United States: Three Point Shot - January 2015

Antitrust Class Action Suit Threatens to Put UFC in Choke Hold

When people talk about mixed martial arts ("MMA"), it is likely within the octagonal context of the Ultimate Fighting Championship ("UFC"). UFC exploded onto the domestic sports scene over 20 years ago and has since firmly established itself as the premier MMA league in the United States with an estimated value between $2 and $4 billion. UFC's parent company, Zuffa, LLC, rakes in nearly $500 million in annual revenue through the promotion of live events, merchandising, licensing fees, sponsorships, advertising fees, video game fees, and digital media revenue streams.

One way that UFC has maintained its industry dominance is by absorbing its competitors. The MMA behemoth successfully tag-teamed its way to capturing approximately 85-90% of the total revenue derived from live elite professional MMA bouts. Unfortunately for UFC, the league's dominance has prompted several disgruntled MMA fighters to punch back.

In a complaint filed on December 16, 2014 in the United States District Court in San Jose, California, three former UFC fighters contested the legality of UFC's business practices, which allegedly contributed to the league's dominance in MMA. The plaintiffs, Jon Fitch, Nate Quarry, and Cung Le (the "Plaintiffs"), claim that UFC violated Section 2 of the Sherman Antitrust Act by using overarching anticompetitive schemes to maintain and enhance its monopoly and monopsony power in the market for live elite professional MMA fighter services. (Le, et al. v. Zuffa, No. 14-05484 (N.D. Cal. filed Dec. 16, 2014)).

The complaint identifies UFC's alleged monopoly and monopsony power – a veritable double leg takedown – as the driving forces behind fighter compensation suppression and the inappropriate expropriation of UFC fighters' identities and likenesses. According to the complaint, UFC's industry dominance enables the league to pay fighters a mere fraction of what they would make in a competitive market. The Plaintiffs claim that UFC fighters earn approximately 10-17% of the revenue generated from a bout, compared to the nearly 50% revenue earned by athletes in the four major sports leagues.

The Plaintiffs highlight UFC's exclusivity contracts with several major physical venues for their MMA bouts as additional evidence of the league's illegal monopoly power. As a result of these contracts, the Plaintiffs claim that other MMA leagues are precluded from hosting their events in these venues, which purportedly suppresses revenue and prevents growth by eliminating channels for international exposure. The Plaintiffs further claim that UFC forces prospective UFC fighters to sign contracts that bar them from working with would-be rival MMA promotion companies.

The case against UFC might have some traction, at least in part, due to the league's social media presence. In 2012, UFC president Dana White delivered a below-the-belt blow to the industry by uploading a video of himself to YouTube holding a tombstone with the names of former MMA competitors along with their "dates of death." White refers to himself as the 'Grim Reaper' in the video, which has since been taken down. White has also made comments on Twitter and in interviews boasting about the lack of competition in MMA.

The legal battle between the Plaintiffs and UFC is only in the first round, but the stage has been set for a potentially long and brutal fight. UFC has not yet filed an answer to the complaint, but affirms that it will "vigorously defend itself and its business practices." While the Plaintiffs have been waiting for class certification for their suit, two similar lawsuits have been filed (an undercard of sorts) on behalf of four different MMA fighters.

Fighters and enthusiasts alike are sitting ringside, popcorn in hand, anxious to see how this lawsuit will affect the future of MMA. Until then, the industry eagerly awaits the judge's scorecard.

French Media Regs Leave Sports Clips on Cutting Room Floor

When it comes to sports, the U.S. touts a particular brand of American exceptionalism. After all, the United States is home to four of the top ten most popular team sports and forty out of the fifty most valuable sports franchises in the world. Yet, let's not forget that the top three most valuable sports clubs on the list are European soccer powerhouses. The Beautiful Game, the World's Game, is quite a popular sport, with legions of fans hungry (as any American sports nut) for highlights of the day's soccer matches. Indeed, in this respect, the American sports landscape is not unique at all.

Much like the U.S., sports financing for our friends across the pond has become increasingly dependent on the broadcasting rights to live content, as the exclusive rights to broadcast live sports have soared in value. This rise in sports programming licensing fees is forcing the cable and broadcasting industry into a new reality.

Sports programming appears to be one of the main reasons millions of Americans resist cancelling their traditional cable TV subscription (a/k/a "cord-cutting"). Ironically, the high premium costs programmers and distributors pay for sports ultimately get passed down to subscribers, who, due to such increasing costs, may consider less expensive cord-cutting, cord-shaving and over-the-top internet programming alternatives.

In France, the increased costs of live sports content have spurred a fight over the replay of sports highlights, pitting two fundamental rights against one another: property rights and the right to information. On the one side of the pitch we have programmers attempting to limit the manner and frequency with which non-rights holders can broadcast sports highlights, or short extracts, in order to protect the exclusivity that is so crucial to their investment. Facing off against the programmers are sports news shows asserting their right to exploit short extracts as information that is of great interest to the public, guaranteed to them by Article L. 333-7 of the Sport Code. Not surprisingly, French fans' love of soccer is fueling this fight – a battle that has already gone into extra time, dating back to the 1980s.

According to the European Audiovisual Observatory: "Since 1986, Article L. 333-7 of the Sport Code has given the channels the right to broadcast brief excerpts of sports events for which the rights are held by another editor, by virtue of the public's entitlement to be informed." However, implementing legislation was never passed to define the parameters of a "brief excerpt." In the absence of a legislative definition, standard practice and case law in the 1990s gave rise to an accepted rule of ninety-second clips per hour of programming.

However, in February 2012, the French legislature forced the issue, adopting Law Number 2012-158, requiring France's media-governing body, the Conseil Superieur De L'Audiovisuel (the "CSA") to define the parameters of permissible "brief excerpts." On January 15, 2013, the CSA published a deliberation officially allowing monothematic broadcasts (those focusing on only one sport), in addition to general news outlets and multidisciplinary sports shows, to air ninety-second sports extracts, in line with long-accepted practices.

Yet, on October 30, 2014, following pressure from certain stakeholders, the CSA rolled back these previously accepted practices. Specifically, as of January 1, 2015, monothematic broadcasters must wait a full twenty-four hours after the end of the original program's broadcast before retransmitting any sports extracts. Moreover, the CSA placed two additional constraints on top of the ninety-second restriction, limiting clips to "three minutes per day of competition and thirty seconds per match."

According to commentators, the new constraints will most severely impact programs like Telefoot, a soccer-only program aired since 1977, which will now have to wait an entire week to televise clips of "goals scored in Ligue 1 matches the day before." Programmers have argued that such limitation certainly diminishes the clips' value (not to mention their show's timeliness and punch), which comes from the use of live, or near-live, game clips. While consumers can still watch general news outlets or multidisciplinary sports programs for timely highlights, such highlights will no longer be available on single-sport (e.g. soccer-only) programs.

The rights holders clearly lobbied hard and won big concessions in the latest CSA deliberation. It remains to be seen whether France's soccer fans eager for more highlights will fight back, even the score, and ultimately reach their goooooooooooal.

Pistols Drawn! Trademark Showdown over Mascot Finally Resolved

Even though the year is 2015, two schools recently engaged in a dispute reminiscent of the Old West. This past October, Oklahoma State University ("OSU" or "Oklahoma State") sued New Mexico State University ("NMSU" or "New Mexico State") for using a cowboy mascot on certain team apparel that was "confusingly similar" to Oklahoma State's venerable Pistol Pete, whose image is a registered trademark of OSU. Despite an apparent decades-long history of New Mexico State previously using a Pistol Pete mascot, Oklahoma State filed a trademark infringement complaint in federal court, formally requesting that NMSU bench its own Pistol Pete immediately. Such action had been informally requested of NMSU previously, but NMSU had shown resistance to disassociating itself from its lucky charm, at least for use on "classic" apparel.

The Pistol Pete caricature is based on Frank Eaton, a Hall of Fame gunslinger from the late 1800s. Eaton, better known as Pistol Pete (not to be confused with "Pistol Pete" Maravich, a sharpshooter of a different kind who played in the NBA almost a half-century ago), acquired his nickname after he outshot United States Cavalry men at age 15. For Oklahoma State, Eaton is significant because he is buried in the state of Oklahoma. For New Mexico State, legend has it that he once won a hotly contested gun fight in New Mexico's capital of Albuquerque.

According to Oklahoma State, the University has been using trademarks depicting Pistol Pete since at least 1930, whereas New Mexico State waited until the 1960s to sign him as a free agent and make him their mascot. While Pistol Pete is still the face of the Oklahoma State Cowboys, New Mexico State eventually transitioned into its own gun-toting, mustachioed mascot in the 2000s, officially known as "Classic Aggie." Interestingly, the University of Wyoming also once claimed a version of Pistol Pete as its athletic mascot, and tried to register the image with the U.S. Patent & Trademark Office in 1989, provoking an outcry from Oklahoma State. Instead of the conflict reaching a boiling point, however, the two sides came to an agreement for University of Wyoming's concurrent use of a cowboy image, with different coloring. To mark its territory moving forward, OSU displayed the letter "R" on its Pistol Pete marks. While NMSU rebranded its image about a decade ago, the modern mascot was not part of the complaint. Rather, the lawsuit was sparked when an old image resurfaced as part of a line of Classic Aggie merchandise, which Oklahoma State deemed confusingly similar to its own trademarked mascot.

In a case reminiscent of Yosemite Sam's declaration to Bugs Bunny that "this town ain't big enough for the two of us," Oklahoma State filed a complaint on October 20, 2014 in the Western District of Oklahoma, asserting claims of trademark infringement and unfair competition. (Oklahoma Agricultural and Mechanical Colleges Board of Regents v. New Mexico State University, No. 14-01147 (W.D. Okla. Filed Oct. 20, 2014)). The complaint not only demanded attorney's fees and any and all profits derived from use of the Pistol Pete image, but also asked for all products, printed materials, signage and other articles that included Pistol Pete's image in NMSU's possession to be destroyed.

Just as the parties lined up for a legal showdown, the two schools settled the whole shootin' match and entered into a licensing agreement. Under the terms, Oklahoma State will collect a nominal fee of $10 a year and allow New Mexico State to continue using the Classic Aggie image on a limited number of items sold in the school's bookstore, online, or through alumni relations – this allowance is being capped at 3,000 items per year. Otherwise, Pistol Pete will remain in the hoosegow, or NMSU's penalty box, as the school will be prohibited from using the image or mascot in relation to its athletic program. If New Mexico State breaks one of the covenants, OSU would have the ability to bring another suit. For the time being, Pistol Pete and Classic Aggie will continue to coexist as rivals in separate leagues, refusing to go down without a bang.

Three Point Shot - January 2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions