Court Sides with Intersport in Dispute over Use of ‘March Madness’

May 23, 2008

An Illinois state appeals court has affirmed a lower court’s ruling, effectively dismissing the claim of the National Collegiate Athletic Association and the March Madness Athletic Association, L.L.C., which had claimed that a defendant company had violated its trademark rights to “March Madness” when it used the term to sell its own content to video-enabled wireless communications devices on demand.
Among the court’s findings were that the plaintiffs should have contemplated Intersport, Inc.’s use of such technology to deliver content when it granted a license to use the term in 1995.
Intersport was actually the original owner of the term. In 1989, it registered the term “March Madness” as a service mark with the United States Patent and Trademark Office for the purpose of marketing its sports-related programming for broadcast in a range of media, including television programming featuring college basketball coaches discussing and analyzing the NCAA men’s Division I college basketball tournament (the Coaches Shows).
A year later, however, the Illinois High School Association (the IHSA) sought to register the mark, claiming that it had used the term “March Madness” in connection with its state high school basketball championships since the 1940s. The IHSA discovered Intersport’s registration, and a dispute ensued. Ultimately, the IHSA and Intersport agreed to resolve any dispute regarding the ownership of the mark by pooling their trademark rights into a new entity, March Madness, L.L.C. This arrangement continued until 1995, when the IHSA became involved in a dispute with the NCAA over the use of the term. At that time, Intersport assigned its rights in the March Madness mark to the IHSA in exchange for, inter alia, royalties and an exclusive, perpetual license to use the mark in connection with its Coaches Shows. The license agreement specifically provided that:
2.1 IHSA hereby grants Intersport an exclusive, paid-up license to use the March Madness Mark in the following manner:
(a) in connection with entertainment services, namely the presentation of athletic and entertainment personalities in a panel forum; and
(B) to advertise, promote and sell publications, videos, and media broadcasts in connection with section 2.1(a).”
While Intersport began operating under that agreement, the legal dispute between the NCAA and IHSA continued to fester. In 2000, they agreed to pool their rights in the mark and form the March Madness Athletic Association (the MMAA). The written agreement between the IHSA and the NCAA forming the MMAA specifically provided that the IHSA thereby assigned the Intersport license agreement, exactly as written, to the MMAA.
In March 2006, Intersport entered into an agreement with Sprint, under which Intersport would provide Sprint with a variety of original programming to be disseminated to Sprint customers via Sprint’s mobile wireless media network. Intersport would also provide edited segments of its Coaches Show programming for dissemination over Sprint’s mobile wireless media network.
The day after Intersport and Sprint announced their agreement, the NCAA sent Intersport and Sprint a letter asserting that if Intersport were to provide the Coaches Shows to Sprint for distribution to mobile communications subscribers, Intersport will have violated the license agreement. The NCAA also took the position that the term “media broadcast” as used in the license agreement should be interpreted in accordance with the definition of “broadcast” in the Federal Communications Act (47 U.S.C. §153(6) (2000)), which defines “broadcasting” as a distribution to the public via television or radio, and the federal regulations concerning personal communications services (47 C.F.R. §24.3 (2007)), which prohibit personal communications service providers from broadcasting as defined in the Federal Communications Act.
Intersport, of course, disagreed, and sought a declaratory judgment proclaiming that it was within its rights to use the mark. The defendants requested that the court deny Intersport the relief it had requested, enter a finding that Intersport’s actions constituted a breach of the license agreement and trademark infringement, award the NCAA and the MMAA monetary damages, and permanently enjoin Intersport from using the mark. The dispute percolated to the trial court, which found that the license agreement was unambiguous and that the term “videos” encompassed any recorded visual production. Intersport then filed a “motion for the entry of judgment, which the trial court granted.
The defendants appealed, arguing that the transmission of Intersport’s Coaches Shows to Sprint’s subscribers does not constitute selling videos within the meaning of the license agreement. Specifically, the defendants claimed that the plain and ordinary meaning of ‘videos’ in 1995 implies that there is a physical object in the hands of the end user. The defendants also claimed that the “narrow language” of the license agreement does not include later-developed technology.
The court promptly dismissed the first argument, turning to the second. Citing Boosey & Hawkes Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481, 486 (2d Cir. 1998), the court found that “if the words used in the license agreement are broad enough to encompass the new use, and the new use is not completely unknown at the time of contracting, the burden of framing and negotiating an exclusion of that use falls on the grantor of the license.”
“… (A)t the time Intersport and the IHSA entered into the license agreement in 1995, the parties would have been able to contemplate distribution of video content to mobile wireless communications devices and comprehend this meaning of the term “video.” See 11 R. Lord, Williston on Contracts §32:7 (4th ed. 1999) (explaining that the court must interpret the contract in light of the objectively determinable circumstances at the time that the contract was made). We accordingly find, as the Second Circuit in Boosey & Hawkes did, that the license agreement in question here encompasses the so-called “new use” of disseminating video content to mobile telephones and other mobile wireless communications devices. Boosey & Hawkes, 145 F.3d at 486.
“We also find it significant that Intersport’s license is exclusive and perpetual. The fact that there is no time limitation on the license, and no clause specifically excluding later-developed technology, suggests that the terms of the license should be interpreted broadly. Indeed, as the perpetual marketing and representation agreement, executed simultaneously with the license agreement (see Gallagher, 226 Ill. 2d at 233, 874 N.E.2d at 58) provides, Intersport had an obligation to promote and further the licensing and use of the March Madness Marks. Intersport’s agreement with Sprint accomplishes this purpose. For all of these reasons, we find that the license agreement does encompass the right to disseminate video content to mobile wireless communications devices on demand.”
Intersport, Inc. v. NCAA and March Madness Athletic Association, L.L.C.; App. Ct. Ill., 1st Dist, 3d Div.; No. 1-07-0626, 2008 Ill. App. LEXIS 227; 3/26/2008
Attorneys of Record: (for defendants) Antony J. McShane, Michael G. Kelber, Hillary A. Mann, Neal, Gerber & Eisenberg LLP, Chicago, IL. (for plaintiff) Paul E. Veith, Michael C. Andolina, April D. Lambert, Sidley Austin LLP, Chicago, IL.


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