Clavio and Shanehsaz: Rules change for name, image, and likeness in college athletics

The NCAA and the five power conferences (Atlantic Coast Conference, Big Ten Conference, Big 12 Conference, Pac-12 Conference, and Southeastern Conference, also known as the “Power 5 Conferences”) have been steadily working to resolve a class-action lawsuit against the NCAA related to revenue sharing with student athletes and name, image and likeness (NIL) rules.

A proposed settlement agreement has been filed with the court which is meant to compensate athletes for past use of their NIL and also tees up suggested guidance for regulating and implementing athlete NIL activities moving forward. In this regard, the draft settlement suggests we are in store for yet another “reboot” of our understanding of NIL in college athletics following several years of rapid change and evolution in the space.

This brief overview scratches the surface of what that future might look like and explores a select few of the questions that remain to be answered.

At the outset, it is important to note that the long-form settlement has been filed with the court, though it may take months for the court to review and certify (or reject) the agreement.

The settlement, in its current form, has several components, but chief among them are the payment of retroactive damages to Division I athletes and creation of a revenue sharing framework for schools to directly pay athletes.

Notably, a revenue percentage is proposed to pay collegiate athletes based on the average Power 5 Conference media, ticket, and sponsorship revenue starting in the 2025-2026 academic year, set at a 22% cap for year one, and can increase based on certain criteria.

The agreement and potential payout to college athletes marks another potentially transformative shift in collegiate sports, sparking an intriguing convergence of intellectual property law, sports law, antitrust regulation, and employment law. As such, it appears clear that athletes seeking to commercialize their persona will continue to face the complex challenge of navigating a maze of state and federal laws, as well as NCAA, conference, and institutional rulemaking, oversight, and regulation.

Similarly, educational institutions and their respective athletics departments must adapt to the rapidly evolving legal landscape.

Regardless of how the settlement unfolds—whether resolved or reverted for further litigation—both brands and athletes must seize this opportunity to realign their strategies with the evolving future of collegiate athletic branding and what that might entail as collegiate athletes begin to enjoy more and more of the rights of “professional” athletes (and potentially receive an “employee” status).

Branding

Branding is inherently about commercialization, and brands have long relied on spokespersons and endorsements to spread their message.

Alongside celebrities and other known personalities, athletes have long been leveraged for their ability to popularize products and services to the public.

Despite this robust history of success, athletes at the collegiate level were “amateurs” under applicable regulation and prohibited from receiving compensation for endorsements until 2021. These changes in 2021 were the first “reboot” of the industry to move collegiate athletes from amateurs to pros.

Notably, while this was new for collegiate athletes, laws surrounding branding and endorsements have otherwise existed for over a century.

Traditionally referred to as “rights of publicity,” these governing laws were born out of common law tort and a right of privacy. Today, right of publicity (or “NIL”) laws remain state-level laws and there is no overarching federal law.

Without federal legislation (or even a uniform code for state adoption), there are numerous inconsistencies between states that create a complex patchwork with differences in what rights arafforded, to whom, and for how long. Despite these inconsistencies, right of publicity laws (both statutory and common law) generally cover “likeness attributes” and are intended to ensure that one’s likeness cannot be used for commercial purposes absent consent. Furthermore, it is generally true that protections are not limited to individuals who have reached a level of fame or notoriety.

Thus, and with the explosion of social media, the “influencer” was born and NIL laws were relied upon by a broader segment of the population (including student athletes outside the marquee sports who may be unlikely to achieve celebrity status in their own right).

When these athletes could engage in this market activity, there were more questions than answers surrounding how this conduct would be regulated, how an educational institution could be involved in this activity, and whether “amateurism” in college athletics was truly a thing of the past.

The recently filed settlement answers some of these questions, but raises new ones. In particular, we will briefly explore questions in the area of intellectual property.

Assistance to athletes

An athlete’s NIL can contribute significant value to their personal brand, public image, and earning capacity. However, college students are typically young adults without material experience or expertise compared to the businesses, platforms, agencies, or others with whom they will negotiate regarding their NIL.

While it has always been possible to obtain independent representation, the proposed agreement intends to further address this issue by allowing athletes to receive assistance directly from their school, as the settlement intents to permit institutions (or designee/subcontractors thereof) to act as the marketing agent for the student-athlete in third-party NIL contract negotiations.

How engaged institutions will wish to be in such representations remains to be seen, though it appears likely that institutions with robust programs will be able to set themselves apart from competitors.

Additionally, the settlement suggests than an athlete can waive assistance in NIL matters. All involved parties should think carefully about informing athletes about the ramifications of doing so, and athletes should only enter into agreements (whether with their school or a third-party) if they seek competent legal review and counsel.

As has been noted since 2021, proceeding without representation is most likely to impact athletes with low-dollar agreements or that otherwise lack the means or network to obtain counsel.

Some institutions have created NIL “workshops” and legal clinics to assist students (for example, the Indiana University Intellectual Property Pro Bono Legal Assistance Clinic at the Maurer School of Law), but many lack such an option (and again, serves as a potential basis for programs to differentiate themselves from competitors).

Athlete-generated content

As athletes begin to enjoy the rights of professionals under the settlement agreement (and may be classified as “employees” as a result of direct payments from their institutions as well as other legal actions co-pending with the subject matter), it remains to be seen whether industry norms will result in student generated intellectual property being treated as works made for hire, with ownership automatically vesting (or routinely assigned) in favor of institutions.

Naturally, as in any agreement, the parties involved in any contract should work to clearly define and tailor the scope of intellectual property rights granted and anticipate, to the extent possible, any such shifts in this ever-changing space.

Similarly, institutions may need to become more familiar with the intricacies of disclosures with brands do not run afoul of state and federal laws and guidelines and that they are properly licensing the use of athlete-generated content.

While this space will be unique, intellectual property laws do not distinguish between an athlete and a non-athlete, and there could be misalignment of existing laws with industry expectations.

Further, while athletes may not need routine disclosures about their affiliation with their institution, any third-party agreements will need to comply with traditional endorsement disclosures and Federal Trade Commission Endorsement Guides are a vital starting point to provide athletes with the necessary understanding of their duty to conduct NIL activity honestly and ethically during their endorsement.

Clearly, the proposed settlement will affect an athlete’s intellectual property rights in numerous ways, and potentially unforeseen ways. If implemented, one thing remains clear.

This settlement agreement will yet again serve as a hard reset of norms in this space.•

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Olivia M. Clavio and Abe Jentry Shanehsaz are attorneys with Faegre Drinker Biddle & Reath LLP’s Indianapolis office. The opinions expressed in this article are those of the authors.