Leonard No Longer Team Player For Nike—Was He “Home-Towned?”

McManis Faulkner

McManis Faulkner

While the Los Angeles Clippers have not lost on the basketball court since March 8, their superstar Kawhi Leonard has racked up consecutive losses against Nike in an Oregon District Court over the last month of the quarantine.  Last week, Oregon District Court Judge Michael W. Mosman issued an order embodying (and supplementing) his decision from the bench last month in which he granted Nike’s motion for judgment on the pleadings with respect to its ownership of the so-called “Claw Design” logo built around the Clippers small forward.

Leonard, who switched endorsement deals from Nike to New Balance in November, 2018, sued the former in the middle of the NBA Finals in June, 2019, alleging the athletic company unlawfully copyrighted his personal logo.  According to the Clippers star’s complaint, the logo, which features his initials and jersey number stylized as an image of his signature large handprint, was created by Leonard long before entering into his deal with Nike.  According to Nike however, this was “a tale of two images,” one sketched by Leonard and another created by Nike’s “design team” in connection with the parties’ endorsement deal.

On April 22, 2020, Judge Mosman ruled from the bench, siding with Nike and granting its motion for judgment on the pleadings, dismissing Leonard’s claim with prejudice in the process.  The court held that the logo was not “merely a derivative work of [a sketch made by Leonard],” but was, instead, an “independent piece of intellectual property” created “in connection with” the parties’ endorsement agreement.  Less than a month later, the court issued an order supplementing that finding, explaining that, while the initial sketch may have been created by Leonard before entering the Nike contract, the Nike design team “modified” that sketch and put together several different proposals that, through an “iterative” process, created a “new, distinct piece of intellectual property,” separate and apart from the “Leonard Sketch.”  Finally, the court explained, since the logo was used on Nike merchandise, which Leonard wore and endorsed and which Nike sold, its creation not only constituted “activity done ‘in connection with’” the contract, but also the “whole point” of it.  Accordingly, the logo was “indisputably” owned by Nike, per the plain language of the parties’ agreement. 

The court also ruled on Nike’s motion for judgment on the pleadings as to its counterclaims against Leonard, reiterating its order granting the athletic company’s declaratory judgment claim as to copyright ownership over the logo and its breach of contract claim premised on Leonard’s breach of the agreement’s forum selection clause.  The court, however, did not grant Nike’s motion on its copyright infringement claim and one of its breach of contract claims (since there were disputed issues of fact regarding whether Leonard’s prior usage of the logo occurred with encouragement by Nike and because his future use was speculative), on its fraud on the copyright office claim, or on another of its contract claims (since Leonard appeared to have sincerely believed that he owned the rights to the logo when he attempted to register a copyright to it).

The parties have been ordered to file a joint status report describing how the case should move forward, in light of the court’s rejection of the crux of Leonard’s position.  Regardless, unlike last year’s NBA Finals, it looks like even an injury to one of his adversaries won’t bail Leonard out of this unfavorable matchup. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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