Legal Issues in the Sports Industry

Legal issues have been numerous within the sports industry. While lawsuits and complaints regarding sports agents have remained in the public spotlight, other issues have become popular among the media this year. Roc Nation has been in the news this year for several legal reasons including recruiting violations. However, one legal issue it has had may not have reached the general public, which will be discussed later in this blog. Sports agent Terry Watson has also been indicted earlier this year after a long investigation by the NCAA into UNC’s football program. Perhaps this year’s biggest sports related legal issue is EA Sports ongoing battle with current and former football players over its use of players’ personas in its NCAA College Football video game.

Earlier this year, Volcom (a modern lifestyle brand for youth) filed suit against Roc Nation (Jay-Z’s entertainment company) for infringement on its trademarked diamond-shaped logo. Volcom has insisted that Roc Nation’s diamond logo too closely resembles its stone logo. Volcom has been using the logo since 1991 and has spent more than $100,000,000 marketing its logo. On the other hand, Roc Nation began using its log in 2009. Volcom issued a cease and desist but Roc Nation has refused to comply. While it is nearly impossible for a company to avoid this situation, Roc Nation should have considered Volcom when drafting its logo since Volcom has been heavily involved with promoting both recorded and live music. Both companies operate in overlapping markets and a logo similar to Volcom’s may be seen as confusing the Roc Nation brand with Volcom. If the logos are deemed similar, Roc Nation could be spending a large sum of money to rebrand itself. This is an issue that should be avoided at all costs by Roc Nation and future agencies without question as most agencies are not recognized by their logos but by their agency names and lead sports agents.

Another issue plaguing the sports realm is agents violating various state athlete-agent acts. These acts were created to protect collegiate athletes who still have college eligibility. Recently, sports agent Terry Watson was charged with 13 felony counts of violating North Carolina’s Uniform Athlete Act in addition to a felony charge for obstruction of justice. Watson is accused of providing gifts to former UNC football players including Greg Little, Robert Quinn and Marvin Austin. These gifts included monthly payments, hotel rooms, and travel expenses.  According to North Carolina state law, sports agents must register with the Secretary of State and are prohibited from initiating contact with a student-athlete or providing anything of value to a student-athlete not under contract with the agent. These violations are still numerous and new laws are required to further prevent this behavior. Agents still have a motive to breach this act and will continue to do so until the reward is no longer greater than the risk. Until then, I would expect these violations to continue to plague the industry and damage the reputation of agents as a whole.

A recent settlement between EA Sports and former collegiate football players has also been a topic of discussion in the sports industry. EA sports announced earlier this year that it would cease to produce its NCAA Football video game, which does not use college football players’ names. The suit began when players alleged that the game used players’ jersey numbers, biography information and physical attributes without their permission or compensation. Both former and current players will receive substantive compensation for the game’s use of their personas. The settlement may not result in student-athletes making a healthy earning off others use of their personas but may spark the discussion of if (and how much) student-athletes should be paid. While former college players in the suit are no longer student-athletes, current college-football players will be receiving compensation for their likeness being used by the EA Sports NCAA Football 2014 game this year. This marks the first time student-athletes will legally be paid other than from scholarship for their efforts on the field.