United States: April Sports Industry News

Last Updated: April 18 2017
Article by Christopher R. Chase and Alan Sacks

So much is happening at the intersection of sports, marketing, and entertainment that we've been inspired to send you summaries to help you put it all into context. Please enjoy this month's content.

What's Happening

Waivers from International Olympic Committee Rule 40. 
The US Olympic Committee ("USOC") recently released guidance on IOC Rule 40 as it pertains to the 2018 Winter Olympics in PyeongChang. The rule prevents 2018 Winter Olympic participants from appearing in advertisements during a "blackout period" unless such participants obtain specific waivers. For the upcoming PyeongChang Games, the "blackout period" is February 1 through February 28, 2018. Although directed at the Olympic participants themselves, the rule is meant to deter so-called brand-based "ambush" marketing during the Games.

The recently released guidance relaxes that ban by creating a waiver from such restrictions. The waiver allows brands using Olympic participants to continue "generic, in-market" campaigns as long as the campaigns begin running before October 1, 2017 and run continuously through the Winter Olympics. Much like Rio 2016, the USOC will grant waivers for Olympic participants that seek to appear in advertising as long as the following criteria (among others) for brands are met:

  • no direct or indirect association with the PyeongChang Games, Olympics intellectual property, or terms generally associated with the Olympic Games; " the initial campaign submission must be submitted to the USOC website no later than August 1, 2017; and
  • submissions must include a media schedule demonstrating that the campaign will be in market and run continuously starting no later than October 1, 2017.

Frankfurt Kurnit helped brands obtain Rule 40 waivers for the Rio Games. If your company is considering employing 2018 Winter Olympics participants for marketing purposes, and you have questions about the Rule 40 waiver process, please contact Christopher Chase.

The Madness May Be Over, But the March Continues: NCAA Enforces Its Rights In MARCH MADNESS. 
In early March, the NCAA sued online game developer Kizzang for trademark infringement, alleging that the company's "April Madness" online fantasy games infringed the MARCH MADNESS mark. National Collegiate Athletic Association v. Kizzang LLC, No. 1:17-cv-00712 (S.D. Ind. March 8, 2017). The NCAA also accuses the company of infringing its FINAL FOUR mark through the company's offering of a "Final 3" online bracket-predicting game. Although the lawsuit continues, Kizzang has stipulated that it will not use the allegedly infringing names during 2017.

A stringent enforcer of its rights in MARCH MADNESS and other marks used in connection with the Division I basketball tournament, the NCAA's suit against Kizzang comes on the heels of an opposition it filed in the US Patent and Trademark Office against the Big Ten Conference (which is made up of NCAA members). In that matter, the NCAA opposed the conference's trademark application for the phrase MARCH IS ON! for the promotion and coordinating of athletic events. The National Collegiate Athletic Association v. The Big Ten Conference, Inc., Opp. No. 91232826 (US Patent and Trademark Office, Feb. 13, 2017) (although the opposition continues, it has been suspended for settlement discussions). And for those brands that incorporate brackets into basketball-related marketing during March and April, note that the NCAA also claims common law trademark rights to the "images of brackets and marks consisting of or referring to the term 'bracket' in connection with entertainment services and related promotional and sponsorship services." See The National Collegiate Athletic Association v. Class Act Sports, Opp. No. 91220749 (US Patent and Trademark Office Feb. 23, 2015) (filing an opposition against the applications for BRACK ATTACK and DON'T LET ONE TEAM BUST YOUR BRACKET).

US Supreme Court Supports Copyright Protection for Fashion and Industrial Designs. 
On March 22, the US Supreme Court ruled in Star Athletica v. Varsity Brands that copyright law can protect designs on cheerleading uniforms. The Court set a clear, single test for copyrightability, resolving a split among various courts. The decision provides needed clarity and changes the tone of IP protection in the design industry: it can no longer be argued that US copyright law does not protect fashion and industrial design. Frankfurt Kurnit's Craig Whitney and Rachel Kronman penned an alert on this important decision.

The decision is already providing a helpful tool in a fashion/apparel brand's arsenal, as Puma SE recently cited the case in its infringement suit against fast-fashion retailer Forever 21, Inc. for allegedly copying a line of Puma shoes made in collaboration with pop star Rihanna. Puma SE v. Forever 21, Inc., No. 2:17-cv-02523 (C.D. Cal. March 31, 2017).

Protecting Three Stripes. 
Sportswear and footwear giant Adidas AG has increasingly enforced its three stripe trademark of late, suing the brands Puma, Marc Jacobs, Skechers, and now Juicy Couture, against whom Adidas brought a lawsuit for selling apparel that allegedly infringes the company's "three-stripe" trademark.  Adidas America Inc. et al. v. Juicy Couture Inc., No. 3:17-cv-00437 (D. Or. March 17, 2017).

The three stripe trademark enforcement threats have increased so much that Forever 21, Inc. filed a preemptive lawsuit against Adidas in response to a cease and desist letter it received. In this suit, Forever 21, Inc. argues Adidas is a trademark bully for taking enforcement of its three stripe mark too far. Forever 21 Inc. v. Adidas America Inc. et al., No. 2:17-cv-01752 (C.D. Cal. March 3, 2017). The retailer argues that "Adidas should not be allowed to claim that Adidas, alone, has a monopoly on all striped clothing."

Fanatics Acquires the Majestic Brand.
No longer solely a back-end e-commerce solution, Fanatics has transformed itself into a vertically integrated platform, whereby it not only operates e-commerce platforms and bricks-and-mortar retail locations, but also controls significant licensing rights. Recent licensing acquisitions include rights across the NHL, NBA, NFL, and various colleges, and, with the ownership acquisition of VF's Licensed Sports Group (which includes the Majestic brand), as announced on April 4, MLB's current on-field uniform rights as well. By adding Majestic's Pennsylvania-based manufacturing facility and the various league licenses, Fanatics now has greater influence over the sports licensing industry, as it can increasingly provide an end-to-end solution for licensed apparel and merchandise.

The "Moral" of the Story. 
Athletes sometimes misbehave. And sponsors or employers sometimes fire them -- relying on the so-called "morals clause." These clauses can be controversial for both endorsers and properties due to the sheer number of behaviors that can cause a breach. The "morals clause" was at issue when the recently relaunched N.Y. Cosmos soccer team terminated retired international soccer star Eric Cantona's consulting agreement with the team. The Cosmos argued Cantona breached the morals clause when it was reported that he punched a press photographer outside a pub in London. When the team enforced the morals clause, Cantona filed a breach of contract suit against the team for alleged improper termination of his consulting services. The parties have likely settled this dispute, however, as after two years Cantona dismissed his complaint at the end of March. Cantona et al. v. New York Cosmos LLC, No. 1:15-cv-03852 (S.D.N.Y. March 27, 2017) (Stipulation of Dismissal). Frankfurt Kurnit has written about the controversial "morals clause" issue here.  

Noted and Quoted

Stephen Curry Spoke. Under Armour Listened. Now What? 
An article written by The Associated Press and picked up by ESPN, USA Today, CBS News, and Sports Illustrated, among others, quoted Christopher Chase on contract issues arising from friction between the NBA star and his sponsor.

Protecting Your Legacy. 
Athletes Quarterly recently published H. Sujin Kim and Adam Osterweil's article, "Protecting Your Legacy: Every Athlete Needs A Game Plan For Estate Planning And Philanthropic Ventures." The article discusses estate planning and philanthropy from the athlete's point of view.

Want to Learn More?

On April 11, Christopher Chase presents a webinar for the Brand Activation Association entitled "From Acquisition to Activation, Best Practices for Brands When Negotiating Sports Marketing Agreements," where he will discuss negotiating sponsorship, endorsement, and licensing agreements with leagues, teams, and athletes. Info here.

On April 14, Christopher Chase speaks at NYU Law's Sports Law Colloquium on "The Evolution of Intellectual Property As a Key Value Driver in Sports." Info here.

www.fkks.com

This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.

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