Proskauer – Three Point Shot Newsletter

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January 2021

Welcome to Three Point Shot, a newsletter brought to you by the Sports Law Group at Proskauer. Three Point Shot brings you the latest in sports law-related news and provides you with links to related materials.

Your feedback, thoughts and comments on the content of any issue are encouraged and welcome. We hope you enjoy this and future issues.

Edited by Robert E. Freeman

NJ Gaming Enforcement Division Lays It on the Line in Seeking to Guide Sportsbooks

New Jersey sports betting operators received $6 billion in bets in 2020 (with nearly a $1 billion handle in December alone, mostly from mobile betting), representing a yearly record for a licensed state sports betting market. With the New York state legislature currently debating proposals for mobile sports betting within its borders, it would seem unclear whether New Jersey could match its sports betting handle in 2021 if its neighbor across the river goes online. What is certain, however, is that when successful bettors wish to withdraw winnings from their mobile bankroll into their terrestrial bank accounts instead of letting it ride, they want to receive their funds as efficiently as possible. Responding to allegations from patrons that some sports betting operators sought to dissuade customers from withdrawing funds out of their gaming accounts and to instead make new wagers, the New Jersey Attorney General’s Office, Division of Gaming Enforcement (the “Division”) released an Advisory Bulletin on January 13, 2021, stating, straight up, that sports betting operators are prohibited from soliciting or incentivizing patrons to rescind withdrawals requests that are “pending.”

According to the Bulletin, the Division received complaints from patrons about delays in withdrawals from online gaming accounts, as well as “delaying tactics” where customer service representatives told bettors inquiring about pending withdrawals that the process takes time but if the patron rescinded the request, such funds would be available immediately for wagering and, in some cases, the operator might offer a bonus incentive to the player. While operators must undertake certain anti-money laundering and anti-fraud protections before releasing winnings to patrons, the Division decided, in light of the complaints, to undertake a review of regulations and operator practices concerning a patron’s right to access their funds as balanced against an operator’s concerns over responsible controls. After noting various state gaming regulations (e.g., N.J.A.C. 13:69D-1.24, which, according to the Bulletin, requires a patron’s retail depository account to be credited with funds immediately upon verification of identity), the Division determined that the current rules, taken together, “prohibit the practice of soliciting, either overtly or covertly, the rescission or reversal of withdrawals once requested by a patron.”

As such, the Division found that solicitation of patrons to reinvest withdrawals led to delays in processing and were inconsistent with the regulations. Thus, the Division determined that the regulations prohibited funds subject to a pending withdrawal to be re-deposited to a gaming account if such action was solicited or incentivized by an operator – in fact, the Bulletin states that “it would be an aggravating factor in any penalty proceeding for patrons to be offered bonus money or other incentives to reverse a withdrawal request.”

The Division noted certain exceptions to the right of a patron to receive funds as expeditiously as possible: (1) delays caused by a failure of a patron to provide adequate documentation needed to process a withdrawal; (2) delays caused by an operator’s reasonable efforts to prevent fraud, collusion and money laundering; and (3) a patron’s independent decision to rescind a pending withdrawal. If such decision was not “covertly influenced by an operator.” The Bulletin goes on to state that any contact by an operator with a patron during the pendency of a withdrawal request will be “scrutinized” to determine whether the communication is consistent with the Bulletin and applicable regulations, with the Division making a point that an operator that “improperly encouraged or incentivized” a patron to reverse pending withdrawals for the purpose of making new wagers would be a favorite for a possible enforcement action by the Division.

Given the licensing and tax money at stake, it is not surprising that New Jersey regulators have responded in this way to what it deemed a pattern of bettor complaints. It is also worth noting that the Division decided to issue guidance to announce its interpretation of the issue, as opposed to undertaking an investigation into a single operator, sending a message to all sportsbooks to take certain withdrawal request procedures off the board in order to comply with the existing state licensing regime or else face a parlay of potential fines and scrutiny.

TTAB Tees Up Driven Golf’s Mark for Registration

Driven Golf, Inc. (“Driven Golf”) is the champion of the most recent round at the United States Patent and Trademark Office (“USPTO”). On November 19, 2020, the Trademark Trial and Appeal Board (“TTAB”) reversed the Examining Attorney’s refusal to register DRIVEN GOLF as a trademark for Driven Golf’s golf training aids and apparel on the ground that the proposed mark was confusingly similar to an existing mark, DRIVEN BY PING, for golf clubs. (In re Driven Golf, Inc., Serial No. 88215365 (TTAB Nov. 19, 2020)).

In the first round back in December 2018, Driven Golf applied to register DRIVEN GOLF (disclaiming the word “Golf”) for goods in International Class 25, apparel, and in Class 9, golf training aids, “namely tangible articles designed to attach to a golfer and/or golf club and improve a golfer’s swing.” On October 3, 2019, the Examining Attorney at the USPTO issued a final refusal to register DRIVEN GOLF, deciding that DRIVEN GOLF creates a likelihood of source confusion with the DRIVEN BY PING mark (Registration No. 4269857) because “the commercial impression of both marks derive from the same dominant term ‘DRIVEN,'” and consumers who know the PING “Driven” brand “will presume that the [DRIVEN GOLF] mark is merely an offshoot [of the DRIVEN BY PING mark].” The Examining Attorney also stated that Driven Golf failed to submit an acceptable identification of its “golf training aids” under International Class 9, concluding that the wording “aids,” among other things, must be clarified because it was too “indefinite.”

Believing the Examining Attorney was off-course, in April 2020 Driven Golf appealed the final refusal to register its mark to the TTAB. Starting from the back tees, Driven Golf contended in its appeal brief that there was no potential for confusion between its mark and the PING mark as the likelihood of confusion requires that “confusion be probable and not simply possible.” Using every club in the bag, Driven Golf raised several points: (1) the dominant portion of the DRIVEN BY PING mark was not “Driven” but “PING,” which labeled a golf club a PING club, as opposed to the DRIVEN GOLF mark, which makes no such clear association; (2) there is insufficient similarity between the goods in question – golf training aids and golf clubs; and (3) the trade

channels are dissimilar, as golf clubs are typically expensive investments while golf aids are inexpensive tools, and in general, the big golf club manufacturers sell clubs, not training aids.

In response, the Examining Attorney’s appeal brief began by stating the black letter law of consumer confusion: “Trademark Act Section 2(d) bars registration where an applied-for mark so resembles a registered mark that it is likely, when applied to the goods and/or services, to cause confusion, mistake or to deceive the potential consumer as to the source of the goods and/or services.” The Examining Attorney took a healthy swing and argued that DRIVEN GOLF is likely to cause confusion with the DRIVEN BY PING mark owned by the widely-known company because: (1) Driven Golf’s goods are golf equipment or apparel directed to the same target audience (i.e., golfers), and sold through the same channels of trade (online golf sports equipment sites); and (2) Driven Golf’s golf aid product is attached to a golf club, and thus is “complementary to use” with, for example, PING golf clubs, and as such, consumers could encounter a DRIVEN GOLF aid used with a DRIVEN BY PING golf club, which could potentially lead to a mistaken association between the products. However, unlike many golfers who use PING golf clubs, the Examining Attorney missed the green.

In a non-precedential opinion, the TTAB analyzed the likelihood of confusion and concentrated on the following factors: the similarity or dissimilarity of (i) the nature of the goods and established, likely-to-continue trade channels, and (ii) the language of the marks. Driven Golf hit an ace in this round, as the TTAB found each factor weighed in favor of a determination that confusion is not likely. First, the TTAB stated, “[i]n comparing goods, ‘the issue to be determined…is not whether the goods…are likely to be confused but rather whether there is a likelihood that purchasers will be misled into the belief that they emanate from a common source.'” The Examining Attorney had teed up various arguments about the similarity in the goods – golf apparel and equipment targeted at golfers. However, the TTAB found that the Examining Attorney had shanked it and presented a “sparse record” that consumers would likely believe Driven Golf’s Class 9 and 25 goods emanate from the same sources as PING. Moreover, the TTAB rejected the Examining Attorney’s trade channel conclusions, finding instead that golf clubs, training aids and golf apparel might be available in common trade channels, but there was “insufficient evidence in the record that these goods travel in the same channels of trade or may be purchased by the same classes of purchasers.”

With respect to the last factor, the TTAB compared the marks in their entireties for similarities and dissimilarities in “appearance, sound, connotation, and commercial impression.” The TTAB recognized both trademarks have the same first word, “Driven,” but determined the marks, taken as a whole, were dissimilar due to the additional wording in each mark and a different pronunciation given that the marks end in a different word. Tallying the scorecard, the TTAB noted, DRIVEN BY PING “connotes PING-branded golf clubs, presumably drivers” and that DRIVEN GOLF connotes golf aids and clothing used by consumers who are driven to improve their game.” Thus, the TTAB dispatched the Examining Attorney’s refusal based on consumer confusion similarity into a watery grave.

While Driven Golf prevailed on the main issues, it did get stuck in the sand on one procedural point. The TTAB affirmed the Examining Attorney’s determination that Driven Golf needed to submit a more definite identification of goods in Class 9 (i.e., Driven Golf’s “golf training aids”), agreeing that Driven Golf’s use of “aids” and “tangible articles” was too vague and could identify goods in multiple classes.

In the end, the TTAB reversed the refusal to register Driven Golf’s mark under both classes of goods (i.e., Class 9 for golf training aids and Class 25 for apparel) after finding no likelihood of consumer confusion, but affirmed the finding that Driven Golf needed to submit a more definite identification of its Class 9 golf training goods. Even the best golfers do not birdie every hole and Driven Golf is certainly pleased with this mixed victory on the hallowed grounds at the TTAB.

From Batting Practice to Battery, Softball Suit Strikes Out on Appeal

Another swing and a miss might be the final stitch in a university sports-related lawsuit stemming from an unfortunate incident that occurred during softball practice when a player accidentally hit her teammate in the head with her bat during practice. A Massachusetts appellate court recently affirmed the dismissal of a tort suit filed by Brooke Brandt (“Brandt” or “Plaintiff”) against her teammate Meredith Ball (“Ball” or “teammate”), as well as the head coach Jaclyn Davis (“Coach Davis”) and Suffolk University (collectively, the “Suffolk defendants”). (Brandt v. Davis, No. 19-P-1189 (Mass. App. Nov. 2, 2020)). Notably, the appellate court held that like players in an athletic contest, players in an athletic practice owe a duty not to engage in reckless conduct but are not subject to suit for simple negligence.

The case springs from injuries caused to Brandt, a member of the Suffolk University women’s NCAA Division III softball team, following an accident during the team’s training on March 7, 2014, where the plaintiff was struck in the back of the head by her teammate’s swing at a batting tee. The teammate testified she looked around before batting, and perhaps due to her helmet obscuring her peripheral vision, stated that she did not see the plaintiff running by before starting her swing. She also testified that she had just received the go-ahead to begin swinging from the coaches. As recounted by the court, during the practice at issue, the players were rotating between fielding and hitting drills, each requiring different equipment and before the players began their next station, Coach Davis would say “go” when she was sure everyone was in position and wearing the proper equipment. The accident occurred when plaintiff, done with fielding drills, was jogging past the batting area to pick up her gear for the next part of practice. On the day in question, there were no protective barriers between the batting tees and the field entrance where the accident occurred.

As a result of the accident, the plaintiff suffered a concussion and required four stitches at a hospital and allegedly suffered long-term cognitive effects from the trauma. On March 1, 2017, the plaintiff filed a complaint against her teammate for negligence, gross negligence, and recklessness; further claims were made against the Suffolk defendants for gross negligence and recklessness.

In April 2019, the lower court ruled in favor of the defendants on summary judgment, concluding that the record did not raise an issue of recklessness or gross negligence on the part of either plaintiff’s teammate or the Suffolk defendants. (Brandt v. Davis, No. 2017-00641-B (Mass. Super. Ct. Suffolk County Apr. 22, 2019)). Ball successfully argued that under Massachusetts precedent “participants in an athletic event owe a duty to other participants to refrain from reckless misconduct” and thus she may not be liable for negligence, only for willful, wanton or reckless conduct because the injury occurred while she and the plaintiff were participating in an athletic event. Making a second pitch, the plaintiff argued that this case was distinguishable because the injury was caused by a teammate and not an opponent during a competition. However, playing hardball, the lower court rejected this distinction and stated that members of the same athletic team participating in a team practice at home base are “participants in an athletic event” as much as members of opposition teams during competition.

In November 2020, the appellate court affirmed the lower court ruling, reasoning that the same level of duty – to refrain from reckless conduct – applied to athletic practices as well as to athletic contests and claims of ordinary negligence were not cognizable. (Brandt v. Davis, No. 19-P-1189 (Mass. App. Nov. 2, 2020)). The court reasoned that players consent to some degree of physical contact when they engage in sport, and therefore, the court was “wary of imposing wide tort liability on sports participants, lest the law chill the vigor of athletic competition.” It added that such restrictions on the intensity of practices could leave athletes unprepared for actual competition, and potentially even expose them to an increased risk of injury during games. Looking back at the fateful day, the appellate court found that a reasonable jury could not find that the teammate saw the plaintiff before the injury with enough time to prevent the accident and thus the conduct did not rise to the level of recklessness (particularly given the age and skill level of the players involved). Even viewing the evidence in favor of the plaintiff, the conduct of the teammate was at most negligent.

With regard to the Suffolk defendants, the plaintiff argued that Coach Davis failed to safely supervise batting practice. These defendants, however, had all the bases covered by having an enforceable liability waiver barring the plaintiff from bringing an ordinary negligence suit, leaving plaintiff with only claims for gross negligence and recklessness. Examining the record of the coach’s conduct at practice, the court found that the positioning of the batting tee station near the field entrance and the timing of each softball drill was, at worst, only ordinary negligence. Similarly, the court determined that prematurely yelling “go” before all the trained athletes were at the next station was at most ordinary negligence by Coach Davis.

Having struck out at the appellate level, the plaintiff has likely reached the end of her legal options, having failed to overcome a signed liability waiver and Massachusetts precedent limiting the duty of care of a co-participant in active sport.