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No. 02-2793
In the
SUPREME COURT OF THE UNITED STATES OF AMERICA
ELECTRONIC ARTS, INC., a Tulania Corporation;
NATIONAL COLLEGIATE ATHLETIC ASSOCIATION
Petitioner
v.
Matt LAUER, individually and on behalf of all other similarly situated;
Al ROKER
Respondent
ON A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
FOURTEENTH CIRCUIT
BRIEF FOR PETITIONER
ORAL ARGUMENT REQUESTED
Dated: January 14, 2014
Team Number 3
ii
TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................ii
TABLE OF AUTHORITIES..........................................................................................................iii
STATEMENT OF ISSUE...............................................................................................................1
STATEMENT OF FACTS..............................................................................................................2
SUMMARY OF THE ARGUMENT..............................................................................................4
ARGUMENT...................................................................................................................................7
I. THE FOURTEENTH CIRCUIT COURT OF APPEALS IMPROPERLY
REVERSED THE DISTRICT COURT‘S DISMISSAL OF RESPONDANTS‘
COMPLAINT OF MISAPPROPRIATION BECAUSE NATIONAL COLLEGIATE
ATHLETIC ASSOCIATION (NCAA) IS SHIELDED FROM VIOLATIONS OF
PETITIONER‘S RIGHT OF PUBLICITY BY THE FIRST AMENDMENT AS A
PROTECTED WORK. ……………….………………………………………………7
A. A Broad Interpretation of the Transformative Use Test Aligns with the Majority of
Circuit Courts………………………………………………………………………….8
B. Adopting a Broad Interpretation of the Transformative Use Test Best Comports
with Public Policy and Protection of First Amendment Rights………………………12
II. THE NCAA AMEATEURISM AND ELIGIBILITY BYLAWS ARE PROTECTED
AS A MATTER OF LAW FROM ATTACK UNDER SECTION 1 OF THE
SHERMAN ACT……………………………………………………………….........14
A. NCAA Bylaws Have Historically Been Protected From the Sherman Act…….….14
B. The Net Procompetitive Effects of NCAA Eligibility Bylaws Outweigh the Net
Anticompetitive Effect………………………………………………………………..17
CONCLUSION..............................................................................................................................24
iii
TABLE OF AUTHORITIES
UNITED STATES SUPREME COURT CASE
Nat'l Collegiate Athletic Ass'n v. Bd. of Regents of Univ. of Oklahoma, 468 U.S. 85, 101
(1984)……………………………………………………………………………...5, 15, 16, 17, 19
Ornelas v. U.S. 517 U.S. 690 (!996)……………………………………………………………7
Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S. 562 (1977)……………………....4, 8, 9
UNITED STATES COURT OF APPEALS CASES
Agnew v.Nat'l Collegiate Athletic Ass'n, 683 F.3d 328 (7th Cir. 2012)………………5, 16, 17, 22
Banks v. NCAA, 977 F.2d 1081 (7th Cir. 1992)……………………………………….5, 17, 18, 21
Cardtoons, L.C. v. Major League Baseball Players Association, 95 F.3d 959 (10th Cir.
1996)..............................................................................................................................................10
ETW Corporation v. Jireh Publishing, Inc., 32 F.3d 915 (6th Cir. 2003) ……………………9, 10
Hart v. Electronic Arts, Inc., 717 F.2d 141 (3rd Cir. 2013)……………..………………..9, 10, 11
Hoffman v. Capital Cities/ABC, Inc., 255 F.3d 1180 (9th Cir. 2001)……………………………10
McCormack v. NCAA, 845 F.2d 1338, 1345 (5th Cir. 1988)………………...………..5, 17, 19, 20
Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989)…………………………………………………9
Tanaka v. Univ. of S. California, 252 F.3d 1059 (9th Cir. 2001)………………………………..15
UNITED STATES DISTRICT COURT DECISIONS
Banks v. Nat'l Collegiate Athletic Ass'n, 746 F. Supp. 850, 859 (N.D. Ind. 1990)……………...18
Comedy III Productions, Inc. v. Gary Saderup, Inc., 25 Cal.4th
387 (2001)……….4, 8, 10, 11, 12
Justice v. NCAA, 377 F. Supp. 356, 383 (D. Ariz. 1983)………………………………………..19
UNITED STATES CODE
15 U.S.C.A. § 1…………………………………………………………………………………..15
CONSTITUTIONAL AMENDMENTS
iv
U.S. Const. Amend. I………………………………………………………………………..passim
OTHER AUTHORITIES
NCAA Manual, Bylaw 1.3.1……………………………………………………………………..14
NCAA Manual, 12.5.2.1…………………………………………………………………………14
1
STATEMENT OF THE ISSUE
I. Whether NCAA Football is protected by the First Amendment from violations of rights
of publicity when, through the Transformative Use Test, the expressive work is found to
have altered the likeness of the individuals into a new original work.
II. Whether the procompetitive effects of the NCAA bylaws regarding eligibility and
amateurism outweigh the alleged anticompetitive effects of allowing college athletes to
receive compensation for their performance or image, thus protecting the bylaws from
Section 1 of the Sherman Act.
2
STATEMENT OF FACTS
Electronic Arts, Inc. (EA) produces a video game series annually entitled NCAA Football
which allows users to manipulate the actions of over 100 college football teams and thousands of
virtual players in a virtual world with simulated games. (Record at 17). The teams in the video
game mirror real teams in the NCAA identifiable by jersey number and position. (R. at 17).
Users have the ability to significantly alter the virtual player avatars by changing their surnames,
personal characteristics, accessories, physical abilities, and biographical details. (R. at 17). Users
most directly influence the games‘ outcome through their own play-calling and their ability to
use their hand-held controllers to manipulate the actions of the virtual players. (R. at 17). The
video game is not simply a reenactment of actual NCAA games using avatars of real players.
The users create their own games, manipulate rosters of players with custom settings, and can
direct a team for an entire season or more. (R. at 17).
Respondents Lauer and Roker allege that EA violated their rights of publicity by
misappropriating and incorporating their identities and likenesses for a commercial purpose in
connection with EA‘s video games without compensating the players whose attributes EA used
for the games. (R. at 18). Respondents identify their corresponding avatars in the video games
which draw from physical attributes referenced in the Ole Tulania Football Media Guide and
actual footage of Respondents during a season in the NCAA. (R. at 18). Respondents allege that
the misappropriations of their identities were committed with the full intent of increasing the
sales and profits of Petitioner without compensating Respondents. (R. at 18).
Lauer and Roker also allege that the NCAA bylaws regarding amateurism and eligibility
of college players violate Section 1 of the Sherman Act. The NCAA bylaws prohibit athletes
from accepting compensation, outside of scholarships and similar exceptions. (R. at 21). If
3
athletes accept compensation for the use of their image or likeness, they are no longer eligible to
participate in college athletics. (R. at 21). Lauer and Roker further allege that the NCAA has
subsequently sold their image to EA, which has created a horizontal price fixing scheme that
prevents the players from being compensated for the use of their ―name, image and likeness used
in archival game footage‖. (R. at 21).
The District Court issued a dismissal order in favor of the NCAA, supporting EA‘s First
Amendment defense and citing decades of precedent upholding NCAA bylaws from attack
under the Sherman Act. (R. at 24). On appeal, the Fourteenth Circuit Court of appeals reversed
the District Courts order, finding the avatars not sufficiently transformative and requesting
further analysis of the net pro and anticompetitive effects of the bylaws. (R. at 11).
4
SUMMARY OF THE ARGUMENT
The Fourteenth Circuit improperly reversed the judgment of dismissal when it held that
the NCAA Football video game was not protected under the First Amendment from violations of
Respondents‘ right of publicity. The lower courts adopted the Transformative Use test set forth
in Comedy III Productions, Inc. v. Gary Saderup, Inc., 25 Cal.4th
387 (2001) as a way to balance
the two interests. However, the test was incorrectly applied with a narrow focus on the
transformative value of the individual elements of the video game avatars. The history of the
Transformative Use test throughout the circuits indicate the analysis to involve the
transformative value of the expressive work in its entirety. View from the appropriate lens, the
use of avatars which closely resemble real NCAA football players such as Respondents, are not
the sum and substance of the video game. Rather, these avatars are the raw materials from which
the video game itself can be utilized effectively. The role that the avatars play assist in allowing
the users of the video game to manipulate and choreograph the finesse nuisances of a real
football game. Importantly, the users do not merely act out actual games that transpire in the
NCAA league. They create completely new, totally fictional games using the avatars provided.
The sum and substance of NCAA Football is this ability to allow users to create their own
football world. The video game therefore is transformed sufficiently to protect the use of the
avatars under the First Amendment.
The purpose of the right of publicity is to protect celebrities who profit off their image
from exploitation. Respondents are seeking to profit off their likeness in a video game that can
be altered and manipulated. Unlike in Zacchini v. Scripps-Howard Broadcasting Co., 433 U.S.
562 (1977), NCAA Football is not profiting off of broadcasting Respondents‘ ―entire act‖ which
would be the games they played in. NCAA Football is also not deterring fans from attending
5
games because an interactive video game is not a substitute for the real NCAA football games
being played. Rather, it is an alternative way for fans to enjoy the sport in an original manner
granting control to the users.
Additionally, the majority of circuit courts have adopted a broader interpretation of the
Transformative Use test than the lower court. Courts typically avoid placing restrictions and
limitations on rights granted through the Constitution, electing for broad interpretations when
specific violations are not outlined. Similarly in this case, adopting a narrow interpretation could
possibly lead to a dramatic limit on First Amendment rights and a limitation on the production of
expressive works which are an integral part of the country‘s society and economy.
The Fourteenth Circuit improperly reversed the judgment of dismissal when it held that
the anticompetitive and procompetitive effects of the NCAA bylaws regarding eligibility and
amateurism required further examination. The aforementioned bylaws have long found
protection from Section of the Sherman Act dating back to the landmark Supreme Court case,
Board of Regents. In Regents the Supreme Court stated that in general the NCAA bylaws are
procompetitive and not subject to the Sherman Act, although the case did hold that the NCAA
rules capping the amount of televised games were not protected activity. Although Respondents
in this case are former college athletes that have challenged the bylaws on the basis that they
prevent athletes from any compensation related to the use of their image and likeness, and
Regents did not specifically deal with the bylaws and their effects on student athletes, Regents
has been followed by nearly every circuit in cases challenging the amateurism bylaws. Multiple
cases, such as McCormack, Banks, and the recent Agnew have held that bylaws regarding
eligibility and amateurism are necessary for the survival of the NCAA product.
6
Furthermore, regardless of the longstanding precedent holding that amateurism bylaws
are necessary to protect the product of non-professional college sports, the procompetitive effects
of the bylaws outweigh any anticompetitive effects when analyzed through the Rule of Reason.
Under the Rule of Reason, the standard analysis for Section 1 Sherman Act cases, the plaintiff
must first establish an anticompetitive effect on the alleged market. Defendants can then rebut
this challenge if they show that the challenged practice has net procompetitive effects. Plaintiffs
can subsequently rebut the procompetitive effects if they can show that the practice is not
necessary to maintain the procompetitive effects. If colleges were permitted to pay student
athletes, or if the student athletes were permitted to seek compensation for their image or
likeness, the product of the NCAA, i.e. amateur competition, would no longer exist. Even though
the Respondents are no longer athletes at the university, and thus not concerned with eligibility,
the bylaws are still necessary to protect the product, as well as the athletes. The Respondents
have not demonstrated any alternatives to the bylaws that would protect the product or produce
similar procompetitive effects. Therefore, the Fourteenth Circuit improperly reversed the order
of dismissal, as the bylaws should be protected as a matter of law from the Sherman Act, and the
Respondents case should once again be dismissed.
7
ARGUMENT
I. THE FOURTEENTH CIRCUIT COURT OF APPEALS IMPROPERLY REVERSED
THE DISTRICT COURT‘S DISMISSAL OF RESPONDANTS‘ COMPLAINT OF
MISAPPROPRIATION BECAUSE NATIONAL COLLEGIATE ATHLETIC
ASSOCIATION (NCAA) IS SHIELDED FROM VIOLATIONS OF PETITIONER‘S
RIGHT OF PUBLICITY BY THE FIRST AMENDMENT AS A PROTECTED WORK.
The first issue before the Court is whether NCAA Football is protected from violating
Respondents‘ rights of publicity by the First Amendment. This Court reviews whether a district
court prematurely granted summary judgment de novo. Ornelas v. U.S. 517 U.S. 690, 691 (!996).
Respondents filed a complaint alleging that EA violated their rights of publicity under
Tulania law by misappropriating and incorporating their identities and likenesses for commercial
purpose within the video game NCAA Football without compensation. (R. at 18). The Complaint
alleges that the characteristics of one of the virtual players in the video game match exactly the
attributes of Respondent Matt Lauer in the Ole Tulania Football Media Guide. (R. at 18). In
addition to the physical attributes, the virtual player also wears Respondent Lauer‘s jersey
number and has the same accessories. (R. at 18). Respondent claims that the misappropriation of
his identity and likeness were ―committed with the full intent of increasing the sales and profits
for Defendant(s) while not reimbursing Plaintiffs since [EA‘s] heightened realism in NCAA
Football video games translates into increased sales and revenues for EA.‖ (R. at 18).
Chief Judge Gifford of the Fourteenth District Court delivered the opinion of the court
finding under the Transformative Use test that there are sufficient elements of EA‘s own
expression found in the game that the use of the players‘ images are transformative and,
therefore, entitled to First Amendment protection. (R. at 25).
Chief Judge Couric delivered the opinion of the Fourteenth Circuit Court of Appeals. The
court found that the district court improperly dismissed Respondents‘ claim of violation of their
8
rights of publicity because NCAA Football did not use their likenesses in a transformative way
to fall under the protection of the First Amendment. (R. at 4).
A. A Broad Interpretation of the Transformative Use Test Aligns with the Majority of
Circuit Courts.
The Transformative Use Test was first formulated in Comedy III Productions, Inc. v.
Gary Saderup, Inc., 25 Cal.4th
387 (2001) as a way to balance the right of publicity with First
Amendment protections, ―[W]hen a work contains significant transformative elements, it is not
only especially worthy of First Amendment protection, but it is also less likely to interfere with
the economic interest protected by the right of publicity.‖ Id. at 405. The court gave further
clarification of the balancing test as ―whether the celebrity likeness is one of the ‗raw materials‘
from which an original work is synthesized, or whether the depiction or imitation of the celebrity
is the very sum and substance of the work in question.‖ Id. at 406.
Both lower courts elected to exclusively use the Transformative Use Test to analyze if
Petitioner‘s use of Respondents‘ identities and likenesses was protected under the First
Amendment. The District Court correctly decided that NCAA Football fulfilled the
Transformative Test. However, the opinion cited the creative elements and interactive devices
that alter the appearance and performance of the virtual players as the transformative elements,
and did not state that the video game itself was transformative. (R. at 25). The Court of Appeals,
also using the Transformative Use Test, did not arrive at the same conclusion, finding instead
that the creative elements cited by the district court did not surmount the resemblance between
the avatars and real life players. (R. at 8).
The singular relevant Supreme Court case addressing right of publicity is Zacchini v.
Scripps-Howard Broadcasting Co., 433 U.S. 562 (1977), in which this Court determined that
Petitioner‘s right of publicity was violated and not protected under the First Amendment when
9
Respondent filmed and broadcasted his entire act, without his permission. Id. at 575. The
rationale behind this Court‘s decision was, ―if the public can see the act free on television, it will
be less willing to pay to see it at the fair.‖ Id. Petitioner was being deprived of economic value of
his performance by the filming and airing of his entire act. Therefore, those actions cannot be
protected under the First Amendment.
Zacchini is distinguishable from the facts of the instant case. NCAA Football is an
entirely fictional video game, controlled solely by its users. Aside from the picture in the
montage which was confirmed by the Court of Appeals to be too fleeting to render the work non-
transformative, there is no actual footage of Respondents. (R. at 11). Rather, there are avatars
created to look like real NCAA players. There is no ―entire act‖ utilized in the video game that
would analogize Respondents‘ argument with Zacchini. More importantly, the creation of the
video game containing these avatars in no way detracts from Respondents‘ performances as
actual NCAA players in real games. The reasoning applied in Zacchini that the performer was
being deprived his livelihood is entirely inapplicable. Regardless of the existence of the video
game or the description of the avatars, Respondents‘ livelihoods are not being deprived by a
substitute for their performances.
The majority of circuit courts have used the Transformative Use test broadly in balancing
interests of the right of publicity and First Amendment protections. The Fourteenth Circuit
follows the Second and Third Circuits in adopting a more limited interpretation of the
Transformative Use Test. Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), Hart v. Electronic
Arts, Inc., 717 F.2d 141 (3rd Cir. 2013). However, the most recent cases have come out of the
Sixth, Ninth, and Tenth Circuits, using a broader interpretation of the Transformative Use Test
and seek to look at the entirety of the work. ETW Corporation v. Jireh Publishing, Inc., 32 F.3d
10
915 (6th Cir. 2003) Hoffman v. Capital Cities/ABC, Inc., 255 F.3d 1180 (9th Cir. 2001)
Cardtoons, L.C. v. Major League Baseball Players Association, 95 F.3d 959 (10th Cir. 1996). By
focusing on the goals of the right of publicity and closely analyzing cases incorporated in the
lower court‘s opinion, a broad interpretation of the Transformative Use Test best comports with
the history and progress of the Transformative Use Test as a balancing tool for the right of
publicity and First Amendment protections.
In ETW Corporation v. Jireh Publishing, Inc., the expressive work in question was a
painting consisting of three views of Tiger Woods in different poses, two caddies, the Augusta
National Clubhouse, and the likenesses of famous golfers of the past. ETW, 332 F.3d 915 at 918.
The court found that the painting was entitled to the full protection of the First Amendment,
―Unlike the unadorned, nearly photographic reproduction of the faces of The Three Stooges in
Comedy III, Rush‘s work does not capitalize solely on a literal depiction of Woods. Rather,
Rush‘s work consists of a collage of images in addition to Woods‘s image which are combined
to describe, in artistic form, a historic event in sports history.‖ Id. at 938. The court focused on
the painting in its entirety, and not only on the portions depicting Tiger Woods.
In a closely analogous case, Hart v. Electronic Arts, Inc., the court analyzed whether the
First Amendment protected EA from violating amateur college football players‘ rights of
publicity by using their likenesses in their video game using the Transformative Use Test. This
test gives First Amendment immunity where, in an expressive work, and individual‘s likeness
has been creatively adapted in some way. Hart, 717 F.3d 141 at 171 (J. Ambro, dissenting). The
dissent disagrees with the majority‘s limited scope of viewing transformative effects as it relates
solely to the avatars in the game. Illustratively, the Comedy III court, in establishing the
Transformative Use Test, focuses on whether the celebrity likeness is one of the ‗raw materials‘
11
making up an original work or whether it is the very sum and substance of the work. Comedy III,
106 Cal.Rptr.2d 126. The dissent also references the decision in ETW, ―No doubt the use at issue
here – creating digital avatars of football teams and placing them in an interactive medium
designed for user interaction and manipulation – is significantly more ‗transformative‘ than the
use in ETW, which simply combined several photographs into a photomontage.‖ Hart, 717 F.2d
at 173. If ETW was analyzed under the same logic of the majority in Hart, the court would only
look at the parts of the collage with Tiger Woods‘ image and determine whether the actual image
of Tiger Woods had been transformed.
The opinion in the Court of Appeals for the instant case follows the majority in Hart
stating that the creative elements of NCAA Football are wholly unrelated elements in deciding
the transformative value. (R. at 11). The dissent in Hart refocuses the lens on the protection of
the entire work, ―the work should be protected if that likeness, as included in the creative
composition, has been transformed into something more or different than what it was before.‖
Hart, 717 F.3d at 174. Crucial to the dissent‘s argument is the actual purpose of the video game,
―Users are not reenacting real games, but rather are directing the avatars in invented games and
seasons‖ and ―[S]uch modes of interactive play are…imaginative transformations of the games
played by real players.‖ Id.
The lower court‘s opinion limits its focus on tallying creative elements rather than
analyzing the creativity of the work in its entirety, ―Acts of blatant misappropriation would count
for nothing so long as the larger work, on balance, contained highly creative elements in great
abundance.‖ (R. at 11). This is not the proper use of the Transformative Use Test. A creative
work is protected under the First Amendment by default. The issue is whether Respondents‘
right of publicity trumps the First Amendment protection. Historically the right of publicity was
12
established to protect the economic interests of people who are able to market their name from
others capitalizing on that ability without the person‘s permission. The use of Respondents‘
identities and likenesses are simply ‗raw materials‘ from which the original work is synthesized,
not the very sum and substance of the work in question. This is evident by the fact that the
avatars are continually updating with the real rosters in the NCAA. Respondents‘ corresponding
avatars are not the sum and substance of the work in question. Their avatars only appear in select
years of the game and then are eliminated. The very substance of the video game is the users‘
ability to manipulate teams and play imaginary games.
The Transformative Use Test was created in Comedy III to balance the interests of right
of publicity with First Amendment protections by analyzing whether the expressive work in
question was transformed, ―whether the new work merely ‗supercede[s] the objects‘ of the
original creation, or instead adds something new, with a further purpose or different character,
altering the first with new expression, meaning or message; it asks, in other words, whether and
to what extent the new work is ‗transformative‘.‖ Comedy III, 106 Cal.Rptr.2d at 126. The
expressive work, therefore, must be looked at in its entirety to determine the use of the likeness
of the celebrity. A broad interpretation of the Transformative Use Test follows the majority of
the circuit courts in analyzing the expressive work in its entirety to determine whether it is
granted First Amendment protections. NCAA Football, in its entirety, clearly utilizes
Respondents‘ likenesses in their avatars to heighten the realism of an alternate world which
allows users to manipulate and customize teams to play in imaginary games, departing from the
reality of Respondents‘ participation in collegiate athletics.
B. Adopting a Broad Interpretation of the Transformative Use Test Best Comports with
Public Policy and Protection of First Amendment Rights.
13
The right of free speech is one of the most jealously guarded rights in this country. In a
society with instantaneous access to ideas and information, it becomes increasingly difficult to
locate originality. In each expressive work, there can be numerous claims of true sources for the
raw materials. The Transformative Use test stems from this realization that originality is a rarity.
The analysis for who is due economic benefit is a weighing between the original source and the
expressive work in question. Clearly, this Court must favor a policy that encourages and fosters
the sharing of ideas and information rather than suppress creativity from fear of lawsuit.
If this Court adopts the narrow approach of the lower court, nearly every expressive work
would fall under scrutiny and most would not survive. Society adapts and grows by learning
from one another, replicating, and adding something new. The narrow interpretation of the
Transformative Use test would stunt this growth. By analyzing each expressive work element by
element, as the lower court did, the results will almost always point to another source of
inspiration. Every unique idea comes from another that was once unique. A broad interpretation,
however, would not limit the First Amendment rights.
The First Amendment automatically provides protection for expressive works. The right
of publicity must trump the First Amendment protections for a violation to exist. The First
Amendment does not demand, in order to pass the balancing test, that every work be wholly and
entirely original. Rather, tests such as the Transformative Use test provide a guideline to attempt
to draw a line between the two competing interests. The issue then becomes whether the subject
of the suit is the sum and substance of the work, or whether it is simply a raw material in an
original work. Raw materials stem from innumerable sources. Thus by interpreting the
Transformative Use test narrowly, this Court would be inviting a flood of misappropriation suits
for seemingly innocuous elements in a work that resemble something else. Instead, the broad
14
interpretation would promote progress of expressive works and still maintain protection from
abuse by analyzing the work in its entirety.
II. THE NCAA AMATEURISM AND ELIGIBILITY BYLAWS ARE PROTECTED AS A
MATTER OF LAW FROM ATTACK UNDER SECTION 1 OF THE SHERMAN ACT.
The Fourteenth Circuit Court of Appeals incorrectly reversed the District Court‘s judgment
of dismissal, because the NCAA Bylaws concerning Amateurism and Eligibility should be
protected from attack under Section 1 of the Sherman Act. Respondents have challenged the
bylaws regarding amateurism and eligibility as anticompetitive because they prohibit college
athletes from receiving compensation for their performance, or the use of their image and
likeness. However, the bylaws are necessary to protect the interests of both the institution, and
the college players. Despite the potential market restrictions that result from the NCAA bylaws,
the rules do not constitute an unreasonable restraint on trade and should thus be protected from
attack from Section 1 of the Sherman Act.
A. NCAA Bylaws Have Historically Been Protected From the Sherman Act.
The stated goal of the NCAA is ―to maintain intercollegiate athletics as an integral part of the
educational program and the athlete as an integral part of the student body and, by so doing,
retain a clear line of demarcation between intercollegiate athletics and professional sports.‖
NCAA Manual, Bylaw 1.3.1. The distinction between an amateur and professional athlete is
crucial to the NCAA product, and one of the key components of the distinction is that college
athletes are not paid or signed to individual contracts, whereas professional athletes are. In order
to protect this distinction, an athlete becomes ineligible if he ―accepts any remuneration for or
permits the use of his or her name or picture to advertise, recommend or promote directly the
sale or use of commercial product or service of any kind‖ NCAA Manual, 12.5.2.1. These rules
may act as a restriction on trade, but only in the sense that college athletes are not paid
15
monetarily, and are instead compensated through ―privileges and incentives such as scholarships,
access to state-of-art training facilities, and . . . the opportunity to compete on a national stage.‖
(R. at 10.) Thus, while the Fourteenth Circuit Court of Appeals held that the bylaws ―must be
examined more closely to determine their actual competitive effects‖, decades of precedent have
already established that the procompetitive effects outweigh the anticompetitive effects, and the
bylaws are thus protected from Section 1 of the Sherman Act. (R. at 14)
Section 1 of the Sherman Act states that ―Every contract, combination in the form of trust
or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with
foreign nations, is declared to be illegal. 15 U.S.C.A. § 1. Furthermore, to make a claim under
the Sherman Act, plaintiffs must ―demonstrate(1) that there was a contract, combination, or
conspiracy; (2) that the agreement unreasonably restrained trade under either a per se rule of
illegality or a rule of reason analysis; and (3) that the restraint affected interstate
commerce.‖Tanaka v. Univ. of S. California, 252 F.3d 1059, 1062 (9th Cir. 2001) (citations and
internal quotations omitted). Inthe landmark caseBoard of Regents, which dealt with an antitrust
challenge to an NCAA rule capping the amount of televised football games schools could
broadcast, the Supreme Court stated that the ―market‖ in the case of the NCAA was ―competition
itself—contests between competing institutions‖ Nat'l Collegiate Athletic Ass'n v. Bd. of Regents
of Univ. of Oklahoma, 468 U.S. 85, 101 (1984). The Supreme Court also stated that the NCAA is
―an industry in which horizontal restraints on competition are essential if the product is to be
available at all‖ which requires restraints and rules to maintain order. Id. Furthermore, the Court
stated that the ―academic tradition differentiates college football from and makes it more popular
than professional sports to which it might otherwise be comparable, such as, for example, minor
league baseball. In order to preserve the character and quality of the ―product,‖ athletes must not
16
be paid, must be required to attend class, and the like.‖ Id. The defining characteristic of college
athletics is that the student-athletes are amateurs, not professionals, which draws the interest of
the fans, and the bylaws are meant to protect that product. Although Board of Regentsdealt with
a different type of competitive restraint than the bylaws currently challenged, it established the
course of analysis that has long been followed by courtsin cases involving on antitrust challenges
to the NCAA.
As the Court of Appeals stated, Regents ―did not address the impact of the NCAA‘s
horizontal restraints on student athletes‖. (R. at 10.) The Court of Appeals found that the bylaws
required closer examination, and cited Agnew to support the holding that Regents did not bar
such further examination. In Agnew, the Seventh Circuit Court of Appeals dealt with a case in
which two former college athletes challenged NCAA scholarship rules.Agnew v. Nat'l Collegiate
Athletic Ass'n, 683 F.3d 328 (7th Cir. 2012). In that case, the Court ultimately dismissed the
claim as the plaintiffs had not established a market. However, the Court also stated that ―the
transactions those schools make with premier athletes—full scholarships in exchange for athletic
services—are not noncommercial, since schools can make millions of dollars as a result of these
transactions‖ and are thus subject to the Sherman Act. Id. at 340 (citation omitted). However, the
Court in Agnew also stated that although the Sherman Act can be utilized as an avenue of attack
to the NCAA bylaws, that ―[m]ost—if not all—eligibility rules, on the other hand, fall
comfortably within the presumption of procompetitiveness afforded to certain NCAA
regulations‖ Id. at 343.
Although Agnew held that former players, if they can establish the market, may challenge
NCAA rules through the Sherman Act, the case does not provide much else in support of the
Respondents case. As the Agnew Court stated, the bylaws challenged in that case dealt with
17
scholarship issues, rather than eligibility issues, which have historically been protected from
attack under the Sherman Act in multiple circuits. For instance, in McCormack the Fifth Circuit
held that suspending players, as enforcement of eligibility violations, did not constitute a group
boycott or violate the Sherman Act. McCormack v. NCAA, 845 F.2d 1338, 1345 (5th Cir.
1988).Additionally, the Seventh Circuit held in Banks that NCAA bylaws, which make college
athletes ineligible if they enter a professional draft but are not drafted, are also protected from
attack. Banks v. NCAA, 977 F.2d 1081 (7th Cir. 1992).Thus, precedent strongly suggests that the
bylaws should be afforded protection. However, the next question is whether the net
procompetitive effects created by the bylaws outweigh any anticompetitive effects.
B. The Net Procompetitive Effects of NCAA Eligibility Bylaws Outweigh the Net
Anticompetitive Effects.
As the Supreme Court stated in Regents, the ―Sherman Act was intended to prohibit only
unreasonable restraints of trade.‖ Board of Regents, supra at 99. Additionally, the―standard
framework for analyzing an action's anticompetitive effects on a market is the Rule of Reason.‖
Agnew, supra at 335.The Rule of Reason places the initial burden on the plaintiff to establish that
there is an ―anticompetitive effect on a given market within a given geographic area.‖ Id. If an
anticompetitive effect is established, ―the defendant can show that the restraint in question
actually has a procompetitive effect on balance, while the plaintiff can dispute this claim or show
that the restraint in question is not reasonably necessary to achieve the procompetitive
objective.‖ Id. at 335-36. The Respondents have alleged that the NCAA prohibition of
compensation for commercial use of college athlete‘s likeness restrains ―competition in the
market for Division 1 student-athletes and results in lower compensation for the student-athletes
than would otherwise prevail in a more competitive market.‖ (R. at 9). While it is unclear from
the facts provided what the potential compensation for athletes image and likeness would be, the
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procompetitive effects of the prohibition outweigh any potential anticompetitive effects raised by
the Respondents.
To begin, even if the Respondents have established the market (presumably player
compensation from image licensing) and that the NCAA has market power, ―market power, for
antitrust purposes, is the ability to raise prices above the competitive level by restricting output.‖
Banks v. Nat'l Collegiate Athletic Ass'n, 746 F. Supp. 850, 859 (N.D. Ind. 1990) (citation
omitted). In Banks, a college athlete challenged the NCAA rules which prevented players from
regaining college eligibility after entering a pro draft but failing to be selected. Id. The Court
stated that ―[i]dentifying the concept of ―price‖ in intercollegiate football is no easy matter‖ and
that while Banks was harmed in that ―the collegiate market for his skills [was] closed to him‖,
the market as a whole was not injured. Id. at 859-60. While players may have remained in
college rather than be stuck in a limbo situation as Banks was, which strengthened the NCAA
product, the NCAA persuasively argued ―the players' profit-making objectives soon would
overshadow educational objectives‖. Id. at 861. Furthermore, the bylaws ―advance the goal of
focusing student-athletes' attention and energies on collegiate endeavors, both academic and
athletic, and so have the procompetitive effect of promoting the integrity and quality of college
football‖ Id. In the present case, the Respondents specifically challenge the limitations on
compensation and the licensing of their image in video games. However, nothing in the record
articulates what specific effect their images had on the product, much less the market, as they
were only in used a brief montage. (R. at 10). Additionally, without addressing the First
Amendment issues of this case the videogames are likely successful because they allow ―users to
experience the excitement and challenge of college football‖, not because of any particular
players, and the developers do not include specific players in the game.
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Regardless, the procompetitive effects of the eligibility rules are inherent and have been
recognized as such by the courts. As Justice White stated in his dissent of Board of Regents, the
effect of many NCAA bylaws ―is to prevent institutions with competitively and economically
successful programs from taking advantage of their success by expanding their programs,
improving the quality of the product they offer, and increasing their sports revenues . . .these
regulations represents a desirable and legitimate attempt to keep university athletics from
becoming professionalized to the extent that profit making objectives would overshadow
educational objectives.‖ Board of Regents, supra (White, dissenting) at 123. (citations/quotations
omitted). Per the stated goal of the NCAA, student-athletes involved in NCAA athletics are just
that: students first, athletes second. College athletics enhance the college experience, and may
also provide opportunities through scholarship to allow athletes to attend college, but outside
compensation would distort, and possibly destroy, the entire institution. Additionally, although
the Respondents believe that without the bylaws, compensation for athletes would be higher.
However, they have produced no evidence to support such a claim. Although the record is
devoid of facts regarding profits that university athletic departments make, it is unlikely many
schools would even be able to pay athletes to play even if they were permitted to do so, beyond
what is allocated for scholarships. Additionally, as the District Court stated, in Justice v. NCAA,
a case in which players challenged sanctions against the University of Arizona, rules that are
―rooted the NCAA‘s concern for the protection of amateurism‖ are not considered to be
restraints on trade. Justice v. NCAA, 377 F. Supp. 356, 383 (D. Ariz. 1983). (also see R. at 24-
25).
Furthermore, as the Fifth Circuit stated in McCormack, the ―NCAA markets college
football as a product distinct from professional football. The eligibility rules create the product
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and allow its survival in the face of commercializing pressures.The goal of the NCAA is to
integrate athletics with academics. Its requirements reasonably further this goal.‖ McCormack,
supra at 1344-45. The enforcement of the bylaws is procompetitive, because without the bylaws
college athletics loses its appeal, i.e. amateur players representing their respective universities.
Players are compensated through scholarships, giving athletes the opportunity to pursue an
education through their athletic ability, which in turn supports the idea of amateur athletes. If
athletes were to be paid, the entire product would be destroyed, as the appeal lies in the fact that
the competitors are not professional athletes.
In the current case, the Respondents are former athletes that challenge their images brief
use in iterations of EA‘s NCAA Football videogames, and claim that the bylaws prevented them
from any form of compensation in connection to that use of their image. This is a novel concept,
but precedent suggests that that the procompetitive effects of the eligibility and compensation
bylaws outweigh any alleged anticompetitive effects in any antitrust challenge to the bylaws,
even those by non-collegiate athletes. For example, in Pocono Invitational Sports, a ―non-
institutional‖, or for profit, basketball camp challenged the NCAA amateurism bylaws. Pocono
Invitational Sports Camp, Inc. v. Nat'l Collegiate Athletic Ass'n, 317 F. Supp. 2d 569 (E.D. Pa.
2004). The camps were meant for high school athletes seeking to compete in the college ranks.
The NCAA ran ―institutional‖ camps, which were not for profit and allowed anyone to
participate, whereas the non-institutional camps were selective of their entrants. The challenge
arose because the NCAA camps were still subjected to the NCAA bylaws, and although the non-
institutional camps were not subject to the bylaws directly, the camps were faced with several
indirect effects. Specifically, the non-institutional camps challenged:
(1) the NCAA requirement that Division I coaches can only evaluate prospects at non-
institutional basketball camps if the camps are certified by the NCAA (Bylaw 13.13.3)
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and the requirements with which non-institutional camps must comply in order to be
certified (Administrative Regulation § 30.16); (2) the reduced number of days coaches
are permitted to visit plaintiffs' camps; and (3) the prohibition of Division I men's
basketball coaches from accepting employment with non-institutional camps attended by
prospects. Id. at 573.
Essentially, the camps alleged that the NCAA bylaws served to promote and protect the
institutional camps, and ―destroy‖ the non-institutional camps, as it required them to be certified,
which involved a detailed certification procedure. Id. at 577. However, the Court correctly
followed precedent and held that the bylaws were protected from attack under the Sherman Act.
Id. at 584.Specifically, the bylaws regarding the camps produced procompetitive effects and
protected young athletes from exploitation by ―increasing the importance of scholastics and
decreas[ing] the impact of nonscholastic external influences on the prospects' lives.‖ Id. at 583.
The bylaws also served to ―separate high school athletics from the realm of professional sports‖
and protect players from camps that had become increasingly ―physically and emotionally
taxing‖ on high school recruits. Id. at 582.
As the concurring opinion in Banks said, it is true that ―times have changed‖ and NCAA
athletics have changed, the bylaws work to protect against the dangers that have accompanied
the changing landscape of amateur sports.Banks supra at 1099.The bylaws regarding
compensation and licensing of images serve to protect young athletes from exploitation by
memorabilia dealers, television companies, videogames developers, or any other merchant that
would seek to take advantage of students inexperienced in business. Much like the certification
bylaws challenged in Pocono, the bylaws concerning licensing and compensation are
procompetitive in effect because they continue the long tradition of college athletics as an arena
purely for amateur student athletes, while also ensuring the safety of the athletes. In Pocono,the
non-institutional camps created scenarios which allowed ―street agents taking advantage of
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prospects, the summer season hurting prospects by making them miss classes and tests, and a
lack of parental involvement which exposed the prospects to exploitation by ―street agents,
runners, and hangers-on.‖ Id. at 577. Thus, the NCAA instituted rules restricting the camps ―so
that prospects would have more recruiting time when parents and coaches were available to
supervise the process.‖ Id. at 583. Similarly, the bylaws restricting compensation to athletes are
meant to protect young athletes from not only losing out on college eligibility, but also from
agents and companies from taking advantage of them.The Respondents have not demonstrated
any alternatives that would show that the bylaws are not necessary for the aforementioned
procompetitive effects.
Although the NCAA may benefit from the products that are made that briefly utilize
player images, bylaws pertaining to amateurism ultimately ensure the safety of the athletes,
much like the bylaws at issue in Pocono. The anticompetitive effect of the bylaws is that athletes
are not compensated for their performance, or in this case, the use of their image. However
procompetitive effects ensure that athletes remain focused on academics, as well as their athletic
endeavors, rather than endorsement deals. The NCAA and colleges may gain some profit from
the images of the athletes, but if the bylaws are removed, the product that enables many athletes
to receive a college education would also be destroyed. As the Court in Agnew stated the ―bylaws
eliminating the eligibility of players who receive cash payments beyond the cost attendance to
receiving an education . . . clearly protects amateurism.‖ Agnew, supra at 343.Furthermore,the use
of the player likeness itself is a procompetitive effect, as it serves to promote the product and in
the case of the videogames, maintain interest of the fans in a world filled with an ever growing
well of entertainment products. The times may be changing, but the values the NCAA sought to
create and protect, namely amateurism in athletics, remain the same. The bylaws procompetitive
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effects serve to protect those values, and as a result, the bylaws should remain protected from
Section 1 of the Sherman Act.
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CONCLUSION
For the forgoing reasons, Electronic Arts, Inc. and National Collegiate Athletic
Association, Petitioners, respectfully request, on Issue I, this Honorable Court REVERSE the
decision of the Fourteenth Circuit, and find instead that the NCAA Football video game is a
protected expressive work under the First Amendment that meets the Transformative Use test.
Also, Petitioners on Issue II respectfully ask this Honorable Court REVERSE the
decision of the Fourteenth Circuit, and find instead that the procompetitive effects of the NCAA
bylaws regarding amateurism and eligibility outweigh any market restrictions that may occur and
should thus be protected from the Sherman Act.
Respectfully submitted,
______________________________
Team Number 3