Today we bring you Part Two of an article authored by our partner Ms. Emily Bayton and published by Law360 on October 16, 2012.  You can check out Part One of the article here:

As an intellectual property lawyer and avid sports fan, I’m always interested in a case involving the legal intersection between sports and IP. There are plenty of IP issues facing the sports industry. Like any other industry, it’s driven by money, much of which is generated from IP. From licensing of team names and logos, to broadcast and sponsorship rights, to merchandise deals, IP plays a large role in the value of the sports industry.

A recent article by the World Intellectual Property Organization estimates global revenue from sponsorships, gate revenues, media rights fees to reach $133 billion in 2013. This figure does not account for revenue generated from the sale of athletic footwear and apparel, estimated at $300 billion worldwide.[1]

It’s no surprise then that athletes, teams and sports organizations go to great lengths to protect their IP. This article provides a summary of current IP issues facing the sports world and the potential impact on the multibillion-dollar industry.

Harsh Reality about “Reality”

Another hot topic in the world of sports is rights of publicity. Rights of publicity relates to one’s ability to control the commercial use of his or her identity. In 2011, NBA star Gilbert Arenas (currently in a contract dispute and considering playing in China for the 2012-2013 NBA season) sued Shed Media, producer of the reality show "Basketball Wives: Los Angeles" for various causes of action, including misappropriation of likeness and rights of publicity. Arenas v. Shed Media US Inc., CV 11-05279 (C.D. Cal. 2011). Basketball Wives features a cast of women who have or have had romantic relationships with professional basketball players. Id. at *2.

Arenas sued Shed over its casting of his ex-fiance on the show. Arenas sought injunctive relief to enjoin Shed from using his trademarks in association with the show, and if his ex-fiance appeared in the show, to prevent Shed from using “Basketball Wives” or any other term that would suggest affiliation with basketball players in the title, and from suggesting in any way any affiliation with basketball players. Id. at *6-7.

Under California common law, to demonstrate that one’s right of publicity was violated, you must demonstrate: (1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of one’s name or likeness to one’s advantage; (3) lack of consent; and (4) resulting injury. Id. at *7.

The court first addressed the issue of whether Arenas’ ex-fiance’s “likely on-air conversations about Arenas (and any future promotional materials relating thereto”) constitute the use of Arenas’ identity as a celebrity. The court ruled that it does. The court also held that it was highly unlikely that Arenas’ ex-fiance would refrain from discussing Arenas or her relationship with Arenas, and therefore, Shed was likely to appropriate from the use of Arenas’ identity in connection with the show. Id.

Despite these findings, the court held that Shed had asserted two valid defenses, both stemming from the First Amendment. First, the court held that Shed offered proof that the show's value does not “derive primarily” from Arenas' celebrity status. Id. at *14. The court found that any references to Arenas would be “incidental to the show’s plot as a whole.” Id.

Shed also offered a public interest defense, stating “no cause of action will lie for the publication of matters in the public interest, which rests on the right of the public to know and the freedom of the press to tell it.’” Id. at *16. Arenas argued that discussion of his family life is not sufficiently related to his celebrity status “to render [the show]’s use of his identity a matter of public concern.” The court disagreed with Arenas based on his own exploitation of his personal life through Twitter and other means, and dismissed Arenas' right of publicity claim and his motion for preliminary injunction.

Knock-Out Punch

Companies have become increasingly aggressive with sending demand letters and filing suit to stop the piracy of sporting events. J & J Sports Prods. Inc., the exclusive commercial distributor of the broadcast rights for certain boxing matches, filed over 700 lawsuits in 2011 alone. See, e.g., J & J Sports Prods. Inc. No. 1:10-cv-4258-WSD, 2011 U.S. Dist. LEXIS 25453 (N.D. Ga. March 14, 2011).

Although businesses are required to obtain a license from J & J Sports to broadcast the boxing matches events to patrons, investigation by J & J revealed that many businesses failed to do so. In an effort to obtain information, J & J sends investigators to various establishments that have not paid the required license fee but are promoting the bout. The investigator then monitors the establishment, determines how many patrons are viewing the fight, and determines how much money is being made from the broadcast. These tactics have helped J & J to gather the information necessary to file suit for damages and lost profits based on the alleged interception and transmission of these events. The reason for being so aggressive is simple — J & J must protect its revenue stream.

Put on Your “Game” Face

In Hart v. Elec. Arts., Inc., plaintiff Ryan Hart, a former college football player at Maryland, brought a putative class action against Electronic Arts, the producer of a videogame series called NCAA Football. 808 F. Supp. 2d 757 (D.N.J. 2011). In his complaint, Hart alleged that Electronic Arts misappropriated his — and various other college football players’ — likeness and identity for a commercial purpose in connection with its video games. Electronic Arts filed a motion for summary judgment on the grounds that the First Amendment barred Hart's claims under New Jersey law for misappropriation of his likeness.

The court sided with Electronic Arts and held that the video game publisher may use college athletes' likenesses in its videogames because "there are sufficient elements of [Electronic Arts'] own expression ... that justify the conclusion that its use of the image is ... entitled to First Amendment protection." Id. For this reason, the court held that the First Amendment was a defense to Hart's right of publicity claim and granted Electronic Arts' motion for summary judgment.

8) Roll (Over) Tide

In one of the most eagerly anticipated decisions of this year, the Eleventh Circuit Court of Appeals issued its decision in the trademark infringement case between sports artist Daniel Moore and the University of Alabama. University of Alabama Board of Trustees v. New Life Art Inc., 05-00585-CV-UNAS-RBP-W (11th Cir. June 11, 2012). The University of Alabama sued Moore for trademark infringement and related claims based on his portrayal of Alabama uniforms in paintings and prints.

For over three decades, Moore painted football scenes featuring the Crimson Tide. Moore’s paintings are very popular and have been reproduced as prints, calendars, on mugs and other articles. Id. at *3. During the first several years of painting these images, Moore had no relationship with Alabama. Id. From 1991 to 1999, Moore entered into several licensing agreements with Alabama to produce and market certain items.

In 2002, Alabama told Moore that he needed permission to depict the school's uniforms because they are trademarks. Moore disagreed and argued that he did not need permission because the uniforms were being used to “realistically portray historical events.” Id. Despite raising its objection, Alabama continued to sell Moore's unlicensed calendars in its campus stores and displayed several of Moore's unlicensed paintings.

The parties couldn’t reach an agreement, and in 2005 the University of Alabama sued Moore for breach of contract, trademark infringement and unfair competition. The district court held that the prior licensing agreements did not require that Moore receive permission to portray the university’s uniforms because they were not included in the definition of “licensed indicia.”

It also found that the university’s colors had some secondary meaning “but were not especially strong marks on the trademark spectrum.” Third, it held that Moore’s depiction of the uniforms in his paintings and prints was protected by the First Amendment and constituted a fair use but that Moore’s depiction of the uniform on mugs, calendars and other “mundane products” was not protected by the First Amendment and was not a fair use. Id. at 7.

The Eleventh Circuit agreed that Moore’s depiction of the university’s uniforms in his unlicensed paintings, prints and calendars was not prohibited by the parties’ prior licenses. The court also held that paintings, prints, and calendars “do not violate the Lanham Act because these artistically expressive objects are protected by the First Amendment." Id. at 32.

Because the uniforms featured in the paintings are “artistically relevant to the underlying work, Moore never explicitly misled consumers as to the source of the items, and the interests in artistic expression outweigh the risk of confusion as to endorsement.” Id. at 32-33. Regarding the other products at issue in the dispute, the court found that record lacked evidence regarding Moore's portrayal of Alabama’s uniforms on mugs and other mundane items. Therefore, the court concluded that disputed issues of fact remained with regard to these items.

Sports, IP and money are not mutually exclusive. As long as consumers are willing to shell out big bucks for tickets, merchandise, and other sports-related items, players, teams and organizations will continue to use the legal avenue to protect their IP rights.