Three Point Shot - May 2012

by Proskauer Rose LLP

Selling the Shirt off Tim Tebow’s Back Requires a License

Quarterback Tim Tebow garners a great deal of media attention, and as a result, he sells a lot of jerseys. So in March, when Tebow was traded to the New York Jets, and into the nation's largest media market, two of the world's most successful apparel companies took note of the revenue implications. Seeking to take advantage of a surge in Tebowmania, Reebok International Ltd. ("Reebok") immediately kicked into gear, preparing thousands of Tebow t-shirts and jerseys bearing his new team’s name. Nike, Inc. and Nike USA, Inc. ("Nike") responded quickly with an action filed in the United States District Court of the Southern District of New York. In its complaint Nike alleged that Reebok was unlawfully selling apparel bearing Tebow's name and associated intellectual property. Underlying the dispute is the interface between certain NFL-related license rights held by Reebok and those held by Nike.

In order to sell a product such as an NFL player jersey or a t-shirt that bears a player number, player name and team logo, a company must first have the right to use both the intellectual property of the National Football League (the "NFL") or an NFL team ("NFL Marks") and the name and number of an NFL player ("Player Marks"). The rights related to NFL Marks must be obtained through the NFL, and rights to use Player Marks can be obtained either directly from the player or through a group license from NFL Players Incorporated ("Players Inc.").

Although Reebok had a group license agreement with Players Inc., that license agreement expired prior to March 1, 2012, at which time Nike became the new owner of the group license. Nike also alleged that it has had an "exclusive right to use Tebow's name in connection with, among other products, athletic and casual apparel" since March 24, 2010. Although the group license was picked up by Nike, Reebok retained the right to sell products bearing NFL Marks until March 31, 2012. But, Nike alleged, this sell-off right alone did not allow Reebok to use NFL Marks and Player Marks, including Tebow's name, on the same product.

In its motion for a temporary restraining order and preliminary injunction against Reebok, Nike argued that if Reebok was allowed to continue to sell the products, the "unique consumer demand" arising from Tebow's trade would be satisfied or substantially reduced, and the opportunity for Nike to reap the benefits of this unique demand would be lost forever. The court agreed, and issued a temporary restraining order and show cause order against Reebok with respect to items that the court referred to as "Unauthorized Tebow Products." The court ruled that Reebok was restrained from manufacturing, taking orders and authorizing the delivery of Unauthorized Tebow Products. Furthermore, Reebok was ordered to advise all retailers and distributors carrying such products that they could no longer be sold because of the injunction, offer to repurchase the products and recall Unauthorized Tebow Products that were "currently in distribution channels controlled by Reebok[.]"

Reebok challenged Nike's arguments by claiming that it had received oral authorization to use Tebow's intellectual property and that its 150 day post-termination sell-off rights under its group license agreement with Players Inc., gave Reebok the right to sell the Tebow-related items. Nike responded by offering evidence that the oral authorization was not valid, and by arguing that Reebok's sell-off right only refers to products that were manufactured during the term of the Agreement which ended on February 28, 2012 (at which time Tebow was still a member of the Denver Broncos).

The court's temporary restraining order was followed by a Preliminary Injunction Order on April 5, 2012. Subsequently, after a settlement was reached between the parties, a Final Judgment was entered into by Nike and Reebok to close the matter, whereby Reebok agreed to abide by the terms of the temporary restraining order as described above, and no costs or attorney fees were awarded to either party.

This case was still ongoing when Nike unveiled its new NFL team uniform design on April 3, 2012, but the Final Judgment was entered far in advance of Nike making NFL jerseys available to the public via pre-orders. If Tebowmania continues on the same course, the Nike swoosh is likely to swamp the Reebok slash with no problem.

I See Your True Colors Shining Through

Here at Three Point Shot Newsletter headquarters, we take a very broad view of what constitutes a sport worth reporting on.

Motorcycling is a sport, right?

Intellectual property rights in sports-related items is something we report on, right?

Stay with me now….

The Public Intelligence blog recently reported on a confidential memo circulated by the Los Angeles Office of the Federal Bureau of Investigation, regarding a trademark registration obtained by the Vagos Outlaw Motorcycle Club. According to the leaked memo, the Club (which is referred to in the memo as an “outlaw motorcycle gang”) obtained the registration in 2010 for its club logo, or “cuts” (also sometimes referred to as its “colors”).

The memo has a serious purpose: warning law enforcement agencies that the Club is passing out the patches containing the ® registration mark on a controlled basis to new members as they are vetted by the Club leadership. According to the memo, the purpose of obtaining the trademark registration is "to prevent law enforcement agencies from inserting undercover officers into their organization." Any undercover agents attempting to infiltrate the Club without a patch containing the trademark registration mark "may be placing themselves in danger," says the memo.

But the FBI memo further suggests that the Club leadership is of the view that obtaining a trademark registration for its "cuts" will deter undercover officers from wearing the patch, presumably because the FBI would fear a trademark infringement lawsuit by an outlaw motorcycle gang.

When interviewed by Wired Magazine regarding the posting of the FBI memo, the Club's attorney, Joseph Yanny, commented: "It's the most ridiculous thing I've ever heard in my life," and the Bureau must have come to its conclusions about the trademark registration by "interviewing clowns in Vegas."

Yanny says that the Club's reason for obtaining the trademark registration is the same reason that any other sports club might have, that is "to protect the intellectual property, to prevent it from being knocked off by others, and improper use."

The Club has an official Web site, but a while back, when we went to check it for more information about this controversy, all we got was a "bandwidth limit exceeded" message. Could this entire story have been a crafty ploy on the part of the FBI to thwart the Club's Web outreach, by generating publicity about the Club's trademark registration, and, in turn, excessive hits on their Web site by curious intellectual property mavens, resulting in its unavailability?

If so, well played, FBI, well played.

Pretty Boy's Right of Publicity Lawsuit Ain't Pretty, Says World Wrestling Entertainment

Wrestler "Pretty Boy" Somers earned his ring name for his curly blonde locks when he appeared in American Wrestling Association ("AWA") events in the 1970s and '80s. He often formed a tag team with "Playboy" Buddy Rose; they were successors, at least in concept and hairstyle, to the famous "Gorgeous George" Wagner. Pretty Boy spent years of his life developing and maintaining the Pretty Boy persona, which is known and loved worldwide by professional wrestling fans. Or so he says, in the complaint he filed in November 2011 against World Wrestling Entertainment ("WWE"). He also names as defendants WWE Chairman and CEO Vincent McMahon, and his wife Linda McMahon, the former CEO of WWE.

In the complaint, filed in Georgia state court in his real name, Douglas Duane Somerson alleges invasion of privacy, unauthorized use of intellectual property, unjust enrichment, and violation of the Georgia Uniform Deceptive Trade Practices Act. Somerson claims that the WWE violated his rights through sales of DVDs containing his likeness, books, dolls and other commercial products, without having obtained the right to do so.

After removing the action to federal court, the WWE and the McMahons individually filed motions to dismiss, which are now pending. In their moving papers, the McMahons supply some context to Somerson's claims. According to the McMahons (and the WWE as well, in its concurrently filed moving papers) while Somerson never competed in the WWE, he appeared in AWA events that were recorded. The AWA ultimately folded, and the WWE eventually acquired the recordings, including applicable copyright rights, in 2003.

The McMahons argue that Somerson's complaint is based on the mistaken conclusion that the former wrestler has the sole legal right to exploit his name and likeness. He has failed to claim, they assert, that the recordings in question were made without his knowledge and consent. Taking a swipe at his career, the McMahons assert that Somerson's bouts were included on the DVDs that they admittedly have been distributing because he was in bouts with Shawn Michaels, a former AWA star who became "one of WWE's most popular and celebrated wrestlers." WWE released the DVDs to exploit Michaels' "popularity and success." Ooh, bodyslam.

The McMahons and the WWE also claim that any footage of Somers is used as part of a truthful retelling of past events, which is properly the subject of public interest and fully protected by the First Amendment; that the privacy and publicity claims made by Somers are preempted by the Copyright Act, and that some of the claims are barred by Georgia’s statute of limitations. The defendants also assert that Somerson’s complaint is deficient under federal pleading standards requiring specificity of claims.

Somerson's reply smacks back with the argument that the assertions of the McMahons and the WWE regarding copyright ownership of the DVDs, as well as other assertions, are unsupported by any evidence.

Developments since the filing of Somerson's lawsuit may not bode well for his ultimate success in the litigation. We previously reported on a similar lawsuit filed in 2010 by Martha Hart, the widow and executor of the estate of WWE wrestler Owen Hart, who died in 1999 in an accident during a WWE event. The Hart litigation also included claims of violation of the right of publicity and unjust enrichment. In a March 28 order, as amended, the court in Hart v. World Wrestling Entertainment, Inc., dismissed Hart's claims against the McMahons individually and dismissed many of the claims against the WWE, including, most notably, the right of publicity and unjust enrichment claims.

We should learn soon if the Somerson versus WWE/McMahon matchup will be a replay of Hart versus WWE/McMahon.



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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