Monday, September 30, 2013

EA and Collegiate Licensing Co. settle with former players in NCAA likeness litigation; NCAA only remaining defendant.

EA Sports and the Collegiate Licensing Company, defendants in the NCAA student-athlete likeness antitrust litigation, settled all claims with former and current college players. The defendants are paying the plaintiffs $40 millionThe case has not been certified as a class action, so this was a good time to settle. If the defendants waited until a ruling on the plaintiffs' motion for class certification, they could have lost a significant amount of leverage in settlement negotiations, and they did not have much leverage at this point anyway.

The NCAA has not settled. It is the only remaining defendant, and publicly shows no indication that it intends to settle. I would be surprised if the NCAA allows the case to go to trial. The NCAA is banking on denial of the plaintiffs' motion for class certification. It also expects more public support as the case draws closer to trial.

Publicly, the NCAA claims it is prepared to go down with the ship; either college sports stays the same or the current model will be replaced with a minor league sports model. To college sports fanatics, of which there are many, this existential threat should garner the NCAA more public support as trial draws closer. Privately, the NCAA must be examining its options for settlement and how it would affect the current NCAA model.

Wednesday, September 25, 2013

The use of state consumer protection laws to curb litigation by "patent trolls."

There is a recent trend among states to try and use state consumer protection laws to prevent patent trolls from suing in their federal courts. I briefly discussed patent trolls elsewhere. When states use their own laws to inhibit the operation of federal law, such as here, federal pre-emption is implicated. The pre-emption doctrine comes from the Supremacy Clause of the U.S. Constitution. Under it, state laws that conflict with federal law are ineffective.

In this context, state consumer protection laws may or may not be pre-empted. There is another reason they may be unconstitutional: the burden on interstate commerce. Under the Commerce Clause, the federal government has the right to govern interstate commerce. Even though the federal government has not spoken directly on this issue, states cannot enact or use legislation that discriminates against interstate commerce. Using state consumer protection laws this way burdens interstate commerce, because one cannot avoid suing in a particular state if jurisdiction or venue requirements mandate that a lawsuit be filed there. Accordingly, a plaintiff entitled to redress could be foreclosed an opportunity to bring a lawsuit.

This does not mean that patent trolls are not a problem. It means that states likely have to wait for the federal government to address the issue. State consumer protection laws could be a valid way to defend an infringement lawsuit by a putative patent troll, but they cannot preclude a party from bringing the lawsuit.

Friday, September 20, 2013

On direct and indirect patent infringement.

There are two types of patent infringement, direct and indirect. Direct infringement occurs if you make, use, offer to sell, sell or import any patented invention in the U.S. without authorization of the patent holder. Indirect infringement occurs in two scenarios. First, you are guilty of induced infringement if you induce someone else to infringe another person's patent. Second, you are guilty of contributory infringement if you offer to sell, sell or import a component of a patented invention, and know that the component will be used for infringing purposes.

Direct infringement is a strict liability tort, which means you can be held liable without intending to do anything wrong. Induced and contributory infringement are not strict liability torts; both require the alleged infringer to know he or she is doing something wrong.

If the claims of a patent cover a product or apparatus, direct infringement will always be present. If a patent claims a method (method patent), you can also have divided infringement, which is a type of induced infringement. With divided infringement, a defendant can be held liable if he or she performed some steps of a claimed method and had others do the remaining steps, or if he or she had others to collectively perform all of the steps of the claimed method but no single party did all of the steps individually.

Thursday, September 19, 2013

NCAA moves to dismiss student-athletes' claim in likeness antitrust litigation.

Yesterday, the NCAA moved to dismiss the plaintiffs' antitrust claim in the NCAA student-athlete likeness antitrust litigation. In moving for dismissal, a defendant must show that there is no factual scenario on which a plaintiff could win the case. Usually, a plaintiff can show some factual basis that would entitle him or her to relief.

The NCAA relied on NCAA v. Board of Regents of the University of Oklahoma, which deregulated college football television broadcasts and paved the way for conference realignment. The NCAA argues that Board of Regents categorically approved NCAA rules on amateurism. The student-athletes argue the opposite. The student-athletes are right, because the legality of the NCAA amateurism rules was not in question in Board of Regents. Only the legality of the NCAA rules on television broadcasts was under consideration. Accordingly, anything the court said about NCAA amateurism rules in Board of Regents was non-precedential.

Filing a motion to dismiss was an odd move by the NCAA, because it will be denied. Proper motion practice is to file a motion only when there is a chance it will be granted. Otherwise, it is a waste of time. The NCAA would have been better off filing a motion for summary judgment. Although unlikely, it would have at least had the possibility of being granted.

Tuesday, September 17, 2013

If fired for the 2011 audio tape, Nebraska football coach Bo Pelini has a claim for business interference.

In October 2011, University of Nebraska head football coach Bo Pelini delivered a post-game press conference shortly after his team completed the biggest comeback in school history. Nebraska had just defeated Ohio State, 34-27, after being down 21 points in the second half. In an off-the-record conversation prior to the press-conference, Pelini lambasted the fans who left the game early, and journalists from the Omaha newspaper. Pelini's comments included numerous instances of the "f-word." They were ill-advised, and some people are understandably offended.

Basically, Pelini called Nebraska fans "fair-weather," which is completely untrue. If there is any fan-base that is not "fair-weather," it is Nebraska football fans. The team has been mostly successful for the last 50 years, but it has also sold out every home game since 1962. No other school comes remotely close. Even in down years, the fans still show up for games. The anger toward the journalists was for leaving press conferences early.

Surely, Pelini's contract has a "morals clause" that might justify dismissal for those type of comments. But even if the school has cause for firing Pelini, the person who released the tape does not have the right to release the tape for the purpose of getting Pelini fired.

If the audio tape had been released shortly after the tirade occurred, there would not necessarily be a claim, because the motives of the person who released the tape would not be so clear. But two years after the fact and after a bad loss at home, the person's motives could not be clearer. The person wanted Pelini fired, and any jury could see this. Business interference requires:

(1) a contract;
(2) that a defendant has knowledge of the contract;
(3) that the defendant intentionally and improperly interfered with the contract;
(4) the interference caused the third party not to perform or to stop performing the contract; and
(5) that the plaintiff was damaged.

The person who released the tape surely knew that Pelini has a contract with the school. Releasing the tape to get the coach fired constitutes "improper interference." If Pelini is fired, he could recover the amount he would earn if there had not been improper interference, i.e., if the tape had not been released for the purpose of getting him fired. He could not recover that amount from the school, but from the person who released the tape. Accordingly, the person who released the tape could be liable for millions of dollars of actual damages, as well as punitive damages if his or her conduct is deemed particularly willful and wanton.

Whether Pelini can recover depends on if he loses his job due to the audio tape. In another post, I warned readers of the ease with which you can be guilty of business interference.

Monday, September 16, 2013

The "Johnny Football" trademark could get sacked.

I have written about Johnny Manziel's "Johnny Football" nickname/mark several times:

- The conflict between U.S. trademark law and NCAA rules: The "Johnny Football" scenario.
- On trademark infringement.
- Use of a trademark "in commerce" and the redux of the Johnny Football example.
- Agency, Cam Newton and Johnny Manziel -- Part 2: Teaching basic legal analysis through college football.
- What is the NCAA enforcement team looking at when investigating Johnny Manziel's eligibility? Part 3: Teaching basic legal analysis through college football.
- By definition, a college athlete with a federally registered trademark is violating NCAA rules.
- Illustrating the difference in legal standards through the NCAA and Johnny Football autograph situation.

Manziel is unique among college athletes because the NCAA allowed him to protect his "Johnny Football" mark prior to the expiration of his eligibility. Being able to protect his mark does not mean that he can use the mark in commerce. If he did use the mark in commerce, he would be violating NCAA rules.

The United States Patent and Trademark Office recently issued an office action illustrating its concern that the "Johnny Football" mark is not being used as a trademark. Manziel is in a difficult position, because he cannot use the mark in commerce and maintain eligibility. But he must use the mark in commerce to obtain a valid federal registration. Manziel's people made a big mistake by not pursuing an intent-to-use application followed by affidavit of use once his eligibility expires. That would have solved this problem.

Wednesday, September 11, 2013

On false patent marking.

False patent marking occurs when someone marks an unpatented article as patented, intending to deceive the public, and it results in "competitive injury." Though undefined in the false marking statute, competitive injury can be loosely defined as "actual monetary damages." Before September 2011, competitive injury was not required to bring a false marking suit. In fact, a plaintiff could sue any defendant for false marking on behalf of the United States (which is called suing "qui tam").

The Leahy-Smith America Invents Act amended the false marking statute by requiring competitive injury. It is not that difficult to show competitive injury, provided you have "standing."

Showing an intent to deceive is more difficult. False marking alleges fraudulent conduct, and fraud requires "particularity" in the complaint. Accordingly, a false marking complaint must explain the "who," "what," "when," "where," and "why" of false marking conduct. This is incredibly difficult before discovery, and jurisdictional discovery may be required.

Basically, you have to explain your allegations in more detail than an ordinary case when suing for false marking or fraud. If you do not sufficiently explain yourself and the false marking conduct, your complaint could be dismissed.

Tuesday, September 10, 2013

A re-introduction to trademarks.

If you visit this blog with any regularity, you will notice I write about trademarks fairly frequently. Some posts are terse and simply link to another article. Some are lengthy and include my own commentary. I thought it might be beneficial to link to the introductory posts I wrote on trademarks, to go back to basics.

- Introduction to trademarks, part one.
- Introduction to trademarks, part two.

Friday, September 6, 2013

Opting out of a class action: The NFL publicity rights example.

As discussed previously, class certification is required before a case is a class action. If a case settles after class certification, court approval is needed before the case can be dismissed. Class members who object to terms of any settlement can opt out of the class. If a class member opts out, he or she is not precluded from bringing another suit against the defendant. If a class member does not opt out, he or she is precluded from bringing another suit against the defendant (unless new facts or events are involved).

This happened in a case filed August 30, 2013. The plaintiffs are former NFL players, and they opted out of a previous class action, Dryer v. NFL. The plaintiffs argue that the NFL and NFL Films used their likenesses without compensation or their consent, like the plaintiffs are arguing in the NCAA student-athlete likeness antitrust litigation. Before approving a class action settlement, a court must make sure five requirements have been met:

- Reasonable notice must be directed to all class members bound by the proposed settlement;
- If the proposed settlement binds class members (which it usually would), the court can approve it only after a fair and adequate hearing on the settlement;
- The parties seeking approval of the proposed settlement must file a statement identifying the terms of any agreement;
- Any class member has a right to object; and
- The court can refuse to approve the settlement if a second opportunity for class members to opt out is not afforded, even if those class members previously had an opportunity to opt out.

Thursday, September 5, 2013

Former NFL star Jim Brown made a strategic error in suit against EA Sports.

NFL hall-of-famer Jim Brown lost a recent appeal against EA Sports, in which Brown alleged that EA Sports used his likeness in the Madden series of video games without his consent. EA Sports is also a defendant in the NCAA student-athlete likeness antitrust litigation, and there are similarities between the two cases. The plaintiffs in the NCAA student-athlete likeness antitrust litigation alleged that their likenesses were used in video games without their consent. In the NCAA and NFL video games, names were not used, but other aspects of the players were imitated. The video game players shared the same jersey number, size, physical skills, skin color and other attributes with their real-life counterparts.

The names of most players are used in the Madden series of video games, because they are licensed by the NFL players' union (NFLPA). Player names that were not licensed by the NFLPA were not included in the game unless consent was given. There is no college football players' union, so no player names were used in the NCAA Football video game.

Brown made a strategic error in his lawsuit. The student-athletes' lawsuit alleged that the use of their likenesses was an antitrust violation. Brown alleged that the use of his likeness was a violation of federal trademark law, which was largely inapplicable to his case.

If Brown sued under common law rights of publicity, his claim would have survived dismissal because a different legal analysis would have applied. Instead, EA Sports filed a motion to dismiss, which was granted and affirmed on appeal.

Basically, in addressing the claim under trademark law, the court only considered the publicity rights issue insofar as it pertained to a violation of trademark law. Since Jim Brown's likeness is not a federal trademark, trademark law was largely inapplicable in his case. Brown should have known of the pending NCAA student-athlete likeness antitrust litigation, and amended his complaint to include a publicity rights claim.

If Brown had done this, when the trademark claim was dismissed, he could have still litigated the publicity rights claim. Since he did not, and the dismissal has now been granted, he is precluded from bringing the publicity rights issue in a new lawsuit.