The NFL Lockout and subsequent decertification by the NFL Player’s Association (NFLPA) has raised some interesting questions about the use of player images by the NFL and its sponsors. Namely, do former licensees under the NFL/NFLPA 2006 collective bargaining agreement (the NFL, teams, sponsors, advertisers, etc) have a legal right to use the players’ likenesses?
Labor and Antitrust Issues in the NFL/NFLPA Relationship
For those unfamiliar with the situation here is a quick primer. The 2006 CBA(pdf) expired on March 2, 2011. League owners have long been unhappy about the current economic model, and have chosen to exercise their lockout rights under federal labor law as a negotiating tactic to exert pressure on the NFLPA. After 17 days of mediation, negotiations hit a stalemate. Thereafter, on March 11 the NFLPA filed papers to decertify the union on March 11, and now acts as a trade association.
As explained by Professor Tim Davis at Wake Forest Law School, decertification lies at the intersection of labor and antitrust law. Contrary to popular belief, the implications of decertification do not arise from the CBA; the CBA merely imposes on the NFL and NFLPA a duty to bargain in good faith. Rather, decertification’s importance comes from an exception granted to what otherwise would likely be deemed anti-competitive practices in violation of antitrust laws.
Under a strict interpretation of antitrust law, NFL activities such as player drafts, salary caps, and free agency restrictions are likely violations of the Sherman Antitrust Act. However, a judicial doctrine called the ‘nonstatutory labor exemption’ prevents collective bargaining restraints from becoming illegal anti-competitive actions. The Supreme Court recognized in 1996 that “to give effect to federal labor laws and policies and to allow meaningful collective bargaining to take place, some restraints on competition imposed through the bargaining process must be shielded from antitrust sanctions.” In other words, the NFL’s anti-competitive behavior is only exempted from antitrust liability because it engages in collective bargaining with the NFLPA. (See similar analysis here.)
Protection provided by the nonstatutory labor exemption, however, only operates if the players’ union is organized as a union; hence the importance of decertification. Now that the NFLPA has decertified into a trade organization, the NFL’s otherwise legitimate player lockout tactic is open to antitrust scrutiny. Therefore, contemporaneous with decertification, ten players represented by the NFLPA filed suit (complaint here) in Federal District Court for the District of Minnesota challenging NFL actions as violations of Section 1 of the Sherman Antitrust Act. Arguing the NFL’s lockout constitutes illegal anti-competitive behavior under antitrust law, the players may be able to impose a significant penalty on the league in the form of treble damages, or three times the amount of actual or compensatory damages. Professor Michael McCann at Vermont Law School lays out a likely scenario of events in Sports Illustrated. Note that the NFLPA successfully used a decertification-and-suit strategy in 1989 to challenge the league’s free agency restrictions.
Sponsorship Implications of Player Image Usage
In the 2006 CBA, the players authorized the NFLPA to act as their exclusive agent in negotiating a Group Player Licensing Program with the NFL.[i] Under the CBA, a Group Licensing Program includes the use of “six or more NFL players’ names, signatures facsimiles, voices, pictures, photographs, likenesses and/or biographical information on or in conjunction with products” on products sold at retail and on promotional items.[ii] Further, NFL players, under the Player Contract in Appendix C of the CBA, assign to the NFLPA “the exclusive right to use and to grant to persons, firms, or corporations the right to use his name, signature facsimile, voice, picture, photograph, likeness, and/or biographical information in group licensing programs.”[iii]
These circumstances raise the interesting legal question of whether the NFLPA still retains the right to negotiate Group Player Licensing Programs, or similar arrangements on behalf of the players?
Under agency law principles, the NFLPA’s rights to negotiate the group licensing agreement on behalf of the players likely did not automatically transfer with the NFLPA during the reorganization. An agent cannot terminate agency, as the NFLPA has done through decertification, for some purposes and recognize it for others, in this case licensing negotiations. An Agent’s renunciation must be a complete one.
In the absence of the CBA, the NFLPA’s ability, as a trade association, to negotiate licensing programs on behalf of the players depends on whether the agency status held by the NFLPA under the CBA was somehow transferred.
One possibility is that when the players voted to decertify, they also consented to the NFLPA retaining agency. The NFLPA has not indicated that this took place, but that is not to say that it hasn’t.
A second possibility, and the NFL’s argument, is simply that the NFLPA no longer has agency status since the bylaws conferring that power have been rescinded. Gary Gertzog, the NFL’s senior vice president of business affairs, in an interview with Sports Business Daily’s Daniel Kaplan, pointed to the CBA to argue the new NFLPA probably does not have player rights, because those rights were exchanged in consideration for the NFLPA use of revenues from group licensing programs to support the objectives set forth in the NFLPA bylaws. With the NFLPA bylaws now inapplicable, arguably no licensing agreement between the NFLPA and NFL players exists. Despite those claims, the NFLPA claims that it continues to represent players for group licensing, but the NFL questions that assertion.
Though last week the NFL disclosed that it is advising sponsors to be wary of signing group licensing deals with the players’ newly established trade association, sponsors who enter licensing agreements with the NFLPA as a trade association likely face minimal litigation risk due to the symbiotic relationship between the NFLPA, the players and sponsors. Further, it isn’t clear that the NFL would have grounds to challenge an agreement between the NFLPA and sponsors.
Player Image Usage Implications for the NFL
A second and more adversarial legal question also arises with respect to the NFL’s continued use of player images on team websites and NFL.com. Arguably, the NFL’s rights to use player images and likenesses expired with the CBA since the players had assigned all rights to the NFLPA who bargained with the NFL. It is very unlikely that the NFL has reached an agreement with any players regarding the use of their image.
At least one commentator has argued that the NFL use of the players’ images and likenesses could produce right of publicity infringement claims or trademark infringement claims. (Trademarking athlete names discussed here.) The right of publicity is a person’s right to control the usage of his voice, name, photograph, likeness, picture of a unique article, and other references to a persona.[iv]
IP expert Barry Werbin recently told Dan Kaplan at Sports Business Daily that the NFL could make an argument for an exception to the right of publicity on First Amendment grounds. Under the First Amendment, a publisher of an image or photo may be able to claim an exception to right of publicity if the use is non-commercial in nature. But generally, if the use of a celebrity’s name or likeness is largely for commercial purposes, the right of publicity prevails.[v] The question here then is whether the NFL’s use is commercial in nature.
Although the NFL may argue that team websites and NFL.com are informative, as opposed to commercial in nature, and that NFL players are public entities, the NFL is still a commercial venture and the use of player images is commercial use. Further, the litigation risk is high for the NFL because procedurally it would be easy to attach an infringement claim to the antitrust claims if the NFLPA chose to pursue infringement.
Sponsors negotiating with the NFLPA for image usage rights are likely in the clear, but the picture is cloudier for the NFL, and further intellectual property infringement claims may be forthcoming.
*Joseph Norman is a second-year law student at Wake Forest University School of Law. He holds a Bachelor of Science in Management from North Carolina State University and an MBA in Finance from the McColl School of Business at Queens University of Charlotte. Prior to enrolling in law school, Mr. Norman worked for Wells Fargo Wealth Management in Equity Research. Upon graduation in May 2012, Mr. Norman intends to practice corporate law.
[i] 2006 CBA, Article V, Section 4. NFLPA Player Group Licensing Program: The NFL recognize that players have authorized the NFLPA to act as their agent in a Group Player Licensing program (defined below) for their benefit. The NFL hereby agrees that neither it, any Club, nor any affiliate of the NFL and/or any Club shall acquire, seek to acquire, induce others to acquire, or assist others in acquiring Group Player Licensing rights, or interfere in any manner with any player’s conveyance of such rights pursuant to the NFLPA Group Player Licensing program, except as otherwise explicitly agreed to between the NFLPA and the NFL.
[ii] 2006 CBA. Group Player Licensing shall be defined as the use of a total of six or more NFL players’ names, signatures facsimiles, voices, pictures, photographs, likenesses and/or biographical information on or in conjunction with products (including, but not limited to, trading cards, clothing, videogames, computer games, collectibles, internet sites, fantasy games, etc.): (a) in any one product category, as defined by industry standards; or (b) in different categories if a total of six or more players are used and (i) the products all use similar or derivative design or artwork or (ii) one such player product is used to promote another player product. For the purposes of this Section 4, Group Player Licensing includes, without limitation, products sold at retail and products that are used as promotional or premium items.
[iii] 2006 CBA. (b) Player hereby assigns to the NFLPA and its licensing affiliates, if any, the exclusive right to use and to grant to persons, firms, or corporations (collectively “licensees”) the right to use his name, signature facsimile, voice, picture, photograph, likeness, and/or biographical information (collectively “image”) in group licensing programs.
[iv] CALLMANN § 22:32. Use of a natural person’s identity; the right of publicity
[v] Grant v. Esquire, Inc., 367 F. Supp. 876 (S.D. N.Y. 1973).