What Does the O’Bannon Case Mean for Licensing Law and Video Games?

Its days could be numbered

The NCAA and EA ended their business relationship in light of a lawsuit. How far will the case go?

By: Pei-Chih “Peggy” H. Keene*

While many agree O’Bannon v. NCAA inevitably changes the way NCAA handles amateurism, few are discussing the impact the case has had on video game licensing from a legal perspective.

In 2009, former college basketball star Ed O’Bannon filed a class-action lawsuit on behalf of himself and other former college athletes against the National Collegiate Athletic Association (“NCAA”) and the Collegiate Licensing Company (“CLC”), the entity that manages the NCAA’s licensing agreements.  In the complaint, O’Bannon alleged that the NCAA took advantage of the athletes by failing to compensate them when it used their likeness in video games, television broadcasts, advertisements, memorabilia, and other promotional ventures that violated federal antitrust laws.  Using the Sherman Antitrust Act as a springboard for the complaint, O’Bannon argued that, together, the NCAA and the CLC conspired to fix the price at zero for the student-athletes’ likeness.  This conspiracy thus eliminated any market competition the NCAA and CLC would have to pay for the student-athletes likeness and kept the prices at an artificially depressed price of zero.

At the heart of the lawsuit is a contract that all student-athletes are required to sign by the NCAA.  As every student-athlete is required to sign the contract if they wish to play, without any true power to negotiate any aspect of it, O’Bannon argues that the contract is a contract of adhesion, and as such, unenforceable.  This contract, known as “Form 08-3a,” gives the NCAA permission to use the student-athletes’ likeness and images in order to promote NCAA championships, events, activities, and programs.

But should the right of publicity be alienable, licensable, and exploitable?  While this has been the NCAA’s standard practice for years, some have argued that a person’s right of publicity should never be completely alienable, citing O’Bannon as a prime example of an unbalanced exploitation of the right.[1] Yet, still others have a different view.  In their article, Games are not Coffee Mugs: Games and the Right of Publicity, Professors Ford and Liebler argue that video games are not mundane commodities like coffee mugs, and as such, they should not require a license to display a person’s likeness at all.[2]  The professors go on to argue that games like the NCAA Football series are more akin to magazines and books, expressive works that the First Amendment shields from right of publicity, whether held by the O’Bannons or NCAAs of the world. [3]

Further complicating matters is that the O’Bannon case has been consolidated with another lawsuit filed by former Nebraska quarterback Sam Keller.  In a similar class-action lawsuit, Sam Keller had sued Electronic Arts (“EA”) Sports for using his and his teammates’ likeness without providing proper compensation.

The impacts from this litigation have been felt immediately.  In July of 2013, the NCAA announced it would not renew its contract with EA after 2014, citing both business and litigation reasons (although more than 150 colleges, conferences, and bowl games would still go on to approve or renew a three-year contract extension with EA).  In addition, each college, league, or bowl would have to individually decide whether or not to renew their obligation to the CLC as well.   In September, EA also announced it would not produce its popular NCAA Football game in 2014, which sells about 2 million units per year.

In November, District Judge Claudia Wilken handed down her latest ruling in the case.  While both sides declared it a victory, neither side came away with exactly what they had asked the judge for.  While the NCAA had been hoping to avoid a class certification altogether and O’Bannon had hoped for a complete certification, District Judge Wilken certified a class for injunctive relief only, but not for damages.  Thus, while this does prevent the NCAA from harming future plaintiffs, it does not grant O’ Bannon, and the other current or former athletes joined in the case, any compensation for their likeness.

It should be noted, however, that weeks before Judge Wilken handed down her ruling in November, video game giant EA Sports and the CLC both opted to settle with O’Bannon and his fellow plaintiffs for approximately $40 million, leaving only the NCAA as the final, remaining litigant.  Despite the NCAA’s defiance, many saw EA Sports and the CLC’s willingness to settle as a signal that that the business of video game licensing may soon have to take a new approach.  Clearly, if student-athletes are to be compensated for their likeness, legal licensing agreements must be drafted differently to properly address this issue.

In spite of the revolutionary nature of this litigation, however, it’s unlikely that O’Bannon v. NCAA will have much of an effect on the video game industry as a whole because its impact is largely restricted to its particular video game genre.  Put more succinctly, the world that the plaintiffs and defendants come from is identical to the impacted genre of video games—college sports.  As such, despite the groundbreaking nature of the case, as well as the waves its been making in the video game industry, overarching changes in either the legal landscape or the game industry are unlikely to be seen soon.

 


* Ms. Keene is an associate at Klemchuk Kubasta, LLP, and a graduate of the SMU Dedman School of Law.  You can view her profile and contact information here: http://www.kk-llp.com/attorneys/detail?id=14

[1] Jennifer E. Rothman, The Inalienable Right of Publicity, 101 Geo. L. J. 185, 187-188 (2012) (“Alienability unquestionably serves publicity-holders, but it is less clear that it is in the best interests of identity-holders.”).

[2] William K. Ford & Raizel Liebler, Games Are Not Coffee Mugs: Games and the Right of Publicity, 29 Santa Clara Computer & High Tech. L.J.,  1, 98 (2013). (“ Games are routinely expressive and should be treated as such, rather than as a second-class medium of expression. The First Amendment should usually stand in the way of treating games like merchandise or mere identity carriers.”)

[3] Id. at 39-40. (quoting Brown v. Entm’t Merchs. Ass’n, 131 S. Ct. 2729, 2733 (2011)).

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