Author: Jeanette Subkhanberdina

Cybersquatters in a Sticky Situation

When in 2015 word broke out that entertainment giant Warner Brothers had filed new trademarks for “Space Jam,” the possibility of a sequel to the 1996 original seemed around the corner. The original movie grew out of Nike’s “Hare Jordan” campaign, which featured basketball legend Michael Jordan facing off in a one-on-one with beloved cartoon character Bugs Bunny. Picked up by Warner Brothers, Space Jam hit theaters on November 10th, 1996, and became a smash hit. The past 25 years have seasoned the live-action animation to be regarded as a classic. Unsurprisingly, any word of a sequel was set to be a big deal — especially for basketball fans. The 2015 buzz was not unfounded. Soon thereafter, Warner Brothers announced a partnership with SpringHill Entertainment, a company founded by none other than Lebron James, making him an executive producer in upcoming ventures. The partnership between a basketball legend and Warner Brothers seemingly confirmed Space Jam’s sequel even before James officially announced a 2021 release on Twitter. As of now, Space Jam 2 is set to release on July 16th. 

Last week, James gave fans a first look into the updated Toon Squad adding momentum to the buzz as he shared exclusive pictures of him on set. The excitement for the film has been long standing. So much so that about a year ago, advertising creative Hunter Fine and commercial director Peter Marquis bought the SpaceJam2.com domain and, in a very literal interpretation of the name, began to sell fruit jam that “looks like space.” Why number 2? The duo claim, “Our first recipe didn’t look like space enough, so we perfected it with space jam recipe #2.” However, it doesn’t take long to piece together that the domain owners may have other goals in mind. Firstly, the homepage displays two products: their jam for $12.99 and their website for a slightly larger price tag of $1,000,000. The duo even produced their own “Space Jam 2 Trailer”, which showcases visuals from the farm as a couple talks about what makes their jam special. One of the reasons being that “you can also buy our website.” 

Coupled with the site’s ostensibly veiled tone, it is clear that the duo hopes for a Warner Brothers payout. According to Front Office Sports, “the ruse became a quarantine project,” the aim of which is a payday with most proceeds going to a sports-related charity. However, several factors may block their plan. Among which is the existence of cybersquatting laws. Tamara Kurtzman, founder at TMK attorneys and contributor at ABA’s Business Law section, notes, “a viable domain name, is not simply a luxury in today’s economy, but rather a corporate necessity without which a business is unable to effectively compete in the marketplace. The inability of a company to acquire a meaningful domain can therefore directly influence the success or failure of that business.” 

To address these concerns, the 1999 Anticybersquatting Consumer Protection Act (ACPA), specifically prevents “cybersquatters” from registering internet domains containing trademarks later to sell the domain name to the trademark owner. To gain relief by the ACPA, the domain name and the registration of the domain must have been registered in ‘bad-faith’ and must be identical or “confusingly similar” to a well-known trademark. As for the question of whether the duo registered the domain in bad faith, the jam front seems to be an attempt to offer legitimacy to their domain registration and sway any allegation of cybersquatting away. However, their subsequent commentary pretty much gives their motivations away, “When Hunter told me he secured SpaceJam2.com, it just felt like, ‘Oh, we can do something really fun with this rather than just a straight extortion model,”  

Kurtzman points out that a viable domain name is a “corporate necessity” in today’s economy, but given Warner Brothers’ established influence coupled with Lebron James’ star-power, how necessary to sequel’s success is the domain, really? Perhaps this is why Warner Brothers have not yet commented on the situation, nor have they proceeded with any legal action. However, if they were to choose to seek action and to attain the domain, the case can be less straightforward than at first glance. Fine and Marquis may be participating in “anticipatory cybersquatting”, which is the practice of registering domain names with minimal present value in the hopes that these names will become desirable, and consequently increasingly valuable, in the future. Again, the existence of a physical jam for sale may hinder the argument that the domain has minimal present value; however, the advertising duo clearly has motives involving a $1,000,000 payout. Importantly, the ACPA doesn’t directly address the anticipatory nature of the cybersquatting exhibited in the Space Jam 2 case, potentially because this practice only gained popularity in the 2000s. Here, it may be relevant to take a closer look at what trademark law says. 

A trademark is usually deemed to belong to a party that uses the mark first in commerce. In other words, the party that first uses the mark in an ordinary course of trade (e.g., placed on containers/displays/documents, and sold or transported in commerce and on services in more than one State or abroad). Fine and Marquis started selling their jam before the release of the anticipated Space Jam sequel. Not to mention, the sequel’s full title is “Space Jam: A New Legacy” as opposed to “Space Jam 2”. This detail is kind of incongruous for the current domain holders.On the one hand, it may help them avoid cybersquatting charges, but it also provides even less incentive for Warner Brothers to proceed with a payout.

 All in all, it seems unlikely that Warner Brothers or James would proceed with a payout since the squatters occupying the Space Jam 2 domain don’t seem to present an exceptionally high obstruction to potential business. Even without the domain, the influence of Lebron James and Space Jam’s secure status is likely to guarantee a financially fruitful sequel. Of course, nothing is for certain, so it will be interesting to see how/if Warner Brothers or James proceed and whether the advertising duo stays in the jam business.

 

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All-Star Game 2021: Behind the NBA’s Decision

The NBA All-Star Game is an annual tradition dating back to 1951. In normal circumstances, the weekend is a highly-anticipated event for fans and players alike. Besides the exhibition game showcasing the league’s best, the voting, slam-dunk contest, and parties make the game one of the most interactive and exciting annual weekends for sports fans. In-person interactivity is something that has been out of reach for almost a year now, so as one might expect, the excitement surrounding the All-Star Game has dwindled during the pandemic. So much so, that some of the league’s highest-profile players have issued statements expressing their disinterest. Earlier this month, Giannis Antetokounmpo told The Athletic, “The Big Dog (LeBron James) says he has zero excitement, zero energy for the All-Star Game. I’m the same way; I really, right now, I don’t care about the All-Star Game. I got zero energy, zero excitement.” Between the Orlando Bubble last spring, the league’s heightened health and safety protocols, and game postponements, a collective sense of pandemic-induced moral fatigue is understandable. Despite some player apprehension, the league officially announced last Thursday that the Game will take place in Atlanta on March 7th. Additional travel for players and staff presents an increased risk of infection, making the decision to go forward with the game seem rather counterintuitive during an already challenging season. ESPN’s Bontemps and Wojnarowski report that each time the NBA has returned from a break (in June, before the start of the bubble, and in November, before the start of training camp), there has been a significant spike in cases across the league. Therefore, the pros of holding an All-Star Weekend during the pandemic must outweigh the cons. Let’s take a look at the considerations the league may be looking at. 

NBA, ESPN, Turner Sports Media Deal 

In 2014, the NBA announced a nine-year extension deal with its long-term partners ESPN and Turner Sports, keeping the Association on the networks through the 2024-25 season. Although the terms of the agreement remain undisclosed, the deal was reportedly at $24 billion and nearly triple the previous contract’s annual value. Consequently, the NBA All-Star Weekend is a big one for Turner-owned TNT and TBS. Last year’s game averaged a 4.1 rating and 7.3 million viewers across TNT and TBS Sunday night (an 8% increase from 2019). Additional All-Star programming is exclusive and spans across the entire weekend, while Turner makes approximately $30 million in ad revenue alone. The New York Times estimates that for the NBA, the event is worth about $60 million. In the event of cancellation, the NBA would have to make up this amount to Turner later. 

Here, we can start piecing together that canceling the game would present some financial concerns that—for the league—may outweigh the cons of canceling. As Sacramento Kings Point Guard, De’Aaron Fox pointed out, “money makes the world go ’round, so it is what it is. “Due to COVID-19, the NBA suffered losses of around $1.5 billion in 2020, and losses of such magnitude affect staff across the league — not solely the players. Therefore, one may consider that the decision to give the All-Star Game the green light comes from the NBA needing to maximize revenue…but what about that aforementioned apprehension from the players?

Labor Relations, HBCU funding, and Vaccine Confidence

This is where the league’s labor union, the National Basketball Players Association (NBPA), comes in. The NBPA’s mission is to ensure that the rights of NBA players are protected and that every conceivable measure is taken to assist players in maximizing their opportunities and achieving their goals— both on and off the court. The most important document between the league and the labor union is the Collective Bargaining Agreement, the language of which explicitly notes that players do not have much choice on whether to partake in the game. Article XXI of the collective bargaining agreement states that any player selected to play in an All-Star game must attend and participate in the game and every other event conducted in association with All-Star Weekend. Additionally, a player will not be required to participate only if he has been excused from participation by the Commissioner at his sole discretion. 

Chris Paul, current NBPA President and point guard for the Phoenix Suns, expressed in an interview, “the job for the union has been to try to make sure our players are healthy and safe” while making it clear that players’ opinions are not a big factor in the league’s decision. Per ESPN, the NBA sent out a memo to its teams on Monday detailing its agreement with the National Basketball Players Association for health and safety protocols during the All-Star break, both for selected players and those who are not. 

Players selected to play are allowed to travel solely to their out-of-market home before going to Atlanta strictly by NBA-provided private transportation. Negative PCR tests are mandatory on March 6th and 7th, and each player can bring a limited number of guests who are to follow the same protocols as the players. Non-selected players can enjoy greater flexibility in travel as they can stay in their market home or go anywhere within the United States; however, staying at and using public accommodation is prohibited. Regardless of whether selected as an All-Star or not, all players have to undergo daily PCR testing. 

Notably, both the league and the NBPA have emphasized that the Game will feature a philanthropic component to benefit historically Black colleges and universities and COVID-19 relief efforts while featuring a campaign to urge fans to take the coronavirus vaccine. Thus far, NBA leadership has withstood the test of a global pandemic. In fact, the league has seen some weeks since the season’s start where none of the players tested positive, indicating that their protocols work. Here’s to hoping this holds true through All-Star Weekend. 

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Biden’s Impact on the Industry: The Stadium Subsidy Question

As we near the end of the first month of Joe Biden’s presidency, it may be interesting to investigate further what Biden’s impact on the sports may be. Beyond the previously highlighted potential changes in environmentally-mind legislation, the current administration may invoke impactful financial regulations. 

First, let’s take a look at the existing landscape. In 2017, when players knelt during the national anthem in protest against police brutality, Donald Trump extended his attack on the National Football League to tax policy. He took to Twitter citing the NFL’s “massive tax breaks” and, as a result, highlighted the stadium-subsidies that exist at state and local levels. Some of these subsidies rely on the ability to issue municipal bonds and generate income, which is then exempt from federal taxes, allowing owners to take advantage of cheaper financing. The foundational assumption here is that the federal government shouldn’t indirectly tax local governments on projects that support public infrastructure. However, the delineation of what is in the public’s interest, and therefore can be exempt from federal taxes, lacks clarity. Although most states have restrictions rooted in the Public Purpose Doctrine that bar them from using public money to support private enterprise, the extent to which sports stadiums are in the public’s interest has been a malleable issue. 

The 1954 Supreme Court ruling in Berman v. Parker may help contextualize why this issue is such a debate. In this landmark case, the Court unanimously ruled that the term “public purpose” may be extended to uses that serve “public welfare,” including those private uses that promote “public safety, public health, morality, peace and quiet, [and] law and order.” Therefore, the legal definition of “public interest” is subject to contestation. During the time of Trump’s tweet in 2017, subsidies for sports stadiums had cost the federal government $3.7 billion since 2000 (follow this link for a closer look at which stadiums were financed with tax-exempt municipal bonds). Under this system, fans may even be unknowingly financing the construction of their rival team’s new stadium. Many suggested that Trump’s tweets did not mean much since his administration’s actual tax plan did not reflect the same energy. 

Unsurprisingly, stadium subsidies are a highly contested issue and have received pushback over the years from both the House and the Senate. Furthermore, in 2015, the Obama administration’s budget included a provision aimed at changing how tax-exempt bonds are issued in hopes of dismantling these stadium subsidies. Six years later, and the sports industry continues to benefit from stadium subsidies. For example, the most expensive Minor-League Stadium in history set to become the Pawtucket Red Sox home may cost taxpayers upwards of $150 million.

Another particularly timely example comes from reigning Superbowl Champions and the first team to host their own Super Bowl appearance, the Tampa Bay Buccaneers. To better prepare for a football season during the pandemic, Raymond James Stadium received upgrades to health and safety measures that cost over $10 million of federal funds. Notably, the Florida Supreme Court holds a history of allowing public funding to go towards recreational, entertainment, and tourism projects (e.g., Rowe v. Pinella Sports Auth., State v. City of Miami, State v. Orange County Indus. Dev. Auth, and more). However, this case comes with a bit of a twist since the funds came from the Coronavirus Aid, Relief, and Economic Security (CARES) Act as the upgrades aimed to address public health concerns and decrease infection risk. Some of the upgrades included touchless equipment ranging from sinks and soap dispensers to ticket scanners and credit card readers as well as a new parking lot PA system. However, in an article published last week, The Hill notes that these upgrades were not completed until most of the season was over, calling into question whether fans’ health and safety were the sole priority. 

Regardless, the added layer of the pandemic and CARES Act only complicates the public interest question when it comes to private enterprise related to sports infrastructure. Phil Mattera, research director at Good Jobs First policy resource center, noted last fall, “The Trump Administration is paying little attention to how CARES Act funds are being spent or the track record of the companies receiving the aid.” Although not much has changed in terms of stadium subsidies since Obama’s efforts in 2015, the turnover of administrations in the White House could present new possibilities and restrictions, especially regarding CARES Act fund monitoring. The case of the Tampa Bay Buccaneers and how they have benefited from CARES Act funds highlights the potential for impact on the industry. 

Regarding tax policy, the Biden administration has conveyed that changes are incoming. The official Biden Harris campaign website systematically defines their plans to put more pressure on big corporations. These changes will, of course, affect the wealthiest members of the sports industry, such as team owners and other executives, as they may consider fluctuations in capital gains tax, estate tax, and gift tax when making decisions. Sportico reported in October that the NFL sent out a memo to all executives across the 32 teams reminding them to inform the league of any ownership transactions before the end of the year. Although the league denies that the upcoming election had anything to do with the memo, Sportico emphasized that NFL owners and their families could have saved millions by making changes before the turnover towards Democratic leadership and the tax changes it may entail. Under the Biden administration, there is an increased likelihood that plans to end stadium-subsidies may re-energize.

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Biden’s Impact on the Industry: Sports Venues and the Environment

The Biden administration has repeatedly emphasized its commitment to environmental justice and climate change, generating some hope of increased momentum toward environmentally-minded legislation. For the sports world, this may mean more legislation encouraging or requiring the reduction of organizations’ impact on the environment. Specifically, these changes may occur in the infrastructure and maintenance of sports venues. Currently, there are several ballparks, arenas, and stadiums under construction across the United States. For example, David Beckham’s soccer-specific stadium Miami Freedom Park is scheduled to open in 2022 while the currently under construction multi-purpose Protective Stadium is set to become the UAB Blazers football program’s home later this summer. 

The 1970 National Environmental Policy Act (NEPA) is foundational in environmental policy law. The act requires federal agencies to consider the environmental implications of their proposed actions. These actions may include: decisions on permit applications, adopting federal law management actions, and constructing highways or other publicly owned facilities. Throughout his presidency, the Trump administration conducted several environmental rollbacks that have made significant cuts in the NEPA and affected the building industry. 

Last June, the Trump administration signed an executive order that weakened clean air and climate change regulations in response to the COVID-19 pandemic. The executive order waived parts of the NEPA to speed up infrastructure projects by citing economic arguments in light of the pandemic induced financial crisis. The New York Times highlighted that lawyers and activists questioned the legality of such an order and suggested that the administration used the pandemic to speed up slow-moving actions on their agenda through the regulatory process. These policies also violated the intent of the Clean Air Act of 1970, the goal of which is the regulation of hazardous air pollutant emissions.

Zoning back into the context of sports venues, a number of new arenas have opened over the last four years—the SoFi Stadium in L.A. and the Hard Rock Stadium in Miami, to name a few. Notably, Irwin Kishner, attorney at Herrick, Feinstein LLP, told Construction Dive that environmentally-minded pushback against sports arena construction is not uncommon. For example, when the Chase Center (the new home of the Golden State Warriors) was still in the planning phase in 2016, the project was met with lawsuits from neighboring businesses accusing the developers of violating the California Environmental Quality Act (CEQA). The case lasted over a year until the Warriors ultimately broke land. 

Sometimes, the push back has less of a grassroots nature and comes from other major organizations. For example, last year, Madison Square Garden Group (MSG) filed a lawsuit against Gov. Gavin Newsom and the state’s Joint Legislative Budget Committee over the California Assembly Bill No. 987. The bill fast-tracks requirements for the construction of certain sports and entertainment venues. MSG’s side argued that the new arena would cause “substantial harm” through traffic and pollution and “lightens the burden” on the project developers to meet CEQA requirements.  It’s important to note that the Los Angeles Clippers’ new Inglewood arena would have also been in direct competition with MSG-owned venue, the Forum. The dispute was settled when Clippers owner, Steve Ballmer, purchased the Forum from MSG for $400-million. Although it is difficult to assess whether the construction of any of the projects mentioned above has significantly benefited from Trump-era environmental rollbacks, the sports arena construction domain will be a worthwhile one to observe as the new administration rolls out environmental policies. 

On his first day in office, President Joe Biden signed an executive order on “protecting public health and the environment and restoring science to tackle the climate crisis.” Section 1 of the document lays out Biden’s overarching environmental policy. The policy includes, but is not limited to, ensuring access to clean air and water; limiting exposure to dangerous chemicals and pesticides; holding polluters accountable, including those who disproportionately harm communities of color and low-income communities; and reducing greenhouse gas emissions. Heads of all agencies must review all existing regulations and policies made between January 2017 and today to ensure compliance with Section 1. Additionally, Section 7 of the executive order revokes Trump’s two orders in 2017 that expedited procedures and deadlines for completion of environmental reviews for certain infrastructure projects. 

These new regulations may not present much of a hurdle for some organizations, given the momentum that sports arenas have gained in environmentally-minded efforts. For example, 2020 was also the year during which Amazon joined forces with NHL expansion team Seattle Kraken and the OakView Group to rename Seattle’s Key Arena to “Climate Pledge Arena” and renovate it to be a leader in sustainability. The venture’s goal is to create the “most progressive, responsible, and sustainable arena in the world.” A move that Bloomberg Law highlighted as the “highest-profile pro sports venue naming rights deal to be centered so prominently around sustainability.” The Seattle Kraken’s new home is set to open in the Fall of 2021 and will have the “greenest ice” in the NHL while being a carbon-neutral facility and eliminating single-use plastic completely by 2024. 

Not all sports organizations can partner with multinational tech companies such as Amazon; therefore, resources for plans unaffected by shifting legislation may vary. President of the Green Sports Alliance, Dr. Allen Hershkowitz, notes, “I know from first-hand experience that many environmental initiatives at ballparks and arenas are on hold due to COVID. Teams need revenue from fans in the seats to respond to environmental challenges.” Besides environmental-concerns pertaining to the infrastructure of sports venues, there will certainly be more changes to look out for as more policies roll out.

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Amid postponements NBA awaits vaccine, mulls mandate

Editor’s Update: Adam Silver spoke about the NBA’s vaccine policy today (1/19/21) on Sportico’s NBA Valuations Panel. Silver highlighted the role that players might have in promoting vaccine efficacy to skeptical populations. Specifically, members of the African American community may understandably mistrust the vaccine given the racist history of vaccination in this country. Silver also reiterated that the league would wait until public health officials agree it’s the right time to vaccinate players.

It is not uncommon for a team’s roster to fluctuate in size as a result of players’ injuries or other personal reasons. However, nowadays rosters seem to be thinning faster due to contact tracing and other COVID-19 health and safety protocols. Last Sunday’s game between the Boston Celtics and Miami Heat was postponed after Miami fell short of the eight-player minimum due to COVID-19 contact-tracing concerns. Per ESPN, Miami guard Avery Bradley was out due to health and safety protocols. Forward Kelly Olynyk, guard Goran Dragic, and center Meyers Leonard were also among the players potentially unable to play due to injury. The Celtics, however, do not have a brimming roster to boast of as of now either. Last week, seven players on the Boston team were out due to health and safety protocols. In fact, Jason Tatum has recently tested positive and is undergoing a 10-14 day quarantine. The Philadelphia 76ers are also currently missing players as Seth Curry tested positive earlier last week, which meant that four of his teammates had to also go into quarantine per the league’s health and safety protocol.  

Teams appear to be short-handed at this point in the season; however, according to ESPN’s Wojnarowski, the NBA has no plans to pause the season. The 2020-21 NBA Health and Safety protocol is reported to be extensive at 158 pages; however, it does not list criteria for the season to be suspended. Monitoring the virus and preventing outbreaks is significantly more challenging outside of last season’s Orlando bubble; however, teams have avoided a single large outbreak. Since last week, twelve more games have been postponed, bringing the total to fourteen. The thing that seems to be counteracting the considerable inconveniences, such as precarious competitive balance across teams and continually disrupted chemistry, is the collective sense of hope for a vaccine and a less volatile latter half of the season. The league’s health safety protocol states, “Once a vaccine is available, the league and the National Basketball Players Association will negotiate whether players, coaches, and staff will be required to receive it. If it is not required, adjustments to the safety provisions — such as requiring more masking or testing of those who choose not to receive the vaccination — might be implemented.” 

Decisions surrounding the distribution of the vaccine will be interesting to observe across professional sports leagues given that considerable skepticism already seems to exist. For example, Utah Jazz forward Derrick Favors told USA Today, “I’m a guy that don’t really take any vaccines. I try to stay away from a lot of medicine.”  Moreover, Denver Nuggets forward Michael Porter Jr. raised some eyebrows over the summer when he suggested that coronavirus was “being used for a bigger agenda” and revealed that he had never been vaccinated. Porter contracted the virus earlier in January and is currently on the list of players sidelined for the duration of their quarantine. Undoubtedly, a mandatory vaccine (assuming it’s ethical, safe, and effective) of all players, coaches, and staff could very much ease the season’s flow and ensure a quicker return to normal. So, can the NBA mandate a vaccine? Take the flu vaccine, for example. The league “strongly recommends” it, and all players and their households receive the option to take the vaccine. In the case of denial, the respective team has the right to provide the player with an educational course on the vaccine’s benefits. However, in 2021, the world is dealing with much more than just the annual flu, so how will the process be handled?

While the NBA has avoided comment on how it will handle the issue so far, history may provide insight on the legality of a potential mandate. A most relevant landmark case is Jacobson v. Massachusetts; a 7-2 decision held that Cambridge, Massachusetts could fine residents who refused to receive smallpox injections during the 1905 epidemic. Jacobson’s side argued that introducing smallpox to a healthy functioning immune system is a violation of the 14th Amendment, specifically of life and liberty. In response, the court reasoned that under the 10th Amendment, states have the authority to enact reasonable legislative action to protect public health. While this decision is over one hundred years old, there is little precedent on vaccine mandates and the NBA may look to this holding as a means to justify enforcement.  However, this determination seemed to grant power to respective states and it is uncertain how it can be applied in the context of an organization. Interestingly, although personal and ethical views are usually insufficient, “sincerely held religious belief” may qualify an exemption from a mandatory vaccination policy under Title VII. However, the current pandemic is largely uncharted territory. The consequences of a player or a coach denying the vaccine may be significant. In light of this, the conversation surrounding risk-management is likely to develop further, and shift legal determinations. Additional federal and state guidelines will likely also inform league decisions surrounding vaccination protocols. For now, Adam Silver has commented that the NBA will not “jump the line in any form whatsoever” in terms of receiving the vaccine.

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