September 01, 2011 4:16pm PT by Eriq Gardner
Why an NFL Star's Tweets Got His Endorsement Deal Canceled
Many celebrities (a) like to tweet opinions to hundreds of thousands of followers and (b) are paid lucrative sums to endorse brands. Most often, these two things don't come into conflict, but when a celebrity says controversial things on Twitter, a sponsor might get nervous and begin reviewing the so-called "morals clause" of the endorsement contract to see if there has been a breach.
Such was the case earlier this year when clothing retailer Hanesbrands, Inc. decided to nix Rashard Mendenhall's lucrative endorsement deal after the Pittsburgh Steelers running back took to Twitter to question the truth behind the Sept. 11 terrorist attacks and decry those celebrating Osama bin Laden's killing.
Mendenhall responded by filing a $1 million lawsuit purporting to speak up for the free speech rights of all celebrities. Now comes Hanesbrands' response, which poses a provocative question: Does U.S. trademark law somehow compel companies to monitor the tweets of their celebrity endorsers?
In Mendenhall's complaint filed in July, he identified what he believed to be the crux of his case:
"This case involves the core question of whether an athlete employed as a celebrity endorser loses the right to express opinions simply because the company whose products he endorses might disagree with some (but not all) of these opinions."
Mendenhall claimed that he had started tweeting in January 2010 and that Hanesbrands was aware of attention he was receiving for things he said on Twitter, but didn't object until May 2011.
Meanwhile, in August 2010, the parties signed a four-year extension of endorsement deal, which altered his moral clause to prohibit activities that would "bring Mendenhall into public disrepute, contempt, scandal or ridicule," but never explicitly restricted what he could or couldn't say on Twitter.
The athlete claimed that the sponsor's contractual silence on the Twitter issue didn't allow it to terminate their agreement.
On Tuesday, Hanesbrands delivered its response in North Carolina federal court in a motion for judgment on the pleadings. The company puts a completely different spin on what's involved in this case:
"Plaintiff posits the wrong question. The correct issue for this Court is whether a trademark owner that has expended considerable time and resources building up substantial goodwill associated with its famous brand is required to continue to pay and employ a celebrity endorser..."
The invocation of trademark is no accident.
The company goes on to say that U.S. trademark law "imposes an affirmative obligation upon (holders)" to control the quality and image of their brands and that "enforcement of 'morals clauses' is entirely consistent" with such law.
As far as the specific "morals clause" in question, Hanesbrands lists the controversial tweets by Mendenhall, which the company believes leave no doubt that the celebrity athlete violated the "public ridicule" provisions of his deal. Nevertheless, the company says it had discretion on how to interpret the provision. As for not sending any warning about Mendenhall's Twitter behavior, Hanesbrands says it had a right but not any obligation to do so.
We're not sure we've ever seen such a line drawn between trademark law and "morals clauses" but here, Hanesbrands says it owed its loyal customers a wholesome image. In fact, the company comes pretty close to suggesting it has some sort of legal responsibility to maintain that image.
Here is the company's argument in full: