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Fantasy League Was Not Required To Have License To Use Baseball Player's Name and Stats; Lawsuit Alleges Online Fantasy League Amounts To Gambling
December 19, 2006
FANTASY LEAGUE WAS NOT REQUIRED TO HAVE LICENSE TO USE BASEBALL PLAYER'S NAME AND STATSAccording to a federal court in Missouri, an online Fantasy Baseball League was not required to have a license to use baseball players’ names in conjunction with their stats, because the use was too incidental to constitute a violation of the players’ publicity rights. As a result, Major League Baseball (MLB) went down swinging in its effort to shut down a fantasy baseball league.
A prerequisite to a publicity rights violation, under Missouri’s common law, is that the use of the name and statistics amount to taking “commercial advantage” of the player’s identity. The court concluded that while the fantasy league operated by CBC Distribution and Marketing Inc. uses the players’ names for commercial purposes, the type of commercial exploitation protected under publicity rights is that of sponsorship or endorsement.
"[T]here 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 games in any way." The court reasoned that all fantasy leagues use the same real-world names and stats, and use of the names in one league does not attract customers away from another league.
Another prerequisite to finding a publicity violation is that the use implicates the player's "identity." The court noted that was not the case here. This is because the fantasy league's use "does not involve the character, personality, reputation, or physical appearance of the players.” It only pertains to historical facts.
The court further held that even if Major League Baseball Advanced Media LP (“MLB”) was successful on its publicity claim, CBC's First Amendment rights would prevail. CBC has a First Amendment right to use any information in the public domain to spread its commercial speech. If CBC needed a license to use the players’ names and stats, which could be withheld by MLB, then CBC's right of freedom of expression "would be totally extinguished."
CBC brought a declaratory judgment action seeking a ruling that its non-licensed use of the names did not violate the players' publicity rights after MLB declined to renew a license that granted CBC permission to use the players' names. This was due to least in part to MLB’s decision to jump on the band wagon and form its own fantasy sports league.
LAWSUIT ALLEGES ONLINE FANTASY LEAGUE AMOUNTS TO GAMBLING
A lawsuit filed in a New Jersey federal court has alleged that the entrance fees to participate in online fantasy leagues amount to "wagers" to participate in what is essentially a game of chance.
Plaintiff, Charles E. Humphrey Jr., invoked a private cause of action provision that exists in various state gambling laws, which gives third parties standing to sue to recover the "wagers" lost by individuals but never pursued by them in court. The plaintiff seeks to recover "all money lost by players participating in defendants' unlawful gambling scheme," and treble damages, against various fantasy sports league operators, including: The Sporting News, ESPN Inc., SportsLine.com, CBS Corp., Viacom, and Vulcan Sports Media.
The Plaintiff primarily argued that the fantasy leagues are a form of sports gambling because so much is left to chance, such as the real-world player’s suspensions, injuries, or a manager's last minute decision to pull a starter from the game lineup.
The complaint states that "[i]In the same way that bettors on the outcomes of horse races and sporting events cannot control the performance of the horses or teams on which they bet, fantasy sports contestants lack the ability to accurately predict and control the performance of their respectively drafted athletes."
However, Congress is proving to be more tolerant of the leagues than the plaintiff in this case. The House recently passed The Internet Gambling Prohibition and Enforcement Act, which defines a prohibited "wager" as an opportunity to win that "is predominantly subject to chance." The House bill specifically excludes "fantasy or simulation sports game[s]" from the definition of wagers. Of course there are conditions that apply for a fantasy league to qualify for the exemption, but they largely take into account how the mainstream leagues operate already.
The exemption also no doubt reflects the fact many Congressmen would like to continue their right to own fantasy teams themselves!
This Newsletter is a periodic publication of Graydon Head & Ritchey LLP and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult your own advisor concerning your situation and any specific legal question you may have.