Trademark Laws Underlie Sports Fortunes

Article excerpt

In innocent days long ago, Mark McGwire's 70-home run record would have been a gateway to fame but not fortune. Today, however, big money goes hand in hand with sports and the celebrity status of sports stars.

The big money of sports memorabilia, sports clothing, and star affiliations is so much a part of contemporary life that today's younger sports fans must assume it is an intrinsic part of professional sports. It isn't. The value of team-related goods, and the value that sports stars possess in their names, likenesses, attributes and endorsements, is a gift of modern law.

Take, for example, the simplest case: team trademarks like the phrases "St. Louis Cardinals," "Cadinals," and "Redbirds" and logos (like the intertwined S, T and L found on every Cardinals cap). Absent the protection of trademark law, these phrases and symbols could be used by anyone. And, in fact, for years baseball team names and logos were pretty much freely used by many persons. The reasons were varied, including the weak federal trademark law prior to the passage of the Lanham Act in 1946, and - odd as it now seems - a fear that the teams' assertions of exclusive trademark rights would discourage the clothing and souvenir vendors who were giving the teams free publicity by using the team name and symbols.

In the 1950s, with the encouragement and support of the major league baseball central office, baseball franchisees woke up to the value of trademark protection and licensing programs. Teams, and Major League Baseball on their behalf, began registering trademarks and cracking down on those "free publicity" vendors who were using the trademarks without permission.

Trademark licensing soon grew into big business. In the 1980s, major league baseball teams consolidated almost all of their trademark activity in an entity, Major League Baseball Properties, Inc., which handles trademark registrations and licensing for all teams from a central office, making sales on a national basis for all teams. A few exceptions for local trademark licensing were carved out - for example, each team reserves the right to license its own trademarks for hot dogs sold in its stadium and for premiums given out in stadium promotions.

The major league baseball trademark program has succeeded spectacularly. Major League Baseball Properties contracts with hundreds of licensees that market thousands of different items. Between 1986 and 1991, the total retail sales of its licensed goods rose from $200 million to $1.5 billion. Discounting this amount to wholesale sales and applying the standard major league baseball royalty amount of 8.5 percent, licensing revenues exceeded $100 million by 1991.

What about players, and particularly star players? How does the law allow them to exploit their celebrity status financially?

To begin with, advertising law has long prohibited advertisers from associating their products with a celebrity (or anyone for that matter) unless that person does in fact use the advertised goods or services. General Mills, for example, can't use McGwire on Wheaties packages unless he actually eats the cereal. That rule has tended to keep endorsements relatively rare and hence valuable.

More importantly, the so-called "right of publicity," a common-law doctrine that evolved out of the right of privacy, permits a celebrity to control the use of his or her name, image or other distinctive personal attributes in commercial advertising and promotion. Practically unheard of 50 years ago, the right of publicity now supports the multi-million-dollar celebrity licensing business.

Originally, the right of publicity was designed to prohibit false suggestions of celebrity endorsements, but it is now often applied to prohibit any use of celebrity attributes in advertising, even in a non-endorsement sense. Hence, for example, even if McGwire did eat Wheaties, General Mills would not be able to use his photo and name in advertising without his permission - possibly even if the advertising did not suggest an endorsement. …