ESPN Relies (in part) on CDM Fantasy League Case to Renegotiate Licensing Fees
In today's edition of Street & Smith's SportsBusiness Journal (subscription required), John Ourand and Eric Fisher report that ESPN is renegotiating its digital rights deal with MLB Advanced Media, looking to pay a significantly lower fee after finding several pieces of the original agreement it signed in 2005 no longer cost effective ("ESPN Seeks Better MLBAM Terms"). According to the authors, ESPN is exercising an out-clause three years into the seven-year agreement worth $20 million a year that provided ESPN with numerous digital and fantasy rights.
Ourand and Fisher noted:
ESPN’s push to restructure the deal comes less than two months after MLBAM’s latest court defeat in the CDM Fantasy Sports case at the federal appeals court level. ESPN thinks the court’s decision means that it was paying a license fee for fantasy rights that others, such as CDM, were getting free. It’s unknown if others who are paying for fantasy rights, such as Yahoo!, Fox and CBS Sports, have the same opt-out rights as ESPN.
The day after the Eighth Circuit's decision was rendered, I discussed why the court's "public domain" standard is simply not a practical standard to use in balancing the First Amendment with the right of publicity. Nevertheless, this is the first instance that I am aware of in which a fantasy league operator (other than CDM) has relied on the Eighth Circuit's ruling to justify its refusal to pay a licensing fee for fantasy rights. Keep in mind that this is just one federal circuit court's opinion on the issue, and the decision adds even more confusion to right of publicity law than already existed.
-- Posted by Rick Karcher @ 1/21/2008 12:20:00 PM --
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Re: the public domain discussion (posting here because I just happened upon the older discussion) -
The public domain standard in regards to statistics isn't new. It's the basis of the NBA v. Motorola decision (short synopsis here - http://legal.web.aol.com/decisions/dldecen/nba.html), which protected Motorola's right to disseminate stats of NBA games as they happened. It doesn't seem like the fantasy league operators are doing anything distinguishable from the stat provider - they're simply combining the stats into new ones.
Right of publicity wasn't discussed in the case, but Motorola was certainly engaging in commerce - I believe Motorola was charging a fee, much like many fantasy sites; certainly it was making money off of distributing the stats, just as operators of free fantasy games do, through ad revenue. You made the argument previously that maybe even a newspaper shouldn't be free from a right to publicity, which is interesting but certainly not current law.
Thanks for the comment. Regarding Motorola, it's not really applicable (or it's very difficult to apply) because:
1.) Motorola involved a complex interplay of state unfair competition by misappropriation and federal copyright laws. Although somewhat analogous to right of publicity law because it involves intellectual property rights, there are different policy considerations in the two cases;
2.) Motorola only involved the use of statistics (i.e. facts), whereas the Eighth Circuit held that fantasy leagues use the players names in violation of their right of publicity. Motorola can't be applicable to a right of publicity claim because names are, in essence, just facts; and
3.) the Eighth Circuit applied the "public domain" rationale to hold that the First Amendment outweighed the players right of publicity, whereas the First Amendment was not at issue in Motorola.
If you really think about it, a public domain standard makes no sense in evaluating a right of publicity claim because you're dealing with names that, because of their celebrity status, are already in the public domain.
Regarding your last statement, just to be clear, I have never argued that a newspaper could be subject to a right of publicity claim when it is reporting news (an obvious First Amendment issue).
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