Is Your Company Accidentally Granting Implied Copyright Licenses?

A recent spate of athlete-driven cases show courts are willing to let alleged copyright infringers defend these suits by claiming they have implied licenses. This could mean long, costly lawsuits for copyright holders.

In June 2019, Kawhi Leonard made a case that he was the best basketball player in the world by leading the Toronto Raptors to the NBA title. That same month, Leonard sued Nike over control of a claw logo he and Nike used to promote his brand before Leonard left Nike for New Balance.

Nike had a contract that a federal judge determined made it the owner of the claw logo. But that contract was not enough to get Nike a quick litigation victory. Instead, the lawsuit lasted more than a year and led to a settlement that likely required compromise.

This case illustrates a problem for all employers whose employees market themselves using company owned copyrights. That’s true not just of celebrities and athletes, but of many public-facing employees.

Nike’s contract made it the owner of the claw logo. But since Nike let Leonard use the logo outside of their contractual relationship and tacitly endorsed those uses, did Leonard have an implied license? Even if Leonard did not have permission, Nike’s conduct raised questions about whether he believed he had permission and therefore could not be liable for willful infringement.

Similarly, two recent decisions about the inclusion of tattoos in video games show how implied licenses can complicate copyright lawsuits. An Illinois federal court found a trial was needed to decide if a video game maker had an implied license to use a wrestler’s tattoos. The game included the tattoos in a depiction of the wrestler, even though the artist who owned the copyrights never agreed to that use. A New York court went even further. It granted a pre-trial judgment in favor of the same video game company, finding there was an implied license allowing in-game depictions of NBA players to include their tattoos.

These cases show that to avoid compounding litigation costs by accidentally creating an implied license defense, copyright holders should:

• Have written agreements with all external users of their copyrights that directly state the bounds of allowed uses
• Clearly document and communicate written policies on employee use of copyrighted materials
• Consistently enforce those agreements and policies

Our Intellectual Property Practice Group will continue to monitor copyright infringement cases. Please contact Andrew Coffman or any member of Phelps’ Intellectual Property team if you have questions or need advice and guidance.