Name, Image and Likeness Scouting Report, Week 2: How Did We Get Here? From the Hope Diamond to NCAA v. Alston

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It is well-recognized today that all individuals have the right to control the use of their identity for commercial purposes during their lifetime. This concept is referred to as the “right of publicity.” The right of publicity is an intellectual property right that protects a person against the misappropriation of their name, image and likeness (NIL) and other indicia of personal identity — such as nickname, pseudonym, voice and signature — for commercial benefit by other third parties (and correspondingly provides a person their own right of publicity). However, the application of publicity rights to athletes in general — and college athletes in particular — did not occur overnight. Instead, it has been the product of an evolutionary journey exemplified by three game-changing events: litigation involving Michael Jordan and the Chicago supermarket chain Jewel; litigation by University of Nebraska quarterback Sam Keller against EA Sports; and the United States Supreme Court’s recent NCAA v. Alston decision.

Michael Jordan Wins With the ‘Hope Diamond’ Theory

Among his many accomplishments, Michael Jordan can be thanked for advancing an athlete’s ownership of their personal identity for commercial purposes. When the Chicago Bulls’ basketball legend was inducted into the Basketball Hall of Fame in 2009, Chicago supermarket chain Jewel ran a seemingly innocent congratulatory ad in Sports Illustrated. The ad read: “Jewel salutes #23 on his many accomplishments as we honor a fellow Chicagoan who was ‘just around the corner’ for so many years.” In addition to echoing the sentiment of Jordan fans, the ad included Jewel’s name, logo and slogan “Good things are just around the corner.” Jordan did not appreciate the tribute and sued the Chicago grocery chain, claiming that Jewel had improperly used his identity without permission.1

The trial court in Jordan v. Jewel Food Stores found the ad was protected by the First Amendment as “noncommercial speech” because it did not “propose any kind of commercial transaction.” The judge reasoned that “[t]he reader would see the Jewel page for precisely what it is – a tribute by an established Chicago business to Chicago’s most accomplished athlete.” However, Jordan countered in the court of appeals with what became known as the “Hope Diamond” defense — if Jewel wanted the “Hope Diamond,” the grocery chain had to “buy the whole thing.” Jewel could not just chip a little piece off because if everyone could do that, nothing would be left of Jordan’s publicity rights. He further argued that because the ad enhanced Jewel’s position with its customers, it was in fact commercial speech that was not protected by the First Amendment. Jordan’s perseverance, and the Hope Diamond analogy, resulted in a true game-winning position that was easily understood by both professional and amateur athletes contemplating the value and protection of their publicity rights.

Nebraska Quarterback Scores Upset Video Game Win

The popularity of college football led video game maker Electronic Arts (EA Sports or EAS) to develop a series of popular video games which allowed players to control avatars representing football players from their favorite teams playing simulated games. In the NCAA Football game series, EAS sought to replicate each school’s entire team as accurately as possible. Every player on a school’s real team had a corresponding avatar in the game with the player’s actual jersey number and virtual height, weight, build, skin tone, hair color and home state. EAS also created realistic virtual versions of the actual university stadiums in which the athletes competed during their collegiate careers. The game also added virtual coaches, cheerleaders and fans and incorporated realistic sounds such as earth-shattering tackles and the roars of the crowd.

The 2008 version of the game featured a virtual quarterback for the University of Nebraska that matched all the personal characteristics of the Cornhusker’s starting quarterback Sam Keller. Keller filed a class-action complaint in the Northern District of California objecting to the use of his likeness without permission or compensation to promote the game.2 His complaint asserted that EAS, the NCAA and Collegiate Licensing Company (which holds the licensing rights to the trademarks of the majority of colleges and universities in the United States) violated his right of publicity, as well as the rights of 200,000 to 300,000 current and former college football players, under California law.

EAS argued that the case should be dismissed because video games are entitled to the full protections of the First Amendment “[l]ike the protected books, plays, and movies that preceded them, video games communicate ideas — and even social messages — through many familiar literary devices (such as characters, dialogue, plot, and music) and through features distinctive to the medium (such as the player’s interaction with the virtual world).”3 The District Court refused to dismiss the case, and the Ninth Circuit agreed in a two-to-one ruling that EAS did not have a First Amendment free speech defense against Keller’s right-of-publicity claims.4 Faced with the case moving forward and an unknown potential liability, the litigation settled with a substantial payment to the plaintiffs.5 As a result, for the very first time Keller and each class member, including both current and former NCAA players, received substantive compensation for their publicity rights. This set the stage for further evolutionary advances in college athletes’ ability to receive payment for their NIL rights which would come only a mere 7 years later.

NCAA vs. Alston: A Supreme Court Antitrust Ruling Foreshadows Further NIL Evolution For College Athletes

The United States Supreme Court’s unanimous Alston decision in June 20216 was an antitrust decision limiting the NCAA’s collective ability to restrict in-kind educational benefits schools may make available to student athletes.7 The decision in Alston is widely believed to have provided a clear indication that if the Court were to examine a similar NCAA ban on athletes’ NIL rights, that too would likely be found to violate antitrust law. While the Alston decision was not about NIL, it appears to have been the final tipping point for the most significant evolutionary change affecting college athletes’ NIL rights.

Prior to Alston, while in college, student athletes were strictly prohibited by NCAA rules from profiting from exercising their publicity rights.8 Within days of the Alston decision, the NCAA announced the suspension of all NCAA NIL rules for all incoming and current student athletes in all sports.9 The new announcement includes temporary guidelines while the NCAA works with Congress to adopt uniform federal legislation or until new NCAA rules are adopted. These guidelines generally allow an athlete to engage in NIL activities consistent with the law of the state where the school is located (to the extent there is any state regulation or requirements to be observed by an individual), to use a professional service provider (e.g., agent, tax advisor, marketing consultant, attorney, etc.) to help navigate the NIL playing field, and to report NIL activities as required by state law, their school or conference.

Because the NCAA is a key NIL player under the current student-athlete NIL paradigm, we will examine the new interim NCAA regulatory playing field in more detail next week.

FOOTNOTES

  1. Jordan v. Jewel Food Stores, Inc..851 F. Supp. 2d 1102 (N.D. Ill. 2012) rev’d 743 F.3d 509 (7th Cir. 2014).
  2. Keller v. Elec. Arts, Inc., No. C 09-1967 CW, 2010 WL 530108 (N.D. Cal., Feb. 8, 2010).
  3. Brown v. Entm’t Merchs. Ass’n, 131 S. Ct. 2729, 2733 (2011).
  4. In re: NCAA Student-Athlete Name & Likeness Licensing Litigation, 724 F.3d 1268, 1279 (9th Cir. 2013).
  5. NCAA settles with former athletes, ESPN (Jun. 9, 2014)
  6. National Collegiate Athletic Association v. Alston, No. 20-512.
  7. Supreme Court Decides National Collegiate Athletic Association v. Alston | Publications | Insights | Faegre Drinker Biddle & Reath LLP
  8. Despite the NCAA’s longstanding prohibitions on commercial exploitation of an athlete’s NIL, the NCAA Board of Governors began the process of examining changes to create flexibility in NIL rules in 2019 after California and other states passed or were considering NIL legislation. https://www.ncaa.org/about/resources/media-center/news/board-governors-starts-process-enhance-name-image-and-likeness-opportunities
  9. NCAA adopts interim name, image and likeness policy; NCAA Interim NIL Policy

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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