Over the past month, Kawhi Leonard, one of the NBA’s most iconic players, has continuously been in the news for leading the Toronto Raptors its first ever NBA championship. However, Leonard has also made news for his actions off the court. On June 3rd, Leonard initiated a lawsuit against Nike for ownership rights to a logo (seen below) that he claims Nike stole, “fraudulently” filed a copyright application for, and threatened to sue him over. The case is a great example of why individuals (in the esports context, players and streamers) must make sure that the ownership rights in their intellectual property are clearly established, expressed, and protected to the fullest extent prior to entering into sponsorships, endorsements, or other types of licensing arrangements.
In his complaint, Leonard begins by stating that he originally created his logo while in college, long before he entered into three-year endorsement deal with Nike. This is an important fact in the case because if true, under United States copyright law, Leonard would have obtained ownership rights to the logo upon its creation.
After making this assertion, Leonard explains that Nike started discussions with him about developing a unique logo to affix on its merchandise shortly after he signed his endorsement deal with the company. Since Leonard had already created a logo, he maintains that Nike repeatedly asked to revise his existing logo, and sent him multiple modified designs based upon the mark he created. After denying several mock-ups, Leonard finally approved a refined design, and authorized Nike to use it on its merchandise.
Throughout the term of their relationship, which had been extended to July 2018, Leonard believed that he retained ownership in the refined logo since it was based on his original design and he never expressly transferred any ownership rights in the mark to Nike – he only authorized Nike’s use of the mark. However, Nike also believed it was the true owner of the new refined mark, and the company even filed an application with the United States Copyright Office to register the mark. Nike’s application was granted in 2017 and its registration lists the company as the sole author and owner of the mark, and describes itself as an “employer for hire.”
Typically, these types of endorsement agreements will include language that provides the company with ownership rights in any intellectual property created by the company during the term of the agreement. This language defines the business as an “employer for hire,” which signifies that it will own any designs created by its employees or independent contractors, as these designs are considered works made for hire. Still, this type of provision would not apply to marks that were created by an individual prior to entering into agreement, which appears to be the case here. Generally, in those situations, the owner of the mark would either sell the mark outright, or agree to license it to the business at the outset of their partnership. In both situations, a written agreement would clearly define ownership rights in the intellectual property and any modifications to the mark.
Here, Nike may try to argue that the “refined mark” was completely different than Leonard’s original logo in hopes of establishing its own copyright in the mark. It may also contend that Leonard expressly transferred any ownership rights in the mark to the company once it made modifications. In either event, Nike will need to provide strong evidence corroborating its argument. While it appears the parties are approaching this matter cordially, executing a well-drafted licensing agreement at the inception of their relationship would have prevented this matter from escalating to this point.
How does this apply to esports?
As the profiles of many players and streamers in the esports industry continue to increase in popularity, these individuals need to be mindful of their intellectual property. They must take the appropriate steps to ensure that ownership of such property is clearly established in all agreements and protected to its fullest extent. This is especially necessary for players and streamers when entering into endorsement or sponsorship agreements with companies, as these businesses may look to use or further develop an individual’s existing intellectual property. As seen with the Leonard case, this is particularly critical with any associated logos or marks. Clearly establishing and expressing ownership rights in a mark will make it apparent to the business that an individual owns the mark it wishes to use.
In order to do so appropriately, individuals should first ensure that they legally own their mark. Oftentimes players and streamers hire parties to design their mark for them. In this case, individuals must make sure that they receive a written work-for-hire agreement from any party who designs their mark. This agreement will state that any rights to the design have been assigned from the artist to the streamer or player. Without this agreement in place, the designer may still have ownership interest in the mark.
Players and streamers should also look to register their mark with United States Copyright Office and United States Patent and Trademark Office. In most cases, proof of copyright and trademark registrations will provide a party with strong evidence of ownership rights in a mark, and also provide them with a number of other benefits.
Once these measure are taken and retention of ownership is firmly in place, individuals can express their ownership rights in mark to any company that wishes to enter into an endorsement deal and proceed to license their mark effectively.
Distinguishing ownership rights to intellectual property can become increasingly difficult when multiple parties begin to use such intellectual property, like a logo. Since companies executing endorsement or sponsorship deals may look to use or further develop a player or streamer’s mark in the activation of these agreements, individuals must make sure that their ownership rights in the mark are clearly defined and expressed to the company at the outset of their relationship. By doing so, companies will be aware of the individual’s rights in a mark and look to license the mark appropriately. Effectively executing this type of agreement should prevent any ownership confusion and/or subsequent litigation, saving both parties time and money.
As most business owners know, running a business is extremely difficult. Aside from all the internal decisions that must be made in order to operate a company successfully, business owners must also handle a wide variety of external problems that arise. One external issue that companies often deal with relates to its trademarks. It is not uncommon for new, competing businesses to try and exploit an established brand’s reputation by using a similar name or logo in order to gain recognition and grow its own brand within a marketplace. This infringement activity can be damaging to an existing brand’s reputation, as consumers may associate and confuse the two brands when making a purchase or utilizing its services. This post will explain what trademark infringement is and how deal with infringing activity should it take place.
What is trademark infringement?
Trademark infringement occurs when an unauthorized party uses a trademark or service mark, or a substantially similar mark, in connection with goods and/or services in a manner that is likely to cause confusion as to the actual company that produced the product or service. In a trademark infringement matter, a junior mark holder – the second business to adopt and use a particular mark with its goods or services – attempts to use a mark that is confusingly similar to senior mark holder’s – the first business to adopt and use a particular mark with its goods or services – mark without the senior mark holder’s approval. This confusion between the companies is problematic to the senior mark holder, as it can lead consumers to buy the junior mark holder’s products or services, resulting in lost profits or damage to the senior mark holder’s brand.
Do I have a claim for trademark infringement?
When determining whether you have a viable claim for trademark infringement, you should first ask yourself if you hold the rights to the specific mark. For maximum protection, it is best to have your mark registered with the United States Patent and Trademark Office (“USPTO”), but trademark owners are still afforded some limited protections under common law. Common law trademark rights start once a mark is used in commerce for the first time within a geographic region. These rights allow to trademark owners to stop competing businesses in their area from using a confusingly similar mark, but it is much more difficult to recover any monetary damages without federal protection. Sophisticated business owners should strongly consider registering their mark with the USPTO, as there are a number of benefits to completing this process.
Next, trademark owners should ask themselves, at a basic level, if there is a likelihood of confusion between the alleged infringing mark and their mark. Would consumers in the relevant markets confuse the two marks? In most situations, trademark owners who ask this question already believe that the similarity between the marks causes a degree of confusion, but it is prudent to ask an independent party (or multiple) for an impartial perspective. This basic assessment should further solidify a trademark owner’s belief in any potential infringement claim.
Having an understanding of how courts evaluate claims for trademark infringement will also help trademark owners analyze their situation, and allow them to evaluate their claim more thoroughly. Courts use an eight-factor balancing test when determining whether there is a likelihood of confusion between two marks. Each factor used in the test is important when measuring the possibility of trademark infringement; however, the first three factors are arguably the most heavily weighed in a court’s evaluation:
Other factors include: (4) evidence of actual confusion; (5) the likelihood that the prior owner will “bridge the gap” in the marketplace; (6) intent of the junior user; (7) sophistication of buyers in the marketplace; and (8) quality of the junior user’s products or services. All of these factors will play a significant role in the court’s evaluation since no single factor is determinative, but doing an elementary assessment using first three factors should provide trademark owners with a strong foundation in assessing the strength of their own potential infringement case.
What do I do now?
If a trademark owner believes that someone is infringing upon its mark, there are a couple of options available to facilitate a resolution. Generally, the first step that can be taken to stop the infringement is to send the infringing party a cease and desist letter. The goal of this letter is to inform the infringing party that the use of its mark infringes upon the trademark owner’s rights and to ask it to discontinue its use. This letter should describe any ownership rights in a specific mark and explain how the junior mark is infringing upon these rights. The letter should also clarify what remedy is sought. Along with the request to stop the use of an infringing mark, some parties may also ask for compensation for past use or pose an offer to license the mark for future use.
Typically, a cease and desist letter will at least start a conversation between the two parties. However, this method is not always well received and can be ineffective, as the letter poses no immediate legal implication on the infringing party. Oftentimes, trademark owners will reach out to the infringing party multiple times before deciding to escalate the matter to its next step - litigation. Once litigation proceedings have commenced, trademark owners will then be able to ask the court for a preliminary or temporary injunction, which if granted, will order the alleged infringer to stop using the mark in question pending the outcome of the lawsuit. As with most litigation, fees for trademark infringement cases can be costly, so trademark owners should consider exhausting all available options before filing a claim.
Trademark infringement can be extremely harmful to a brand and must be dealt with as soon as a trademark owner becomes aware of any infringing activity. After analyzing the infringing activity to determine whether it is actually infringement, trademark owners should try to communicate with the infringing party and inform it of its unlawful activity. In order to make sure there is a record of these correspondences, a cease and desist letter would likely be the most effective form of communication. If these attempts are unfruitful, litigation may be imminent to in order to stop the infringing activity. While this may be a costly endeavor, it is necessary to prevent any further damage from being done to your brand by the infringing party.
Analyzing and fighting trademark infringement claims tend to be a complicated matter. If you have any questions regarding trademarks or potential trademark infringement, please feel free to contact us.
As we have discussed previously, intellectual property is a core part of every business. Intellectual property encompasses a variety of works including trademarks, copyrights, patents, trade secrets, and propriety data, amongst other things. Assets like a company’s trademarks (i.e. logo or slogan) can be extremely valuable in commercial affairs because, if properly maintained, these rights provide owners with an exclusive right to use and monetize their creations. This means owners have sole control over who is able to use their intellectual property and how it can be used. Oftentimes, intellectual property owners will use these rights strictly for their own monetary gain, but owners can also sell these rights, or uniquely license them to another party.
What is Licensing?
Licensing is a business arrangement where the owner of certain intellectual property rights (licensor) agrees to authorize another party to use such rights (licensee) in exchange for compensation. This compensation can vary in form, but will typically comprise of a one-time, upfront fee or a percentage of all gross or net revenues received from the use of the licensed intellectual property, otherwise known as royalties. One common example of licensing occurs in the retail market, where a company may enter into a retail licensing deal with an apparel company that allows the apparel company to use its trademark (i.e. the licensor’s name or logo) on all types of clothing sold in exchange for a percent of the profits from apparel sales using the licensed mark.
Businesses frequently use this kind of arrangement because it provides them with another way of profiting off of their intellectual property without completely transferring or assigning all of their ownership rights to another party. Through licensing partnerships, a company is able to use the expertise of another business that operates in a different sector, like manufacturing, to reap commercial benefits from that sector at minimal cost. For example, a company that only creates comics books may license its characters to a toy company without having to use its resources on costs or labor associated with the production of action figures. In most cases, the comic book company would not have to take an active role in any of the production, distribution, or marketing of the action figures, and would still receive a percentage of any sales of this product. Licensees welcome these partnerships because they are able to profit off the popularity of the licensor’s brand.
Licensing arrangements are most effective when they are solidified through a written contract. This provides all parties with necessary control and reduces the risk associated with the agreement. Parties in a licensing deal are able to determine when (duration of term), where (territory of use), and how (scope) the intellectual property can be utilized. By defining these terms effectively, a business has the ability to profit from different sectors (i.e. apparel, entertainment, etc.) in an efficient manner. Additional protections can also be added to ensure that a partnership is operating successfully. A licensor may require that certain benchmarks be met in order for the licensee to keep the using its rights. For instance, a licensor can require that the licensee meet a minimum annual revenue target in order to ensure that the licensee is adequately marketing the product bearing the licensed intellectual property. Licensing agreements that include provisions like this may provide for the return of all intellectual property rights to the owner if these goals are not met. These types of provisions can act as added security in the event one side fails to meet certain quality control or performance standards.
Licensing in Esports
Licensing partnerships are especially apparent within the esports industry. Game developers, like Riot, Activision Blizzard, and Epic Games, license their games to tournament organizers through various types of licenses so that these organizers can use games like League of Legends, Overwatch, or Fortnite in their tournaments. Additionally, esports teams will often enter into licensing deals with apparel companies to produce products like performance wear, fanwear, and other accessories. Influencers can also enter into their own licensing deals for branded products. Most recently, Ninja, through his partnership with Red Bull, entered into an exclusive licensing deal with Walmart for the sale of his unique headband. Sponsorship agreements will also oftentimes include language that defines terms of licensing, if any, between the parties as both parties will use of each other’s intellectual property (logo, slogan, etc.) in sponsorship activation. The amount of licensing opportunities within esports is endless and these types of partnerships will continue to make up a significant portion of all business transactions within the industry as it grows.
Any time intellectual property is involved, which is almost always certainly the case, companies will have the opportunity to license it for commercial gain. Through a licensing arrangement, both parties to the transaction can reap certain benefits. Licensors may be able to use a licensee’s production, distribution, and marketing network, while licensees can profit off of the licensor’s brand appeal. Still, while these types of deals seem easy to complete, there are a number of concerns that must be considered before executing a deal. Be on the lookout for a future post where we will address these concerns.
On September 27, 2018, Nintendo’s blue-shell finally reached the Japanese go-karting company MariCar. The Tokyo District Court ruled in favor of the video game giant and awarded it damages for Maricar’s copyright infringement. MariCar, a popular service in Tokyo since 2011, must now pay ¥10 million (nearly $89,000 USD) in compensation and cease its use of Nintendo-related cosplay to promote its business.
MariCar is a well-known tourist attraction in Tokyo that offers street-legal go-kart rentals to users who wish to tour the streets of the city. The company also gave customers the option of renting out costumes to wear during their go-kart adventure. These options included costumes that mirrored characters like Mario, Luigi, Princess Peach, Bowser, and other characters from the classic Nintendo title Mario Kart, undoubtedly in an effort to make the virtual game a reality for fans.
The game developer filed the lawsuit in February 2017 alleging copyright infringement and a violation of Japan’s Unfair Competition Prevention Act. In its filing, Nintendo stated that MariCar provided users of the service with copyrighted Nintendo character costumes and often posted photos and videos of the customers in said outfits in an effort to promote its business. Nintendo believed the go-kart company’s actions were a violation of Nintendo’s intellectual property rights, since MariCar had been using the characters’ likeness without a license. The Tokyo District Court agreed with Nintendo and ordered MariCar to stop using Nintendo-related outfits in connection with its services and awarded Nintendo the requested amount of 10 million yen. Interestingly enough, the company still offers its customers the option of wearing other character cosplay like Superman and Spiderman – for now.
This lawsuit was not the first time Nintendo legally opposed MariCar. Prior to filing its lawsuit against the go-kart company, Nintendo filed an objection with the Japan Patent Office over MariCar’s registered trademark. In its objection, Nintendo argued that the MariCar trademark beared a striking resemblance to Nintendo’s Mario Kart franchise, and that MariCar directly intended its trademark to confuse the public. Nintendo went on to assert that the public widely interpreted MariCar to be nickname for Mario Kart, much like other abbreviated Japanese nicknames for game titles, such as “Pokemon” for “Pocket Monsters,” “Pazudora” for “Puzzle & Dragons” and “Sumabura” for “Super Smash Bros.” This colorful argument did not appeal to the authoritative body, as the Japan Patent Office maintained that there was no connection between the two trademarks, handing Nintendo a rare legal loss.
Nintendo has a long history of aggressively defending its trademarks and copyrights. The publisher recently opposed a United States couple's “Poké Go” trademark that was intended for use in connection with clothing. Predictably, Nintendo stated that the trademark would be confusingly similar with its Poké trademarks. More recently, the game developer sued a website operator over two websites that allowed anyone to play and download a number of Nintendo games for free. Over the years, Nintendo has shaped the gaming industry through its zealous fights to protect its intellectual property against copyright infringement.
At first it may be hard for passionate Nintendo fans to understand why the publisher has taken such an aggressive approach in defending against copyright and trademark infringement. From their perspective, the Japanese company is simply preventing supporters from living out their fantasies of a real life video game like Mario Kart and stopping others from making its older games more available to the masses. However, Nintendo is only doing what is necessary to protect its property and brands that have taken years, and substantial sums of money, to build. Without opposing similarly confusing trademark registrations, Nintendo, in time, could potentially lose a trademark that it previously held. Additionally, by allowing others to use its copyrights for their own businesses, the publisher would be losing out on creative control over similar opportunities it may have planned to provide at a later date and any profits that would be associated. Still, companies that wish to use Nintendo’s copyrights may do so legally by obtaining a license from the game developer, though the price for a license may be steep. In the mean time, fans will have to wait for Nintendo to make their dreams come true with a theme park containing all their favorite characters.
(Image used under creative commons license from Cory Denton)
Trademarks are the foundation of branding, as they protect the rights holder from third parties using any protected words or logos for their own pecuniary gain. Fnatic, Fatal1ty, and Overwatch League, are a few of the many examples of trademarks utilized in the esports and streaming industries. Trademarks are extremely valuable assets to those who own them because they provide heightened protections and rights to owners. These benefits are not only available to companies, like when a streamer or influencer creates a company to provide their services through, but also to individuals who can prove that their name, or pseudonym, has acquired “secondary meaning”. Secondary Meaning is a legal term used to mean that the mark owner can show that the individual’s name or pseudonym is indicative of the producer of the services and not the services themselves. Popularity certainly plays a role in whether Secondary Meaning can be proven. Athletes like LeBron James and Cristiano Ronaldo have trademarked their names, nicknames and even their commonly-used phrases to provide themselves with exclusive use of these words and phrases for their own pecuniary gain. Streamers and influencers should follow in these athletes’ footsteps with respect to their intellectual property.
What are trademarks?
Trademarks are words, symbols, or phrases, used to identify and distinguish the specific source of goods or services. A trademark provides its registrant with the exclusive right to use a registered word, symbol, or phrase in connection with the goods or services specified in its registration. This means that the use of confusingly similar words, symbols or phrases in the same or similar industries could be unlawful. Trademark registration provides owners with a number of other benefits as well.
Once a trademark is federally registered, the registration serves as notice to the rest of the United States that the word, mark or phrase is being utilized in commerce by the mark’s owner. This means that if someone tries to utilize that mark, or a confusingly similar mark, for the same service or product, even if they were unaware of the registered mark, the prior registration precludes that mark from being utilized in commerce.
The federal registration also allows the mark holders to use the ® symbol. This symbol appears after the registered mark, in the upper right hand corner, when the mark is being used in connection with the goods and services listed in its registration. It gives constructive notice to potential infringers that the mark has been registered with the United State Patent and Trademark Office (“USPTO”) and that the mark holder has the exclusive right to use and license the trademark.
Oftentimes, the registration and use of the ® symbol alone will prevent users from creating marks that are confusingly similar. However, if a third party infringer utilized a mark that is confusingly similar, a mark owner can demonstrate their ownership by directing any infringers to their registered trademark, which is publicly viewable on the internet. Federal registration also allows a mark owner to obtain statutory damages up to $200,000 (in counterfeit cases), treble damages (for willful infringement), and attorneys fees, should the mark owner need to pursue any infringement of its trademarks through litigation. For these reasons, trademarks can act as both a sword and a shield for the registrant.
Why Trademarks are Important for Streamers
A trademarked alias will provide you with complete control over the use of your name in connection with the goods and services in which your trademark is registered. For instance, if your alias is “CKNdinner”, and you file a trademark registration for that phrase in connection with Class 25 (clothing, footwear, headgear, etc.), you will be the only person or business that is able to sell t-shirts, hats, etc. with that name on it once the mark is registered. These goods will also show the ® symbol after the mark, which will help deter potential infringers before they even think about utilizing the registered mark, or a confusingly similar one, on their own goods. Further, if someone were to infringe on their registered marks, they would have a strengthened position to pursue a claim through court due to the potentially increased damages and ability to be awarded attorney’s fees.
Without the trademark on your alias, it is much more difficult to protect against a third party trying to profit off of your established brand. It sounds uncommon, but this happens more frequently than you may think. A few years ago, professional athlete Johnny Manziel was forced to take legal action against a man who sold t-shirts using his popular moniker, "Johnny Football". Although Manziel did not have formal trademark protection for the nickname, he still had common law rights to use the phrase and the opportunity to plead his case in court. Plaintiffs in these types of actions may still be successful without a registered trademark, but in order to receive a monetary award, they would have to demonstrate actual damages, which can be in difficult in many cases. Nonetheless, the federally registered trademark would grant streamers and influencers the right to sue in federal court, and due to the statutes which govern trademarks, the bar to recover monetary damages would be much lower.
As online streaming viewership continues to grow, individual brands are becoming increasingly more valuable by the week. Subscribers and companies alike are willing to pay a great deal of money to streamers and influencers in the hopes reaching their audience and showcasing its brand. In order to make sure that their brand is adequately protected, streamers and influencers should consider the benefits a trademark can provide to them. In addition to the benefits described in this blog post, trademark registration in the US may also serve as the basis for a foreign trademark registration, which is especially helpful given the increasingly global esports and streaming industries. Sophisticated streamers and influencers should follow in the footsteps of the entertainers before them, and their massive brands, in order to shield themselves from any potential infringers while they grow their brand.
If you are a streamer or influencer and you would like to discuss how our attorneys can help you with this process, please contact us.
Its Super Bowl week, and the Seattle Seahawks are back to defend their title against the New England Patriots. However, the Seahawks have made the news for some of their off-field business endeavors this week. The Seattle Times has reported that the Seahawks have filed applications for multiple trademarks since their Super Bowl victory last year. One of these applications is for "12".
The Seahawks refer to their fans and their stadium as the 12th man, largely due to the noise of the crowd not allowing opposing teams from hearing each other on the field. The team has previously attempted to trademark "12" twice, to no avail. Their applications for "12" were previously denied due to a conflict with a NASCAR team trademark and a hotel's trademark. Currently, the Seahawks are attempting to trademark "12" in the font that appears on their jerseys.
But what is a trademark? A trademark is a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from another.
Effectively, the Seahawks application for "12" in their jersey's font is asserting that it identifies and distinguishes its source as the Seahawks. However, this mark is likely not distinctive enough for trademark registration. Instead, this mark would likely be found as generic. The block letter jersey font, as shown in the picture above, is strikingly similar to many other football teams' fonts, at every amateur and professional level. Because a trademark must identify and distinguish its source, and the term "12" is not distinctive enough on its own, the font's similarity to other team fonts weakens the strength of the mark.
Generic marks can be trademarked if the mark has acquired secondary meaning. That would mean that despite its prima facie generic qualities, that consumers have come to associate the mark with the source of the goods. Although there may be an argument that Seahawks fans may associate articles bearing "12" as having originated from the Seahawks, that argument seems somewhat tenuous. The strong generic nature of the mark may be difficult to overcome and achieve secondary meaning.
Although it should be encouraged for sports teams and athletes to pursue trademark opportunities to protect their brands, the Seahawks attempt to trademark "12" appears to be an overreach.
Quiles Law is an esports and sports law firm based in New York City.
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