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The Current Status of NIL Rights and a Review of NFT Trends

April 16, 2021

You may have noticed that name, image, and likeness (NIL) rights and non-fungible tokens (NFTs) have been hot topics in the news lately, particularly in collegiate and professional sports. This article will provide a brief overview of each and how these ideas intersect.

I. Introduction to Name, Image, and Likeness (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.”1 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.2 Consent is generally a defense to conduct that would otherwise infringe interests protected by the right of publicity.3 “Consent can be communicated through a formal agreement such as a license,”4 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 51.5 § 50 provides that it is a misdemeanor to use a living person’s name, portrait, or picture for advertising or trade purposes without first obtaining his or her written authorization.6 “Portrait or picture” has been interpreted to mean “any recognizable likeness.”7 § 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.8 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.”9 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.10 The law also “creates new penalties for publishing sexually explicit depictions of individuals.”11

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.”12 § 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.”13 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.14

II. NIL Rights and the NCAA in the News

NCAA regulations presently prevent student-athletes from receiving any form of compensation.15 Therefore, the NCAA and its member institutions 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 receive 100% of the royalties.16 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.17 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.”18 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.19

In February 2019, California passed a law which will allow student-athletes to use their name, image, or likeness for certain commercial purposes beginning in 2023.20 Since then, a majority of states have introduced or passed similar legislation.21 Florida’s law, passed in 2020, will be the first to become effective, on July 1, 2021.22 The NCAA itself also got involved and as of January 2021, each NCAA division had developed specific proposals to further modernize name, image, and likeness rules for student-athletes.23 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 name, image, and likeness.24 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 name, image, and likeness activities.25 NCAA membership was expected to vote on the proposed rule changes in January 2021, but the association postponed votes in all three divisions.26 That same month, the NCAA stated that it opposed state legislation on the name, image, and likeness of college athletes in favor of a federal law: “A federal, nationwide solution for name, image 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.” 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.”27

III. Proposed Federal Bills Affecting the NCAA

Several federal bills addressing NCAA players’ NIL rights have been proposed. The most recent, proposed by Sen. Chris Murphy and Rep. Lori Trahan on February 4, 2021, “would enhance college and high school athletes’ ability to make money from their names, images and likenesses while leaving the NCAA and its schools susceptible to antitrust challenges if they do not comply with the bill’s provisions.”28 If passed, the bill would allow college athletes to unionize and would make NIL “a federal right” that could not be limited by the NCAA.29 It would also provide for “group licensing agreements” for players, meaning players could conceivably negotiate directly with a party such as EA Sports, and “players’ names, image and likenesses [could] be used in the game in return for EA Sports purchasing a group license.”30 The College Athletes Bill of Rights, which Sens. Cory Booker and others proposed last session and said they will reintroduce in 2021, would provide compensation for name, image, and likeness, and other protections.31 It would allow college athletes to market their NIL, either individually or as a group, with minimal restrictions.32 The Athlete and Compensation Rights Act, proposed in the previous session by Sen. Roger Wicker, 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.”33

If one of these 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 be able to protect their publicity rights through the use of copyrights, trademarks, state right of publicity laws, contract law, and various privacy laws.

IV. A Sample of European NIL Law

Many countries in Europe protect a right of publicity. Article 18.1 of the Spanish Constitution guarantees “[t]he right to honour, to personal and family privacy and to the own image.”34 Organic Law 1/1982, of May 5, provides civil protection of the right to honour, personal and family privacy, and one’s own image.35 The right to the image can be licensed; it is described as “a personal right but endowed with a potentially patrimonial content in that through its exercise economically valuable assets can be obtained.”36

Two aspects of the German “general right of personality,” based on the German Constitution and Civil Code, are the right to one’s name and image.37 The “right of publicity is not recognized as a right per se in Germany,” but in practice, “the broad scope of a person’s identity is protected, including protection of [a] person’s likeness, voice, signature, and other personal characteristics.”38 The right of publicity “is not transferrable, voidable, and descendible,” however, “a person may consent to the usage of some aspects of his/her identity for a fee, allowing this right to be marketable.”39 Some commentators believe that German law has moved toward the American approach by recognizing the ability to consent through licenses.40

The French notion of “personality rights” comprises the right to image, right to privacy, freedom of speech, religious freedom, family relations, and intimacy.41 “French legal doctrine differentiates the right to one’s image, meaning that an individual has an exclusive right to use his/her image and prevent third parties from such usage (a positive right) and the right on one’s image, allowing the person to commercially exploit his/her image.”42

In Italy, the right to one’s image is protected by the Civil Code and the Copyright Law.43 Generally, “no person is permitted to display or publish another’s image unless such display or publication has been consented to by the person to which the image relates, or is ‘justified’ under one of the exceptions . . . Any other dealings with a person’s image, such as its licensing, are similarly not permitted without the relevant individual’s consent.”44

The United Kingdom does not recognize a right of privacy or a right of publicity.45 Instead, the right of publicity “is now protected by framing the case in the torts of breach of confidence and passing off.”46 “In order to succeed in a passing off claim, a claimant shall prove: misrepresentation, the goodwill of the claimant, and damages caused to the claimant.”47 However, the basic principle stands in English law that “there is no image right or character right that allows a celebrity to [preemptively] control the use of his name or image,” other than through copyrights or trademarks.48

V. Non-Fungible Tokens (NFTs), NIL Rights, and Athletes in the News

A recently popularized method of commercializing athletes’ NIL rights is through non-fungible tokens (NFTs). NFTs are similar to Bitcoin and other cryptocurrencies, except that Bitcoins are fungible, meaning they are interchangeable and are not unique.49 NFTs are individually unique and each represent a singular item, commonly a piece of digital art or a digital collectible.50 NFTs are analogized to certificates of ownership for virtual or physical assets, except that NFTs have no tangible form of their own.51 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.52 Some sales of NFTs by musicians, artists, and Twitter founder Jack Dorsey have been multimillion-dollar transactions.53

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 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.54 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.55 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.”56 NFL players Rob Gronkowski and Patrick Mahomes both released digital collectibles of themselves in March 2021, sales of which made millions of dollars.57 These pieces are not licensed by the NFL and do not feature team logos.58 Matthew Tkachuk recently become the first NHL player to release an NFT,59 and Luka Garza the first college athlete.60 LeBron James’s dunk highlight recently sold for $210,000 on NBA Top Shot, a virtual NBA trading card website.61

VI. Conclusion

In conclusion, the trend appears to be that opportunities for athletes to capitalize on their NIL rights are expanding through, for example, proposed federal legislation and alternative forms of creative ownership rights such as NFTs. While the extent of college and professional athletes’ freedom to take advantage of such opportunities under current league contracts is not clear, these rights are almost certain to be a point of negotiation going forward, and the topic of further federal, state, and league-wide regulation.

1Publicity, LEGAL INFORMATION INSTITUTE, https://www.law.cornell.edu/wex/publicity#:~:text=The%20right%20of%20publicity%20prevents,recognizable%20aspects%20of%20one's%20persona.&text=Under%20the%20Restatement's%20formulation%2C%20the,of%20one's%20name%20or%20likeness (last visited Apr. 6, 2021).
2Right of Publicity, INTERNATIONAL TRADEMARK ASSOCIATION, https://www.inta.org/topics/right-of-publicity/ (last visited Apr. 6, 2021).
3RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 46 cmt. f (1995).
4Id.
5N.Y. CIV. RIGHTS LAW § 50–51 (McKinney 2000).
6N.Y. CIV. RIGHTS LAW § 50 (McKinney 2000).
7Burck v. Mars, Inc., 571 F. Supp. 2d 446, 451 (S.D.N.Y. 2008).
8N.Y. CIV. RIGHTS LAW § 51 (McKinney 2000).
9Id.
10Governor Cuomo Signs Legislation Establishing a “Right to Publicity” for Deceased Individuals to Protect Against the Commercial Exploitation of their Name or Likeness, NEW YORK STATE (Nov. 30, 2020), https://www.governor.ny.gov/news/governor-cuomo-signs-legislation-establishing-right-publicity-deceased-individuals-protect.
11Id.
12CAL. CIV. CODE § 3344 (West 2019).
13CAL. CIV. CODE § 3344.1 (West 2012).
141 J. THOMAS MCCARTHY & ROGER E. SCHECHTER, RIGHTS OF PUBLICITY AND PRIVACY § 6:25 (2d ed. 2020).
15Audrey C. Sheetz, Note, Student-Athletes vs. NCAA: Preserving Amateurism in College Sports Amidst the Fight for Player Compensation, 81 BROOK. L. REV. 865, 873 (2015).
16Id.
17O’Bannon v. National Collegiate Athletic Ass’n, 802 F.3d 1049, 1055 (9th Cir. 2015).
18Id.
19Id. at 1079.
20Cal. Educ. Code § 67456 (West 2019).
21Tracker: Name, Image and Likeness Legislation by State, BUSINESS OF COLLEGE SPORTS, (Mar. 27, 2021), https://businessofcollegesports.com/tracker-name-image-and-likeness-legislation-by-state/.
22Steve Berkowitz, Florida governor signs bill on college athletes’ name, image and likeness, USA TODAY (Jun. 12, 2020), https://www.usatoday.com/story/sports/college/2020/06/12/florida-bill-college-athletes-name-image-likeness/534.
23Questions and Answers on Name, Image and Likeness, NCAA (Jan. 2021), https://www.ncaa.org/questions-and-answers-name-image-and-likeness.
24Id.
25Id.
26Board of Governors supports postponing name, image and likeness votes, NCAA (Jan. 13, 2021), https://www.ncaa.org/about/resources/media-center/news/board-governors-supports-postponing-name-image-and-likeness-votes.
27Questions and Answers on Name, Image and Likeness, supra note 23.
28Steve Berkowitz, Sen. Chris Murphy offers bill to help college athletes make money from name, image, likeness, UNITED STATES CONGRESSWOMAN LORI TRAHAN (Feb. 4, 2021), https://trahan.house.gov/news/documentsingle.aspx?DocumentID=1973.
29Dennis Dodd, New Congressional bill aims to make name, image and likeness ‘a federal right’ for college athletes, CBS (Feb. 4, 2021), https://www.cbssports.com/college-football/news/new-congressional-bill-aims-to-make-name-image-and-likeness-a-federal-right-for-college-athletes/#:~:text=It%20is%20the%20latest%20piece,with%20the%20fewest%20restrictions%20possible.%22.
30Id.
31Id.; Senators Booker and Blumenthal Introduce College Athletes Bill of Rights, CORY BOOKER (Dec. 17, 2020), https://www.booker.senate.gov/news/press/senators-booker-and-blumenthal-introduce-college-athletes-bill-of-rights#:~:text=He%20has%20publicly%20called%20for,In%20May%2C%20Booker%20and%20Sen.
32Senators Booker and Blumenthal Introduce College Athletes Bill of Rights, supra note 31.
33Wicker Introduces Bill Establishing a National Framework for Student Athlete Name, Image, Likeness, U.S. SENATE COMMITTEE ON COMMERCE, SCIENCE, & TRANSPORTATION (Dec. 10, 2020), https://www.commerce.senate.gov/2020/12/wicker-introduces-bill-establishing-a-national-framework-for-student-athlete-name-image-likeness.
34Manuel Sánchez de Diego, Right to One’s Own Image in Spain, 8 JOURNAL OF INFORMATION POLICY 401, 403-06 (2018).
35Id.
36Id.
376Kateryna Moskalenko, The right of publicity in the USA, the EU, and Ukraine, 1 INTERNATIONAL COMPARATIVE JURISPRUDENCE 113, 115-16 (2015).
38Id.
39Id.
40Id.
41Id.
42Id.
43Id.
44Federico Venturi Ferriolo, Claire Shepherd & Oliver Howley, Image rights: the Italian position, SPORTS LAW ADMINISTRATION & PRACTICE, Dec. 2013, at 12.
45Carrie Rainen, The Right of Publicity in the United States and the United Kingdom, 12 NEW ENG. J INT’L & COMP. L. 197, 214-16 (2005).
46Moskalenko, supra note 37.
47Id.
48Kate Swaine and Alice Stagg, Celebrity image rights: who are you wearing?, THOMSON REUTERS PRACTICAL LAW UK (Feb. 26, 2015), https://uk.practicallaw.thomsonreuters.com/8-601-3865?transitionType=Default&contextData=(sc.Default)&firstPage=true; Rainen, supra note 45.
49Jacob Feldman, Eben Novy-Williams & Brendan Coffey, What NFTs Mean for Sports Business, YAHOO! ENTERTAINMENT (Mar. 24, 2021) https://www.yahoo.com/entertainment/nfts-mean-sports-business-095558067.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAEaLB9wOKumQr8uiYd90hCY-Z7LkCZvVHfBRI2moYrZ4LhnGFPRFeQtjCgUfC_g4QJvjKQ4zr0-dInrkAVtV1D_yTfEUvtb0yL1E-DoSiY4eW1fpdw406HEYxB2OPP2gWmBn8WIWnWmY05KrQO0DlgaS8hFBdc6TnxxzphBgtfK0.
50Id.
51What are NFTs and why are some worth millions?, BBC.COM (Mar. 12, 2021), https://www.bbc.com/news/technology-56371912.
52Id.
53Id.
54Eric Patterson, Bryson’s agent: Underwhelming NFT release shows golf is ‘niche sport,’ THE SCORE (Mar. 26, 2021), https://www.thescore.com/pga/news/2141681.
55Id.
56Geoff Shackelford, Will Golf Discover NFT’s?, THE QUADRILATERAL (Mar. 16, 2021), https://quadrilateral.substack.com/p/will-golf-discover-nfts/comments.
57Danny Nelson, Quarterback Patrick Mahomes Joins Gronk in NFL Blitz of NFT Mania, COINDESK (Mar. 12, 2021), https://www.coindesk.com/patrick-mahomes-to-sell-nft-collectibles-on-makersplace; Patterson, supra note 54.
58Nelson, supra note 57.
59Patterson, supra note 54.
60Adam Hensley, Luka Garza becomes first college athlete to sell his own NFT card, HAWK CENTRAL (Apr. 7, 2021), https://www.hawkcentral.com/story/sports/2021/04/06/nft-luka-garza-iowa-basketball-first-college-athlete-sell-non-fungible-token-auction-art-crypto-nil/7112482002/.
61Dapper Labs, creator of NBA Top shot, gets $305 million in funding, ESPN (Mar. 30, 2021), https://www.espn.com/nba/story/_/id/31164860/dapper-labs-creators-nba-top-shot-get-305m-funding.