Class Action Seeks Compensation for Use of Likeness of Former NCAA Players

By Ian B. Brooks – Edited by Sarah Sorscher
Class Action Complaint, O’Bannon v. NCAA, No. CV 09-3329 (N.D. Cal. July 21, 2009)
Complaint

Former National Collegiate Athletic Association (NCAA) player Edward C. O’Bannon, Jr. filed a class action lawsuit on behalf of former NCAA student-athletes in the US District Court for the Northern District of California against the NCAA, the Collegiate Licensing Company (CLC), and multiple alleged co-conspirators for unlawful use of class member’s images. The complaint seeks unspecified damages and injunctive relief for violations of the Sherman Act and unjust enrichment of the defendants as well as accounting of licensing revenues. In support of his complaint, O’Bannon cites sources of NCAA licensing of players images for which the players receive no direct compensation including DVDs, rentals of game films, on-demand sales of game footage, cable and network broadcasts of games, photographs, action-figures, posters, and video games. The complaint further seeks injunctive relief on behalf of current students with respect to their rights to control the use of their image and likeness.

Sports Illustrated provides an overview of the case and Projo Sports Blog provides background. Kevin Arnovitz and Rush the Court have weighed in their support in favor of the athletes.

The plaintiff, O’Bannon, is a former NCAA basketball national champion who played for the University of California, Los Angeles (UCLA) between 1991 and 1995. O’Bannon alleges that his image has been featured without his consent in various media over the last four years preceding the filing of the complaint. Defendant, NCAA is an unincorporated not-for-profit educational organization responsible for many aspects of collegiate athletics. To participate in NCAA athletics, the NCAA requires each student-athlete to sign Form 08-3a, which grants the NCAA the right to use the athlete’s name or picture to “promote NCAA championships or other NCAA events, activities or programs.” The complaint alleges that Form 08-3a has been utilized by the NCAA to prevent current and former athletes from receiving compensation. The complaint notes that the retail market resulting from college athletes has grown from $100 million per year in the 1980s to its current level of approximately $4 billion per year. With the increase in deals made by the NCAA and CLC, the complaint alleges that in recent years the NCAA has “unlawfully utilized the images of Class members.” Television deals in the billions of dollars, DVD sales and rentals, rebroadcasts of classic games, as well as video games from alleged co-conspirator Electronic Arts, Inc. are examples of deals that contribute to this growing market. The video games are particularly a target for their use of the player’s likeness and jersey numbers without use of the player’s pictures or name. Electronic Art’s games also feature players that are no longer in the NCAA as part of “classic teams” in the game. The complaint alleges that the use of player’s likeness in the games has not been authorized by the players.

This case is not the first against the NCAA seeking to end the practices of denying compensation to student-athletes for the use of their likeness. This case differs in focusing on seeking compensation only for players that no longer play for the NCAA. As noted by Sports Illustrated, a favorable decision for the athletes could change the market for the use of athlete images.

The complaint provides further support for these athletes by noting the sacrifices the players make in their education to support their athletic programs, the debt that “full-scholarship” players can carry upon leaving their schools, and medical bills and injuries that plague the players after their college years are over. If this case proceeds to trial, it will be left to the jury to decide whether the arguments in favor of the athletes have merit.

By Jad Mills – Edited by Caitlyn Ross
AFL Philadelphia LLCl v. Krause, June 4, 2009, No. 09-614.
Slip Opinion hosted by Exclusive Rights.

On June 4, 2009, Judge Baylson of the Eastern District of Pennsylvania denied Philadelphia Soul’s motion to dismiss defendant Joe Krause’s counterclaims for trademark infringement and misappropriation of name in AFL Philadelphia LLC v. Krause. The judge allowed both counterclaims to go forward because Krause had sufficiently alleged that his name had acquired the necessary “secondary meaning” for trademark protection under the Lanham Act.

Ex©lusive Rights and Shannon Duffy provide summaries of the case, paying particular attention to Judge Baylson’s inclusion of Bon Jovi song references in the opinion. An earlier post by Ex©lusive Rights summarizes the ongoing Pennsylvania State Court litigation between the same parties. 

Philadelphia Soul, an arena football league (AFL) team partially owned by Jon Bon Jovi, sued Joseph Krause in federal court after Krause filed suit in state court for almost $125,000 in unpaid commissions. Philadelphia Soul had terminated Krause and other staff members after AFL suspended the 2009 season. Among other things, Philadelphia Soul alleged that Krause infringed its copyright and trademark by making and selling championship rings using the team’s logo. Krause counterclaimed for Lanham Act violations and for misappropriation of his name based on an email sent out to season ticket holders by Philadelphia Soul discussing the season suspension. The email indicated that it came from “Joe Krause [mailto: jkrause@philadelphiasoul.com].”

Before analyzing the elements of the Lanham Act claim, the court applied the 5 factor Conte test to determine whether Krause had prudential standing under the Lanham Act. The court held that 4 of the factors favored prudential standing and that the fifth factor was neutral. Although the court recognized that “the nature of [Krause's] injury [was] somewhat remote from the type of injury that Congress sought to protect in the Lanham Act,” it found that Krause’s pleadings justified prudential standing because the Act protects against harm to one’s commercial reputation and goodwill. Judge Baylson found that Krause pled damage to his commercial reputation by alleging that Philadelphia soul had “diverted some of their reputational damage to Defendant by associating him with their actions.”

The court held that Krause had sufficiently pled all three elements of the Lanham Act claim. First, Krause’s name was a protectable mark because it had acquired “secondary meaning” by becoming synonymous in the public mind with the sports and entertainment industry. The secondary meaning was evidenced by the length of time in which Krause’s favorable reputation was used, the extent and number of sales under Krause’s directorship, Philadelphia Soul’s use of his name to send the email, and because the email caused actual confusion among recipients. Second, Philadelphia Soul admitted that Krause owned his own name. Third, the court found that Krause had sufficiently pled a likelihood of confusion because consumers viewing the email would probably assume that the email was associated with Krause. 

The court also held that Krause had sufficiently pled misappropriation of name. Although Judge Baylson found that Krause did plead that Philadelphia Soul appropriated Krause’s name for commercial benefit, he held that misappropriation of name, in contrast with the right of publicity, does not require commercial benefit. Misappropriation of name takes place even when the defendant “makes use of the plaintiff’s name or likeness for his own purposes and benefit, even though the use is not a commercial one, and even though the benefit sought to be obtained is not a pecuniary one.”

This case suggests that an individual may demonstrate that her name has achieved legally protected distinctiveness through secondary meaning by being publicly viewed as synonymous with a specific industry, as opposed to being synonymous with a specific business. 

Major League Baseball Advanced Media v. C.B.C. Distribution and Marketing
8th Circuit, Oct 16, 2007, cert. denied June 2, 2008
Eighth Circuit Opinion, Supreme Court Order

On June 2, the Supreme Court denied petition for a writ of certiorari from Major League Baseball Advanced Media (“MLB”). MLB had sought to appeal the Eighth Circuit’s decision, which held that the First Amendment interests in public information about baseball and baseball players outweighed the players’ state law right of publicity.

The Eighth Circuit affirmed the district court, which had granted summary judgment to CBC, a producer of fantasy major league baseball games. CBC sought a declaratory judgment that it may use, without license, the names of and information about major league baseball players in connection with its for-profit fantasy baseball products.

The Eighth Circuit found that MLB had provided sufficient evidence to establish a cause of action for violation of players’ rights of publicity under Missouri law. It held, however, that under Supreme Court precedent, a state law right of publicity must be balanced against First Amendment considerations. The court found that the CBC’s First Amendment rights superseded the players’ rights of publicity. The majority noted that information meant only to provide entertainment still enjoys First Amendment protection, and it reasoned that the significant public value of information about “the national pastime” entitles it to substantial protection. It noted also that as the information used by CBC was already available in the public domain, it would be “strange law” if CBC did not have a First Amendment right to use information available to everyone else. The court was not persuaded that CBC had violated the economic interests of the players which the right of publicity seeks to protect, noting that the players were already adequately compensated for their participation in games. It also rejected the argument that the non-economic interests protected by the right of publicity, such as rewarding celebrity labors and avoiding emotional harm, were violated, finding that none of these interests were implicated in the context of fantasy baseball.

Judge Colloton dissented. He agreed with the majority’s analysis of the right to publicity and the application of the First Amendment to fantasy baseball, but disagreed as to its resolution of the contractual dispute between the parties.

The Supreme Court’s denial of certiorari lets stand a decision securing strong First Amendment protection for information available in the public domain, even where such information is used for commercial, for-profit purposes. In its First Amendment analysis, the Eighth Circuit purported to use a balancing test, with free speech interests on one side and the players’ rights to publicity on the other. However, the test does not appear to be neutral, as the majority started with the supposition that restricting access to information available in the public domain would be “strange law,” which suggests that denial of access to publicly available information should be the exception rather than the rule. The logic of the decision can almost certainly be extended to other popular fantasy sport games, as it is unlikely that courts can draw principled distinctions between fantasy baseball and, for example, fantasy football. It is also possible that the majority’s reasoning can be extended to other public domain information, such as works of art whose copyright protection has lapsed, works created by the U.S. government or its agencies, or software and code placed into public domain by its author. It remains to be seen, however, whether other circuit courts will find the Eight Circuit’s expansive holding persuasive, and whether the logic of its opinion will be expanded or curtailed in future litigation.

Mainstream coverage of the Supreme Court decision can be found at the New York Times and the Wall Street Journal

A recent New York Times editorial welcomed the Supreme Court decision as a win for fans and free speech.

Above the Law comments that this decision will encourage more affordable fantasy sports games by removing licensing requirements that previously inhibited new parties seeking to compete in the fantasy game market.

Although supportive of the Eighth Circuit ruling, Mark Conrad of Sports Law Blog was surprised by the Supreme Court decision to deny cert, which he points out leaves unresolved confusion over the right of publicity standard and the nature of its interaction with the First Amendment.

Further discussion of the Eight Circuit decision can be found at Concurring Opinions, Sports Law Blog, and the Silicon Valley Media Law Blog