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 million. The 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.

Index to posts on general legal tips to date.

Here is an index to postings on general legal tips to date:

• Illustrating the difference in legal standards through the NCAA and Johnny Football autograph situation.
• How to respond to a lawsuit.
• Teaching basic legal analysis through college football.
• The importance of "notice" in so many areas of the law.
• The importance of tangible evidence.
• The basic anatomy of a civil lawsuit.
• Being "litigation-ready."
• Back to Basics: Do you need copyright, patent or trademark protection?
• Avoiding allegations of business interference.
• Little things you can do to help yourself from a legal perspective.

 

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.

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.

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.

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.

This past Saturday, on September 14, 2013, Nebraska lost to UCLA, giving up 38-straight points in the process. Within the next two days, audio tape of the October 2011 off-the-record conversation was released to the media. If Pelini is fired for his comments in the audio tape, he can sue the person who released the tape for business interference.

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.

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.