Thursday, October 05, 2017

Fantasy gambling is newsworthy, doesn't violate players' rights of publicity

Daniels v. FanDuel, Inc., No. 16-cv-01230 (S.D. Ind. Sept. 29, 2017)

Akeem Daniels, Cameron Stingily, and Nicholas Stoner played college football and sued FanDuel and DraftKings for violating their Indiana right of publicity. Defendants run fantasy sports websites and mobile apps; they assemble a group of select collegiate players—including plaintiffs—to appear on a list of available athletes, and they assign each player a fictitious “salary.” A customer can then buy the services of individual athletes, and each athlete on the fantasy team scores a certain number of points in each contest based on real-life performance.  Defendants allegedly generated roughly $3.0 billion in customer entry fees in 2015, and used athletes’ names and likenesses in marketing.

Indiana Code Section 32-36-1-8(a) provides that a “person may not use an aspect of a personality’s right of publicity for a commercial purpose during the personality’s lifetime or for one hundred (100) years after the date of the personality’s death without having obtained previous written consent ….” The statute defines a person’s right of publicity as “a personality’s property interest in the personality’s: (1) name; (2) voice; (3) signature; (4) photograph; (5) image; (6) likeness; (7) distinctive appearance; (8) gestures; or (9) mannerisms.”

The law does not apply to:

1. The use of a personality’s name, voice, signature, photograph, image, likeness, distinctive appearance, gestures, or mannerisms in material that has political or newsworthy value.
2. The use of a personality’s name, voice, signature, photograph, image, likeness, distinctive appearance, gestures, or mannerisms in connection with the broadcast or reporting of an event or a topic of general or public interest.
3. The use of a personality’s name, voice, signature, photograph, image, likeness, distinctive appearance, gestures, or mannerisms in literary works.
4. The use of a personality’s name to truthfully identify the personality as the performer of a recorded performance.

Newsworthiness: plaintiffs argued that this exception didn’t apply to noncommercial speech.  But the statute only covers uses with a commercial purpose. Thus, “the exceptions must apply to uses that are commercial in nature.” [Not all uses that have a commercial purpose are commercial speech; the analysis here doesn’t require understanding that, but below the conflation will cause some trouble.] 

Newsworthiness is broad under Indiana law. As a 1993 federal court applying Indiana law wrote, “The privilege of enlightening the public is by no means limited to dissemination of news in the sense of current events but extends far beyond to include all types of factual, educational and historical data, or even entertainment and amusement, concerning interesting phases of human activity in general.” Plaintiffs argued that this 1993 case was inapplicable because it was decided prior to the enactment of the ROP statute.  But, of course, that’s exactly why it applies—“[t]he legislature is presumed to know the common law and to incorporate it into the statute except where it expressly indicates otherwise.”  Plus, a contrary holding would raise significant constitutional issues, so avoidance supported a broad interpretation as well. Given the breadth of the exception, plaintiffs’ athletic achievements and activities were newsworthy.

Plaintiffs argued that defendants weren’t “news organizations” engaged in “reporting,” so they couldn’t qualify for the exception, but neither of those were predicates for qualifying for the exception, and the court wouldn’t read in any such requirements.  Plaintiffs then argued that the assignment of fictitious salaries to plaintiffs and commentary posted in comment fields or in commentary/blog portions of the sites weren’t newsworthy.  However, the statute doesn’t prohibit the use of materials “associated with” the name, likeness, etc. of an individual—it prohibits the use of the names and likenesses themselves. “Adopting Plaintiffs’ reading of the statute would bring an almost limitless universe of materials within its reach, with obvious First Amendment implications.” Thus, fictitious salaries and commentary [about those salaries?] didn’t constitute a person’s name or likeness, and weren’t encompassed within the definition of a person’s right of publicity. [For an example of what would be at risk with a contrary holding, consider Joyce Carol Oates’ Blonde or the more low-brow Alternate Presidents, a collection of fictional stories (also, not coincidentally, including some alternate Marilyn Monroe stories).]  Thus, defendants’ motion to dismiss was granted on this ground.  (Defendants’ ads were also covered because advertising related to exempt material is also exempt, which only makes sense.)

For the same reasons that the defendants’ materials were newsworthy, they were also matters of public interest.  But the public interest exemption requires use “in connection with the broadcast or reporting of an event or a topic.” Defendants argued that their websites “report” information about college sports, because they profile players on their websites; “corral [the] week’s news, notes and injury updates;” and disseminate performance information. But they also allow customers to create fantasy football teams.  The Ninth Circuit, in In re NCAA Student-Athlete Name & Likeness Licensing Litig., 724 F.3d 1268, 1271 (9th Cir. 2013), considered a similar challenge raised by former student athletes to a video game, which allowed individuals to “control avatars representing college football players as those avatars participate in simulated games,” and ruled that the material at issue did not constitute “publishing or reporting.”  However, it also distinguished the video games from the C.B.C. fantasy baseball case because video games use “virtual likenesses” rather than just performance and biographical data.  Here, defendants’ websites could be used as “reference sources,” “either for purposes of playing the associated game, or for information about the collegiate sports and athletes represented on the websites.” This was a close call, but given the policy of defining reporting broadly/constitutional avoidance, the court found that the materials were “reporting” and defendants also won their motion to dismiss on that ground.

That was good, because they fared less well on their other objections, which the court presumably addressed to save time after the inevitable appeal.

DraftKings argued that its contests fell within the “literary works” exception.  Other courts have determined that video games are literary works for similar purposes, and websites are literary works under the copyright law.  However, for the publication/reporting exception, DraftKings tried to distinguish itself from video games, and it also didn’t explain why “the particular features of fantasy sports competitions are similar to the video games that courts have determined constitute literary works.” This created factual issues not suitable for resolution at the motion to dismiss stage.

Plaintiffs also argued that they were entitled to the exemption for naming performers of recorded performances. The statute doesn’t explicitly require that a protected entity be the entity that “otherwise rightfully reproduce[s], exhibit[s], or broadcast[s] the recorded performance.” However, defendants also used plaintiffs’ names and likenesses for purposes other than to identify them as performers of a recorded performance. “At a minimum, Defendants also listed selections of Plaintiffs’ athletic and statistical achievements.” “The statute itself only lists a personality’s ‘name’ as subject to coverage by this exception, and Defendants have offered no justification as to why it should expanded to cover the other uses—including Plaintiffs’ likenesses—that are at issue in this case.”  [Does that mean that a greatest hits DVD would violate the law if it talked about the players on the promo text on the back?]

The court also declined to recognize a First Amendment defense at this stage, because it wasn’t clear (among other things) whether defendants’ speech was noncommercial. In classifying whether “mixed” speech should be classified as commercial or non- commercial, the Seventh Circuit has highlighted the following relevant considerations: “whether (1) the speech is an advertisement; (2) the speech refers to a specific product; and (3) the speaker has an economic motivation for the speech.”  [But not all speech offered for profit is “mixed” speech—I doubt the court would think that a (non-sponsored, I have to add) NYT article or editorial was “mixed” speech even though the NYT seeks to make a profit. The court thought it couldn’t figure this out at the motion to dismiss stage, even though the pleading itself apparently distinguished between defendants’ ads and the service defendants sold, so I’d say this could be done on a motion to dismiss.

The court also rejected defendants’ copyright preemption argument, because the Seventh Circuit’s holding in Toney indicates that persona (etc.) isn’t copyrightable subject matter because it can’t be fixed.  It may be that a person’s likeness can’t be fixed in a specific photo, but if she uses the same name through time I can’t see what’s so unfixable about the name; I guess the argument must be that the name is just the manifestation of the unfixed persona which is really what the ROP protects.  Still, that name is fixed in a tangible medium, like other uncopyrightable stuff as to which state-law protection is preempted.  Sigh.

No comments: