The limits of contract -- MLB's restrictions on use of player names and statistics held unenforceable in fantasy league case
Andrew Raff's IPTA Blog has a thorough review of CBC Distribution v. Major League Baseball Advanced Media, the recent case holding that fantasy baseball leagues don't infringe MLB rights by using player names and statistics. William Patry also has comments on the decision. The Missouri district court held last week that CBC's fantasy league was engaging in protected first amendment speech and their use of the names and statistics did not violate the players' publicity rights.
What I found particularly interesting was the court's disposition of the league's breach of contract claims. Even if a particular use of intellectual property rights is permitted under the law, it is becoming increasingly common for a plaintiff to assert a contract theory to override that permissible conduct -- especially in the Internet context where contracts and licenses are generally not negotiated. In this case, the court found the contract terms unenforceable on public policy grounds.
CBC and MLB had previously negotiated a license agreement in 2002 covering the use of the player names and statistics. The license agreement had terminated, however, and the league pointed to several clauses in the contract as grounds to block CBC's use of the player materials.
The agreement included a "no-challenge" clause, which stated that CBC could not during the term of the contract "dispute or attack the title or any rights of Players' Association in and to the Rights and/or the Trademarks or the validity of the license granted."
The agreement also required CBC after termination "to refrain from further use of the Rights and/or the Trademarks, or any further reference to them, either directly or indirectly".
In its holding finding the contract terms unenforceable, the court concluded:
"The court, therefore, finds that in the circumstances of this case 'the strong federal policy favoring the full and free use of ideas in the public domain' as manifested in the laws of intellectual property prevails over the challenged contractual provisions in the 2002 License Agreement. As such, the court further finds that the no-challenge provision in the 2002 Agreement and the provision which prohibits CBC from using players' names and/or playing records without acquiring a license are unenforceable and void as a matter of public policy." [citations omitted]
In a footnote the court clarified that the no-challenge was unenforceable only with respect to the players' names and playing records, not with respect to the league's trademarks and other intellectual property. The court also noted that in "applying the Lear balancing test, the court must balance the concern for the demands of contract law against the concern for full and free use of ideas in the public domain."
This ruling is subject to appeal by MLB to the 8th Circuit Court of Appeals, which last year upheld the waiver of fair use rights by contract in the Blizzard/bnetd case, Davidson & Associates v. Jung, see prior post. And recall it was the 7th Circuit that held a decade ago in ProCD v. Zeidenberg that contract terms could limit use of public domain white page listings. So we'll have to wait and see what happens on appeal.
Update: My partner Glenn Colton filed this amicus brief in the case on behalf of the Fantasy Sports Trade Association. According to Glenn:
"Judge Medler's decision reestablishes order and common sense in the ever-growing business and phenomenon that is fantasy sports. Hopefully, the leagues and the players' associations will see the light, stop threatening legitimate businesses with a flawed right of publicity theory, and work together with the Fantasy Sports Trade Association and its members to provide fans and fantasy players alike with the best possible products and services."
Spoken like a true advocate.
Cathy Kirkman is a partner at Wilson Sonsini Goodrich & Rosati in Palo Alto, California. Her practice focuses on intellectual