) allowed copyright protection of short phrases. The Copyright Office described this as a “longstanding fundamental doctrine of copyright law.” The author goes on:
All of this can be found in pp. 39-41 of the linked document.
All of this comes even before any consideration of Fair Use. Fair Use, as the article points out, is an affirmative defense, but it’s one that you don’t even have to make if the courts (and the Copyright Office) have already found that what you’ve taken is not, on its own, subject to copyright.
Admittedly, the author does suggest that a de minimis defense might not always work, and she notes that
Shaw also notes that, if the court decides to apply the Fair Use test, it is not always easy to predict the outcome, as each court makes its own decision about exactly how to weigh the four fair use factors. As she observes, this can lead to rather “unpredictable and inconsistent results.” The Fair Use law is pretty vague, and there’s little guidance from the Copyright Act about how courts should apply it. As someone who spends a fair bit of time reading about copyright cases, I can attest that you learn pretty quickly something that Shaw points out in her article: “In other words, no one knows if a use is fair until a court has conducted its analysis.”
In her discussion of copyright as applied to short phrases, Shaw notes that some courts have found that this can constitute copyright infringement. One example she gives is a case where a company put phrases like “I love you, E.T.” and “E.T. phone home!” on coffee mugs, although the court in this case focused not so much on the quotes themselves, as on the use of the name E.T., in which Universal Studios held a trademark. She notes that “the court did not expressly find that Universal had rights in the quotes.” Shaw notes:
She also discuses a case where a magazine took 300-400 words out of a 200,000-word manuscript and published them. The Supreme Court ruled that this was not Fair Use, but part of its logic was that the manuscript was not yet published (the “nature of the work” test), but was forthcoming, and so the publication of an essential portion had “scooped” the original and also caused Time Magazine to cancel a contracted serialization of the book (the “effect on the market” test). Shaw notes that, while a few courts have relied on this decision, they have done so wrongly, and she argues:
Before moving on to the trademark issue, which really is a quite different analysis, she concludes:
As all of this suggests, this can be something of a crapshoot.
Another thing you soon discover if you spend any time reading about copyright law is that having the law on your side is often less determinative to the outcome than having the deepest pockets. Movie studios and television networks and publishing houses often have lots of money and lots of lawyers, and it’s often the case that winnable “fair use” cases don’t even make it inside the courtroom because the targets of the cases don’t want to front tens of thousands of dollars. That’s something you’d have to consider if you want to print t-shirts with movie quotes on them. Even if you end up winning in court, it might take half your resources and give you an ulcer.
I should add that this is not a small website , they sell hundreds of shirts from various artists.