Jeffrey F. Brown, James Bo Pearl, Jeremy Salinger, and Annie Alvarado are all authors of a forthcoming piece for JSEL’s Fall 2020 Edition on the topic of group licensing in NIL. Their interview covers topics explored in-depth in their journal article, the executive summary of which is excerpted below as a preview for their exciting scholarship to come.
Athletes and other celebrities often assert a right of publicity to use their NIL in a variety of commercial activities. Their right to publicity is governed by state law, which typically prevents unauthorized use of the relevant NILs by third parties. The protection of NIL rights factors heavily in the recent debate over compensation for collegiate college athletes. With limited exceptions, the National Collegiate Athletic Association NCAA currently prohibits college athletes from commercializing their NILs via promotions or product endorsements.
Recent litigation has clarified rules governing the right to publicity and in some cases has expanded opportunities for college athletes to commercialize their NILs. For example, in O’Bannon v. National Collegiate Athletic Association, the Ninth Circuit Court of Appeals ruled against NCAA restrictions on college athlete compensation for their NILs beyond grants in aid (tuition, fees, required books, etc.) and ordered the NCAA to allow colleges to offer athletic scholarships to athletes up to the full cost of their attendance . O’Bannon and other cases increased public attention to college athlete compensation for NIL-related activities, and soon resulted in state-level reform. The first change occurred in September 2019 with California’s SB 206 (The Fair Pay to Play Act, taking effect in 2023), which prohibits universities from preventing college athletes from earning compensation from their NILs.  Similar provisions appear in laws passed in Florida and Colorado and bills under consideration in many other states and in Congress.
Group licensing is one of many ways in which college athletes could commercialize their NILs to create team-based products. Two notable examples of group licensing entities – patent pools and performing rights organizations (PROs) – each illustrate the potential economic efficiencies of a group licensing solution for college athlete NILs. Patent pools encourage market adoption by making it easier to license patented technologies. By aggregating patents into a portfolio, a pro-competitive pool combines complementary inputs, negotiates fair and reasonable royalties, and lowers transactions costs by reducing the need for individual licensing agreements. Patent pools may also enable creation of new products and promote innovation.
PROs generate similar efficiencies via group licensing of copyrighted music. Without a PRO, individual musicians would need to locate each music consumer, negotiate a licensing agreement, and administer royalty payments. PROs reduce the musicians’ burden by aggregating music copyrights into a portfolio, negotiating a portfolio license, collecting royalties from licensees, and distributing royalties to musicians. PROs also play an enforcement role by monitoring consumer use of copyrighted music and resolving disputes via negotiation or litigation.
The history and experience of patent pools and PROs informs the structure and operations of a group licensing entity for college athlete NILs. An NIL licensing entity could serve the dual purposes of enabling college athlete compensation for NIL activities while complying with NCAA rules related to payments by NCAA members, employee status, the role of boosters and agents, and other concerns described above. The NCAA and Congress should consider the likely pro-competitive benefits of an NIL licensing entity as an alternative to the antitrust exemptions discussed in the NCAA Report and in some legislative proposals. The NIL group licensing entity would have the following roles and responsibilities:
- Legal structure and safeguards. The entity would be structured as a non-profit membership organization operating on behalf of college athletes. Joining would be optional except in the case of team group licensing opportunities where an entire team was necessary for the licensing.  The entity would not be a union nor would it serve as a generalized negotiating body for college athletes other than in the context of NIL activities. It would seek to expand the market for licensed products and prevent anticompetitive conduct with antitrust safeguards.
- Licensing and royalty administration. The entity would negotiate licenses via market-based transactions, determine royalties based on factors other than athletic success, and distribute royalties to college athletes with no administrative support from the NCAA or its members.
- Compliance and dispute resolution. The entity would monitor NIL activities for compliance with NCAA rules and applicable laws. It would seek to resolve disputes among college athletes, licensees, the NCAA and other interested parties through litigation or an alternative dispute resolution forum created by Congress.
- Information collecting and reporting. The entity would create and maintain a database of college athletes, NIL activities, licensing agreements, royalties, and other relevant information.