By: Tavis McClain

In the new era of college sports that allows players to profit from their name, image, and likeness (“NIL”), growth is rapid and more entities seek industry involvement. Initially, in 2021 when NIL became legal, college athletes could not be paid by the universities directly. Recently, a District Court Judge granted preliminary approval for a settlement that would allow universities to pay their athletes directly. Seeing a lucrative investment opportunity, private equity firms have recently begun investing in college sports. For many years, the NCAA has rejected investment from outside sources, such as private equity firms. College sports is heading toward becoming a semi-professional industry direction, due to a combination of NIL factors and the NCAA allowing private equity firms to invest in college sports. This blog will provide a brief history of why investment in college sports has changed, and cover the various legal issues that may arise with private equity firms’ investment in college sports including antitrust law, regulatory/compliance concerns, and labor law implications. 

History 

In October 2024, a settlement was reached in House v. NCAA that required the NCAA and its power conferences to pay out $2.8 billion in backpay for former athletes over the past ten years. The settlement further requires that athletic departments find up to $30 million annually between revenue sharing with athletes and reduced NCAA distributions. This has provided the opportunity for private equity firms such as Red Bird Capital and Weatherford Capital to negotiate with universities in need of funding.

Antitrust 

A key issue is antitrust law, which seeks to promote fair competition and prevent monopolistic practices. When private equity firms invest in multiple college sports programs, there is a possibility that these investments could reduce the level of competition among institutions, creating antitrust concerns. Private equity firms would be wise to invest in established programs that can generate their desired returns. If private equity firms control several top athletic programs, they could potentially consolidate power over broadcasting rights or negotiate favorable media contracts for those programs. This would reduce opportunities for smaller schools to compete on equal footing, potentially creating an unfair advantage for schools backed by private equity. This is an even greater concern because of the TV deals/streaming rights that the SEC and Big Ten have–the most lucrative TV deals by a sizable margin. If private equity firms invest in schools from these conferences, it could exacerbate the talent disparity between conferences. Because private equity firms could own stakes in multiple teams, this could create conflicts of interest and hinder competition. It’s been reported that JPMorgan Chase has had negotiations with Florida State and other schools to capitalize on the promising opportunity to have stakes in multiple teams. The legal issues could stem from accusations of price-fixing or anti-competitive conduct, especially if the investments result in monopolies or oligopolies within the college sports market.

Regulatory/Compliance Issues

In addition to antitrust concerns, private equity investments in college sports may also raise issues related to compliance with existing state and federal regulations. Because college sports are typically governed by both federal law and the regulatory frameworks of state governments, private equity firms looking to invest in these programs must navigate a complicated landscape of rules and oversight. A specific example is the recent changes in NIL legislation. With college athletes now able to profit from NIL, there is increased potential for private equity firms to leverage their investments by facilitating NIL deals. In the absence of clear federal regulation governing how these transactions are handled, private equity firms could exploit loopholes, leading to further legal and ethical complications. The most important NIL law in the state of Washington is Senate Bill 5913, now RCW 42.52.807. Private equity firms could run into legal issues if they violate the act, such as the failure to comply with the disclosure requirement. Legal questions will arise around whether private equity firms are required to comply with these state regulations.

Labor Law Implications 

There has been significant movement toward the recognition of student-athletes as employees rather than amateurs. In light of recent legal developments such as the NCAA v. Alston case and the broader push for NIL rights, the role of private equity in shaping the economic and employment landscape of college athletes is becoming more controversial. 

Private equity involvement may result in legal challenges regarding whether student-athletes should be classified as employees. This could entitle college athletes to collective-bargaining rights, the rights of employees to negotiate with their employer as a group through a representative, which the NCAA has opposed. If college athletes were to attain collective bargaining power, they could further leverage their power as employees and argue for more favorable policies. Private equity firms, with their financial influence, may also advocate for arrangements that limit student-athletes’s control over their image or impose longer-term contracts, which could come under scrutiny from legislators and agencies. By placing limitations on students’ control over their image and imposing long-term contracts, private equity firms can maximize their profits. Long-term contracts could lead private equity firms to profit from college athletes later in their careers. For example, Big League Advantage, an investment firm, sought to enforce a contract that entitled the company to 15% of a college athlete’s pretax earnings for the rest of his career. These types of contracts in college sports are unprecedented and there may be legal challenges to the enforceability of these contracts.

Conclusion

The legal landscape in college sports is constantly evolving. Lawyers will play a pivotal role in navigating the complex challenges that are presented that span across multiple areas of law. Stay tuned to see how private equity’s investment changes college sports.

#WJLTA #sports #competition #athletes #NIL

By: William H. Kronblat

In today’s music landscape it may feel painfully obvious that some artists incorporate, mimic, or replicate parts of previous songs—even those that are not their own—on the way to producing top charting hits. While this practice may feel commonplace it still presents a very relevant and contemporary copyright-centric legal question as to whether that copying was allowed, who has ownership of the musical composition used, and what remedies are allowed if someone were to unlawfully copy a copyrighted work. Moreover, if someone in the music industry wants to bring a copyright lawsuit forward, who is legally able to do so? This particular question has come to the forefront of one the latest celebrity music copyright lawsuits in which Tempo Music has sued Miley Cyrus, alleging she ripped off Bruno Mars’ “When I Was Your Man” in her hit song “Flowers”. 

The Leadup to the Lawsuit:

In January of 2013 Bruno Mars Released his hit song “When I Was Your Man” as a single. A few years later in 2020, Tempo Music Investments acquired a share of the copyright to the song from one its four writers, Philip Lawrence. Roughly a decade after Mars released his single, in January of 2023, Miley Cyrus released her hit song “Flowers”. It quickly topped charts  and was “streamed more than 2 billon times on Spotify.” The popular song also garnered  Cyrus a Grammy award for Record of the Year, and a Grammy award for Best Pop Solo Performance. As of June of 2024, Cyrus’ song made history by holding the top spot on various music charts. Then in September of 2024, Tempo Music Investments filed a civil lawsuit against Cyrus. The lawsuit did not list the song’s other three songwriters as plaintiffs. 

The Heart of the Lawsuit and Cryus’ Motion to Dismiss:

Tempo Music Investments accused Cyrus of copying or mimicking parts of Mars’ song including key elements like the melody, harmony, and chorus. Tempo Music Investments claimed that     “based on the combination and number of similarities between the two recordings that “Flowers” would not exist without “When I Was Your Man.” In addition to Cyrus, the lawsuit names “Flowers” other songwriters as defendants along with Sony Music Publishing and various distributors like Amazon, Walmart, and Target. In the lawsuit, Tempo Music Investments is seeking damages and to bar Cyrus from performing and distributing “Flowers”. 

Cyrus and her legal team responded by filing a motion to dismiss arguing that the lawsuit should be thrown out. In the motion to dismiss, Cyrus’ legal team asserts that the “allegedly copied elements are random, scattered, unprotected ideas and musical building blocks.” However, the more intricate argument that Cyrus’ legal team advances is that Tempo Music Investments does not have standing to bring the lawsuit. They claim that in the 9^th Circuit, where the lawsuit was brought, there is precedent that a copyright holder must have exclusive rights over the copyright under Section 501(b) to confer standing. Furthermore, they claim that Tempo Music Investments lacks exclusive rights over the copyright because they only have a partial interest from Philip Lawrence—one of the four songwriters of “When I Was Your Man”— and do not have the interests from the other “When I Was Your Man” songwriters. 

A New Precedent Out of the Ninth Circuit?

This motion to dismiss hearing is set to take place on January 27^th of 2025 in the US District Court for the Central District of California. Tempo’s lawyers have already noted that they adamantly disagree with Cyrus’ standing to sue argument noting that it is “blackletter law” any one owner of copyright could bring a lawsuit without the other owners. Nonetheless, Cyrus’ motion to dismiss has opened the doors for a new precedent on who can bring a copyright lawsuit (more specifically in the Ninth Circuit). Some lawyers and legal scholars believe that if Cyrus’ standing claim is successful it may create a “problematic” precedent. If her argument is successful, it could make it increasingly difficult to enforce a copyright without every partial owner’s participation.  This could have significant ramifications for the licensing of intellectual property and would diminish the value of licensing fractional shares of copyrights. 

Ultimately, this case could fundamentally change how intellectual property contracts are done in the entertainment industry and cast a shadow on numerous previous license deals because it may render partial ownership of IP worthless. The ability to enforce your intellectual property is a fundamental aspect of intellectual property law. If this precedent is established, those who purchase partial ownership of a copyright will be left powerless to enforce their newly purchased copyright, and they will be at the mercy of the other copyright owners as to whether they can go after potential infringers. As noted above, this case is still in district court and would require a decision on appeal to officially set any kind of precedent. However, even if this case does not go up on appeal it may still present the foundation for a new legal argument others may attempt to adopt. In the meantime, this will be an important case for any intellectual property owner or intellectual property lawyer to keep an eye on.  

#Miley Cyrus, #Copyright, #Flowers Lawsuit

By: Wolf Chivers

Suppose one day someone is bored and exploring some of the stranger sides of YouTube, only to be inexplicably graced with the knowledge that lightsaber stunt fighting exists. It reminds them of the time they dressed up as a Jedi as a kid for Halloween. But that lightsaber they had for their costume was three colored, telescoping tubes inside a plastic toy, and the people in that sparring video are swinging hard. Where does one get a lightsaber for their newfound hobby that will hold up to that kind of impact?

Soon they are down the Internet rabbit hole to discover that there is a whole wealth of fancy, expensive lightsabers on the market. The only mention of “Disney” on those websites sits at the very bottom of the page as a tiny disclaimer stating that the products are not associated with “Disney, LUCASFILM, or any Lightsaber franchise.” Given Disney’s history of zealously protecting its intellectual property, even against small businesses and individuals, could Disney try to stop these lightsaber sales? These third-party manufacturers are not pop-up companies who are in and out of business too quickly to sue. Many of these businesses are well-established manufacturers with Ultrasabers being nearly 20 years old and one of the highest-profile names on the market. Nevertheless, the question remains as to whether Disney has a basis for a copyright infringement claim. 

The Empire—Copyright Law

Even though Disney owns the Star Wars intellectual property, whether or not lightsabers are copyrightable is tricky. Copyright protections extend to a wide variety of media, including motion pictures. Owners of copyrights generally have exclusive rights to use, reproduce, and distribute their work or derivatives based on their work, to prevent its copying. The Star Wars films and many of their specific elements are subject to copyright, including aspects like individual characters. However, copyright law does not protect ideas or concepts, only the specific portrayals or depictions of an idea. Consequently,  the central idea of a laser sword is not copyrightable, but the particular ways Disney has portrayed lightsabers are. Therefore, lightsaber manufacturers could potentially claim that their sabers are portrayed sufficiently differently from those depicted in Star Wars. 

For some time, it seemed like some companies were making halfhearted attempts to walk such a line. When they made screen-accurate replicas, they were often titled in such a way as to tip off fans who knew the source material, without explicitly claiming it was a certain character’s lightsaber. Luke’s lightsaber was not advertised as “Luke Skywalker’s lightsaber,” it was “the Graflex,” a nod to the fact that the original Star Wars lightsaber prop was made from a Graflex camera flash tube. Ahsoka Tano’s referenced “Fulcrum,” Mara Jade’s was the “Emperor’s Hand,” and so on. These are instances of intentional references to the properties in which they appeared without making outright claims.

Now, however, some of the lightsaber manufacturers have appeared to give up the charade and have overt “character lightsabers” sections on their websites that openly purport to be accurate replicas of the lightsabers from Star Wars properties. In so doing, manufacturers are not even trying to pretend their replica lightsabers are different from those seen in Star Wars.

However, some of the manufacturers also have lightsabers that are not specific character replicas and are at least original individual designs. What about those, if the general idea of laser swords is not copyrightable?

The First Order—Derivative Works

Copyright holders generally have the right to control the creation of derivatives based on their work. Derivative works are products based on or derived from already-existing works. There is no hard standard for determining how much of a copyrighted work a derivative work must change before it no longer infringes on the copyright, but it does infringe if the two works are substantially similar. The test for substantial similarity is subjective; the aim is to assess the total concept and feel of the two works. In effect, the court is trying to determine whether the derivative work copies the essence of the original. 

Lightsabers are iconic. Even the third-party manufacturers acknowledge it. There are many recognizable aspects of lightsabers that such manufacturers seek to duplicate, from the sounds to the meaning of the blade colors to the fact that in Star Wars the lightsabers are powered by crystals in the hilt. Lightsaber designs can vary greatly, from the complex and metal to the simple and wooden, but they are all still lightsabers. Perhaps most importantly, these third parties are still marketing their products as lightsabers, and consequently derivatives, not generic laser swords. Creating a lightsaber in an original shape does not seem to alter the “total concept or feel” in such a way as to render it not, in essence, a lightsaber, and so even the designs not directly drawn from a specific character are likely still infringing.

The Rebellion—A Possible Defense

Even if a work would be infringing on a copyright, there are certain uses for a copyrighted work that are immune from infringement claims, mostly found in sections 107-112 of Title 17. Most are irrelevant to lightsaber manufacturers; for example, there are protections for reproductions for libraries and for educational purposes. Fair use, however, may provide a possible defense for third-party lightsaber manufacturers. Fairness is determined by weighing four factors: the purpose and character of the use, the nature of the copyrighted work, how much of the copyrighted work is used, and the effect of the use on the market. However, courts also look for whether the new work transforms the original in some way, especially by adding a new expression, meaning, or message. 

There is maybe some narrow possibility that lightsaber sellers could claim fair use because they are adding an element of transformation, even though most of the factors seem to weigh against them. First, they are building lightsabers to sell, and commercial purposes are less likely to be fair use. Second, Star Wars is a creative work, and copying creative works is less likely to be fair use. Third, sellers are using basically all of the work; as previously discussed, many of the lightsabers are highly accurate replicas of those belonging to specific characters. Fourth, sellers seem likely to have an effect on the market; they are selling lightsabers alongside Disney.  

The lightsaber manufacturers have, however, added at least one thing that might be transformative—their lightsabers are advertised and warrantied for full-contact dueling, while Disney’s lack a similar warranty. Still, the question of transformation looks mostly at adding a new expression, meaning, or message. Adding durability might not give the lightsabers a new meaning, even if it perhaps adds functionality. Therefore, arguing that there is enough transformation to outweigh the four factors is tricky.

Conclusion 

In conclusion, even if Disney has chosen not to take action against third-party lightsaber manufacturers, it seems likely that it would have a viable copyright infringement claim and fair use would be a tricky defense for the manufacturers to put forth. Were Disney to take action against these third parties though, it would raise a question—where should fans go for dueling lightsabers? Should copyright law give copyright holders the power to withhold a product that passionate fans want, or is there a need for further exceptions? 

 #WJLTA #disney #copyright #infringement #starwars #lightsaber