By Maidie E. Oliveau*
An entrepreneur wishing to use historical information about any of the major sports leagues has long been pressed to venture out on his or her own without a license from the league. Such licenses may be obtained, with varying degrees of difficulty, from the leagues in exchange for a royalty and sometimes a guarantee and/or an advance against earned royalties. The risk of antagonizing the league is something not taken lightly as the resources of the leagues tend to far outstrip those of the entrepreneur.
On August 8, 2006, a U.S. Magistrate Judge issued a decision in the declaratory judgment motion filed by a fantasy game operator, C.B.C. Distribution and Marketing, Inc. (CDM) against Major League Baseball Advanced Media (MLBAM), which provides guidance to both parties in these transactions. MLBAM and the Major League Baseball Players Association (MLBPA), an intervening party, issued a joint press release stating they expected to appeal the decision upholding CDM’s right to use Major League Baseball player names and records on their website. In the meantime, there will be immediate ramifications on the licensing activities of the major sports leagues which will vary depending on how assertive the respective league has been in claiming rights to this type of data.
The limitations on the claim of ownership of the statistics of the various sports have long been perplexing to both the leagues and potential users. There is on the one hand the view that the players’ records are public domain, which view was accepted as a matter of fact by the deciding judge in the CDM case. On the other hand, there are various legal arguments which could favor the view that there are exclusive publicity rights in the players’ identities for commercial purposes or that the compilations are original works and thus subject to copyright protection. Both of these latter arguments can prevail, but only if the circumstances in their totality support them.
Fantasy game operators use individuals’ sports records as part of their offerings, while the leagues in some cases have sought to license them exclusively. There are many different applications for these bits of information. The leagues have been well within their rights to license the statistics as part of a license granting the rights to the league and team trademarks, names and logos, such as those published by Sporting News and the NBA (“Official NBA Register 2005-06: Every Player, Every Stat”), or by the NHL, in its “NHL Official Guide and Record Book”. Contrast those to factual compilations published by Sporting News for “Pro Football” (“2005 Pro Football Register: Every Player, Every Stat”), apparently without any license from the National Football League. Of course, this same information is used by the fantasy game operators, which generate an estimated $100 million in revenue and are growing at a 7 – 10% rate annually.
In Major League Baseball’s case, it has been reported that up until 2004, the MLBPA had been licensing the player names and statistics along with its trademarks to 19 fantasy game operators directly for a 9% royalty. CDM was one of these licensees and as part of its license agreement, agreed to a “no challenge” provision. This type of provision is fairly typical in the licensing context and requires the licensee during the term of the agreement not to dispute or attack the title or any rights of the licensor in and to the rights granted (including the statistics). Some licensors insist that the “no challenge” provision survive the termination of the licensing agreement. The CDM license agreement with MLBPA contained a further provision that upon termination, CDM would “refrain from further use of the Rights and/or the Trademarks or any further reference to them, either directly or indirectly… .” When CDM signed this agreement, it took a calculated risk that this provision would either not be enforceable or not enforced by MLBPA should the circumstances arise and the license agreement not be renewed (as eventually did occur).
In 2005, MLBPA granted its rights to MLBAM in return for a $10 million annual payment. In turn, MLBAM combined those “rights” with the Major League Baseball trademarks and sought to limit the number of their fantasy game licensees to seven at a premium of a reported $2 million annually. Presumably those licensees who entered into this agreement (such as CBS SportsLine and ESPN) perceived the enhanced value of the players’ records along with the Major League Baseball trademarks. CDM apparently did not. Thus, as with any licensee, the actual ownership of the essential ‘rights’ had to be analyzed and CDM’s conclusion was apparently that the data which had been licensed by the MLBPA was in fact in the public domain.
The court held that the players’ names and records are public domain, and lack any originality to be copyrightable. Had the players’ identities been used, such as in the form of photographs, their rights of publicity may have been infringed. As used, however, the names and records are simply educational, historical facts and as such are protected under the First Amendment. Had the subject of the license been a compilation, this would have been licensable, as the Supreme Court has made it clear that “it is beyond dispute that compilations of facts are within the subject matter of copyright.” (Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345 (1991)). The court in the CDM case also held that the “no challenge” provision of the expired license agreement was not enforceable as the MLBPA did not have the rights to license the names in conjunction with the playing records (since they were in the public domain). The court also held that this “no challenge” provision is void as a matter of public policy only to the extent it addresses the names and playing records.
The sports leagues (and fantasy game operators) therefore have been given some guidance should the leagues seek to license their historical information. Subject to any contrary decision on appeal, it appears that a compilation of the facts, along with player identities would be licensable. Of course, the league’s name, trademarks and other indicia are licensable. The simple facts however are not.
* Maidie E. Oliveau has negotiated and administered more than 200 sports deals, including television and new media, totaling more than $700 million and is an arbitrator for the Court of Arbitration for Sport. Her e-mail is moliveau@lawsports.com
