Shifting path for right of publicity

Akeem Danielsgetty images

When a little-known, diminutive running back from Northern Illinois sued daily fantasy operators FanDuel and DraftKings two years ago, alleging that the companies unlawfully profited from the use of his name and statistics in their games, a federal judge quite predictably dismissed the case.

To those who have followed the evolution of the fantasy business even casually, it seemed to be a matter long settled.

Fantasy game providers have been free to operate without licenses from sports leagues or players associations since 2006, the product of a watershed decision that declared the stats produced during sporting events to be in the public domain, and thus exempt from the requirement of league or player approval.

And yet earlier this summer, the Indiana Supreme Court considered a question with the potential to unsettle that.

Reviewing an appeal by the aforementioned player, Akeem Daniels, who now is joined in the class-action lawsuit by two other former college players, a federal judge asked the Indiana justices to use state right of publicity laws to determine the following:

“Whether online fantasy-sports operators that condition entry on payment, and distribute cash prizes, need the consent of players whose names, pictures, and statistics are used in the contests, in advertising the contests, or both.”

If the justices find that they do not, it seems likely that the appeals court will let the lower court’s dismissal stand. But if Indiana’s highest court rules that fantasy sports operators do need a player’s consent to use his name or likeness — or clarifies the circumstances under which they do — that could lead the appeals court to send the players’ case back for a new hearing. There, a court could revisit a host of issues around not only fantasy sports but another emerging enterprise that shares many of its characteristics.

“I’ve been telling a lot of people that this case is very important, particularly as it relates to gambling,” said Jon Oram, a partner in the sports practice at law firm Proskauer. “There are all these various technology ventures springing up. And it all really goes to the question of what you can and can’t do without a license. The law seems to really be ever-evolving in this area. And I think the courts have had a very difficult time in trying to fit sports into the rubric of publicity rights and copyright and our other intellectual property laws.

“It’s an interesting time for us lawyers, because there are a lot of questions that are not susceptible to easy answers.

Evolution of publicity rights

The first time the concept of a “right of publicity” showed up in U.S. law came in a sports case.

In 1953, baseball card company Bowman sued up-and-coming rival Topps when the latter produced trading cards of baseball players that Bowman had signed to contracts that it believed to be exclusive. The lower court ruled for Topps, finding that the right to privacy that protected the players’ names and likenesses did not transfer to the companies that signed them to contracts. While Bowman could sue the players, it could not prevail against Topps.

But in an important reversal, the appeals court found for Bowman. Along with a right to privacy, the players had another, previously unexplored “right of publicity,” the court said. Rather than hinging on the protection of privacy, and the ability to collect a fee for waiving it, the court crafted the new right to acknowledge that famous people could actively trade on the use of their names and likenesses in commercial endeavors.

That three-word phrase — right of publicity — would form the bedrock of 65 years of evolving case law, applied first to trading cards, but later to other areas that affected athletes, including table games, video games, fantasy games and, perhaps next, sports betting.

Like right of privacy, right of publicity is a matter for state law, which means the way it is handled can vary based on jurisdiction. California courts consider publicity rights cases differently from New York courts, or Indiana courts for example. Though heard in federal court, a case typically reverts to the laws of the state in which it was brought.

That’s why the question in play landed with the Supreme Court of Indiana.

Like others of its ilk, Daniels’ case against FanDuel and DraftKings will come down to whether the athletes’ right of publicity trumps the fantasy providers’ First Amendment right to publish information that, in recent cases, has been ruled to be in the public domain. States vary in how their laws guide the courts to determine that.

In Indiana, those using name or likeness can do so under either of two exceptions: That the material has “newsworthy value” or that it is the “reporting of an event of general or public interest.”

While those sound almost identical, attorneys for the athletes have argued that the use of the words “newsworthy” and “reporting” indicate that the exceptions were meant for the traditional distribution of information as done by news organizations and book publishers, not the commercial use of stats and player images by companies operating daily fantasy games and soon to be taking bets in the states that allow it.

In their brief in support of the college players, the NFL Players Association and other players unions questioned whether Indiana legislators meant for the exemption to extend beyond traditional news outlets.

“Just because you put out a box score doesn’t make you a news organization,” said Casey Schwab, vice president of business and legal affairs for the NFLPA. “Just because EA scrolls scores across the bottom of a video game, that doesn’t make EA ESPN.”

Were the Indiana Supreme Court to offer guidance that leads the appeals court to rule against FanDuel and DraftKings, it would be a 180-degree turn on a case that was resolved through an appeals court decision that seemed to leave little room for re-evaluation, at least on the question of the use of names and stats in traditional fantasy games.

In CDM v. MLBAM, a fantasy operator with mom-and-pop roots sued MLB when the league refused to renew a license that the company had held for about a decade. Seeing the increasingly popular pastime as a new revenue stream thanks to the emergence of online play, MLB had decided to bring the games in-house.

Relying on 25-year-old case law that dealt with stats-based tabletop games that typically used cards and dice (see story, left), MLBAM and the MLB Players Association argued that the league controlled the data used to create the games and that the unauthorized use of names and statistics violated the publicity rights of the players.

In a decision that surprised the industry, a federal court in Missouri sided with the fantasy provider. Then, a federal appeals court concurred, issuing a ruling so clear in its message, it made it sound unfathomable that a court could see it any other way.

“It would be strange law,” Judge Morris Arnold wrote, “that a person would not have a First Amendment right to use information that is available to everyone.”

“You had the convergence of the right of publicity cases where there is protection and the data cases where there really isn’t,” Oram said. “Fantasy sports was really the first time where those two converged. People were looking at it and asking, ‘Is this an apple or is it an orange?’ And the judges are constrained by the laws that they’re looking at as opposed to trying to predict where technology is headed.

“I think the courts looked at it and said, ‘This looks more to me like data than like protecting somebody’s image.’ So that was essentially the path they chose.”

Before you assume that means that FanDuel and DraftKings are in the clear, consider that not only are there some differences between the daily fantasy sites and the games that CDM ran, but also the 180-degree turn that the court took when it ruled against MLB.

“All of a sudden, judges looked at these games and said, ‘Wait a minute. What we’ve essentially done here is digitize the old newspaper box score,’” said Ahmad Nassar, a former NFL union lawyer who is now president of NFLPA licensing arm Players Inc. “Newspapers don’t need a license to publish the box scores. Those are stats. That’s newsworthy. This is all protected under the First Amendment. Let’s move on with our lives.

“That quickly unraveled any licensing, both at the league level and at the players associations — not just right of publicity, but also federal trademark, copyright and intellectual property as it relates to team and league marks. And that’s pretty much the state of the fantasy world today.

“But that wasn’t the end of the story.”

What comes next?

At their core, popular video games such the “Madden NFL” series, “NBA2K” and “MLB The Show” are quite similar to the tabletop games that came before them. Game makers use stats to create simulation that allows fans to reproduce, or reimagine, sports as they are played in an actual season.

Of course, video games play out quite vividly on screens rather than in the imaginations of the players. But one could argue that the core premise — the simulation of a sport based on actual players and their stats — is the same.

Fantasy case law evolved from tabletop case law.

And yet the courts have issued markedly different rulings on publicity rights cases involving video games than they did in the watershed CDM v. MLBAM fantasy case.

Clearly, they see some distinctions.

The two cases that thus far have carried the water on the use of player names and likenesses in sports video games are almost identical.

The named plaintiffs, former Arizona State and Nebraska quarterback Sam Keller and former Rutgers quarterback Ryan Hart, sued EA — Keller in California, Hart in New Jersey — charging that the game maker violated their respective rights of publicity when it included them in its once-popular NCAA football series without paying them or acquiring permission.

In its defense, EA based its argument on a “transformative test” developed in California, saying that while it admitted using the players’ names and likeness without permission, it did so using renderings created by artists, and in the larger context of a game that incorporated hundreds of players. Those factors, EA argued, “transformed” Keller’s identity into something new, which was protected by the First Amendment.

While the lower court agreed with EA, the appeals court did not, saying that while EA had transformed the players’ identity, it did not do so sufficiently to trump the players’ publicity rights.

In New Jersey, the appellate court found in favor of Hart, applying the same transformative test used in the Keller case because it found New Jersey right of publicity laws to be “strikingly similar” to California’s.

EA and the NCAA reached a $60 million class-action settlement with players used in its college games, which it stopped producing in 2014.

“Hart and Keller were two cases that really represented existential threats to our business because they took the fantasy logic of First Amendment protection and applied it to video games, where EA is still the single biggest licensee for the NFL Players Association,” said Nassar, who worked on briefs the NFLPA and other player unions filed in support of Hart and Keller. “We said, ‘Listen, this is
different.’ Even if you buy into the logic of digitizing a box score from a newspaper, what’s happening in a video game is very different.”

The courts have for the most part sided with players when it comes to video games and game operators when it comes to fantasy. But where will they land with what comes next?

At the firm O’Melveny, sports practice group co-chair Irwin Raij recently launched a committee of lawyers from various disciplines to consider prickly issues that might be lurking behind the commercial promise of sports betting.

“I created a task force at the firm because I think it’s much deeper than saying: ‘We’re going to have gambling. Yay! Everybody’s going to make money,’” Raij said. “There’s a complex set of issues that are pretty interwoven at times.

“This Indiana case that’s currently pending actually has the ability to address broader points than what was involved in Motorola. So you could have two courts with different opinions. And where does that lead you?”

Any time appeals courts disagree on a matter it could end up in front of the U.S. Supreme Court. Motorola, as it is widely known, is a frequently cited 1997 case in which the court ruled that a data stream from an NBA game was not the same as a broadcast, and thus could not be protected by copyright.

It was the first major sports case to deal with the impact of digital technology.

Considering the vastly evolved landscape of products — from tabletop games to video games to fantasy games to betting — and the ever-changing world of digital media, some suggest it’s time to look at it all with fresh eyes.

“Now that we’re in this world where we’ve got sports betting coming down the pike, where is that going to fit in?” Nassar asked. “Does that open up the fantasy line of cases again? Fantasy isn’t really betting. And betting isn’t really video games. So where does betting fit in?

“We’re about to bring up this right of publicity issue in a totally different context for the third time in 10 or 15 years. We just want to make sure it doesn’t undermine the players.”