I am pleased to bring to you our next guest post by Aashna Sheth. Aashna Sheth is an LLM graduate in IPR from the University of Pennsylvania Law School. During her time at UPenn she focussed extensively on copyrights, trademarks, entertainment law and trade secrets.
The advent of technology and the dynamicity of consumer decision-making has changed the way in which goods and services are marketed and sold. The growing influence of social media platforms and the development of closer relationships between companies and consumers has been bridged by bringing on board celebrities (be it athletes, social medial influencers or others) as the face of these brands.
When individuals of such a stature are signed on to these campaigns, they often become synonymous with the product or service that they are endorsing. Therefore, the company as well as the celebrity are profiting off of each other in what could be termed as a symbiotic relationship. As these individuals and brands slowly become one, it becomes imperative for celebrities to retain their own identities and maintain their own brand image.
This issue becomes especially important if these individuals are using their own names as a selling factor in relation to these brands. When this comes into the equation, it is crucial that they exercise control as well as ownership over their own names in order to retain the option of exploiting them as commercial assets.
Explored and analyzed in this post is the use of names in sponsorship and other agreements. I begin by introducing this concept using the dispute between Roger Federer and Nike as an initial case study. Next, I explore transactional discrepancies that might have led to such a dispute in the first place. Lastly, I propose my own contractual solutions to this issue while exploring sample clauses in order to enunciate the same.
The Dispute between Federer and Nike
The ongoing dispute between Roger Federer and Nike surfaced after Roger Federer terminated a longstanding contract with Nike and subsequently signed a ten-year and $300 million deal with Japanese clothing giant Uniqlo[i]. Although this deal seems to be lucrative, the intellectual property issues that have arisen in consonance with this contract has put at the forefront the importance of intellectual property clauses in such transactions.
While Roger Federer is a household name in the world of tennis, the iconic ‘RF’ logo that has become tantamount with his persona on and off the court, is the brainchild of Nike. Although the logo was designed for and promoted by Federer, Nike owns the rights in and to it and has been Federer’s sponsor since 1994[ii]. While Federer owns the rights to his own name i.e., ‘Roger Federer’, the rights to the RF logo exclusively belong to Nike[iii]. Therefore, even as Federer endorses Uniqlo, Nike continues to possess the right to exploit the RF trademark while preventing/precluding third parties (including Federer) from utilizing and thereby profiting from the same.
This dilemma brings to focus the importance of intellectual property provisions in sponsorship and other agreements. Such problems usually arise when these considerations are not given enough weight at the negotiating table. Most of the time, when such contracts are entered into, the primary focus is on the purpose of the agreement and the deliverables and financials that will be received; intellectual property issues are more often than not, sidelined. What we need to understand is that intellectual property, in such cases especially, is an imperative intangible asset. It should therefore be given adequate weight and consideration and be protected at all costs.
Transactional Discrepancies in Sponsorship and Other Agreements
The Federer and Nike dispute sheds light on the lack of importance given to intellectual property clauses when it comes to sponsorship agreements. Explored below are some transactional discrepancies that might give us a more nuanced understanding as to why a dispute of such a magnitude might have come into being.
A. The ‘Stage’ Factor
Often, when Sponsorship Agreements are entered into with athletes, they are at the initial stage of their careers (probably at the time they’ve been discovered or newly drafted). During this time, their agents try their best to secure for them lucrative and profitable deals that will build their brand and make their reach and recognition ubiquitous. The main focus on the negotiating table at that stage is not securing intellectual property protection or ancillary considerations, but on getting the most out of the deal (i.e., mainly the financials, and deliverables). Thus, larger companies (such as Nike for instance) take advantage of these situations and ensure that the intellectual property rights remain with them. In these contracts, the absence of provisions that protect the athletes’ intellectual property, keep the door open for disputes such as the one between Federer and Nike.
B. Ancillary Factors to the ‘Name’
Athletes and celebrities often trademark their own names (for instance Roger Federer owns the trademark rights to his name i.e., Roger Federer). However, when they enter the world of sports or any other domain (if we consider celebrities in other spheres), the means by which they are recognized extends to beyond just their names. For instance, when it comes to Federer, his fan base identifies him with the iconic RF logo; his persona has become synonymous with RF on as well as off the court. It is also important to note that a trademark is a source identifier; athletes and other celebrities can/are allowed to trademark their names because they, themselves are large brands and their names clearly identify a source. However, names are not the only factors that act as source identifiers. These individuals have also coined certain catch phrases that are now associated solely with them. For instance, Usain Bolt has the trademark rights to the phrase ‘Bolt to the World’, Le Bron James has trademarked the phrase ‘Just a kid from Akron’, and Shaquille O’Neal owns the rights to the phrase ‘Shaq Attaq’[iv].
When these contracts are initially entered into, such ‘ancillary’ factors have not yet been introduced/developed and this aspect especially is given no consideration during negotiations. The absence of contractual provisions in this regard has led to third parties often taking advantage of such situations. When Vince Young’s nickname and initials ‘VY’ and ‘Invinceable’ were trademarked by a third party, he had to sue such third party in order to acquire the rights to his own name and catch-phrase[v].
As a result, once athletes grow and their brand image ameliorates, they become/are identified with factors other than just their names. These considerations should also find their way into these Agreements in order to avoid such disputes in the future.
As we have seen above, problems such as the one between Federer and Nike often arise when intellectual property issues are not adequately addressed in agreements/transactions. Therefore, provided below are four (4) potential contractual solutions that could be incorporated in these agreements in order to prevent such disputes from arising.
A. Licensing Provision:
One of the most common ways in which this issue is addressed (as has been discussed/provided above), is through a licensing provision in the contract. A provision such as this one would imply that the athlete/celebrity owns the rights to the intellectual property (for instance to the logo, his name, any other design or catch phrase) and that during the term of the sponsorship agreement, he is simply licensing this right to the company (for instance Nike/Adidas etc). Therefore, upon the termination of the contract, the license granted would consequently terminate and the rights would continue to vest with the athlete/celebrity.
Such a licensing provision should be properly worded and be as detailed and clear as possible so as to cover all of the athlete’s/celebrities’ intellectual property that is being granted. The provision must also include the forms/media and territory in which the licensed material is permitted to be utilised in (for instance when it comes to athletes then solely on athletic gear, equipment, advertisements in print, social media).
B. Assignment of Rights
Another manner in which the athletes/celebrities’ rights can be protected is through an assignment provision. These contracts are entered into at a stage when these individuals’ careers have just begun. Therefore, it is the large companies/corporations that would want to control or develop the intellectual property in connection therewith. While the bargaining power might be higher on the companies’ side in this instance, the attorneys for the athlete/celebrity could include a contractual provision for the assignment of rights to the celebrity/athlete post termination of such a contract. Such a provision would therefore ensure that in the event such an agreement is terminated, and if the intellectual property that has been developed has become synonmymous with the athlete/celebrity over time, it should be assigned to him/her.
C. Modification/Revision Provision
Another manner in which an issue such as this could be addressed is through a modification/revision provision in the contract. Such a provision would give the parties the freedom to alter the provisions of the contract over time as the athlete/celebrities brand continues to be built. Such modifications could include a change in the way Intellectual Property Rights are administered, the ownership thereof, the different kinds of Intellectual Property that are created and a change in the manner and territories in which they are exploited (different media/products etc).
The dispute between Roger Federer and Nike brought to the forefront the importance of addressing intellectual property issues in sponsorship agreements and other contracts. More importantly, the issue pointed out to the world at large the commercial value of a ‘name’ and the extent to which it can be used and exploited along with the problems that such use brings with it.
By exploring and analysing other scenarios in which similar problems have occurred (the use of names in the fashion and sports industry), we realized that the broader issue that needs to be tackled is that of transactional discrepancies. Most of these problems arise because the intellectual property provisions in these transactions are not sound and fail to address details in relation to what intellectual property constitutes, the extent to which it can be exploited and the consequences that follow upon the termination thereof. The solution therefore lies in drafting succinct and incontrovertible provisions that act as cautionary measures and prevent such disputes from arising at all.
In advocating for these approaches I do not mean to suggest that such protection is the sole or primary means for the protection of such celebrities’ or athletes’ interests. However, unless this intangible asset is valued and protected, it will continue to be exploited. In sum, these contractual solutions should be a small, although crucial part of protecting names and identities in sponsorship and other agreements[vi].
[i] Roger Federer in TM Dispute over RF Logo, The Trademark Lawyer (July 5, 2018) at https://trademarklawyermagazine.com/roger-federer-in-tm-dispute-over-rf-logo/, (Last Visited: March 5, 2019)
[ii] Roger Federer in Battle over RF Trademark, Novagraaf (July 10, 2018) at https://www.novagraaf.com/en/insights/roger-federer-battle-nike-over-rf-trademark, (Last Visited: March 5, 2019))
[iv] Ahiza Garcia, Pro Athletes and the things they Trademark, CNN Money (August 19, 2016) at https://money.cnn.com/2016/08/19/news/trademarks-athletes-usain-bolt-olympics/ (Last Visited: March 6, 2019)
[v] Katie Thomas, Sports Stars Seek Profit in Catch Phrases, The New York Times (December 9, 2010) at https://www.nytimes.com/2010/12/10/sports/10trademark.html (Last Visited: March 7, 2019)
[vi] On April 3rd 2019, the dispute between Federer and Nike came to an end. Nike stopped selling RF merchandised gear, which means Federer will now have control to sell and utilize merchandise with the RF logo. More at http://www.sportspromedia.com/news/report-federer-rf-logo-nike-uniqlo