Intellectual Property Law Blog
Intellectual Property
Not Forgetting Trademarks: Protecting your NFT Brand
To Read Part One of our NFT series, click here »» This latest installment in Offit Kurman’s NFT series looks at protecting NFT’s under trademark law. As of July 21, 2021, a search of the US Patent and Trademark Office (USPTO) database shows that 407 trademark applications have been filed that list “non-fungible tokens” as goods and/or services. Of these, 374 were filed on or after March 11, 2021, the date that news broke that the digital artist Beeple sold an NFT at auction for $63.9 million. Looking at these trademark filings, we see that some familiar names are planning to get in on the NFT action. Fender has filed four applications to register trademarks for NFT’s, including its well-known guitar brand STRATOCASTER. The Andy Warhol Foundation for the Visual Arts, Inc. seeks registration of the name of the famous pop artist for NFT’s. And Lion’s Gate Entertainment, Inc. filed an application to register the trademark JOHN WICK, apparently planning to create NFT’s associated with the successful movie franchise. If you’re entering the NFT space, it’s good to keep in mind that your NFT’s are products, and trademark protection is important just as with any other product you might launch. Below are a few best practices for your NFT trademark strategy: Conduct a clearance search. Especially with this rapidly exploding area, it is important to make sure that there is not already someone else creating or marketing NFT’s under the same or similar trademarks. Consider searching more broadly than just NFT’s. Remember that NFT’s can touch various areas and industries when conducting your search. The examples above involve a music company, an artist’s estate and a motion picture series. Because NFT’s can be used to represent, commemorate or give value to all kinds of goods and services, it will be good to think broadly when conducting a clearance search. Once the clearance diligence has been done, file an intent-to-use application quickly. This will reduce the risk that a third party could apply to register the same or similar mark or commercialize an NFT business under the same name before you secure your rights. Many others are employing this strategy – of the 374 filings since March 11th, 320 are based on an intent to use. Use a watch service to detect similar trademarks or domain names using your trademark. Such uses could be innocent, or could intentionally try to capitalize on your success if your NFT line takes off. A watch service will alert you to such uses and enable you to evaluate and take action quickly. Your Offit Kurman attorneys can help position you to be at the forefront of this new technological wave. If you have any questions, please contact Laura Winston at lwinston@offitkurman.com or 347-589-8536.
July 29, 2021
Intellectual Property
It’s a New Game: Pennsylvania Statute Adopted on College Athlete Compensation for Name, Image and Likeness
On June 30, 2021, Governor Tom Wolf signed legislation to allow college athletes in Pennsylvania to earn compensation for the use of their name, image, and likeness ("NIL"). The new law, adopted as part of Senate Bill 381 ("SB 381"), was signed on the same day the NCAA approved a related policy reversing its long-held prohibition against such NIL activity. The new Pennsylvania statute, along with similar laws in other states and the NCAA policy reversal, follows years of mounting pressure from athletes. These reform initiatives reached a clear turning point with the unanimous antitrust decision by the U.S. Supreme Court in National Collegiate Athletic Association v. Alston on June 21, 2021, affirming an injunction against NCAA rules that had limited the education-related benefits schools may offer student-athletes. The NCAA's June 30 policy allows students who participate in intercollegiate athletics to engage in NIL activities consistent with the laws of the state in which their school is located. Those attending school in a state without NIL laws can still participate without violating the NCAA's NIL rules. Other non-NCAA athletic conferences may issue their own rules as well. However, Pennsylvania's new statute does not include those who take part in club or intramural sports or professional sports outside of intercollegiate athletics. SB 381 returns the individual Right of Publicity to college athletes, which was originally denied by prior NCAA regulations. With these regulations set aside, athletes can now take advantage of the same rights enjoyed by other public figures. SB 381 provides much-needed guidance in Pennsylvania for institutions of higher education and for athletes and their potential representatives in this brand-new and unprecedented era of student-athlete endorsements and compensation. Essential analysis and practical takeaways for athletes and schools are presented below. COLLEGIATE ATHLETES SB 381 states that "a college student-athlete may earn compensation for the use of the college student athlete's name, image or likeness." However, athletes should be cautious when pursuing opportunities, as there are specific rules and limitations under this new law. The statute includes detailed provisions about disclosure required by athletes before signing potential NIL deals; avoiding NIL compensation in exchange for participation or commitment to a school; avoiding product and service categories banned for use of NIL; avoiding conflicts with current school sponsorships; hiring professionals for assistance; and bringing a lawsuit if necessary. Under SB 381, athletes must disclose any potential NIL deals "at least seven days prior to execution of the contract to an official of the institution of higher education, who is designated by the institution of higher education." NIL compensation cannot be "provided in exchange ... for a current or prospective student-athlete to attend, participate or perform at a particular institution." This provision is intended to avoid transforming collegiate athletics into some form of a "pay-to-play" scheme. By way of restriction, the law provides that athletes "may not earn compensation . . . in connection with a person, company or organization" associated with these product and service categories: - Adult entertainment, - Alcohol, - Casinos and gambling, including sports betting, - Tobacco and electronic smoking products, - Prescription pharmaceuticals or - Controlled substances Furthermore, athletes may not engage in NIL activities and contracts that "conflict with existing institutional sponsorship arrangements at the time." For example, a school may be able to prohibit an athlete from engaging in an NIL agreement with one athletic shoe company when the school has a prior sponsorship arrangement with a different athletic shoe company. Schools may also prohibit a student's NIL activities based on other considerations, such as conflicts with "institutional values." In addition, schools "shall have policies that specify" the NIL activities in which athletes "may or may not engage." In addition to NIL compensation paid on a fixed-fee basis, athletes may also earn royalty payments. SB 381 requires a party that produces a college team jersey, video game or trading cards "for the purpose of making a profit" to make a royalty payment to each athlete whose NIL or "other individually identifiable feature" is used. It is important to note that payment for royalties or endorsements shall not affect the athlete's eligibility, scholarship, or grant-in-aid. College athletes can hire professional representation for their NIL dealings. These professionals can be: (1) An athlete agent meeting state registration requirements under 5 Pa.C.S. Ch. 33; (2) A financial advisor acting under Pennsylvania law; or (3) An attorney admitted to practice law by a court of record of the Commonwealth. However, "a person that represents an institution of higher education may not represent a college student-athlete in a business agreement." This language in the Commonwealth's new law needs clarification, but some may interpret this to mean that an individual representing the school in some capacity cannot also represent an athlete of that same university in their NIL dealings. These issues regarding potential conflicts for law firms in particular and whether such conflicts can be waived are yet to be determined. Athletes also maintain their right to pursue a private civil action for any violation of SB 381's NIL provisions, and they may receive costs and reasonable attorney fees, in addition to damages, if they prevail. COLLEGES AND UNIVERSITIES Pennsylvania colleges and universities ("institutions") and athletic associations and conferences, including the NCAA, are now prohibited from preventing an athlete from earning NIL compensation. An institution itself cannot be prevented by an association or conference from participating in intercollegiate athletics due to an athlete's NIL dealings. Institutions are not required "to identify, create, facilitate, negotiate or enable opportunities" on behalf of athletes to earn NIL compensation, but they can choose to do so. In addition, institutions are not required by SB 381 to allow athletes to use the school's "name, trademarks, service marks, logos, symbols or any other intellectual property," but again, they can choose to do so. This will open the door to opportunities for institutions to share in a revenue stream should they elect to license the use of their intellectual property as part of an athlete's endorsement campaign. Institutions may prohibit an athlete's involvement in NIL dealings that conflict with existing institutional sponsorship arrangements at the time of the athlete's disclosure. Similarly, institutions can prohibit NIL dealings that conflict with "institutional values." Institutions of higher education "shall have policies" that specify the NIL activities in which athletes "may or may not engage." As discussed above, prohibited NIL activities could include, at the very least, adult entertainment, alcohol, casinos and gambling (including sports betting), tobacco and electronic smoking products, prescription pharmaceuticals, or controlled substances. Schools also have the right to expand this list in accordance with their values and codes of conduct. In addition, schools maintain the right to establish and enforce academic standards and requirements, team rules of conduct or other rules of conduct, disciplinary rules applicable to all students, and policies regarding participation in intercollegiate athletics, such as NCAA rules. Schools must designate "an official of the institution of higher education" to receive notice from students disclosing a possible NIL contract. Also, "any person" who sells merchandise using an athlete's NIL must pay royalties to the athlete. This includes sales of jerseys, cards, or other merchandise that uses an athlete's name, image, or some other feature of identity. While the use of the term "any person" is slightly ambiguous, we believe that this is intended to include institutions of higher education. PRACTICAL TAKEAWAYS Athletes thinking about profiting from their NIL should consider contacting a licensed attorney and/or other professionals to assist them with the process. Endorsement agreements are often long, complicated documents that may contain language that works against the athlete's interests if not carefully reviewed. In addition, students will need assistance to ensure they are abiding by state law, school rules, and NCAA policies. Athletes may also benefit from professional representation if they want to negotiate for the right to use the logos and other intellectual property of their school or conference. Colleges and universities will need to closely address and monitor this issue. In considering opportunities for NIL compensation, an athlete who deems it to be cost-effective may further benefit from seeking federal trademark protection for his/her name, signature, nicknames, logos, and the like. Similarly, athletes should consider registering internet domain names based on such categories. Legal counsel well-versed in the costs and processes associated with intellectual property laws and practices can help to make these economic determinations and strategic filings. Institutions should consider drafting specific NIL rules, including those required by SB 381, and updating other relevant policies. Effective written policies will provide necessary guidance for athletes and protect the interests of the school. Ongoing training for staff and monitoring of NIL activities will also protect the school's interests in the event of a dispute. Policies should identify the official at the school who will be responsible for reviewing and approving contracts disclosed by athletes and address the circumstances under which contracts will not be approved. In order to protect its intellectual property, an institution should also consider expanding its portfolio of registered trademarks and logos to include protection for product categories that are likely to be the subjects of athlete NIL endorsements. Although institutions are not required to facilitate NIL opportunities for students, it will likely benefit the institution to find appropriate ways to assist athletes in such activities. Schools may want to consider relaying such opportunities to their athletes and suggest prospects for mutual participation in these deals. SB 381 constitutes a significant development for collegiate athletes in their longstanding efforts to protect and benefit from their Right of Publicity. However, there are some outstanding questions that remain, including: Will institutions be subject to the statutory provisions requiring royalty payments for the sale of merchandise using athletes' NIL? Can institutions charge athletes a royalty or a flat fee for the use of the institutions' trademark, logo, and other intellectual property in conjunction with the athletes' endorsement deals? What are the parameters of the conflicts provision stating, "a person that represents an institution of higher education may not represent a college student-athlete in a business agreement"? What effect will this have on lawyers and law firms, and can these conflicts be waived? Is there a transparency requirement for these NIL contracts, and must they be disclosed to the public? When a student discloses a potential NIL contract at least seven days prior to its execution, as required by SB 381, what will happen if the school fails to review the contract within this time? Athletes and institutions, as well as companies con-templating endorsement deals with students, should consider working with attorneys and other professionals who have broad experience with the various interrelated aspects of these issues, including the state and federal laws for higher education, intellectual property, sports law, and other relevant subjects. In short, the game has changed in a big way for both college athletes and their educational institutions. We are monitoring these emerging issues and will continue to report on material developments. As these matters evolve over time, individuals and organizations should consult with counsel. This summary of legal issues is published for informational purposes only. It does not dispense legal advice or create an attorney-client relationship with those who read it. Readers should obtain professional legal advice before taking any legal action.
July 15, 2021
Intellectual Property
Summer School for Intellectual Property
Universities Must Prepare Student-Athlete Endorsement Policies in Response to New NCAA Rules On June 30, 2021, the National Collegiate Athletic Association (“NCAA”) officially adopted a uniform interim policy suspending previous NCAA name, image and likeness (“NIL”) rules for all incoming and current student-athletes in all sports. The move would allow athletes in all NCAA divisions to profit from endorsements, their signatures, public appearances, and other business ventures for the first time in over a century. Background College student-athlete’s ability to receive full compensation has been at the forefront of statutory, litigation and political initiatives for the last several years. In addition to the class action antitrust lawsuit that culminated in the U.S. Supreme Court’s recent ruling in NCAA v. Alston, several states have taken legislative action to address student-athlete endorsements. California’s Fair Pay to Play Act passed in 2019 and is set to become effective on January 1, 2023. New Jersey’s NIL law will become effective in 2025, but efforts are underway to move up that date. Indeed, several other states have also taken up the baton with more immediate effect: similar endorsement laws in Alabama, Florida, Georgia, Mississippi, and New Mexico already went into effect on July 1, 2021. The NCAA’s Board of Governors had previously proposed expanding its NIL rules in April 2020, but the Divisions failed to take action. Apparently, the abrupt implementation on June 30, 2021, of the new interim policy was likely prompted by the recent outcome in Alston, along with concerns that the state-by-state approach could give rise to further litigation and complications for recruitment and compliance. The NCAA has signaled that this expansive new policy is only temporary and that it intends to pursue a federal solution with Congress that would provide clarity on a national level. The New Rules The new NCAA policy provides the following guidance to college athletes, recruits, and member schools: Individuals can engage in NIL activities that are consistent with the law of the state where the school is located. Colleges and universities may be a resource for student-athletes regarding state law questions. College athletes who attend a school in a state without an NIL law can engage in this type of activity without violating NCAA rules related to name, image and likeness. Individuals can use a professional services provider for NIL activities. Student-athletes should report NIL activities, consistent with state law or school and conference requirements, to their university. Additionally, students are allowed to sign with agents or other professional representatives to help them acquire endorsement deals with the following caveat – students cannot stipulate that the agents would represent them in future negotiations outside of the NCAA. Some restrictions still remain in effect. NIL compensation cannot be contingent upon enrollment at a particular school, nor can the school compensate an athlete in exchange for the use of the student’s NIL. Compensation for athletic participation or achievement, or pay-for-play, remains prohibited, as affirmed by the U.S. Supreme Court in NCAA v. Alston. Next Steps for Colleges and Universities The change in NCAA policy means that higher education institutions nationwide will have to accelerate their response over this summer in time for the fall athletic season. Such preparation may be especially important, as the NCAA policy encourages student-athletes to turn to their schools for information about their state’s NIL law. Schools in states that have adopted NIL laws may have the benefit of such state rules as a guideline, but all schools will have to confront some common issues: Whether to permit the student-athlete to use the school’s trademarks in endorsements and, if so, what kind of reasonable restrictions should be put in place? Would the school require an approval process for the endorsements? How do the NIL rules affect the school’s other policies (for example, its social media use policy) or the school’s existing relationships with sports retailers? What new resources should be made available to help the school and the students navigate the legal and compliance issues related to student endorsements? While some schools, such as Louisiana State University, will allow students to use its official logos and facilities in endorsements so long as the athletes ask for written permission, not all schools will adopt such a broad policy. Schools may want their policies, training, and related communications on this issue to reflect possible complications and disputes. For example, how will the school approach a situation where a student enters into an endorsement agreement for products or approach that could give rise to further litigation and complications for recruitment and compliance? The NCAA has signaled that this expansive new policy is only temporary and that it intends to pursue a federal solution with Congress that would provide clarity on a national level. For this summer, at least, schools have their hands full with a significant intellectual property homework assignment. This summary of legal issues is published for informational purposes only. It does not dispense legal advice or create an attorney-client relationship with those who read it. Readers should obtain professional legal advice before taking any legal action.
July 6, 2021
Intellectual Property
What Does the Future Hold for College Athletics after the Supreme Court Decision in NCAA v. Alston?
On June 21, 2021, the United States Supreme Court issued a unanimous decision in National Collegiate Athletic Association v. Alston. The long-anticipated decision affirmed the injunction against NCAA rules that limited the education-related benefits schools may offer student-athletes. But perhaps equally as important as the majority decision is the concurring opinion by Justice Kavanaugh. BACKGROUND Current and former student-athletes in men’s Division I FBS2 football, and men’s and women’s Division I basketball brought a class-action claim against the NCAA and eleven Division I conferences, alleging that their agreement to restrict the compensation colleges and universities may offer the student-athletes who play for their teams violated the Sherman Anti-trust Act. The District Court’s March 2019 ruling enjoined the NCAA from enforcing “rules limiting the education-related benefits schools may offer student-athletes—such as rules that prohibit schools from offering graduate and vocational scholarships.” However, the District Court decision also allowed the NCAA to maintain its rules limiting athletic scholarships to the full cost of attendance and restricting compensation and benefits unrelated to education. The Ninth Circuit affirmed, and the injunction took effect in August 2020. SUPREME COURT DECISION On appeal, the Supreme Court only considered the injunction’s legality. The Court unanimously held that “[t]he district court’s injunction is consistent with established anti-trust principles” and that the NCAA’s compensation restrictions were “properly subjected to antitrust scrutiny under a ‘rule of reason’ analysis.” The Court determined that: First, “the NCAA enjoys ‘near complete dominance of, and exercise[s] [monopoly] power in, the relevant market’” of “athletic services in men’s and women’s Division I basketball and FBS football.” As a result, the NCAA and its member schools are able to “restrain student-athlete compensation in any way and at any time they wish, without any meaningful risk of diminishing their market dominance.” Second, while the NCAA was concerned that the injunction would result in “micromanagement” of its business, the Court noted that the injunction applies only to the NCAA’s rules “limiting the education-related benefits” that conferences or schools may offer student-athletes. Relaxing these restrictions will not “blur the distinction between college and professional sports,” and the NCAA can achieve the “same procompetitive benefits” by significantly less restrictive means than its current rules provide. Finally, because the injunction applies only to the NCAA and multi-conference agreements, the Court reasoned that the injunction both leaves the NCAA with “considerable leeway” and leaves the individual conferences and their member schools “free to impose whatever rules they choose.” With this in mind, the Court upheld the injunction prohibiting the NCAA from enforcing its rules limiting education-related benefits that conferences and schools may provide to student-athletes, including those rules limiting scholarships for graduate or vocational school, payments for academic tutoring, and paid post-eligibility internships. These education-related benefits could not “be confused with a professional athlete’s salary.” The Court also held that the NCAA may continue to limit cash awards for academic achievement, but only if those limits are no lower than the cash awards currently allowed for athletic achievement (currently a maximum of $5,980 per year, but the NCAA is free to reduce the amount). To the extent the NCAA is concerned that schools might exploit the injunction to give student-athletes “unnecessary or inordinately valuable items” that are only nominally related to education, the Court held that the NCAA can specify and enforce “rules delineating which benefits it considers legitimately related to education” and forbid questionable benefits. Finally, the NCAA and its member schools can propose a definition of “compensation or benefits related to education,” and the NCAA is free to regulate how conferences and schools provide them. TAKEAWAYS Alston may bring student-athletes one step closer to receiving full benefits for their services. Looking forward, Justice Kavanaugh’s concurring opinion may give hope to student-athletes that further ground can be gained on this issue. Justice Kavanaugh directed his attention to the NCAA’s remaining compensation rules and suggested that they also “raise serious questions under the antitrust laws.” He found that these rules should also be scrutinized under “rule of reason” analysis, “absent legislation or a negotiated agreement between the NCAA and the student-athletes.” In such a case, Justice Kavanaugh leaves little doubt about how he would rule: The NCAA’s business model would be flatly illegal in almost any other industry in America . . . Price-fixing labor is price-fixing labor . . . No-where else in America can businesses get away with agreeing not to pay their workers a fair market rate on the theory that their product is defined by not paying their workers a fair market rate. And under ordinary principles of anti-trust law, it is not evident why college sports should be any different. The NCAA is not above the law. Alston and the threat of potential future litigation may spur the NCAA to negotiate an agreement with conferences and schools, or even with student-athletes if they become unionized, out of concern that another court will use “rule of reason” analysis to dismantle its remaining compensation rules or otherwise “micromanage” its business. A negotiated agreement would at least allow the NCAA to maintain some control over whether any of its remaining compensation rules remain intact. The NCAA may also explore other options to achieve more robust compensation for student-athletes, including further expansion of the rules on how student-athletes may use their name, image and likeness beyond the NCAA Board of Governors’ proposed rules from April 2020. Read the Court’s ruling in Alston here: https://www.supremecourt.gov/opinions/20pdf/20-512_gfbh.pdf. This summary of legal issues is published for informational purposes only. It does not dispense legal advice or create an attorney-client relationship with those who read it. Readers should obtain professional legal advice before taking any legal action.
June 28, 2021
Intellectual Property
Is Genericide Still A Thing? Maybe We Worry Too Much About 'Proper Use Of Trademarks'
As Published in The Legal Intelligencer – Special Section March 2021: Intellectual Property By: Laura Winston Earlier this year, the comedian Seth Meyers was making a joke about a politician on his talk show "Late Night with Seth Meyers." In doing so, he referred to a well-known brand of popular plastic building bricks as “Legos.” Mr. Meyers was immediately flooded with online comments telling him that the plural of Lego is Lego. He took to the airwaves again on the topic, thanking the commenters but adding, “It’s too late for me…I’m not going to walk home and tell my kids `Clean up your Lego’”. Not long after, the owner of the world-famous LEGO trademark got into the act via a tweet, saying, “Hey @SethMeyers, let us blow your mind...the plural is not `Legos.’ It’s not even `Legos.’ It's actually `LEGO BRICKS!’" @LEGO_Group, Twitter (February 11, 2021), https://twitter.com/lego_group/status/1359856214591627269. If you have questions about this or any other legal matter, please feel free to contact Laura Winston at 347.589.8536 Reprinted with permission from the March 30, 2021 issue of The Legal Intelligencer. © 2021 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.
April 5, 2021
