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July 12th, 2017
June/July Sports Industry News
Ban on "Offensive" Trademark Registrations Lifted
On June 19, 2017, the US Supreme Court unanimously ruled in Matal v. Tam that Section 2(a) of the Lanham Act, which prohibits the federal registration of disparaging trademarks, is unconstitutional because it violates "a bedrock First Amendment principle: Speech may not be banned on the ground that it expresses ideas that offend." The decision reverses the longstanding practice of the United States Patent and Trademark Office to refuse such registrations, and affirms the rights of owners of arguably disparaging marks. Frankfurt Kurnit's Catherine Farrelly penned an alert on this important decision.
The decision has already affected the sports world, as the five Native Americans challenging the Washington Redskins' REDSKINS registrations withdrew their lawsuit against the team. Reason: their claims were brought under Section 2(a) of the Lanham Act, which has now been held unconstitutional. The Department of Justice, arguing in favor of the same provision of the Lanham Act, also abandoned its case, writing "consistent with Tam, the court should reverse the judgment of the district court and remand the case with instructions to enter judgment in favor of Pro-Football." Pro-Football Inc. v. Blackhorse et al., No. 15-1874 (4th Cir. 2017).
A Touchdown for Spirits
The NFL recently lifted its ban on liquor advertising during its games and liquor companies will now be able to advertise their vodkas, whiskies, and rums during NFL game broadcasts. Some restrictions remain: the number of 30-second liquor ads allowed per game is capped at four, with a limit of two ads in any quarter or within halftime, and football-themed liquor ads are prohibited. Liquor companies will also have to stay within the guidelines set forth by the various broadcast networks, as well as their own industry trade organization - DISCUS.
The Party Stops Here?
Continuing the trend of athlete branding, Rob Gronkowski (through his IP holding company, Gronk Nation LLC) recently filed a trademark application for the registration of a silhouetted figure about to spike a football (below left) for various articles of clothing. Nike opposed this application based on Nike's Jordan Brand "Jumpman" logo (below right). Nike argues that Gronk's use and registration of this logo will "inevitably lead to confusion, to mistake, or to deception of the public" and is likely to dilute "the distinctive quality" of the famous "Jumpman" logo. Interestingly, Gronkowski is a Nike endorser. Nike, Inc. v. Gronk Nation LLC, Opp. No. 91235231 (TTAB June 19, 2017).
NASCAR's Stewart-Haas Racing ("SHR") team recently settled its $31 million lawsuit against sponsor Nature's Bakery. Filing in state court in North Carolina in early February, SHR had alleged that Nature's Bakery failed to make agreed-upon payments. Nature's Bakery, which entered into the sponsorship to have primary placement on the SHR team's car driven by Danica Patrick, countered that it did not receive the return on investment that SHR promised, and that the team was not able to guarantee Patrick's exclusivity, as she promoted another nutrition company that she endorsed. As part of the settlement, Nature's Bakery will return as a sponsor for four top NASCAR series races this year, to be split between SHR's drivers. Although sponsorship disputes do not often land in court, this suit shows the potential for misaligned expectations between the selling properties and hopeful sponsors, as well as the difficulty in obtaining complete exclusivity from a property, particularly when a team's athletes have their own endorsement deals.
New York Attorney General Stops Scouts
On June 30, the New York Attorney General announced a settlement with a college athlete scouting company for deceptively advertising its recruiting services. Attorney General Eric Schneiderman accused National Scouting Report, Inc. of falsely advertising the success of NSR's recruiting programs and making claims about services provided by scouts that went unfulfilled. As part of the settlement, NSR will modify its advertising and pay over $20,000 in restitution, costs, and penalties. This investigation serves as a reminder to marketers in the sports industry that not only do they have to address potential concerns from the Federal Trade Commission, competitors, or individuals, but from state law enforcement as well.
Noted and Quoted
Defending Your Trademark
Athletes Quarterly recently published Christopher Chase's article "Defending Your Trademark," which addresses the need for athletes to protect their names, nicknames, logos and other intellectual property rights.
Christopher Chase recently attended the NBA draft-themed American Express 'Teamed Up' event at the PlayStation Theater in New York City, which featured NBA legends Shaquille O'Neal and Alonzo Mourning. Chase assisted American Express with the negotiation of its NBA sponsorship renewal and the appearance agreements for O'Neal and Mourning.
If you have questions about sports industry legal matters, please contact Christopher Chase at firstname.lastname@example.org or (212) 826 5568, Alan Sacks at email@example.com or (212) 705 4857, Lisa E. Davis at firstname.lastname@example.org or (212) 826 5530, or any other member of the Sports Group at Frankfurt Kurnit.
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