October 25, 2013 1:50pm PT by Eriq Gardner
NCAA Athletes Advance in Antitrust Lawsuit Over TV Broadcasts and Video Games
U.S. District Judge Claudia Wilken in San Francisco has delivered an eagerly awaited ruling that could eventually swing the economics of the TV cash cow that is college sports. On Friday, she denied the NCAA's motion to dismiss a lawsuit brought by current and former collegiate athletes.
The plaintiffs allege in their class action antitrust lawsuit that the NCAA forces its athletes to sign release forms as a condition of their eligibility to compete. The forms require athletes to relinquish the right to the commercial use of their images in perpetuity, and those suing say that the NCAA has enlisted its licensing partners to enforce a boycott that has the effect of foreclosing compensation for amateur athletes.
The lawsuit started out as one that was mainly concerned with the use of ex-athlete likenesses in videogames, but has morphed into a much bigger dispute that potentially puts billions of dollars in TV industry income on the line. The NCAA has argued that the morphing of the lawsuit hasn't been fair, but in her opinion delivered on Friday, the judge has decided that it should move forward.
In doing so, Judge Wilken rejected the NCAA's three main lines of argument for dispensing the lawsuit at this juncture.
The NCAA contended that the antitrust claims were "nothing more than a challenge to the NCAA's rules on amateurism," and should be dismissed under the precedent of a 1984 case ("Board of Regents") that focused on the NCAA's cap on the total number of football games that Division I schools were allowed to televise each season. The Supreme Court determined that the NCAA's cap violated the Sherman Act, but gave the NCAA some leeway from antitrust allegations by also finding that intercollegiate athletes is "an industry in which horizontal restraints on competition are essential if the product is to be available at all."
Judge Wilken notes, though, that the Supreme Court never analyzed the NCAA's ban on student-athlete compensation and brings up other recent cases where athletes stated valid antitrust claims.
"Thus, while Board of Regents gives the NCAA 'ample latitude' to adopt rules preserving 'the revered tradition of amateurism in college sports,'" she writes, "it does not stand for the sweeping proposition that student-athletes must be barred, both during their college years and forever thereafter, from receiving any monetary compensation for the commercial use of their names, images, and likenesses. Although it is possible that the NCAA’s ban on student-athlete pay serves some procompetitive purpose, such as increasing consumer demand for college sports, Plaintiffs’ plausible allegations to the contrary must be accepted as true at the pleading stage."
Next, the judge analyzes the NCAA's argument that the First Amendment bars student-athletes from asserting their rights of publicity over game broadcasts. This issue is potentially most impacting TV broadcasters who aren't named as defendants in this present case, but who plaintiff-lawyers have signaled might be targeted in future court battles.
"Neither the Supreme Court nor the federal courts of appeals have ever squarely addressed whether the First Amendment bars athletes from asserting a right of publicity in the use of their names, images, or likenesses during sports broadcasts," writes the judge.
Ultimately, after struggling with the balance between publicity rights and free speech and analyzing some rulings from other lower courts, she says the central question is "whether the defendant's use of the athlete's name, image, or likeness is primarily 'commercial.'"
Without offering any firm answer, she discusses various types of game footage including live game broadcasts, rebroadcasts of classic games, highlight films and stock footage and says "it is plausible that at least some of the broadcast footage described in the complaint -- particularly the promotional highlight films and the 'stock footage' sold to advertisers -- was used primarily for commercial purposes."
The NCAA's First Amendment defense thus can't prevail at this stage.
Finally, the NCAA also argued that the plaintiffs' claims were preempted by the Copyright Act because it owned rights in the footage, but the judge says the athletes' persona rights at issue are "fundamentally different from those protected" by federal copyright law.
For those reasons, Judge Wilken denies the motion to dismiss.
Where the case goes from here is an open question. Some legal observers have expressed the theory that a victory for athletes at this preliminary stage could set up settlement discussions that might usher in the end of amateurism. If that were to happen, accommodations would probably have to be made to divide some of the money earned by the NCAA from its broadcasting partners. On the other hand, officials at the NCAA have publicly committed to appealing any adverse ruling all the way up to the U.S. Supreme Court.