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The real problems of fantasy sports

Submitted by-Rishika Mendiratta

The origin of fantasy sports-

The origins of fantasy sports can be traced to the post-WWII era. Wilfred Winkenbach designed fantasy golf. Golf offered an easy and simple fantasy league template. Participants had to select a group of professional golf players and the one who had the lowest stroke total of their respective players at the end of the tournament was the winner.

It was Daniel Okrent who transformed fantasy sports into what it is today in 1980. He introduced the idea of managing a fantasy sport team in sync with the ongoing sports season, incorporating day to day or week to week game scores and player stats. The first traces of the same can be found in Rotisserie League Baseballs. Participants in a fantasy sports game act as managers of their “fantasy” (i.e. imaginary) teams. Fantasy leagues correspond with the professional leagues, the information that makes the fantasy games possible is the factual record of what takes place in live games: the statistics generated by each individual player.
Public are invited to build and manage virtual teams consisting of real-life sportsmen and compete against fellow users based on statistics generated and/or points accrued by such real-life sportsmen or teams in certain professional sporting events.

“Fantasy sport is considered legal (game of skill) in India, US, Australia and England. “It is expected that the industry will touch 50 million in the next three years,” as per Rakesh Desai, founder & CEO of CricBattleInc, a fantasy cricket platform. The fever of fantasy sports reached its peak in India at the time of various sports leagues. This is becauseall sports fans are amateur statisticians who love keeping track of their favourite players. If it is an IPL match between Delhi and Bengaluru, most don’t care who wins or loses but are more eager to track the performance of the star players in the team.” – Harsh Jain founder of Dream11.com

The legal trouble-

It can be said that sports frenzy in India is fast burgeoning in the direction of a fantasy sport centric scenario which will change the way fans interact with one another just the way it did in other countries especially in America.

In this emerging era of fantasy sports in India there are several issues which might embroil this arenain legal issues. The article further explores the probable problems which could arise in the fantasy sports with respect to intellectual property rights.

The tryst with trademark

An inherent threat to trademark owners of highly visible sporting events, team schools and the Olympics is the pirating of their marks. Capitalising on the fans’ desire to identify with a favourite franchise or athletic organisation numerous business have been exploited the goodwill or marketability of the sports organisations by producing anything from hats to T-shirts to pennants that carry a team name ,nick name, team player name or a logo or symbol without any authorisation.

Professional sports is a multi-billion dollar empire and athletes are beginning to find ways to leverage and add value to their own personal brands. Thus the commercialization of sporting teams and athletes is ubiquitous. Owing to thisthe licensing of trademarks is a big business in sports. In addition to this the sports fan obsession with sport related items with sports team affiliation has created a revenue stream for many sport related organisations

In the important sports trademark case of National Football League Properties Inc v Wichita Falls Sportswear, Inc , the court’s scrutiny of the consumer confusion issue that led to the plaintiff’s success in preventing the defendant sportswear company from manufacturing and selling NFL football jersey replicas that created the likelihood of confusion. The court held that NFL Properties had the burden of proving that secondary meaning of the descriptive term i.e. Seattle related the jersey to the NFL team and 2) Wichita Falls activities created a likelihood of confusion. The NFL was able to prove that placing Seattle on the jersey created a likelihood of confusion in the minds of the buyer.

Even in India section 32 of the Trademarks Act 1999, rather indirectly, speaks about acquired distinctiveness and secondary meaning. The section conveys that when a mark is registered overlooking the facts in relation to grounds for refusal of registration, it will not be rendered invalid if as a consequence of its use it has, after registration and before commencement of any legal proceedings, acquired a distinctive character in relation to the goods for which it is registered. Thus the fantasy sports could use certain elements of sports events and sportspersons taking the defence of the secondary meaning which it obtains from the development of these fantasy leagues.

Besides in National Football League Properties, Inc. v. Consumer Enterprises, Inc ‘ dealt with the issue regarding the unlicensed sale of embroidered patches of NFL team symbols. The court recognized that the plaintiffs had a property right in the team symbols, which entitled them to protection. This right accrued as a result of the teams acquiring goodwill and a strong secondary meaning in their marks. Because the NFL teams and their symbols had acquired popularity and notoriety through extensive licensing arrangements made by NFLP, the court found that the defendant’s duplication of the trademarks would cause consumers to associate the patches with the NFL and its teams. The court held that

“Defendant is in the business of manufacturing and selling embroidered emblems; it can place any design it wishes on the emblems. However, it has chosen to copy the marks of the NFL teams because they are very distinctive and are associated with highly successful football teams. Therefore, we conclude that the trademarks of the teams copied by defendant indicate sponsorship or origin in addition to their ornamental value.”

Thus, in various cases in the world of sports, various organizations have been successful in preventing the unauthorised use of their marks/logos.

Even trademark pertaining to the personality rights of the sportspersons. For example, Jamaican sprinter Usain Bolt’s “Lightning Bolt” pose and his “to di world” slogan, US basketball star Michael Jordan’s “jumpman” pose and his Air Jordan brand shoes, and English Rugby star Johnny Wilkinson’s distinct kicking stance are all examples of registered trademarks. Without bestowing absolute rights over those poses and words, trademarks prevent unauthorized commercial use of products without the endorsement of the celebrities. Even without a registered trademark, however, celebrity athletes have “image (or personality) rights” to prevent unauthorized use of their name, likeness or other personal attributes.

The first issue in the case of fantasy sites is with respect to ‘”image rights” of the players. In the case of Uhlaender v. Henricksen , Major League Baseball Players Association (MLBPA) brought a suit alleging a violation of state misappropriation law against a creator of a board game. The production of the board game involved using the “statistics and names” of over 500 professional baseball players without compensation or the permission of the MLBPA. The court said, “A celebrity must be considered to have invested his years of practice and competition in a public personality which eventually may reach marketable status. That identity, embodied in his name, likeness, statistics and other personal characteristics, is the fruit of his labours and is a type of property.” The players in Uhlaender had a right to their statistics and names, and the defendant had infringed on their rights to publicity by using this information without the players’ permission or compensation.

In relation to fantasy sports Professional sport leagues can claim player’s statistics are equitable to one’s personality and physical features when it comes to marketability. Thus, statistics should be considered part of a player’s identity. This reasoning finds it rationale from the reasoning given in the case of Uhlaender.

Fantasy leagues on the other hand could bank upon the reasoning that numbers generated from a player’s performance do not reveal anything about his physical characteristics, his personality, image, or his persona and thus in no way crosses the line of affecting their image rights.

The test of commercial use stands an important measure to evaluate the legality of the use of player attributes in fantasy leagues.

Palmer v. Schonhorn Enterprises, Inc was the first case that dealt with the unauthorized integration of names and statistics of professional athletes. In Palmer, the defendant used the image and statistics of golf legend Arnold Palmer and other professional golfers in its video game Pro-Am Golf by listing the player’s information in “profile and playing charts” in hopes of improving the sale of the game. The court rejected the defendant’s argument that “since the information contained in the profiles is readily obtainable public data and available to all, it should be denied the privilege of reproducing. The court distinguished between the “act of capitalizing upon the name by using it in connection with a commercial project” and pure reporting of an individual’s statistics. The former was deemed unjust because it allowed the defendant to freely exploit and to profit from successes of another based on the owner’s highly publicized accomplishments. Even in the case of Arsenal v Reed it was adjudged that the use of signs identical to Arsenal Football Club’s registered trademarks on unauthorized football merchandise by a street trader constitutes trademark infringement.

Fantasy sports can easily wriggle its way out of the complexities of this test. The reason being fantasy sports do not satisfy this test because players’ names and statistics are not included based on the players’ celebrity status, nor are the statistics used as an advertisement to associate the player with the fantasy league.
Fantasy sports would be equally successful if they did not use the players’ name and only used their statistics. Players would still be drafted because, for the most part, participants draft players based on their statistical output, not on the players’ name. The ability of fantasy sports to be successful without players’ names refutes the argument that fantasy leagues appropriate player information for commercial gain or that the leagues would be unsuccessful without it..

Fantasy sports do not use players’ names and statistics to promote any specific leagues. Participants join fantasy leagues because they enjoy playing the role of “general manager” and the analytical fun that the leagues involve. Also, every fantasy league uses the same players and statistics, therefore player information is not used to promote one league over another. The statistics have no bearing on the marketing of fantasy leagues instead they are used strictly as raw data that is computed to develop the league standings.

The doctrine of transformative use is another test which can help the fantasy leagues to justify their operation of the various fan centric leagues. According to this doctrine works that are deemed to possess significant transformative elements are less likely to interfere with the individual’s economic interest, and thus are not violative of their image rights or publicity rights.

The well recognised concept of rights of publicity under the Lanham Act of USA has emerged from the genesis that any person must have a control over the commercialization of his or her personality. The same has been reiterated by the Hon’ble Delhi High Court in the case of ICC Development (International) vs. Arvee Enterprises and Anr. The court held the following in this case-

“The right of publicity has evolved from the right of privacy and can inhere only in an individual or in any indicia of an individual’s personality like his name, personality trait, signature, voice, etc. An individual may acquire the right of publicity by virtue of his association with an event, sport, movie, etc. However, that right does not inhere in the event in question, that made the individual famous, nor in the corporation that has brought about the organization of the event. Any effort to take away the right of publicity from the individuals, to the organiser {non-human entity} of the event would be violative of Articles 19 and 21 of the Constitution of India. No persona can be monopolised. The right of Publicity vests in an individual and he alone is entitled to profit from it.”

The case of EBC v D.B. Modak is a landmark judgement with respect to the transformative test. In this case it was stated by the Apex court that no doubt, the appellants have collected the material required for writing the judgment and improved the readability of the judgment by putting inputs in the original text of the judgment by considerable labour, and arranged it in their own style, but that does not give the flavour of minimum requirement of creativity.”In this case the sweat of the brow doctrine was rejected and the threshold for copyright violation was increased from the sweat of the brow doctrine was till less than the modicum of creativity standard.

Fantasy sports use player statistics to create new data that is customized to its leagues. The performance of the players’ is transformed from hits, yards, touchdowns, and baskets, into fantasy points. The players’ statistics are not used to attract attention to the fantasy leagues; they are used to compute data. Since the statistics are transformed to create new data the fantasy sports could take the defence of this test to establish the novelty and innocuous nature of their work.

The use of trademark can evade legal liability when if falls under the ambit of nominative fair use. Under Section 30 (2)(d) of the Trademark Act, 1999 it is provided that a nominative fair use of a trademark by a third party is not an infringement of a registered trademark.

This has been used in the case of Consim Info Pvt. Ltd vs Google India Pvt. Ltd while referring the cases of New Kids on the Block v. News Am. Publ’gInc) the Hon’ble High Court of Chennai held that

A use is considered to be a permitted nominative fair use, if it meets three requirements, viz.,

(i) the product or service in question must be one not readily identifiable without use of the trademark;

(ii) only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and

(iii) the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.

Nominative fair use and initial interest confusion wereat the centre of the dispute in J.K.Harris& Co. vs. Kassel. In this case, J.K.Harris and Kassel were rendering the services of negotiating reductions in tax assessments and resolution of past due tax obligations for clients. Both of them promoted their services online. On its website, taxes.com, Kassel began publishing negative information about Harris on a page that was designed so as to be prominently featured in the search engine results of those seeking information about Harris. Kassel did this by creating “keyword density” on the page in concern. No nominative fair use defense was allowed in this case, the Court held that Harris was likely to prevail on its initial interest confusion claim as consumers were likely to be confused by Kassel’s use of Harris’ trade name.

Thee limits on the use of any registered trademark have been given section (1) Nothing in Section 29 shall be construed as preventing the use of a registered trade mark by any person for the purpose of identifying goods or services as those of the proprietor provided the use –

(a) is in accordance with honest practices in industrial or commercial matters, and

(b) is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the trade mark.

(2) A registered trade mark is not infringed where –
(a) the use in relation to goods or services indicates the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services or other characteristics of goods or services.

There is a recent case involving TATA Steel Ltd. and an international environmental NGO called Greenpeace called Tata Sons Limited vs Greenpeace International &Anr . TATA. Steel Ltd. planned to set up a steel plant at Dharma Port which is situated off the coast of Orissa and this had the risk of endangering the lives of numerous Olive Ridley turtles habituating near the port. Greenpeace in retaliation launched its own iconic Pac-Man video game targeting Tata wherein the Tata logo was used to depict monsters. The international environmental NGO, successfully argued that their use of TATA’s logo (stylized T in a circle) was a case of nominative fair use of the mark; and that its representation was evidently exaggerated and could not have lowered TATAs’ reputation in the eyes of the public. The Delhi High Court has declared that Greenpeace India, which is a non-profit organisation, has not indulged in any profit-making by launching the ‘Turtle v. TATA’ game on its website. Also the aim of the user of the trademark was to invite the attention of the people towards the owners of the trademark. The use of the TATA’s logo by Greenpeace has been termed merely denominative in nature by the Court and the use of the trademark as an object of critical comment does not amount to infringement.

In the case of fantasy sports, the leagues in no way use the trademarks in an unfair manner or use it in a manner which is detrimental to the registered trademark. Their use is mainly denominative in nature and causes no confusion in the minds of the sports fan.

The ‘functionality’ doctrine concerning the use of trademarks, which seeks to promote competition by protecting a company’s reputation, from inhibiting legitimate competition by allowing a producer to control a useful product feature. With respect to the functionality doctrine it has been observed generally that, a product feature is functional, and cannot serve as a trademark, if it is essential to the use or purpose of the article or if it affects the cost or quality of the article, indicating that exclusive use of the feature would put competitors at a significant disadvantage unrelated to their reputations. The functionality doctrine bars protection for something that is essential to the use or purpose of the article or which affects its cost or quality, to avoid an adverse effect on competition.In India this doctrine finds mention in section 9(3) of the Trademarks Act wherein it is basically applied with respect to the shapes of goods. There is a scope of extending the functionality doctrine to other areas in today’s commercialised world as is seen in other countries and especially in the field of sports because of the emergence of fantasy leagues and other related events.

In Inwood Laboratories, Inc. v. Ives Laboratories, Inc. it was stated, in general terms, a product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article. If trademark law were to protect such functional features, “the original producer would be able to establish a monopoly in useful goods.”‘

Thus, the functionality doctrine is intended to protect consumers from such monopolies by allowing competitors to copy the functional features of a products and the fantasy avoid a lot of legal trouble if it could prove that it only copied the functional features of events or personality rights thereby not infringing anything. The benefit of the said doctrine can be replicated in the Indian scenario if the scope of the same is extended beyond the shapes of the objects as has been discussed before.

The landmark caseconcerning fantasy league and the legality of its use of player statistics and their images is the case of CBC v MLBAM –
The court said in this case said “There is nothing about CBC’s fantasy games which suggests that any Major League Baseball player is associated with CBC’s games or that any player endorses or sponsors the game in any way.” In addition, the use of the players’ names and statistics did not involve the personality, character, physical appearance, or reputation of the players. Categorizing this information used by CBC as historical facts about baseball allowed the court to rationalize that the players’ name and statistics did not equate to the players’ persona and thus not a symbol of his identity.The court also considered the policy reasons behind the right of publicity and concluded that CBC’s use of players’ names and statistics did not harm the players’ commercial value because: the players’ ability to earn a living did not depend on the publication of their statistics and names; fantasy sports actually enhanced the marketability of players; and CBC was not unjustly enriched as the players’ names and statistics were available in the public domain.”

Thus in India with rapid rise of fantasy leagues with respect to various sports, there are several new aspects in the legal scenario which will emerge relating to sport events and player rights. Fantasy leagues in addition to big a commercial venture are platform for sports fans wherein they have a sense of association with the players they follow and enjoy being themanagers of their imaginary teams. The craze for fantasy sports in America has reached up to a frenzy wherein fantasy insurances are provided to the fans as an indemnity of their losses. In India we are surely heading towards a direction where such scenarios are not unforeseen. Thus the legal solution to all the controversies pertaining to image rights and other trademark issues has to find a golden mean wherein the intellectual property of the sporting events and the sports person is not misused for commercial gain and at the same time fans can continue to experience the joy of being the managers of their dream teams.

References:

  1. Gary P. Quiming, Comment, Playing by the Rules of Intellectual Property: Fantasy Baseball’s Fight to Use Major League Baseball Players’ Names andStatistics, 29 U. HAW. L. REV. 301, 304 (2006).
  2. Adam L. Sheps, Note, Swinging for the Fences: The Fallacy in Assigning Ownership to Sports Statistics and its Effect on Fantasy Sports, 38 CONN. L. REV. 1113, 1114 (2006).
  3. Kamath article
  4. Tom Van Riper, A Guy’s Fantasy, Forbes, Feb. 28, 2011.
  5. 532 F. Supp. 651 (1982).
  6. 327 N.E.2d 242 (I1. App. Ct. 1975).
  7. 16 F.Supp. 1277 (1970).
  8. 96 N.J. Super. 72 (1967).
  9. [2002] EWHC 2695 (Ch).
  10. 2003 (26) PTC 245 De.
  11. (2008) 1 SCC 1.
  12. 2013 (54) PTC 578 (Mad).
  13. 2011(1)ARBLR244(Delhi).
  14. Non-conventional Trade Marks (Manupatra Article)  by Dev Ganjee.
  15. 456 U.S. 844 (1982).
  16. 443 F.Supp.2d 1077.