By Michelle Cooke
As with any form of entertainment, a fan base is key to the success of sports teams. Fan dedication to a team will pack a stadiums game after game and pay for high priced box seats, and lead to the construction of luxury stadiums. Fan dedication to players generates lucrative contracts, jersey and other merchandise sales, and coveted endorsements. It is the fan’s emotional tie to a team that transcends time, losing streaks, changes in coaches and players, and geographic moves by the fan, player or even the team. Through such upheavals, the consistency of the team’s brand and image help sustain fan devotion.
It therefore is unsurprising that among a team’s most valuable assets are its trademarks and logos, and for players their names and images. Want proof of the big dollars at stake? Here are rankings of sports brands by Forbes.com: the number one sports brand worldwide, Manchester United, was valued at $351 million; the number one U.S. sports team, New York Yankees, was valued at $217 million; and the number one ranked athlete brand worldwide, Tiger Woods, was valued at $64 million. Forbes.com, September 26, 2007. The money generated by unauthorized use of sports brands is significant. In a single weekend in February 2008, U.S. Immigration and Customs Enforcement, with assistance from the NBA, seized over $730,000 in counterfeit and infringing merchandise, the majority of which appeared to be fake NBA, MLBA and NFL goods, at a New Orleans’ flea market.
As any intellectual property owner, teams and players must stop the misuse of their intellectual property to prevent an erosion or even forfeiture of their rights. Failing to stop someone from making unauthorized use of a mark over a long time period may prevent the owner from being able to stop that party from continuing the activity in the future. Widespread unauthorized trademark use eventually can denuder a trademark of its key function, specifically, to act as a source identifier for products and services. Consumers see trademarks as indicia of quality. They expect the same quality from similarly branded products and services or view the trademark as the endorsement of the brand owner. When multiple unrelated parties use a trademark without quality control by or the approval of the owner, consumers no longer can rely upon the trademark to indicate source or quality. When this happens, the owner looses control of the mark.
Stopping unauthorized use when the use results in commercial gain for the user is a fairly easy and non-controversial call. A team is unlikely to incur backlash from shutting down vendors of unauthorized T-shirts with team logos. Standard procedures, such as civil action, raids and seizures, can be used to stop infringing sales.
The fight for control of intellectual property rights inevitably has spread to the Internet. In 2007, a non-U.S. soccer team, The Football Association Premier League Limited, and others, filed suit against YouTube for alleged copyright infringement. The basis for the suit is the user generated content posted on and disseminated through www.youtube.com that contains video and audio of broadcasts of games, in which the league claims copyright ownership. Viacom also filed suit against YouTube in 2007 raising similar claims. The fact that YouTube is profiting from its dissemination of user generated content undoubtedly helped motivate these plaintiffs into taking legal action. If these plaintiffs are successful against YouTube, the impact it would have generally on unauthorized online dissemination of game clips will remain an open question for some time to come. Take for example the Napster fight where online music sharing revealed itself to be a hydra. While the music industry successfully shut Napster down, multiple new online music sharing venues quickly filled its place. Similarly, the plaintiffs against YouTube undoubtedly also are considering how to approach other Web sites that show unauthorized copies of game broadcasts.
Another question that faced the music industry which the YouTube plaintiffs and other content owners will have to answer, is what to do with the individuals that post clips on YouTube in violation of the owners copyrights and trademarks. Even non-commercial but unauthorized use of an owner’s intellectual property can damage the owner’s rights if unchecked. The duty to police and enforce one’s intellectual property rights can give rise to difficult issues when the intellectual property owner is a sports team and the unauthorized user is the very entity driving its business, the fan base. How does a team balance building a strong brand image by protecting its marks when the infringer may be an overly enthusiastic fan?
The NBA and NHL appear to be trying to adopt fan friendly approaches. Both leagues have their own YouTube channels to post video, which acknowledges the reality of the Internet and gives the leagues access to the ever expanding universe of YouTube viewers. The potential argument that partnering with YouTube may be a concession to online infringement that could be used against the leagues in their future efforts to protect their copyrights, can be counter-balanced by a vigorous enforcement program. This would include routinely reviewing and notifying YouTube and other relevant online venues of unauthorized postings of the leagues’ copyrighted material for take down under the Digital Millennium Copyright Act.
To avoid angering fans, teams and leagues are more likely to tread carefully, if at all, when there is non-commercial but nonetheless unauthorized use of their marks on a Web site. Take for example, a fan-run Web site dedicated to a team that uses the team’s distinctive colors throughout and team logo as the background wallpaper, displays the team name prominently in the banner at the top of every page, is peppered with photographs and clips of the players and team mascot taken from broadcast games, and plays the team song in a continuous loop. Each of these items may very well constitute trademark and copyright infringement, but the Web site only promotes and encourages devotion to the team and players. Is this fan site not positive publicity for the team? Or should the team take action, even informal action, against this fan to protect its intellectual property rights and risk provoking a backlash?
So, what can teams do to protect their intellectual property without fighting with their own fans? Teams should continue to work to stop others from profiting from unauthorized use of their intellectual property. In many instances, this will entail standard enforcement procedures of seizures and legal action. Other circumstances though may require different and creative approaches for maximum long-term benefit. For example, intellectual property owners can stop infringers by turning them into licensees. Establishing licensing arrangements with royalty payments may be worth exploring particularly in respect of online use. Teams and leagues also need to be vigilant as to non-commercial yet unauthorized use of their intellectual property to minimize potential long term damage to their rights. A step in the right direction would be to craft straight forward guidelines that identify what fans can and cannot do. This would allow most fans to become authorized users of the intellectual property in a manner controlled by the licensing team. Develop creative and Interactive outlets for fans to celebrate the sport of their choice in venues controlled by the teams and leagues. When it comes to a team’s intellectual property, it works to everyone’s benefit to keep fans engaged, enthusiastic and under control.
Michelle A. Cooke is a partner at Steptoe & Johnson’s IP and technology group in its Century City office. Lydia Bergman, an associate in the same office, contributed to this article.