Name and Image and Likeness Oh My! Tennessee Legislation and NCAA Rules for Student- Athletes in the New Era of College Sports

NAME AND IMAGE AND LIKENESS. OH MY!

TENNESSEE LEGISLATION AND NCAA RULES FOR STUDENT-ATHLETES IN THE NEW ERA OF COLLEGE SPORTS

“I don’t always drink sweet tea, but when I do, I prefer Milo’s.” - Bo Nix, Starting QB for the Auburn Tigers (probably)

All kidding aside, Name, Image, and Likeness (“NIL”) deals have been all over the media ever since July 1, 2021, when the NCAA Division I Board of Directors instituted a new policy allowing for Division I (“D-I”), Division II (“D-II”), and Division III (“D-III”) student-athletes to profit from their NIL, regardless of if the relevant state has laws in place yet. This policy has allowed for sponsorships like:

• Hanna Cavinder and Haley Cavinder (Fresno State Women’s

Basketball) - Boost Mobile; • Bo Nix (Auburn QB) and Malachi Moore (Alabama Defensive

Back) - Milo’s Sweet Tea (smart move by Milo’s, playing both sides of that rivalry); • Derek Stingley, Jr. (LSU

Cornerback) - Walk-On’s

Bistreaux & Bar; • Trey Knox (Arkansas

Wide Receiver) –

PetSmart; and, • the entire offensive line of the Notre Dame

Fighting Irish - Jet’s

Pizza.

For $25 you can even get a personalized message from the Tennessee Volunteers starting quarterback, Joe Milton III, on Cameo. The list of NIL deals could truly go on and on. But why and how is this happening, you might ask. Well, it starts with intellectual property rights.

What is Name, Image, and Likeness?

NIL rights are based on the idea that you have property rights in your own person. NIL rights therefore grant one an exclusive right to control the commercial use of one’s name, image, or likeness, and the ability to prevent others from exploiting their NIL for economic gain. Keep in mind, though, that NIL rights are subject to First Amendment defenses which would allow for use of one’s NIL in certain circumstances (educational, newsworthy, transformative, etc. uses).

NIL rights are protected by state statute or state common law, but not all states protect NIL in the same way. For example, some states protect NIL as a part of a Right to Privacy1, others specifically recognize a Right of Publicity2, and still others protect NIL under trade practice-type statutes (like Tennessee3). Federal law is involved only if an individual has trademarked their likeness (tough to do as one must prove a commercial activity/brand is linked to their likeness, think Newman’s Own salad dressing), or if false advertising under the Lanham Act is implicated.

Now, student-athletes have always had these rights. It is just that they were not allowed to use them without being punished by the NCAA and/or their school for any NIL-related commercial activity (signing jerseys, selling memorabilia, etc.). The reasoning behind the prohibition was basically that the NCAA believed it was necessary to preserve the amateurism of college athletics.

While the battle over NIL is not new4, things came to a head with the Supreme Court’s decision in NCAA v. Alston.

NCAA v. Alston

This case could encompass its own book chapter, but here are the highlights. On March 5, 2014, Shawn Alston, former West Virginia running back, filed an antitrust action against the NCAA. Mr. Alston took issue with NCAA rules which limited the amount of compensation a student-athlete could receive in connection with their athletic services, alleging that these limits violated the Sherman Antitrust Act. Several other D-I student-athletes followed suit and eventually obtained class certification. The Northern District of California found in part for the Plaintiffs and entered a permanent injunction against the NCAA preventing it from limiting educationrelated compensation or benefits (think scholarships, payment for tutoring, books, paid internships, etc.).

Both sides appealed the decision, with the Plaintiffs arguing that the NCAA should have been enjoined from any and all compensation limits and the NCAA of course arguing that the district court went too far by prohibiting it from limiting education-related

COVER STORY By: Campbell D. Cox

Corporate Counsel Appalachian Underwriters, Inc.

compensation. The Ninth Circuit affirmed the district court’s ruling, holding that it had “struck the right balance in crafting a remedy that both prevents anticompetitive harm to Student-Athletes while serving the procompetitive purpose of preserving the popularity of college sports.”5

The NCAA then petitioned the United States Supreme Court for certiorari. Notably, the student-athletes did not renew their across-theboard challenge to the NCAA’s compensation limits. However, on June 21, 2021, not only did the Supreme Court unanimously affirm the lower court’s ruling as to education-related benefits, but Justice Kavanaugh authored a scathing concurring opinion stating that the “NCAA’s business model would be flatly illegal in almost any other industry in America,6” that the NCAA’s other compensation rules are questionable, and the following:

The bottom line is that the NCAA and its member colleges are suppressing the pay of student athletes who collectively generate billions of dollars in revenues for colleges every year. Those enormous sums of money flow to seemingly everyone except the student athletes. College presidents, athletic directors, coaches, conference commissioners, and NCAA executives take in six- and seven-figure salaries. Colleges build lavish new facilities. But the student athletes who generate the revenues, many of whom are African American and from lower-income backgrounds, end up with little or nothing.7

NCAA Rules & State Legislation

The High Court’s opinion clearly spurred the NCAA to action as nine days after the Alston ruling, the NCAA officially suspended its rules prohibiting student-athletes from profiting off their NIL and adopted a temporary rule that punted the issue to the states to come up with NIL regulations. As multiple states had already begun drafting NIL legislation prior to the Alston decision, the NCAA directed studentathletes to comply with any applicable NIL laws of their state but noted that it would not monitor for compliance with state law.8 As of the writing of this article, about 40 states (Tennessee included) have now either signed into law or at least introduced a bill regarding NIL rights for student-athletes.

On May 11, 2021, Tennessee House Bill 1351, which amends T.C.A. Title 49, Chapter 7, was signed into law. The amended statute goes into effect on January 1, 2022, and adds two sections, §2081 and §2082. Aside from granting student-athletes the ability to earn compensation for their name, image, and likeness, T.C.A. § 49-7-2082 sets forth a few notable restrictions (summarized below):

• No compensation in exchange for athletic performance or as an incentive to attend. • Compensation can only come from a third party. • Compensation can only come from an “entity whose purpose includes supporting or benefiting” the school or athletic program (i.e. boosters) if it is not contingent on the athlete’s enrollment or continued participation in the program. • Neither the school, nor its officers, directors, or employees can be involved in the development, operation, or promotion of a

current or prospective student’s NIL or cause compensation to be provided to the athlete. • Athletes must disclose any agreement, including the amount of compensation and identities of entities or persons providing compensation, to the school in which they are enrolled. • An agreement may not extend past their time participating in the athletic program. • A school may prohibit an athlete’s involvement in NIL activities that are “in conflict with the values of the institution.” • Athletes must take a financial literacy workshop during their first full semester of enrollment. • Athlete NIL activity is subject to reasonable time/place/manner restrictions. • Athletes are prohibited from involvement in NIL activities that promote gambling, tobacco, alcohol, and adult entertainment. • Schools may prohibit athletes’ use of their intellectual property. • No athlete may enter into an NIL agreement that conflicts or unreasonably competes with the terms of an existing agreement of the institution. (i.e. could not enter into a clothing deal with

Adidas when UT Athletics is sponsored by Nike).

T.C.A. § 49-7-2082 also specifically allows student-athletes to obtain third-party representation for the purpose of securing NIL compensation while in school, noting that if the representative is an attorney, they must be active and in good standing in the state where they are licensed.

Comparatively, Tennessee is on the more restrictive end of state NIL statutes. Most states do not require a financial literacy course and some states do not even address booster involvement and compensation. However, all states with NIL legislation seem to agree that school payment (also called “pay-to-play”) to student-athletes for NIL is prohibited.

What’s Next?

With states rushing to draft and sign into law different statutes on NIL rights, it raises the question: Will the federal government eventually step in? After all, the NCAA has asked Congress on multiple occasions to intervene and create a uniform federal law on NIL rights. There haven’t been any NIL scandals or lawsuits, so far, but it will be interesting to see NIL’s involvement come recruiting season. One thing is certain, while the track is now open for student-athletes to begin pursuing commercial use of their Name, Image, and Likeness, there are still some big hurdles to clear.

1 See NY CLS Civ R §§50-51. 2 See Burns Ind. Code Ann. § 32-26-1-1. 3 See T.C.A. § 47-25-1103. 4 See In re NCAA Student-Athlete Name & Likeness Licensing Litig., 724 F.3d (9th Cir. 2013) (where the N.D. of California consolidated the cases O’Bannon v. Nat’l

Collegiate Athletics Ass’n. and Keller v. Elec. Arts, Inc. as having substantially similar NIL subject matter). 5 Alston v. NCAA (In re NCAA Ath. Grant-In-Aid Cap Antitrust Litig.), 958 F.3d 1239, 1263 (9th Cir. May 18, 2020). 6 NCAA v. Alston, 141 S. Ct. 2141, 2167 (2021) (unanimous decision) (Kavanaugh, B. concurring). 7 Id. at 2168. 8 See Name, Image and Likeness Interim Policy, https://www.ncaa.org/about/takingaction.