In a decision that may significantly impact licensing rights for property owners, licensees, celebrities, and user generated content sites, the Supreme Court has decided not to review the Eighth Circuit's ruling to allow fantasy sports game operator C.B.C. Distribution and Marketing, Inc. to use players' names and statistics without obtaining licenses from property owners Major League Baseball Advanced Media, L.P. and Major League Baseball Players Association.
The Eighth Circuit Court of Appeals held that player names and records are in the public domain and that the "the recitation and discussion of factual data concerning the athletic performance of players on Major League Baseball's website command a substantial public interest and, therefore, is a form of expression due substantial constitutional protection." Thus, CBC's First Amendment rights to use baseball players' names and statistical information supersedes the players' publicity rights.
Implications of the Court's Decision
Property owners, including MLBAM, the MLBPA, the National Football League and other leagues and players associations, may lose income generated from licensing the right to use players' names and statistics to fantasy game operators, since the CBC decision now allows this factual information to be used without a license (and thereby without charge) from the property owner. The ruling could also have a significant negative impact on MLBAM's existing $50 million, five-year agreement with the MLBPA, whereby MLBAM acts as the licensing agent for Major League Baseball players with respect to licensing the use of their names to fantasy sports operators like CBC.
Property owners like MLBAM and the NFL can no longer require fantasy sports game operators to pay licensing fees to use players' names and statistics in their fantasy games. New fantasy game operators will likely join the marketplace now that they can definitively use this
information free of charge. Many fantasy game operators who were paying licensing fees had already begun to reduce or eliminate their rights payments based on the Eighth Circuit's earlier ruling. Other operators may continue to pay the license fees but will demand that the property owners provide rights to intellectual property such as game clips as part of the licensing arrangement. It is likely that the fantasy game industry will grow because fantasy sports games can now be operated without the significant expense of having to license the players' names and statistics from the property owner.
Players and Other Celebrities
Players and other celebrities will now have less control over the use of their names regarding information about them in the public domain. The Eighth Circuit's decision in CBC, however, still recognizes that publicity rights be protected as long as countervailing First Amendment rights do not supercede them. Accordingly, whether a celebrity's publicity rights are protected depends on the facts of each case and whether there is a substantial public interest in using their name that outweighs the need to protect their publicity rights. For instance, Trivial Pursuit contains questions about celebrities but does not pay licensing fees to those celebrities. The CBC decision enables a game like Trivial Pursuit to continue to use the questions without paying a licensing fee. If the game, however, makes consumers think that a particular celebrity has endorsed the game, the celebrity's publicity rights would likely supersede the game's First Amendment rights.
YouTube and Other User Generated Content ("UGC") Sites
The court's decision should have little effect on YouTube and other UGC sites which are, for the most part, already using this type of information without paying a licensing fee. Though the CBC case did not specifically address the issue, there is an important distinction between factual data and copyrighted video. A video highlight of Alex Rodriguez hitting a home run is copyrightable material, however, the fact that Rodriguez hit the home run is factual data and, accordingly, not copyrightable. YouTube and other UGC sites generally require those who post information to agree not to "submit material that is copyrighted, protected by trade secret or otherwise subject to third party proprietary rights, including privacy and publicity rights…." Viacom, unlike some other content owners, has not signed a license agreement with YouTube and has filed suit charging that YouTube is liable for users that post video clips of its copyrighted material. The resolution of this case will further clarify the use of copyrighted material on YouTube and other UGC sites.
Fantasy sports game operators no longer need to obtain and pay for a license to use players' names and statistics. The number of fantasy providers will likely increase and the top-tier providers will need to differentiate themselves and offer a superior product to compete with the likely influx of new fantasy game operators. This may provide an opportunity for property owners to offer a more comprehensive and appealing rights package, including video and other copyrighted material, to game operators that want to distinguish themselves from the pack. A fantasy website that enables fantasy game players to see video clips of their players hitting home runs could provide the consumer with a richer experience than the website that merely posts the home run as a statistic. To increase their market share—and thereby increase revenue—leading fantasy game operators will likely have to equip their games with more features to enhance the consumer's experience to create a more robust fantasy sports product.
See C.B.C. Distribution and Marketing, Inc. v. Major League Baseball Advanced Media, L.P.
How We Can Help
Herrick has followed the CBC case since its inception and can help you understand its implications for you, whether you are a property owner, licensee, celebrity, or user generated content site operator. To read a previous Herrick alert on this topic, please click here.
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Copyright © 2008 Herrick, Feinstein LLP. The IP, Sports & Entertainment Alert is published by Herrick, Feinstein LLP for information purposes only. Nothing contained herein is intended to serve as legal advice or counsel or as an opinion of the firm.