Sponsorship and image rights

Concept of image rights

Is the concept of an individual’s image right legally recognised in your jurisdiction?

There is no federally recognised image right, known in the United States as the ‘right of publicity’. At least 30 states, however, have recognised a right of publicity, either through common law or a statutory provision. Typically, the right of publicity gives an individual the exclusive right to exploit his or her name, likeness or identity for commercial purpose. Infringement requires a showing that the defendant exploited the plaintiff’s likeness for a commercial purpose without permission. While defences to infringement can vary by state, a First Amendment defence is available in all jurisdictions.

Commercialisation and protection

What are the key legal considerations for the commercialisation and protection of individuals’ image rights?

Athletes commercialise their publicity rights through licensing agreements. The scope of these licences is determined by contract language, so it is vital that athletes and their representatives clearly define what uses licensees can make of their image, and whether any rights or categories are exclusive to the licensee or prohibited from use.

For example, in player agreements with teams, athletes retain the right to license their names and likenesses to third parties. But athletes also face contractual restrictions, most notably through a league’s player endorsement policy and the morality clauses found in players’ agreements and endorsement contracts.

Sponsorship conflicts may also create roadblocks to licensing publicity rights. For example, former National Football League (NFL) quarterback Colin Kaepernick was reportedly fined US$10,000 by the NFL for wearing Beats by Dre headphones after a game because Bose is the official headphone and headset sponsor of the NFL. Thus athletes, leagues and advertisers must structure their agreements with these conflicts in mind.

How are image rights used commercially by professional organisations within sport?

Athletes enter into licensing agreements with several entities – their league, team, players’ union and third parties – to allow these parties to commercially exploit their images for certain purposes.

In the player’s contract with the team, the player typically grants both the league and the team the right to use his or her name and likeness for promotional purposes, so long as such use is limited to promotion of the league or team itself. For example, in the NFL’s player contract, the player authorises the NFL to ‘use his name and picture for publicity and the promotion of NFL Football, the League or any of its member clubs in newspapers, magazines, motion pictures, game programmes and roster manuals, broadcasts and telecasts, and all other publicity and advertising media’.

Further, players may enter into endorsement contracts with third parties, either individually or through the players’ union’s group licensing programme. Under group licensing programmes, individual players assign their publicity rights to the players’ union, which in turn can license to third parties the names and likenesses of groups of athletes. This provides an efficient way for sponsors to acquire publicity rights from a large number of players. Typical product categories for endorsements may include collectibles, video games and digital products, and apparel such as jerseys, hats and T-shirts. While possible endorsements are wide-ranging, they may be limited by each league’s policies (eg, no hard-liquor sponsorships).

One notable and emerging trend is that businesses are increasingly making unlicensed uses of athletes’ names and likenesses on the internet, in fantasy leagues and other areas. Courts have found that the First Amendment may pre-empt athletes’ image rights in these contexts.

Morality clauses

How can morality clauses be drafted, and are they enforceable?

Courts have long held that morality clauses are enforceable, and courts interpreting these clauses in sports endorsement contracts have accepted the basic premise that they are.

A well-drafted morality clause should identify the conduct that will trigger the other party’s rights and the rights the other party has once the clause is triggered (eg, termination or suspension). Typical triggers involve conduct or accusations that cause the athlete to fall into disrepute in the eyes of the general public, and may include getting arrested for drunk driving, conviction of a felony or behaviour that stands at odds with values of the league, team or sponsor. Sponsors typically seek broad triggers, and athletes typically seek triggers that are narrow and as specific as possible. Players may also bargain for similar rights if their sponsor engages in or is accused of disreputable conduct (eg, unfair or unsafe labour practices). However, morality clauses found in player agreements between athletes and sports leagues are not negotiable on a player-by-player basis, as they are subject to the league’s collective bargaining agreement.

Restrictions

Are there any restrictions on sponsorship or marketing in professional sport?

Each major sports organisation in the United States has rules or restrictions on player endorsements. These policies place restrictions on the entities with which athletes can enter into endorsement deals as well as the manner in which they may do so. For example, the PGA TOUR allows players to enter into sponsorships with casinos and daily fantasy sports companies, but prohibits any sponsorships within the United States with companies whose primary purpose is sports betting. The TOUR allows players to be sponsored by beer, wine and liquor producers, subject to certain restrictions.

Besides gambling and alcohol, other common restrictions include prohibitions on sponsorships from tobacco or marijuana companies, limits on logo usage, and restrictions on the manner in which an athlete endorses a product or service that competes with league or team sponsors.

Law stated date

Correct on

Give the date on which the information above is accurate.

11 August 2020.