Month: July 2021

A Historic Victory for Student Athlete’s IP Rights—The NCAA Changes NIL Compensation Rules

by: Cole Baker & IIPSJ Staff

Starting July 1, the NCAA changed its rules regarding student athlete commercial use and exploitation of their names, images, and likenesses (“NIL”) and their accompanying intellectual property rights, referred to as the right of publicity. For the first time in its history, the NCAA will allow member-schools to permit student-athletes to pursue opportunities to profit from their NIL and publicity rights, such as in product endorsement deals. The NCAA change in policy will finally allow student-athletes to participate in the billion dollar NIL industry derived from their talent, eradicating decades of unfair exploitation and IP social injustice. The NCAA adopts the new rules on an interim basis until “federal legislation or new NCAA rules” are enacted.

College Athletics as a Path to Education: The “Play for Pedagogy” Bargain

The modern tradition of the collegiate athlete is rooted in a bargain of the exchange of young athletic talent for a college education. However, with the advent of mass televised events and games, colleges and universities changed that bargain and insisted that student-athletes also allow them to exploit their NIL IP rights, but without adding anything to the student-athletes’ side of the deal. By unilaterally restructuring the student-athlete bargain, NCAA schools gained as much as $11 billion in revenues annually.¹ Seemingly everyone shared in these revenues, with the NCAA president earning more than $2 million a year, the top-50 Division 1 football coaches earning a median salary of more than $4 million a year, and NCAA schools receiving hundreds of millions of dollars in endorsements from athletic brands.²

Everyone benefited except the student-athletes. Under NCAA rules, students were not only denied a share in these revenues, they were also prevented from engaging in their own deals to benefit from their NIL intellectual property. For instance, for most of the past two decades, college athletes had their images and likenesses copied into video games but were not compensated by the video game makers. These rules even resulted in the loss of two University of Iowa swimmer’s eligibility due to a clothing line they created. The clothing line had nothing to do with swimming; however, the GoFundMe page that they used to start production mentioned that the two had met by swimming together at Iowa. In order to regain eligibility, both swimmers had to remove any pictures of themselves from the business’s website as well as any mention of University of Iowa swimming.³

A Policy Shift Toward IP Social Justice

In the wake of growing public criticism, targeted social activism, and a rapidly changing legal landscape, the NCAA Board of Governors voted on June 30, 2021 to approve a new policy, effective July 1. The Board announced that it had adopted a, “uniform interim policy suspending NCAA name, image and likeness rules” for student-athletes in every sport.

The policy is effective across “all three divisions,” and provides a four-prong guidance structure for member schools. The first guidance indicates that “Individuals can engage in NIL activities that are consistent,” with each school’s state law, and that schools “are responsible for determining whether those activities are consistent with state law.” The second indicates that athletes in states without a NIL statute can “engage in this type of activity” in accordance with NCAA rules. The third allows athletes to retain a “professional services provider” for advice in pursuing NIL monetization opportunities. Finally, the fourth guidance urges athletes to report their NIL activities to their schools.

The NCAA’s change in policy comes in response to immense public pressure, including new state laws and successful challenges to NCAA policies in the courts. In 2019 California enacted the “Fair Pay to Play Act”, which prohibits schools from preventing their student-athletes from exploiting their NIL intellectual property, and more than 30 other states soon passed similar legislation. Recently, in NCAA v. Alston the United States Supreme Court ruled in favor of an antitrust challenge to the NCAA’s policies, with Justice Kavanaugh noting that “the NCAA’s current compensation regime raises serious questions under the antitrust laws.”⁴ And the NCAA’s change in policy comes in the wake of a national conversation about systemic racial exploitation. While the NCAA’s compensation policies affect student-athletes of every race and gender, the disproportionate impact on black athletes, who make up the majority of athletes in the NCAA’s top revenue generating sports, football and basketball,⁵ has long been evident.

IIPSJ has long advocated for and today welcomes this progressive evolution in NCAA policy, which implements an IP social justice perspective toward student-athlete NIL intellectual property rights. While the policy change does not require schools to pay student-athletes, and still allows NCAA schools to capitalize on student-athlete NIL intellectual property through televised games, merchandising deals, and the like, the change in policy finally allows the student-athletes the chance of also benefiting from their intellectual property.

The NCAA is not out of the weeds of litigation, however. There is another consolidated class action in progress in the Northern District of California where athletes are claiming the NCAA’s rules on NIL are in violation of antitrust laws. Notwithstanding the NCAA’s changed policy, the suit goes further than what the NCAA’s policy change did. It seeks to permanently tear down all remaining NIL strictures. Furthermore, the suit seeks to recoup and distribute money to athletes made by the NCAA and its member conferences in licensing television rights.⁶

As the NCAA acknowledges, federal legislation is necessary to provide a national, uniform framework for student-athlete use of their NIL intellectual property rights. In the meantime, the new NCAA policy is an important step toward providing student-athletes a meaningful stake in the IP system, and fulfilling the social justice obligations of the intellectual property regime.

¹ Robert Zafft, Forbes, The Supreme Court, NCAA, and Juneteenth (July 5, 2021).

² Id.

³ Erin Jordan, The Gazette, Hawkeye swimmers’ clothing line causes NCAA violation (August 14, 2017).

^{4 NCAA v. Alston, 141 S. Ct. 2141, 2208 (2021).}

^{5 NCAA.org, NCAA Demographics Database (March, 2021).}

⁶ Zachary Zagger, Law360,  NCAA Athletes Say Name, Image ‘Experiment’ Proves Case (July 27, 2021) (January 9, 2021).

For more on this topic, check out this page: https://iipsj.org/iipsj-advocacy/student-athlete-nil/