Student Athletes And Compensation For Likeness

This article explores some key issues relating to student athlete's rights to their likeness.

Player Branding

'Player branding' is a major issue in today's market. With a nearly insatiable market for player-branded paraphernalia and apparel, popular player nicknames would presumably be an opportunity for players to cash in on their fame and success.

However, the NCAA amateurism rules largely prevent such financial gain. Specifically, the NCAA prohibits a student athlete from participating in collegiate sports if he or she '[a]ccepts any remuneration for or permits the use of his or her name or picture to advertise, recommend or promote directly the sale of a commercial product.' Academic & Membership Affairs Staff, Nat'l Collegiate Athletic Ass'n, NCAA Division I Manual '12.5.2.1 (2013). Instead, the NCAA retains exclusive rights to use and license the athlete's 'name or picture' for commercial gain. See, Form 13-3A: Student Athlete Statement ' NCAA Division I (2013).

O'Bannon

The NCAA's exclusive rights have been on the hot seat of judicial scrutiny for the last couple of years, with a recent Ninth Circuit Court of Appeals decision largely upholding them in a high-profile opinion that issued on Sept. 30, 2015.

In O'Bannon v. NCAA, the Ninth Circuit held that, although the NCAA was not exempt from antitrust laws, its amateurism requirement passed muster. See, 2015 U.S. App. LEXIS 17193 (9th Cir. Sept. 30, 2015).

The decision was largely a reversal of the underlying district court decision that had previously held that student athletes are entitled to compensation when their likenesses are used commercially. See, O'Bannon v. Nat'l Collegiate Athletic Ass'n, 7 F. Supp. 3d 955, 955 (N.D. Cal. Aug. 8, 2014). The O'Bannon case stemmed from an Electronic Arts (EA) video game that depicted avatars of former UCLA player Ed O'Bannon and other college basketball players without providing compensation to the athletes. In 2009, O'Bannon sued the NCAA, EA, and the Collegiate Licensing Company, arguing that the NCAA's amateurism rules were an illegal restraint of trade under the Sherman Act, 15 U.S.C. '1. The district court agreed and held that the NCAA's rules were unlawful, and imposed a plan that would have allowed schools to provide deferred athletes compensation of $5,000 or more per year. The Ninth Circuit affirmed that the NCAA was bound by antitrust laws, but rejected the lower court's order that college athletes could receive deferred licensing payments from schools for the use of their name, image, or likeness. At the time of this article, representatives from both parties have declined to state whether they will seek en banc review or certiorari to the U.S. Supreme Court.

Thus, at least for now, student athletes are not entitled to receive compensation for use of their likeness. However, trademark registrations may provide a means for the athletes to reserve rights in their name at a minimum and to possibly receive compensation if third parties infringe those rights.

Hurdles in Obtaining'Trademark Registrations

The world of trademark registrations is especially murky for college athletes due to: 1) the 'use in commerce' requirement; and 2) the 'bona fide' intent requirement for '1(b)' intent-to-use applications.

An application for trademark protection must allege use of the mark in commerce, or intent to use. To be 'used in commerce,' the mark 'is placed in any manner on the goods or on their containers or the displays associated therewith ' [and] the goods are sold or transported in commerce.' 15 U.S.C. '1127 (2012). For services, the mark should be 'used or displayed in the sale or advertising of services.' Id. Applicants are not permitted to engage in 'banking' or 'warehousing' of marks. Id. When an application for trademark protection is based on 'intent to use,' the applicant must prove actual in commerce use within approximately the following three years.

When relying on an intent-to-use application, the applicant's intent must be 'bona fide,' which is measured by 'objective factors.' S. Rep. No. 100-515, at 23 (1988). Typically, the USPTO's Trademark Trial & Appeal Board looks for documentary evidence, and in the absence thereof, has cancelled challenged trademark registrations. See, e.g., Spirits International B.V. v. S.S. Taris Zeytin, 99 U.S.P.Q.2d 1545 (T.T.A.B. 2011); Honda Motor Co., Ltd. v. Friedrich Winkelmann, 90 U.S.P.Q.2d 1660 (T.T.A.B. 2009).

While most commercial enterprises have little trouble meeting the use-in-commerce requirements, NCAA athletes face a unique dilemma in that they are prohibited from getting involved in sponsoring commercial products. However, a student athlete might find a creative solution to the problem by relying on the intent-to-use option. Typically, most trademark-seeking athletes will have moved beyond the NCAA's rules and into professional sports within three years of their initial interest in obtaining a trademark. Importantly, the NCAA does not prevent a student athlete from having a 'bona fide' interest in using his or her likeness in the future. Thus, a student athlete could take the necessary steps to plan on using his or her likeness as a trademark, without actually starting use. Such planning could be in the form of consulting with a merchandising company, or starting a personal website with the intent to sell merchandise after the individual is no longer bound by the NCAA's rules.

Another creative solution involves third-party licensing. A student athlete could license his trademark rights to a third party, so long as the agreement did not result in compensation while the athlete is bound by the NCAA's rules. The third party could then commercialize the athlete's nickname and file for trademark protection, with the understanding that the license would terminate upon the athlete's exit from school, reverting right to use the trademark back to the individual. This scheme is exactly the one that Johnny Manziel employed during his days at Texas A&M, when his family started a company, JMAN2 Enterprises (JMAN2), that filed for the 'Johnny Football' trademark. JMAN2 also eventually filed suit when the 'Johnny Football' mark was used by an unrelated t-shirt company selling 'Keep Calm and Johnny Football' shirts.

Why Registrations Are'Gaining Popularity

Student athlete trademark applications are rising in frequency for two related reasons.

First, by securing the trademark registrations to phrases and nicknames associated with themselves, the players lock them down in the USPTO, preventing unscrupulous companies from beating the athlete to the punch and obtaining the registration (and, ergo, claiming exclusive rights to sell merchandise bearing the mark). Indeed, the marketplace is replete with so-called 'trademark poachers' who rush to obtain registrations for athlete's nicknames, or who sell unauthorized merchandise. At least one company tried to beat Johnny Manziel to the USPTO and applied for 'Johnny Football,' albeit unsuccessfully. At the time this article was authored, a search for LSU running back and Heisman hopeful Leonard Fournette results in t-shirts bearing phrases like 'South East Beast,' a nickname for Fournette. Of course, this mark is not currently registered, allowing any enterprising party to profit off the slogan and Fournette's popularity. These examples underscore the importance of securing trademark rights.

Trademark applications, and trademark interest in general, also are rising because they potentially create a 'loophole' around the NCAA amateurism rules. After JMAN2 settled the trademark infringement lawsuit stemming from 'Keep Calm and Johnny Football' shirts, the NCAA had to decide how to handle proceeds from this litigation. The NCAA ruled in 2013 that student athletes may keep damages earned from trademark litigation, even if the athlete is a student at the time. The NCAA added in its initial declaration to the university that such a ruling certainly does not mean a student-athlete can sue an individual ' say a booster of his school ' with the intent of the defendant then channeling money to the student-athlete via a schemed lawsuit and ensuing payout.

In an article published in the Houston Chronicle, Shane Hinckley, Texas A&M's vice president for business development, clarified: 'The NCAA specifically said Manziel has a right to keep any winnings from a civil proceeding as a private entity, but if it was an orchestrated event enabling a cash flow to the student-athlete, that would be a violation of NCAA rules.' See, 'Manziel Can Keep Earnings from Trademark Suit,' Houston Chronicle, Feb. 27, 2013. Of course, it will be up to the NCAA to determine whether any future 'infringers' are bogus, but the Manziel decision certainly does nothing to discourage trademark registration efforts.

What's Next

All eyes will stay focused on the courts as the clock ticks on efforts to seek en banc rehearing or certiorari on the O'Bannon decision. Meanwhile, public consensus appears to be shifting towards supporting some type of compensation for athletes, particularly in light of some public relations concerns for the NCAA.

For example, some commentators have suggested that the NCAA's stance on amateurism is hypocritical, as college sports generate billions of revenue for the NCAA and college athletic departments. In one year, the NCAA generated $700 million for itself by selling the rights to the 'March Madness' tournament. Curtis Eichelberger, 'NCAA Play in March Proving Madness Without College Profit,' Bloomberg (Mar. 20, 2013). In August 2013, the NCAA stopped selling individual player jerseys, with NCAA President Mark Emmert admitting that the optics were problematic. Meanwhile, some NCAA athletes have reported that they were too poor to buy food. See, e.g., Jeremy Fowler, 'Ole Miss' Bo Wallace: Shabazz Napier Was Right, Players Go Hungry At Night,' CBS Sports Online (July 17, 2014).

These headlines arguably create the perfect storm for a public mandate for change. But while we all wait to see how it plays out in the courts and within the NCAA, the USPTO likely will continue to be an unorthodox, but helpful, resource for student athletes.

Amanda Hyland is an attorney with Taylor English Duma LLP in Atlanta. She counsels clients on a variety of intellectual property matters, including trademark registrations. She may be reached at [email protected].

In the last few years, every college football fan became familiar with 'Johnny Football,' 'The Honey Badger,' and 'Famous Jameis.' These recognizable names are not only associated with Heisman-quality talent, but also with the new world of student athlete trademark registrations.

In 2014, Mississippi State University quarterback Dak Prescott applied for a trademark on his name, along with 'Dak Attack' and 'Who Dak.' In August 2015, Ohio State University running back Ezekiel Elliott applied for five trademarks, including applications for his nicknames 'Zeke' and 'Eze.'

On Sept. 30, 2015, the Ninth Circuit Court of Appeals largely upheld the amateurism regulations imposed by the National Collegiate Athletic Association (NCAA), preventing student athletes from receiving compensation (other than tuition credit) for use of their likeness. This decision reaffirmed the status-quo, but also made trademark registrations more appealing than ever.

This article explores some key issues relating to student athlete's rights to their likeness.

Player Branding

'Player branding' is a major issue in today's market. With a nearly insatiable market for player-branded paraphernalia and apparel, popular player nicknames would presumably be an opportunity for players to cash in on their fame and success.

However, the NCAA amateurism rules largely prevent such financial gain. Specifically, the NCAA prohibits a student athlete from participating in collegiate sports if he or she '[a]ccepts any remuneration for or permits the use of his or her name or picture to advertise, recommend or promote directly the sale of a commercial product.' Academic & Membership Affairs Staff, Nat'l Collegiate Athletic Ass'n, NCAA Division I Manual '12.5.2.1 (2013). Instead, the NCAA retains exclusive rights to use and license the athlete's 'name or picture' for commercial gain. See, Form 13-3A: Student Athlete Statement ' NCAA Division I (2013).

O'Bannon

The NCAA's exclusive rights have been on the hot seat of judicial scrutiny for the last couple of years, with a recent Ninth Circuit Court of Appeals decision largely upholding them in a high-profile opinion that issued on Sept. 30, 2015.

In O'Bannon v. NCAA, the Ninth Circuit held that, although the NCAA was not exempt from antitrust laws, its amateurism requirement passed muster. See, 2015 U.S. App. LEXIS 17193 (9th Cir. Sept. 30, 2015).

The decision was largely a reversal of the underlying district court decision that had previously held that student athletes are entitled to compensation when their likenesses are used commercially. See , O'Bannon v. Nat'l Collegiate Athletic Ass'n, 7 F. Supp. 3d 955, 955 (N.D. Cal. Aug. 8, 2014). The O'Bannon case stemmed from an Electronic Arts (EA) video game that depicted avatars of former UCLA player Ed O'Bannon and other college basketball players without providing compensation to the athletes. In 2009, O'Bannon sued the NCAA, EA, and the Collegiate Licensing Company, arguing that the NCAA's amateurism rules were an illegal restraint of trade under the Sherman Act, 15 U.S.C. '1. The district court agreed and held that the NCAA's rules were unlawful, and imposed a plan that would have allowed schools to provide deferred athletes compensation of $5,000 or more per year. The Ninth Circuit affirmed that the NCAA was bound by antitrust laws, but rejected the lower court's order that college athletes could receive deferred licensing payments from schools for the use of their name, image, or likeness. At the time of this article, representatives from both parties have declined to state whether they will seek en banc review or certiorari to the U.S. Supreme Court.

Thus, at least for now, student athletes are not entitled to receive compensation for use of their likeness. However, trademark registrations may provide a means for the athletes to reserve rights in their name at a minimum and to possibly receive compensation if third parties infringe those rights.

Hurdles in Obtaining'Trademark Registrations

The world of trademark registrations is especially murky for college athletes due to: 1) the 'use in commerce' requirement; and 2) the 'bona fide' intent requirement for '1(b)' intent-to-use applications.

An application for trademark protection must allege use of the mark in commerce, or intent to use. To be 'used in commerce,' the mark 'is placed in any manner on the goods or on their containers or the displays associated therewith ' [and] the goods are sold or transported in commerce.' 15 U.S.C. '1127 (2012). For services, the mark should be 'used or displayed in the sale or advertising of services.' Id. Applicants are not permitted to engage in 'banking' or 'warehousing' of marks. Id. When an application for trademark protection is based on 'intent to use,' the applicant must prove actual in commerce use within approximately the following three years.

When relying on an intent-to-use application, the applicant's intent must be 'bona fide,' which is measured by 'objective factors.' S. Rep. No. 100-515, at 23 (1988). Typically, the USPTO's Trademark Trial & Appeal Board looks for documentary evidence, and in the absence thereof, has cancelled challenged trademark registrations. See, e.g. , Spirits International B.V. v. S.S. Taris Zeytin , 99 U.S.P.Q.2d 1545 (T.T.A.B. 2011); Honda Motor Co., Ltd. v. Friedrich Winkelmann , 90 U.S.P.Q.2d 1660 (T.T.A.B. 2009).

While most commercial enterprises have little trouble meeting the use-in-commerce requirements, NCAA athletes face a unique dilemma in that they are prohibited from getting involved in sponsoring commercial products. However, a student athlete might find a creative solution to the problem by relying on the intent-to-use option. Typically, most trademark-seeking athletes will have moved beyond the NCAA's rules and into professional sports within three years of their initial interest in obtaining a trademark. Importantly, the NCAA does not prevent a student athlete from having a 'bona fide' interest in using his or her likeness in the future. Thus, a student athlete could take the necessary steps to plan on using his or her likeness as a trademark, without actually starting use. Such planning could be in the form of consulting with a merchandising company, or starting a personal website with the intent to sell merchandise after the individual is no longer bound by the NCAA's rules.

Another creative solution involves third-party licensing. A student athlete could license his trademark rights to a third party, so long as the agreement did not result in compensation while the athlete is bound by the NCAA's rules. The third party could then commercialize the athlete's nickname and file for trademark protection, with the understanding that the license would terminate upon the athlete's exit from school, reverting right to use the trademark back to the individual. This scheme is exactly the one that Johnny Manziel employed during his days at Texas A&M, when his family started a company, JMAN2 Enterprises (JMAN2), that filed for the 'Johnny Football' trademark. JMAN2 also eventually filed suit when the 'Johnny Football' mark was used by an unrelated t-shirt company selling 'Keep Calm and Johnny Football' shirts.

Why Registrations Are'Gaining Popularity

Student athlete trademark applications are rising in frequency for two related reasons.

First, by securing the trademark registrations to phrases and nicknames associated with themselves, the players lock them down in the USPTO, preventing unscrupulous companies from beating the athlete to the punch and obtaining the registration (and, ergo, claiming exclusive rights to sell merchandise bearing the mark). Indeed, the marketplace is replete with so-called 'trademark poachers' who rush to obtain registrations for athlete's nicknames, or who sell unauthorized merchandise. At least one company tried to beat Johnny Manziel to the USPTO and applied for 'Johnny Football,' albeit unsuccessfully. At the time this article was authored, a search for LSU running back and Heisman hopeful Leonard Fournette results in t-shirts bearing phrases like 'South East Beast,' a nickname for Fournette. Of course, this mark is not currently registered, allowing any enterprising party to profit off the slogan and Fournette's popularity. These examples underscore the importance of securing trademark rights.

Trademark applications, and trademark interest in general, also are rising because they potentially create a 'loophole' around the NCAA amateurism rules. After JMAN2 settled the trademark infringement lawsuit stemming from 'Keep Calm and Johnny Football' shirts, the NCAA had to decide how to handle proceeds from this litigation. The NCAA ruled in 2013 that student athletes may keep damages earned from trademark litigation, even if the athlete is a student at the time. The NCAA added in its initial declaration to the university that such a ruling certainly does not mean a student-athlete can sue an individual ' say a booster of his school ' with the intent of the defendant then channeling money to the student-athlete via a schemed lawsuit and ensuing payout.

In an article published in the Houston Chronicle, Shane Hinckley, Texas A&M's vice president for business development, clarified: 'The NCAA specifically said Manziel has a right to keep any winnings from a civil proceeding as a private entity, but if it was an orchestrated event enabling a cash flow to the student-athlete, that would be a violation of NCAA rules.' See, 'Manziel Can Keep Earnings from Trademark Suit,' Houston Chronicle, Feb. 27, 2013. Of course, it will be up to the NCAA to determine whether any future 'infringers' are bogus, but the Manziel decision certainly does nothing to discourage trademark registration efforts.

What's Next

All eyes will stay focused on the courts as the clock ticks on efforts to seek en banc rehearing or certiorari on the O'Bannon decision. Meanwhile, public consensus appears to be shifting towards supporting some type of compensation for athletes, particularly in light of some public relations concerns for the NCAA.

For example, some commentators have suggested that the NCAA's stance on amateurism is hypocritical, as college sports generate billions of revenue for the NCAA and college athletic departments. In one year, the NCAA generated $700 million for itself by selling the rights to the 'March Madness' tournament. Curtis Eichelberger, 'NCAA Play in March Proving Madness Without College Profit,' Bloomberg (Mar. 20, 2013). In August 2013, the NCAA stopped selling individual player jerseys, with NCAA President Mark Emmert admitting that the optics were problematic. Meanwhile, some NCAA athletes have reported that they were too poor to buy food. See, e.g., Jeremy Fowler, 'Ole Miss' Bo Wallace: Shabazz Napier Was Right, Players Go Hungry At Night,' CBS Sports Online (July 17, 2014).

These headlines arguably create the perfect storm for a public mandate for change. But while we all wait to see how it plays out in the courts and within the NCAA, the USPTO likely will continue to be an unorthodox, but helpful, resource for student athletes.

Amanda Hyland is an attorney with Taylor English Duma LLP in Atlanta. She counsels clients on a variety of intellectual property matters, including trademark registrations. She may be reached at [email protected].