College Football is a huge business. According to the Forbes list of College Football’s Most Valuable Teams (link: http://www.forbes.com/sites/chrissmith/2012/12/19/college-footballs-most-valuable-teams-texas-longhorns-still-on-top/), the nation’s most lucrative college football program, the Texas Longhorns, is worth a staggering $133 million. According to the referenced Forbes article published at the end of 2012, the Longhorns generated $104 million in revenue in 2011, the first time a college football team has ever cracked nine figures. Yet, unlike their professional counterparts, college athletes are prohibited by NCAA rules from individually profiting from their programs’ successes, even in ancillary ways such as from merchandizing. College athletic programs benefit from all of the merchandise sales of their professional counterparts (some to an even greater degree than smaller market professional franchises), yet many college athletes cannot even afford to purchase a replica of their jerseys at the college bookstore. No matter what your position is on whether student athletes should be permitted to be compensated for certain aspects of their success like merchandizing, a recent decision from the United States Court of Appeals for the Third Circuit casts a portion of the debate under a new legal framework.
In Hart v. Electronic Arts, Inc., decided May 21, 2013, the Third Circuit Court of Appeals held that the use of an athlete’s likeness in a NCAA Football video game violates the athlete’s right of publicity. The factual underpinnings of the of Third Circuit’s decision undoubtedly will have successful college athletes from top programs across the country scrambling for legal advice. Ryan Hart, a former Rutgers University quarterback, filed suit against Electronic Arts, Inc. (“EA”), a leading videogame franchise developer that has developed some of the most recognizable (and profitable) sports videogame franchises in the world, such as the annual Madden NFL game and countless others, for appropriating his likeness in EA’s NCAA Football video game releases in 2004-2006. During those years, EA’s NCAA Football video game included an avatar that resembled Hart. The computer animated figure also shared Hart’s biographical statistics. Although users can alter certain characteristics of the animated figure, the Third Circuit noted that the NCAA Football video game’s realistic features contribute to its commercial success.
The District Court below granted summary judgment for EA, dismissing Hart’s case, concluding that video game expression was protected by the First Amendment. However, on appeal, the Third Circuit acknowledged that the First Amendment is not absolute, and that it can be outweighed by other conflicting rights. While the First Amendment protects the right to communicate information, the Third Circuit noted that New Jersey law prohibits individuals from exploiting another’s identity. Under NJ law, the right of publicity is an individual’s exclusive right to exploit the value of his own notoriety or fame. See McFarland v. Miller, 14 F.3d 912 (3d Cir. 1994). Since an individual’s name, likeness and endorsement may be valuable, the unauthorized use by another person may harm the owner by diluting the value of the owner’s name and depriving that individual of compensation.
The Third Circuit analyzed three separate tests as potentially applicable to the facts before the Court: (1) the Predominant Use Test, which is focused on commercial interests; (2) the Rogers Test, which is borrowed from Trademark law; and (3) the Transformative Use Test, which is borrowed from Copyright law. Under the Predominant Use Test, a product violates the right of publicity when, regardless of content, the predominate function of the product is to exploit the commercial value of an individual’s identity. See Doe v. TCI Cablevision, 110 S.W.3d 363 (Mo. 2003). Under the Rogers Test, a product violates the right of publicity when it utilizes an individual’s name in its title in a way that is wholly unrelated to the product or is merely a thinly veiled, unauthorized “commercial advertisement” for that product. See Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). Under the Transformative Use test, a product violates the right of publicity when the designer fails to transform the product into the designer’s own form of expression. See Comedy III Prods, Inc., v. Saderup, Inc., 25 Cal. 4th 387 (Cal. 2013).
Adopting the Transformative Use Test to the facts presented, the Third Circuit reversed the District Court’s grant of summary judgment to EA. The Court held that there were facts sufficient to conclude that EA violated Hart’s right of publicity for three central reasons: (1) the realistic features of the avatar and its contextual application to the video game greatly resembled Hart; (2) the digital characteristics of the avatar did not alter or transform Hart’s identity; and (3) the existence of a feature in the game to alter or modify Hart’s identity was insufficient. In other words, the Third Circuit borrowed a concept from intellectual property law to hold that EA was improperly marketing Hart’s identity because it failed to transform the product into EA’s own unique form of expression. The Third Circuit remanded the case back down to the District Court below for further proceedings consistent with that legal conclusion.
By combining First Amendment principles and Copyright law, the Third Circuit has fashioned a standard for the use of a college athlete’s likeness in merchandizing that may have some traction in the broader debate over whether college athletes are entitled to a piece of the commercial value that they bring as a result of their athletic prowess. While it does not get around rigid NCAA regulations pertaining to the acceptance of payments by college athletes, the Third Circuit’s decision in Hart v. Electronic Arts, Inc. has certainly opened the door to claims by college athletes after they leave school and are no longer subject to strict NCAA rules for the significant merchandizing profits associated with the athletes’ collegiate success.
Matthew S. Adams is a member of the Litigation Department at Fox Rothschild LLP, and practices in the areas of Commercial Litigation and White Collar Criminal Defense. Matthew can be reached via e-mail at firstname.lastname@example.org, by phone at 973-994-7573, and on LinkedIn at http://www.linkedin.com/pub/matthew-s-adams/19/133/66.
Special thanks is owed to Julius Suarez, a rising second year law student at Rutgers Law School – Newark and Summer Law Clerk at Fox Rothshchild LLP, for his significant research contributions to this article.