Introduction to NIL Rights in the United States

In the US, NIL rights are grouped under the right of publicity, which generally “prevents the unauthorized commercial use of an individual’s name, likeness, or other recognizable aspects of one’s persona. It gives an individual the exclusive right to license the use of their identity for commercial promotion.” There is no federal law recognizing the right of publicity, or NIL rights, but a majority of states recognize a right of publicity by statute, case law, or both. Consent is generally a defense to conduct that would otherwise infringe interests protected by the right of publicity. “Consent can be communicated through a formal agreement such as a license,” which is a common method of granting permission to use NIL rights. In addition to the right of publicity, athletes and celebrities have protection for the elements of their personas and brands through trademark, copyright, and contract law.

Two states with the most developed case law regarding the right of publicity are New York and California. New York’s right of publicity has traditionally been covered by its right of privacy laws, Civil Rights Law §§ 50 and 51. § 50 provides that it is a misdemeanour to use a living person’s name, portrait, or picture for advertising or trade purposes without first obtaining his or her written authorisation. “Portrait or picture” has been interpreted to mean “any recognizable likeness.” § 51 provides that any aggrieved person may maintain an equitable action to prevent such unauthorized use and may also sue to recover damages sustained as a result. However, § 51­ should not be construed “as to prevent any person, firm or corporation from selling or otherwise transferring any material containing such name, portrait, picture or voice in whatever medium to any user of such name, portrait, picture or voice . . . for use in a manner lawful under this article.” New York recently codified a limited statutory right of publicity that allows the descendants of deceased individuals to protect against the commercial exploitation of the individual’s name, picture, voice, or signature after their death. The law also “creates new penalties for publishing sexually explicit depictions of individuals.”

California Civil Code § 3344(a) provides that “[a]ny person who knowingly uses another’s name, voice, signature, photograph, or likeness, in any manner, on or in products, merchandise, or goods, or for purposes of advertising or selling, or soliciting purchases of, products, merchandise, goods or services, without such person’s prior consent, or, in the case of a minor, the prior consent of his parent or legal guardian, shall be liable for any damages sustained by the person or persons injured as a result thereof.” § 3344.1 protects a deceased personality’s name, voice, signature, photograph, or likeness from unauthorized use, and provides that these rights are “property rights, freely transferable or descendible.” California also has a common law right of publicity, which has four elements: (1) defendant’s use of the plaintiff’s identity; (2) appropriation of plaintiff’s identity for defendant’s advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury.

The Evolution of NIL Rights in the NCAA

Until recently, NCAA regulations prevented student-athletes from receiving any form of compensation. Therefore, the NCAA and its member institutions would sell and license products such as video games, rebroadcasts of classic games, DVDs of games, photographs, and replica jerseys using the names, images, and likenesses or current and former student-athletes, and the organizations received 100% of the royalties. In 2008, former college and professional basketball player Ed O’Bannon was depicted in a college basketball video game, but had never consented to the use of his likeness and had not been compensated for it. O’Bannon sued the NCAA and the Collegiate Licensing Company, the entity which licenses trademarks of the NCAA for commercial use, alleging that “the NCAA’s amateurism rules, insofar as they prevented student-athletes from being compensated for the use of their NILs, were an illegal restraint of trade.” The Ninth Circuit held that NCAA regulations are subject to antitrust scrutiny, and the rules had been more restrictive than necessary to maintain its tradition of amateurism, but the court did not require the NCAA to allow its member schools to pay deferred compensation.

In February 2019, California passed a law that would allow student-athletes to use their name, image, or likeness for certain commercial purposes beginning in 2023. Since then, a majority of states have introduced or passed similar laws, five of which planned to become effective on July 1, 2021. However, the NCAA itself also got involved and each division developed specific proposals to further modernize NIL rules for student-athletes. The proposals were based on the action the NCAA Board of Governors took at its April 28, 2020 meeting, which outlined specific categories in which student-athletes would be able to earn compensation from their NIL. Categories included third-party endorsements related to athletics, without school or conference involvement, and other student-athlete opportunities such as social media and personal appearances, without institutional involvement or the use of trademarks/logos, but did not include schools paying student-athletes for NIL activities. NCAA membership was expected to vote on the proposed rule changes in January 2021, but the association postponed votes in all three divisions. That same month, the NCAA stated that it opposed state legislation in favour of federal law: “A federal, nationwide solution for name, image and likeness is necessary and . . . [t]he Association looks forward to working with Congress to enact legislation that ensures a federal solution to NIL legislation, provides narrow safe harbor protections against ongoing litigation and reaffirms the nonemployment status of student-athletes. This approach will provide for a uniform name, image and likeness approach that will result in fair, national competition for all student-athletes and protect and ensure opportunities for future student-athletes.”

Proposed Federal Bills Regarding NIL Rights

Several federal bills addressing NCAA players’ NIL rights have been proposed. On one end of the spectrum is the College Athletes Bill of Rights, which Democratic Sens. Cory Booker, Richard Blumenthal, Kirsten Gillibrand, and Brian Schatz proposed last session and have said they will reintroduce in 2021. This bill would not only allow college athletes to market their NIL with minimal restrictions, but would also provide for enforceable health and safety standards addressing issues such as concussions and sexual assault, create scholarships for college athletes for as many years as it takes them to earn a college degree, establish a fund that athletes could use to cover out-of-pocket medical expenses, require all schools to provide annual public reporting of revenues and expenditures, and more. In contrast, the Athlete and Compensation Rights Act, proposed in the previous session by Republican Sen. Roger Wicker, is primarily focused on NIL rights; it would “permit student athletes to earn compensation for the use of their name, image, or likeness” and “create a uniform, national framework for NIL compensation.”

On June 9, 2021, Sen. Maria Cantwell convened the fifth hearing on Capitol Hill addressing the legislative proposals to allow college athletes to monetize their NIL. Among the testifying witnesses were Dr. Mark Few, Head Coach of Men’s Basketball at Gonzaga University; Dr. Mark Emmert, President of the NCAA; and Dr. Wayne A. I. Frederick, President of Howard University and Chair of the Mid-Eastern Athletic Conference’s Presidents and Chancellors. At the hearing, partisan conflict was apparent: the three Democratic senators support a broad bill that addresses athlete compensation as well as long-term medical care and educational opportunities, while the two Republican senators are opposed to such a bill for fear that smaller schools cannot afford to comply. Emmert, however, suggested a potential solution to the concern of the latter group in that schools with well-funded athletic programs could help to provide for the additional opportunities at less wealthy institutions.

If one of the above or a similar bill becomes law, college athletes could potentially take advantage of business and financial opportunities by entering into licensing agreements with new licensees on their own, as part of a group, or through the NCAA. However, the proposed bills would not change the rights of celebrities, non-NCAA athletes, and regular people. These individuals would still have the option to protect their publicity rights through the use of copyrights, trademarks, state right of publicity laws, contract law, and various privacy laws.

A Temporary Solution Emerges

On June 21, 2021, in NCAA v. Alston, the Supreme Court ruled unanimously that the NCAA cannot limit education-related benefits that colleges can offer student-athletes because current limits violate antitrust laws. These limits presently prevent students from being paid and cap the scholarship money a college can offer at the cost of attending the school. The Court did not address the legality of the NCAA’s remaining compensation rules, but one Justice found “serious questions” about the validity of the remaining rules, potentially suggesting that future challenge is warranted.

Then, on the eve of July 1, when the first states’ NIL laws were about to take effect, all three NCAA divisions adopted a uniform interim policy suspending NIL rules for all incoming and current student-athletes in all sports. NCAA President Mark Emmert made clear that this is a temporary solution—the end goal is still to pass new federal legislation or adopt new NCAA rules—but there is no doubt that the interim policy reflects progress and, as Emmert put it, “an important day for college athletes.”

NIL Rights and Non-Fungible Tokens (NFTs) in the News

A recently popularized method of commercializing athletes’ and celebrities’ NIL rights is through NFTs. NFTs are similar to Bitcoin and other cryptocurrencies, except that Bitcoins are fungible, meaning they are interchangeable and are not unique. Instead, NFTs are individually unique and each represent a singular item, commonly a piece of digital art or a digital collectible. NFTs are analogized to certificates of ownership for virtual or physical assets, except that NFTs have no tangible form of their own. In many cases, the creator of the art retains copyright ownership, so the creator can continue to produce and sell copies, while the owner of the NFT technically owns the “original” work. The recent interest in NFTs can be attributed to several major investments in cryptocurrency, including Tesla’s $1.5 billion investment in Bitcoin in February 2021.

NFTs represent a new marketing opportunity for athletes and celebrities to profit from their NIL rights. Athletes are becoming their own marketing platforms, and athletes and unions are negotiating for these rights to fall outside of the scope of collective bargaining agreements. It is unclear if NFTs currently fall within or outside the scope of sports leagues’ rights, but several professional athletes have entered the NFT market thus far. In March 2021, Bryson DeChambeau became the first golfer to use NFTs to release copies of five different digital trading cards. DeChambeau put the cards up for auction on Open Sea, an NFT trading platform, and in the first 24 hours, sold ten cards for the equivalent of USD 64,000 in digital currency. A PGA Tour spokesperson was reported that month as having stated, “As with other potential revenue sources for our membership, we will explore whether NFTs make sense for us and our members.” NFL players Rob Gronkowski and Patrick Mahomes both released digital collectibles of themselves in March 2021, sales of which made millions of dollars. These pieces are not licensed by the NFL and do not feature team logos. Matthew Tkachuk recently become the first NHL player to release an NFT, and Luka Garza the first college athlete. LeBron James’s dunk highlight recently sold for about $210,000 on NBA Top Shot, a virtual NBA trading card website.

NFTs have also created new opportunities for artists. The process of creating an NFT, known as “minting,” is quite simple. Once an NFT has been minted, the creator can list it on an online marketplace, which cuts out the need for an auction house or gallery and creates more profit for the artist. Some creators and celebrities are also using NFTs as a way to regain authority over the use of their identity, such as author and model Emily Ratajkowski. Ratajkowski recently sold an NFT of herself for $140,000, but her motivation was apparently more to repossess her digital identity than to make a profit. Zoë Roth, subject of the “disaster girl” meme, gave a similar justification for her decision to sell an NFT for about $500,000.

Despite these creative benefits, there are also challenges associated with the use of NFTs, such as piracy incidents. Some artists and creators have found their work minted as NFTs and listed for sale without their permission. The NFT system does not currently require people to actually own the copyright to something in order to mint it, creating this opportunity for fraud. Existing federal intellectual property legislation may not be adequate to protect artists and creators in an NFT world, thus, depending on how long NFTs remain popular, they could create a demand for legislative reform. At this turning point, it is difficult to predict the future of NFTs – they could explode in popularity as a novel method of making a profit and reclaiming one’s autonomy, or they could fade away because they do not provide the owner with much more than bragging rights, and because of increasing concern over their energy consumption.

Conclusion

In conclusion, the trend is that opportunities for athletes and celebrities to capitalize on their NIL rights are expanding through both proposed federal legislation and alternative forms of creative ownership rights such as NFTs. Athletes’ rights and their ability to engage in business ventures like NFTs are almost certain to be a point of negotiation in league contracts going forward. But while NFTs are being praised as new sources of profit and expression for everyone from athletes to artists, their challenges are numerous, and the fact that they may be ushering in a new era of copyright law cannot be ignored.