The Legal Impact: EA, Commanders’ Trademark, and Robinson Memorabilia

Wednesday, May 24, 2023

Professor Michael McCann talks about his recent Sportico articles; including the latest in EA and NIL, Commander's trademark dispute, and Jackie Robinson memorabilia causing SEC issues. Produced and Hosted by A J. Kierstead

Learn more about our Sports & Entertainment Law Institute at https://law.unh.edu/seli

Articles discussed

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Legal topics include sports, entertainment, intellectual property, trademark, SEC, securities, contract, name image likeness

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A. J. Kierstead, Host:
This is The Legal Impact, a podcast presented by the University of New Hampshire, Franklin Pierce School of Law. Now accepting applications for JD and graduate programs. Learn more and apply at law.unh.edu. Penns discussed to sole the opinion of the faculty or host that do not cost legal advice or necessarily represent the official views of University of New Hampshire, the UNH Franklin Pierce School of Law. I'm your host, A.J. Kierstead, and I'm joined by Professor Michael McCann, director of the Sports and Entertainment Law Institute, law.unh.edu/seli. To learn more about that, he's also a writer over at Sportico, which we'll be diving into some of his articles today. Welcome back to the show.

Professor Michael McCann:
Thanks for having me back, A.J.

A. J. Kierstead, Host:
So we got to kick off right off the bat here with the continuing journey of EA Sports video games and NIL, which has been the saga. You've been involved with Ed O'Bannon. Co-authored the book with him... Came out last year, I want to say. So be sure you have a plug for the book and give the super ten-second high-level look at what this is based around.

Professor Michael McCann:
Yeah, so for years the NCAA and Electronic Arts had an arrangement where Electronic Arts would make college football and college basketball video games. The NCAA was paid, the colleges were paid for the use of their intellectual property, but the players weren't paid. And at O'Bannon, who you referenced, a former UCLA basketball star, NBA player, he had been retired by 2009. A buddy of his told him, "Hey Ed, you're in this video game." Because Ed was in a classic team, a team from the mid-nineties UCLA basketball that won a national tournament. Ed was college basketball's player of the year before he became a lottery pick in the NBA. And he was surprised. He said, "Why would I be in a video game? I'm this retired player, haven't played college hoops in a long time." Well, his friend's son showed him the game and Ed was the star in the game.
And Ed thought, "This is interesting, it's cool, I'm in a game." But Ed also thought, "It's a little weird that nobody asked for his permission." The game sold for $60. And while Ed had a lucrative basketball career, most of his teammates never made any money playing basketball. And they're in the game too. Now, the names weren't there, but the players looked like them. They had similar attributes and all of that. And that led to a lawsuit against the NCAA and Electronic Arts. Electronic Arts settled paying players up to $7,000. Most of them got about 1200, 1300 for being in video games. And then EA stopped making games because EA wanted to have games with real players. But the NCAA didn't allow Name Image and Likeness. They didn't let players make money for the use of their identity, even though they have that right as Americans.
The NCAA basically said, "If you use that right, you will lose your eligibility to play sports." So that era of No NIL ended in 2021. The NCAA changed its rules because it was forced to do so by different state laws. EA is now bringing back the game because EA can get the IP of the NCAA and colleges without running a foul of their rules, and they're now offering players $500 to be in the football game. Now some would say, "Well, they should get more than 500." Maybe. But EA can offer what it wants. And a player that doesn't get paid isn't in the game. They'll use a generic made-up player.
So the game's coming out next year, it'll probably be very popular. I know Ed O'Bannon. I've talked to him, he is excited about the game coming out and he likes that players are paid. That's really the way it should have been years ago. The fact that it took this long, I think is so unnecessary. It really goes to the NCAA suppressing rights that people have as Americans. This is really about treating people as Americans. Anyone has a right of publicity, yet college athletes weren't allowed to use it. So a new error is here.

A. J. Kierstead, Host:
Do you believe a lot of the laws that are now being put into effect at the state level are having an effect where EA is now feeling like, "Okay, this is the way it needs to go be going forward?"

Professor Michael McCann:
Yeah, I honestly think EA would've paid the player. I don't think EA cares about amateurism, right? EA cares about making video games. I think if they were allowed to pay the players years ago, they would've done that because these games make EA a lot of money. They're really popular games. So I think EA is happy that players can now make money through NIL. Probably feels like the player should have gotten that years ago. The fact that there haven't been any games since 2013 for football, I think 2009 for basketball. It's bad for the consumer and it's because the NCAA had a set of rules that were illegal and also sort of bizarre. I mean, why can't players make money?
An eSports player, an actor, an artist, a musician can all make money while they're in college. No one says, "Oh, I can't believe somebody got paid to be in a commercial or an eSports player getting paid." Nobody's worried about that. Yet with college athletes, they couldn't sign endorsement deals or just get paid even modest amounts of money to promote things online, social media influencing. It's really an unnecessary and peculiar way of setting up rules and really, I would say goes against the fabric of our country. We're a country that's entrepreneurial, that values letting people as individuals use their rights. And I think the NCAA's approach to that issue was proven wrong and led to a worse set of facts for consumers that certainly wanted to play video games.

A. J. Kierstead, Host:
Is the NCAA in a steady state at this point when it comes to at least this level of NIL or is this still very much in flux?

Professor Michael McCann:
It's in flux. They're lobbying Congress to pass a federal law that would create restrictions and regulate an industry that many would say, "Why are you regulating it?" Previously, they just outlawed it. So now they want it regulated. They want the federal government to give it seal of approval to make it harder to sue the NCAA. And there are collectives, which is a phrase used to describe alumni that have set up groups to pay college athletes, NIL. It may be more pay-for-play and the NCAA is worried about that, that college athletes are basically being paid ostensibly for the use of their name, image, and likeness but in reality is recruitment.
Now, Congress could do something. They probably won't. But you could also say, "Why doesn't the NCAA do something? They have rules against this. They don't want to use them because they don't want to get sued." That's how the world works. If you try to enforce these rules in a lawful way, and even if you get sued, doesn't mean you're going to lose. So, to answer your question... No, it's in flux because the NCAA is trying to create a dynamic where it's in flux. But I think at the end of the day, a lot of this gets resolved by the marketplace. If people can make money, they're going to make money.

A. J. Kierstead, Host:
So be sure to check out Court Justice, which is Ed O'Bannon's book co-authored with Professor Michael McCann available widely. Be sure to check that out if you want the background on this story. 'Cause it's a fascinating story. There's a lot to it and it means a lot for what's going to happen going forward. All right, let's move over to another intellectual property deal here, which is with the Washington Commanders. Trademark Drive stalled by US Patent Office. Commanders can't catch a break here.

Professor Michael McCann:
No, they changed their name twice and they're still having issues with trademark law. The commanders want to have a trademark protection registration specifically for Washington Commanders, but the US Patent and Trademark Office has deemed it too close to existing trademarks or applications for trademarks, including a college football game that uses the word commanders. Now, the reality is that this isn't over for the commanders. They can respond to this and still get what they want, but there are others that are squatting on some similar words that creates a problem for the Commanders, and they may have to pay people off essentially to get control. And at the same time, A.J, there are all these fans that hate the word commanders. They don't like the name. They want to go back to the old name, which was controversial. I don't think that's going to happen. And the Chancellor, they don't change the name again, but they've had some real issues with their name, to put it mildly.

A. J. Kierstead, Host:
Is this the team that was also dealing with the roller derby club that had the same name?

Professor Michael McCann:
That was The Guardians.

A. J. Kierstead, Host:
That was The Guardians.

Professor Michael McCann:
That was the Guardians, yeah.

A. J. Kierstead, Host:
It's been a fascinating couple of years of IP and team names.

Professor Michael McCann:
It is. It really has been. It's been... Yeah, because The Guardians were the Indians. The Indians changed their names to The Guardians and they didn't know or didn't care that there was already a roller derby team in Cleveland with the name Guardians and that eventually they reached it. But most of these things just end in a settlement. Somebody gets paid and that's the end of it. Probably that's what happens with the Commanders. But they've been spending a lot of money on IP and especially trademark law issues over the last 10 years, and a lot of frustrating moments for them.

A. J. Kierstead, Host:
With regards to their bottom line, the tremendous cost that goes into these rebranding efforts is astronomical. You figure the physical facilities, the digital branding, the jerseys, I mean the merchandising that needs to happen. I mean, ultimately in the merchandising, they're probably making up a lot of the stuff because when you get a rebrand, everyone needs to buy all the new merch that goes along with it. But then if you need to also be buying out all these other people that are using your trademark, it must be problematic for them in the long run.

Professor Michael McCann:
It is. And some of these become worse for the team because it doesn't seem like either they anticipate or they correctly preempted a controversy. The Guardians had to have known that there was another... Literally, if you Google it came up. So they must have figured the roller derby team wouldn't do anything about it. But what do they do? They got all these media to write stories. You can't get away with stuff these days. And I think a team that proactively tries to address these issues before they become public controversies usually will end up saving money rather than either litigation or hiring PR firms to deal with some of this stuff. Some of these costs seem totally avoidable.

A. J. Kierstead, Host:
Yeah, it's crazy they didn't have a PR agency or something like that go around and then find everyone that has the same IP, especially considering in the same region it's bonkers that didn't come up. Especially like you said, "It works on the other side also." The Commander's crew can Google and look to see what's going on and make sure that there isn't... Anytime you start a business, that should be the first thing you do as an entrepreneur. Is make sure, "Hey, am I picking a company name that's going to be viable in the economy I'm going to be working in?"

Professor Michael McCann:
Yeah, it's not hard. Either Google or just go to the trademark search on the government's USPTOs website. It actually really takes 10 minutes. It's sort of one of these... It's not that hard. And my guess is that they calculate that they either can't negotiate a deal or they don't want to initiate a conversation for fear that it's going to trigger sort of ransom demands, right? "Okay, you want this, well, you got to pay us $10 million." But I think what we've seen now with several teams is by not doing anything, by letting the controversy create, it goes on social media. There's such a craving for content that, "This is in 1987. There's the new cycles, as we know, instantaneous. So these types of things get quick traction and you wonder if teams are just miscalculating.

A. J. Kierstead, Host:
And NDAs are only so effective. Back in the day, you would just, on the down low, reach out to the company that has your URL, for example, is the big thing, especially in the .com bubble days where you would just reach out to the owner of the domain and buy them out given an NDA. But, you could make more off of leaking it out there to someone who is not as ethical and it renders the NDA ineffective just because of that.

Professor Michael McCann:
That's right. Yeah. NDAs are only effective if they're obliged and if they're enforceable. Sometimes it's... Once somebody breaches it, then you got to go after them for breach of a contract. Then it ends up becoming a pain and expensive. I always say try to pre-up stuff by doing things behind closed doors before they become public controversies.

A. J. Kierstead, Host:
All right. I want to dive into this Jackie Robinson story where talking about collectibles as collateral, and it is a journey. I highly suggest you check out the article on Sportico, but dive into what's going on here.

Professor Michael McCann:
Yeah, so Jackie Robinson, of course, the first black player in the 20th century. In Major League Baseball, he broke the color barrier. Just a historical figure in US history, let alone US sports history. Well, he signed a couple of contracts in the 1940s. One was with the Minor League team for the Dodgers, and then later the Dodgers themselves. And interestingly, those contracts really weren't physically protected. The Dodgers let basically museums exhibit them and they kept being passed around from what we know. It wasn't like the Dodgers sort of safeguarded what were really incredibly valuable pieces of American history. And what does that mean? Well, it led to a museum director basically giving them to his children as part of a will as part of the estate. And then the children and the family sold the contracts for 750,000. And then they were sold again for 2 million.
And this collectives' online auction company bought them. And then the online auction company said, "We need to raise money." So they use these contracts as collateral to raise $6 million. And then what happened? Well, the government for related but separate issues argue that they were committing securities fraud. The Dodgers wrote them a letter saying, "Hey, they actually belong to us, those contracts. That they're part of our history." And then moreover, the Dodgers assigned whatever rights they have of them to the Jackie Robinson Foundation, which is at least created by the late Jackie Robinson's family. And they're arguing now that they have a right to these contracts, which are worth millions of dollars.
Jackie Robinson, one of the most historic figures around, and the long story short is that now the SCC is going after this auction company. These investors who gave that auction company money, 6 million bucks, say, "Well, we're going to collect the collateral because the company is in default." The Dodgers say, "No, they're ours, and we've given them to the Jackie Robinson Foundation." And the judge is saying, "I'm not sure." The judge is basically saying, "I don't know. This has to go to a jury. Let them look at this. This is really complicated and there's not an obvious answer."

A. J. Kierstead, Host:
It's fascinating to consider that something like this could go to a jury. If you're just an outsider to the legal system and you think about a jury trial, you always think criminal and someone's been murdered, something's been stolen, something atrocious has happened physically to someone's being or stolen or something. It's like, "No, this is a multimillion-dollar issue of ownership and contracts that could end up going in front of a jury. How do you get a jury ready to do something like that?

Professor Michael McCann:
Yeah, they have to look at... So some of the evidence that's already come up is the Dodger's policy of retaining records that they apparently didn't... Early physical contracts were not valued. Also, they had a bankruptcy about 10 years ago where they didn't list these historical physical contrasts. Contracts would suggest it wasn't at the top of their mind. It's interesting. It gives a window into collectibles that they weren't really cherished like they are today. And that becomes relevant because it goes to who owned these things and the Dodgers... Or were they even stolen from the Dodgers? That has come up. Were the Dodgers, were they taken by this by museum and not returned while there was no evidence that Dodgers asked for the back? Did the Dodgers abandon them? Yeah. Did they assign them? Did they loan them? Did they gift them?
They all have different legal significances, so the jury's going to have to look at testimony. And of course, the people from the 1940s and fifties are no longer around. That we're dealing with written records of things. There are expert witnesses in this case regarding handling of records. Jackie Robinson obviously is not around, and he's one of... What were his wishes with these contracts? Who knows? Right? Why did the foundation not pursue them earlier? Maybe they didn't know. It's really interesting. And again, millions of dollars are there. And if I'm an investor and I loan all that money, I want those contracts, right?

A. J. Kierstead, Host:
Yeah.

Professor Michael McCann:
And-

A. J. Kierstead, Host:
If that money got spent... Oh gosh.

Professor Michael McCann:
Right.

A. J. Kierstead, Host:
Are there a lot of cases like that? This in the past, the only big collectibles thing that immediately comes to my pop culture mind is OJ, but that's a totally different situation.

Professor Michael McCann:
Yeah, yeah. The opposite, right? Someone reviled, not cherished. "There's not a whole lot of case law on this." There's case law above collateral, but usually collateral's not in the form of an asset where questions of ownership come up later. I suppose it can happen with real estate where there are liens against properties or things like that. But to collectible stuff is kind of a newer industry, especially we've seen the values of collectibles take off and the financial interests involved go up along with it. So this case is, it's in the southern district of New York. It's, it will be quoted, it will be cited, and maybe it gets to an appellate court, who knows? P.
Retty interesting that... It's interesting because it's a case about this famous cherished player and the contract he signed and the fact that people didn't... It didn't seem like the contract was really given the respect it was owed, but then you read some of the pleadings and it's like, "Well, they weren't." People didn't take care of these things. It wasn't like a contract was considered all that special. It was just a piece of paper.

A. J. Kierstead, Host:
All right, Professor Michael McCann, thanks so much for joining me.

Professor Michael McCann:
Thanks for having me.

A. J. Kierstead, Host:
If you want to learn more about the Sports and Entertainment Law Institute, check out law.unh.edu/seli. Be sure to check out his articles on Sportico and follow Professor McCann on Twitter @McCannSportsLaw.
Thanks for listening to The Legal Impact presented by UNH Franklin Pierce School of Law. To observe word about the show, please be sure to subscribe and comment on your favorite podcast platform, including Apple Podcast, Google Podcast, and Spotify. Get the back episode to the show and podcast links at law.unh.edu/podcast.