The dominance of social media allows individuals, including athletes, musicians, artists, designers and other influencers to build their personal brand within the confines of a social media account and outside the umbrella of a large sports or lifestyle brand, music label, art gallery or fashion house. Especially in the current social and political climate, as athletes and other individuals realize their voices matter on and off the field more than ever before, turning to personal social media platforms to speak out has become commonplace and encouraged. Similarly, companies seek athletes who cannot only market their brand, but also empower their brand's position on social, political or other societal concerns that are critical to consumers and potential consumers-as Nike's relationship with Colin Kaepernick shows.
Who Owns the Intellectual Property?
The relationship between athletes looking to build up goodwill in their personal brands and likeness, and companies' desire to leverage athletes as true ambassadors on their platform, raises a host of issues. One question that continues to evolve, particularly as athletes leverage their own personal brands, is who in fact owns the intellectual property created as a result of the company-athlete relationship?
When a marketer approaches an individual athlete with significant social media influence for a collaboration or endorsement, it is likely that the athlete may have already built up strong goodwill in their personal brand, including with respect to name, image and likeness, and, possibly, trademarks, logos or designs. (See, for example, discussion of Leo Messi's recent success in securing trademark rights, included in this issue's Quick Updates section.)
Traditionally, the ownership question could be answered by which party was driving the overall financial commitment. In today's market, financial investment is no longer the only driving factor in determining ownership rights, but instead just one piece of the puzzle. One key question is whether the company is designing (or redesigning) the individual's logo or developing a logo based on an athlete's "idea" or "concept," in which case the company may have a strong preference to own the logo-or, whether the company is simply providing a platform for the individual's preexisting brand and product line, in which case the athlete would want to continue to exert ownership rights. Some of the important questions companies and athletes need to consider include: How much will the parties collaborate on building goodwill for the brand? Is the company launching the individual's brand for the first time, creating the branding elements from scratch and designing the product line? How much of the individual's name and/or likeness is reflected in the brand's logo design or trademarks? How does the brand's financial or marketing investment play into these questions including the level of ongoing brand commitment?
Kawhi Leonard v. Nike
The high-profile case between NBA star Kawhi Leonard and Nike this past April serves as a good case study for exploring some of these questions and the pitfalls that can occur in the athlete-company relationship. After Leonard's time as part of Nike's Jordan brand came to an end, he soon realized that the "KLAW" logo, which is associated with his signature large hands and bears his initials, could potentially stay behind.
Leonard's continued use of the logo resulted in a dispute with Nike over its ownership, culminating in a lawsuit filed by Leonard against Nike during the 2019 NBA finals. In the suit, Leonard claimed rights to the logo based on an initial rough logo design and concept he had previously created and presented to the Nike team.
Nike successfully argued that, from an intellectual property law perspective, Nike's team designed the KLAW logo itself, and that it was sufficiently distinct from Leonard's rough sketch to be considered a separate work. Therefore, the KLAW logo was considered an original work of authorship entitling Nike to copyright ownership. In addition, from a contractual perspective, Leonard's endorsement contract granted ownership to Nike of any "logos, trademarks. or other forms of intellectual property" created by either Nike or Leonard in connection with the agreement.
Of course, it is natural, and consistent with general principles underlying intellectual property law, that a company's investment and expenditure of resources to make the logo or brand valuable would result in the company's ownership of rights in that logo or brand. Regardless of the parties' respective arguments, and the differences between Leonard's rough draft and the final KLAW logo, this dispute teaches athletes and companies a valuable lesson: Make sure to understand the intellectual property ownership at play and consider the expectation of the arrangement up front.
What's in a Name?
While athletes expect to continue to own their name or any version of their name (such as initials), this is not always the case (as Leonard's case shows). Logos can certainly be distinguished from the athlete and become a famous or recognizable brand on their own. What the contract says and who created and developed the logo or brand is the key, not whether it incorporates an individual's initials, name or likeness. This is true in other cases as well, inside and outside of basketball. When NBA star Steph Curry inked a blockbuster endorsement deal with Under Armour, Under Armour was tasked with designing and developing Curry's brand. Now, as shown through U.S. trademark registrations, Under Armour owns the trademark rights to Curry's "SC" brand, including a recent logo redesign in 2019. Another example of this is the well-known "RF" logo associated with Roger Federer. Nike created the "RF" symbol and built the brand to one of the most recognizable in the world-accordingly, after Federer's relationship with Nike ended, although his initials were his, the logo was not. Federer then purchased the logo from Nike.
What Can Be Learned Here?
On one hand, companies can consider other revenue streams outside of simply developing and owning an athlete's brand-for example, structuring a deal with an athlete who has more leverage, or whose existing brand can be lucrative for the company, as a licensing arrangement with a revenue share. One example is Tom Brady's TB12 fitness and nutrition brand. Brady had developed the TB12 brand on his own, with a trademark registration in the name of his personal company, but his current endorsement deal with Under Armour includes Under Armour selling certain TB12-branded apparel. Under Armour is tapping into the goodwill underlying Brady's name and likeness as well as his personal brand, not the other way around. This business model is becoming more common not only in sports but also in the consumer world where many celebrities are partnering with larger brands to launch new lines of products.
Companies can also consider alternative intellectual property ownership arrangements that still achieve the goals of both parties. If a company is spearheading the development of an athlete's brand (such as Nike for Leonard or Federer, or Under Armour for Curry), but an athlete seeks to retain ownership in the brand from the outset, the company can obtain the necessary rights through an exclusive license from the athlete for the duration of the endorsement deal, plus a possible tail period after the deal expires, for example. This way, the company reaps the benefit of its hard work in designing and building the brand, with exclusivity for perhaps five, 10, or 15 years. With this type of arrangement, the company also avoids the awkward scenario where, after the endorsement deal is over, the company sells merchandise with an athlete's name or initials, while the individual athlete endorses a different company. This can lead to consumer confusion and reduced interest in the brand-for example, Nike's KLAW brand is less exciting to buy now that Leonard is endorsing New Balance. Although the brand and the athlete can be separated from a legal perspective, it may not be prudent from a branding perspective.
On the other hand, athletes should be aware of the intellectual property rights at play and work with their attorneys to make sure the expectations for ownership rights in the athlete's brand, including name and likeness, are clearly communicated. Although signing a major endorsement deal is an exciting milestone for a young athlete, the athlete should weigh the short-term considerations of signing a deal with the long-term considerations of permanently relinquishing ownership in the brand. This is especially important in cases where the brand is heavily tied to the athlete's individual self, by prominently incorporating the athlete's name, initials, likeness or jersey number. And, of course, this is important in cases where the athlete participates in the development of the brand concept, logo or other features, including by contributing ideas that came about before the deal started, such as Leonard's.
Brands for Junior Athletes
These lessons on ownership of intellectual property will be especially key in the sports world over the next few years. The movement to allow collegiate athletes to monetize their name, image and likeness was fueled by California's Fair Pay to Play Act, signed by California Governor Gavin Newsom in September 2019, requiring the state's schools to allow collegiate athletes to monetize their name and likeness by 2023. Several other states followed suit, leading to an announcement by the NCAA this past April setting forth a path for collegiate athletes to earn money through their name, image and likeness. Most recently, the U.S. House of Representatives introduced a bipartisan bill in September 2020 that would preempt applicable state law on the topic. This wave opens up an entirely new category of personal athletic brands. High-profile junior athletes, including in high school and college, already have a prominent social media presence among sports fans-look no further than Shareef O'Neal (son of Shaquille O'Neal) or Bronny James (you guessed it).
Young athletes should look to The Greek Freak as a helpful role model in this regard. NBA player Giannis Antetokounmpo obtained trademark rights to the rhyming moniker "The Greek Freak" as a young up-and-coming athlete and continues to actively police infringing use of the trademark by online apparel stores and others selling unlicensed "Greek Freak"-branded goods. Although Antetokounmpo signed a sneaker deal later on in his career, like Tom Brady with TB12, he has built up goodwill in his own brand and kept the rights to "The Greek Freak" all to himself.
For athletes and other individuals-from a superstar like Kawhi Leonard, Roger Federer or Tom Brady, to an up-and-coming high school athlete with 100,000 Instagram followers and the eye of college recruiters, to companies looking to collaborate with, endorse, market or develop such individuals' personal brands-understanding and evaluating each contractual arrangement and intellectual property consideration at the outset is essential to protecting each party's rights and avoiding a dispute down the road.
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.