POSTED BY Rajat Bhardwaj
The recent denial of Motion to Dismiss of National Collegiate Athletic Association (NCAA) Student-Athlete Name and Likeness Licensing Litigation by District Judge Claudia Wilken marked a drastic change in thought on compensating student athletes. A group of twenty-five current and former college athletes pursued two claims against the NCAA: four pursued a right of publicity claim for misappropriation of their names, images, and likeness; and twenty-one pursued an antitrust claim for NCAA conspiring with Electronic Arts Inc. (EA) and Collegiate Licensing Company (CLC) to restrain competition in the marker for commercial use of their names, images, and likeness. The most recent dismissal only addressed the latter under the Sherman Antitrust Act, 15 U.S.C. §1.
This action stems from May 2011 when the Plaintiff’s filed the second Consolidated Class Action Complaint (2CAC). They alleged that the NCAA required student athletes to sign forms relinquishing all rights to commercial use of their images, including after they graduated and no longer subject to NCAA regulations. NCAA subsequently relied on these “misleading” forms and sold and licensed the student-athletes names, images, and likeness to third parties such as EA and CLC, who then made profit from these agreements. In September 2012, the Plaintiffs narrowed their claims specifying the class of students to include whose names, images, and likeness were featured in game footage or videogames; emphasizing damages from review generated in live television broadcasts; and identifying specific markets: “Division I college education market where colleges and universities compete to recruit the best student-athlete” and the “market for the acquisition of group licensing rights for the use of student-athletes’ names, images and likenesses in the broadcasts or rebroadcasts of Division I basketball and football games and in videogames featuring Division I basketball and football.”
This was followed by a third Consolidated Class Action Complaint (3CAC) which maintained the Plaintiffs’ price fixing and group boycott claims; added the class specification; and included six current NCAA football players to the complaint. In September 2013, EA and CLC agreed to a settlement with Plaintiffs but the NCAA claim remained affective. The court recently denied the motion to dismiss the complaint on three grounds.
First the court recognized the Plaintiffs’ theory alleges that NCAA’s prohibition of monetary compensation on student athletes hinders competition in the market for Division I student-athletes which would otherwise prevail in a competitive market. Although the court recognized tradition of amateurism in college sport, it asserted that this does not bar students from receiving monetary compensation for commercial use of their names, images, and likeness.
Second, considering the allegations in 3CAC most favorable to the Plaintiff, the court suggested that it is plausible broadcast footage, especially stock footage and broadcast footage sold to advertisers, was used primarily for commercial purposes. Thus, the First Amendment does not dismiss Plaintiffs’ claims related to broadcasting.
Finally, NCAA argued that the Copyright Act preempts the application of right of publicity to broadcast college football and basketball games. However the court noted that the right of publicity claims of the Plaintiff was notably different than those protected by Copyright Law since they do not actually own any game footage described in the complaint. On the contrary, the Plaintiffs’ seek the right to license the commercial use of their names, images, and likeness in certain broadcast footage. Furthermore, federal courts have emphasized, “Intellectual Property rights do not confer a privilege to violate the antitrust laws.” Thus, the Copyright Act does not affect the underlying claims because they are based on injury to competition and not on misappropriation.
The Plaintiffs and NCAA have not yet engaged in settlement talks but this case may carry a risk of tens of millions to even billions of dollars. Where one side of the continuum maintains lack of compensation to be essential to maintain integrity of the amateur culture of college sports, the other asserts fairness in providing athletes with compensation, beyond college scholarship, for using the students’ names, images, and likeness. If settlement talks do not commence soon, we are sure to see an energetic debate where tradition clashes with equity.
It is clear that NCAA is generating significant revenue, $871 million in revenue for 2011-2012 with 81 percent from television and marketing rights fees, by utilizing the likeness of their athletes. A duty is owed to these athletes to ensure that at least a certain level of consideration is allotted to them for their service beyond a college scholarship. Not all student athletes are able to ensure a decent standard of living after they graduate and some come from fairly unprivileged backgrounds. It is important to look out for their futures, as it is their hard work and dedication that has provided the NCAA with its level of success.