While the recent strong performance of the Toronto Raptors in the NBA finals has brought joy and hope to Toronto sports fans and supporters of Canadian basketball, it has also brought with it a flood of media coverage. The daily spotlight being shone on the team should come as no surprise to anybody, nor should the fact that anything even remotely associated with Raptor’s star forward, Kawhi Leonard (“Leonard”), is met with an exceptional amount of scrutiny. So, one can imagine just how much attention a story might receive involving one of the NBA’s biggest stars and the sports industry’s largest apparel company.
As was widely reported earlier this week by just about every single news media outlet in North America, Leonard has initiated legal action against sports apparel giant Nike Inc. (“Nike”) over control of his personal branding. Apparently, according to the Complaint filed in United States District Court for the Southern District of California, in 2011 Leonard “traced his notably large hand, and, inside the hand, drew stylized versions of his initials “KL” and the number that he had worn for much of his career, “2”. The drawing Leonard authored was an extension and continuation of drawings he had been creating since early in his college career.”
On October 26, 2011, Nike and Leonard signed a “Men’s Pro Basketball Contract” with Nike Inc. (the “Nike Agreement”) which was terminated in September 2018. According to the Complaint, during the term of the Nike Agreement “Nike began discussions with Leonard about creating a unique logo to affix to merchandise to be sold under the Nike Agreement. Nike provided to Leonard its ideas for modifying the logo that Leonard had designed. Leonard for the most part rejected Nike’s concepts and, instead, forwarded to Nike the Leonard Logo which Leonard said he would permit Nike to use during the term of the Nike Agreement (under his supervision and control). Nike reviewed the Leonard Logo, modified it, and returned pro formas to Leonard in the Spring 2014. Leonard rejected those proposals as well. In early Summer 2014, Nike provided additional proposals to Leonard using the Leonard Logo. Leonard accepted one of the June 2014 proposals and granted Nike permission to affix that logo, based upon the Leonard Logo, on Nike merchandise during the term of the Nike Agreement.”
Nike apparently, without Leonard’s knowledge, applied to register in its name copyright in the “Kawhi Leonard Logo” on the basis it had been created as a work for hire. Apparently under US Copyright Law Section 101 of the Copyright Act (title 17 of the U.S. Code) a “work made for hire” is defined as follows:
A “work made for hire” is —
(1) a work prepared by an employee within the scope of his or her employment; or
(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.
The US Copyright Act goes on to provide:
In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.
How does Canada factor in?
From a Canadian perspective, copyright arises automatically at the time of creation. Copyright in Canada is owned by the author unless the author of the logo was in the employment of some other person under a contract of service and the logo was made in the course of the employment. It is a question of fact and Nike’s US Copyright Registration is not determinative. There is no concept of “work made for hire” as set out in the US law.
There is in Canada case law establishing the tort of appropriation of personality which allows a person to control the commercial use of his or her name, likeness, voice, reputation, image, or other unequivocal aspects of his or her identity. According to case law, a plaintiff must prove at least two elements: first, the exploitation of the plaintiff’s identity was for commercial purposes and secondly, the exploitation clearly and primarily captures the plaintiff. If the dispute extends to Canada (especially if Kawhi chooses to re-sign with the Raptors before next season, right Toronto fans?), it may be an issue as there is a public interest associated with copyright if Nike’s registration of copyright in the Kawhi Leonard Logo without his consent constituted an invasion and impairment of his exclusive right to market his personality. This would constitute an aspect of the tort of appropriation of personality giving another possible ground of attack on the Nike allegation of copyright ownership. This is also found to an extent in Canada’s Trademarks Act s.9(1)(k) which prohibits adoption or use in connection with a business or otherwise, any mark consisting of or likely to be mistaken for …. any matter that may falsely suggest a connection with any living individual.
Leonard has applied for and subsequently received registration of two trademarks in three different categories of registration consisting of, and inspired by, Leonard’s creation of the Leonard Logo; one an image of his hand, his initials and jersey number, the logo above (US Registration No 5608427), and a second logo based upon letters and numbers corresponding to Leonard’s initials and jersey number, KL2 (US Registration No. 5612281) (the “Leonard Trademarks”). These marks appear to have been registered without any objection by Nike even though it had an opportunity to do so.
In a recommended form of athlete endorsement contract there is a provision that recognizes the athlete may obtain a trademark or trademarks and the athlete agrees to grant to Nike Inc. a license for the use of such trademark and such license shall be coextensive and coterminous with the endorsement.
This provision makes no mention of copyright in any logos registered as trademarks but no doubt such agreements are being reviewed and if possible amended to avoid the unique situation in the Leonard v Nike scenario where it appears Nike is using copyright to upset Leonard’s right to exploit his personality rights in a new deal with New Balance. Zion Williamson and R.J. Barrett take note.
Nike has apparently alleged in recent correspondence to Leonard that Nike owns the Leonard Logo pursuant to the Nike Agreement and Nike’s copyright registration of the Leonard Logo and demanded that Leonard cease using the Leonard Logo on non-Nike merchandise.
By virtue of Leonard’s US Trademark Registration, Nike is precluded from using the logo on Nike merchandise in the US. But Nike appears to be arguing that, even though its contract with Leonard has been terminated, Leonard cannot use his logo without infringing Nike’s copyright. Leonard likely has no choice but to sue Nike to resolve matters so that his new deal with New Balance can proceed without any speed bumps or road blocks. It will be interesting to see how matters proceed and if Nike can succeed in controlling how an athlete exploits his or her personality rights after endorsement contracts between it and an athlete are terminated.