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NIL Licensing

Athlete-Entrepreneurs, We See You

Thanks to new legal rights, student-athletes are finally making money from their hard work.

You need a lawyer who understands the complex web of laws and rules that govern name-image-and-likeness licensing deals. NIL deals are complicated. Dunlap Law attorneys are here to advocate for you and protect you.

Navigating Name, Image, and Likeness (NIL) Laws: Empowering Athletes

Welcome to our comprehensive guide on Virginia’s Name, Image, and Likeness (NIL) law—a revolutionary shift in the world of collegiate and professional sports. As of July 1, 2022, Virginia Code grants student-athletes the right to earn compensation from licensing of their NIL. This change has transformed the landscape for student-athletes, allowing them to capitalize on their personal brand without compromising their eligibility to participate in collegiate sports. Let’s delve into the core aspects of Virginia’s NIL law, how it works, and the implications it holds for athletes, institutions, and the sports industry.

Understanding NIL Laws: What Are They?

Name, Image, and Likeness (NIL) laws grant collegiate athletes the right to profit from their own names, images, and likenesses. This means that student-athletes can now engage in endorsement deals, promotional activities, and other business ventures, all while competing for their schools.

NIL laws are based on an emerging legal principle called the right to publicity. The right to publicity holds that individuals have a right to control the commercial use of ones’ identity. Until 2021, NCAA rules penalized college athletes for receiving any compensation beyond their scholarships for use of their name-image-and likeness.

For example, in 2010-11 Ohio State quarterback Terrelle Pryor sold memorabilia and signed autographs in exchange for a free tattoo. The NCAA suspended Pryor for the first five games of the 2011 season and OSU coach Jim Tressel lost his job. To avoid the NCAA suspension, Pryor left OSU for the NFL’s supplemental draft only for the NFL to penalize him with a five-game suspension.

These kinds of draconian penalties are no longer legal thanks to a unanimous 2021 decision by the Supreme Court of the United States which held that NCAA rules governing student-athletes’ compensation violated federal anti-trust laws. A tsunami of new state laws followed.

Now, Virginia and many other states have laws entitling student-athletes to compensation for NIL licensing deals.

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Competing Legal Principles

The right to control use of your name-image-and-likeness is countered by the First Amendment rights held by others to use your NIL in certain circumstances. Currently, a patchwork of court decisions determines where the line is between a student-athlete’s right to publicity and others’ First Amendment rights. Over the last 70 years, courts have held that First Amendment rights protected an artist’s rendering of quarterback Joe Montana, parody trading cards with caricatures of Major League Baseball players, and a fantasy sports league’s use of athletes’ images.

Practically speaking, the right to publicity allows athlete-entrepreneurs to control their NIL in the context of endorsements. However, it does not create a blanket right to block use of your NIL in all contexts.

For example, a journalist’s First Amendment right to publish a story on an athlete’s outstanding performance will not violate her right to control commercial use of her NIL.

NIL deals are complex. Like any business deal, these licensing deals need careful legal review. As business lawyers and IP attorneys, we can help student-athletes (as we see it, “athlete-entrepreneurs”) understand and negotiate the terms in their NIL business deals.

NIL Is Intellectual Property

Student-athletes are now entrepreneurs, thanks to this series of court decisions and new state laws. Name-image-and likeness licensing is an emerging area of law which means it is a bit messy as novel legal principles are developed, enshrined in contracts, found in new state laws, and tested in court decisions.

In addition to the right to publicity, a new way of thinking about NIL as a form of intellectual property is emerging. Traditionally, intellectual property law focused almost exclusively on defining and protecting patents, trademarks, copyrights, and trade secrets. Now, thanks to NIL licensing, individuals can control most commercial uses of their name-image-and likeness.

But, as with all the traditional forms of intellectual property, it means that student-athletes seeking to protect their NIL from unauthorized use must actively and affirmatively enforce their rights. Just like with a trademark, allowing others to use your mark without permission dilutes your legal rights to the mark. Failure to enforce your exclusive rights to the mark can cause erosion or loss of those legal rights. That’s one reason why student-athletes considering NIL licensing deals need legal counsel, so the terms of the deal clearly define who has the right to use your NIL.

A NIL deal and protecting your IP are complicated. Like any business deal, these licensing deals need careful legal review. As business and IP attorneys, we can help athlete-entrepreneurs understand and negotiate the terms in their NIL business deals.

 

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Runner training on bleachers

Virginia’s NIL Law

Virginia’s 2022 law gives student-athletes a statutory right to earn compensation from use of their name, image, or likeness and to be represented by an agent and an attorney for purposes of securing and negotiating NIL deals.

Institutions – and that means colleges but also athletic conferences – cannot declare a student-athlete ineligible or reduce, revoke, cancel, or not renew a student-athlete’s scholarship because the student-athlete signed a NIL deal.

But Virginia’s law includes a long list of limitations that prevent student-athletes from endorsing certain products or activities. Also, there are limits on when student-athletes may engage in activities for their NIL deals and prohibitions on use of their institution’s “facilities.” Further, student-athletes have duties to disclose their NIL deals to their colleges. In short, Virginia’s law is complicated with a host of caveats, limitations, and prohibitions. It’s a briar patch and student-athletes need a business lawyer who understands it.

No student-athlete should sign a NIL deal without their attorney’s review. There is too much at stake. Because we recognize that athlete-entrepreneurs need our legal counsel but have little or no money to cover the cost, our fee is based on the athlete’s success. We charge a percent of the deal’s value, allowing us to guide you through the entire process without you paying out-of-pocket. 

Key Features and Implications

Empowerment of Athletes:

NIL laws empower athletes to leverage their popularity and personal brand to secure endorsement deals and collaborations, reflecting the true value of their talents and hard work.

 

Entrepreneurial Opportunities:

Athletes are now entrepreneurs. We can guide you on the many facets of starting your own businesses or creating merchandise, without fear of violating amateurism rules.

 

Fairness and Equity:

These laws promote fairness and equity by allowing athletes from all sports and backgrounds to benefit from their NIL, bridging the gap between high-revenue and lower-revenue sports.

 

Educational Value:

Student-athlete-entrepreneurs gain valuable real-world experience in marketing, negotiation, and financial management through NIL opportunities, enhancing their education beyond the classroom.

 

Recruitment Advantage:

Schools in states with NIL laws will have an advantage in recruiting top-tier talent by promoting the potential for athletes to build their personal brands while

competing at a high level. We expect the proliferation of state NIL laws to continue because of the market forces at work.

 

Compliance Challenges:

Institutions and athletes must navigate a complex landscape of state-specific laws, NCAA regulations, and potential conflicts of interest to ensure compliance. Also, Congress is studying the issue and responding to pressure from the NCAA to pass a federal NIL law that will preempt laws passed at the state level. We are tracking these developments closely.

 

Long-Term Impact:

NIL laws have the potential to reshape college sports and even influence professional leagues, as athletes enter the next phase of their careers with a stronger personal brand.

 

Navigating the Terrain:

You Need a NIL Lawyer. While NIL laws bring unprecedented opportunities, they also present challenges that athletes and institutions must manage effectively.

 

Legal Considerations:

Athletes need to understand the legal implications of contracts and agreements they enter into, ensuring that they safeguard their rights and interests. No student-athlete should sign a NIL deal without their attorney’s review. There is too much at stake, including but not limited to: loss of eligibility or scholarships, lawsuits initiated by their sponsor, school, or conference, and NCAA or conference enforcement actions.

 

Branding and Reputation:

Athletes should be mindful of the brands they associate with, as their choices can impact their personal brand and reputation. Virginia’s NIL law prohibits student-athletes from endorsing certain products or services. As NIL lawyers, we can help clients navigate this complexity and understand which brands meet the legal standards.

 

Financial Literacy:

With newfound income streams, athletes should prioritize financial literacy and seek guidance to make informed financial decisions. We believe that student-athletes are best-served when they leverage a NIL deal to support their long-term well-being. We take a holistic view of our clients’ goals and needs so that our advice is tailored to help student-athletes create the life they want, now and into the future.

 

Balancing Priorities:

Student-athletes must strike a balance between their academic commitments, sports training, and NIL opportunities. We help ensure that the terms in the NIL contract support a student-athlete’s overall well-being and create reasonable balance.

 

A Transformational Shift

The era of Name, Image, and Likeness laws marks a transformational shift in the sports world—one that empowers athletes to seize their own destinies and claim their fair share of the revenue they generate. This page is your comprehensive resource for understanding NIL laws, their implications, and the strategies athletes can employ to thrive in this evolving,

complicated legal landscape. As these laws continue to shape the future of sports, we are here to provide guidance, insights, and support every step of the way.

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