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 others similarly situated; Al ROKER Respondent. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALSFOR THE FOURTEENTH CIRCUIT Brief for Petitioner 9
TABLE OF CONTENTS TABLE OF AUTHORITIES... ii Questions Presented... 1 Opinions Below... 1 Constitutional Provisions and Rules... 1 INTRODUCTION... 2 STATEMENT OF THE CASE... 3 ARGUMENT... 4 I. No Matter Whether This Court Applies The Rogers Test Or The Transformative Use Test, Petitioner Has A Complete First Amendment Defense Against Respondents Right Of Publicity Claims... 7 A. The Rogers Test Is Less Prone To Misinterpretation And More Protective Of Free Expression Than The Transformative Use Test Is, And As A Matter Of First Impression, Should Be Adopted In Right Of Publicity Cases.... 10 B. It Is Undisputed That Petitioner Prevails Under The Rogers Test.... 11 C. The Transformative Use Test Requires That Courts Consider The Entirety Of The Expressive Work In Question, Not Merely Whether The Plaintiff s Likeness Itself Was Altered.... 12 D. Petitioner Prevails Under The Transformative Use Test Because The Creative And Transformative Elements of Petitioner s Games Predominate Over The Commercial Use Of The Likenesses Of The Athletes Within The Games.... 16 II. The District Court Properly Dismissed Respondents Sherman Act Claims Because the NCAA s Eligibility Rules Are Presumptively Procompetitive As a Matter of Law... 17 A. Respondents Complaint Failed to Allege a Plausible, Relevant Market and Thus Did Not State a Claim under the Sherman Act... 18 B. NCAA Eligibility Bylaws Are Presumptively Procompetitive as a Matter of Law, and the Respondents Failed to State Facts Sufficient to Overcome the Presumption... 19 CONCLUSION...24 i
TABLE OF AUTHORITIES Cases UNITED STATES SUPREME COURT Bell Atlantic Corp. v. Twombly, 550 U.S. 544........................................................... 19 NCAA v. Board of Regents of Univ. of Oklahoma, 468 U.S. 85 (1984)........................................ 6, 19, 20, 21, 22, 24 Zacchini v. Scripps-Howard, 433 U.S. 562 (1977).......................................................8 UNITED STATES COURTS OF APPEALS Agnew v. NCAA, 683 F.3d 328, 335 (7th Cir. 2012).............................7, 17, 18, 19, 20, 21 Association for Intercollegiate Athletics for Women v. NCAA, 735 F.2d 577 (D.C. Cir. 1984)...............................................6 Banks v. NCAA, 977 F.2d 1081 (7th Cir. 1992)...........................................18, 21 Brown v. Elec. Arts, Inc., 724 F.3d 1235 (9th Cir. 2013)........................................11, 12, 13 E.S.S. Entm t 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095 (9th Cir. 2008).............................................. 9 ETW Corp. v. Jireh Publ g, Inc., 332 F.3d 915, 927 (6th Cir. 2003)......................................9, 15, 16 Hennessey v. NCAA, 564 F.2d 1136 (5th Cir. 1977)..............................................19 Mattel, Inc. v. MCA Records, 296 F.3d 894 (9th Cir. 2002).............................................. 11 Matthews v. Wozencraft, 15 F.3d 432 (5th Cir. 1994).................................................9 McCormack v. NCAA, 845 F.2d 1338 (5th Cir. 1988)..................................... 6, 17, 20, 21 Parks v. LaFace Records, 329 F.3d 437 (6th Cir. 2003)................................................9 ii
Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989)..........................................5, 8, 9, 10 Smith v. NCAA, 139 F.3d 180 (3d Cir. 1998)..........................................18, 20, 23 UNITED STATES DISTRICT COURTS Gaines v. NCAA, 746 F. Supp. 738 (M.D. Tenn. 1990).........................................24 Justice v. NCAA, 577 F. Supp. 356 (D. Ariz. 1983)........................................ 21, 24 Jones v. NCAA, 392 F. Supp. 295 (D. Mass. 1975).....................................21, 23, 24 Montgomery v. Montgomery, 60 S.W.3d 524 (Ky. 2001)..................................................9 Romantics v. Activision Publishing, Inc., 574 F. Supp. 2d 758 (E.D. Mich. 2008)........................................9 Ruffin-Steinback v. depasse, 82 F. Supp. 2d 723 (E.D. Mich. 2000).........................................9 Seale v. Gramercy Pictures, 949 F. Supp. 331 (E.D. Pa. 1996)............................................ 9 CALIFORNIA COURTS Comedy III Productions v. Gary Saderup, Inc., 25 Cal. 4th 387 (2001).......................................5, 7, 10, 14, 15, 16 Guglielmi v. Spelling-Goldberg Productions, 25 Cal. 3d 860 (1979).................................................. 6, 16 No Doubt v. Activision Publishing, Inc., 122 Cal. Rptr. 3d 397, 410 (Cal. Ct. App. 2011)................................15 Winter v. DC Comics, 30 Cal. 4th 881 (2003)..................................................5, 14 Statutes 15 U.S.C. 1.................................................................. 7 iii
Secondary Materials M. Abramowicz & M. Stearns, Defining Dicta, 57 Stan. L. Rev. 953, 953 (2005)........... 18 D. Kelley & L. Jordan, Twenty Years of Rogers v. Grimaldi: Balancing the Lanham Act with the First Amendment Rights of Creators of Artistic Works, 99 Trademark Rep. 1360 (2009)........................................................................ 10 E. Volokh, Freedom of Speech and the Right of Publicity, 40 Hous. L. Rev. 903 (2003)............................................................................8, 10 J. Thomas McCarthy, The Rights of Publicity and Privacy........................... 9, 13 Restatement (Third) of Unfair Competition 47............................... 4, 8, 9, 10 iv
Questions Presented I. WHETHER THE FIRST AMENDMENT PROTECTS THE DEFENDANT S RIGHT TO USE PLAINTIFFS PHOTOGRAPH IN GAME MONTAGE II. WHETHER THE NCAA AMATEURISM AND ELIGIBILITY BYLAWS ARE PROTECTED AS A MATTER OF LAW FROM ATTACK UNDER SECTION 1 OF THE SHERMAN ACT? USDC No. 03-AC-2554 (S.D. Tulania 2013). Docket No. 03-1049 (14th Cir. 2013). Opinions Below U.S. Const. Amend. 1 15 U.S.C. 1 (West 2012) Constitutional Provisions and Rules 1
INTRODUCTION Both the Transformative Use Test applied by the Fourteenth Circuit Court of Appeals below and the two-part Rogers test advocated for by Petitioner EA both dictate that EA s First Amendment rights trump Respondents economic interest in their likenesses as used in EA s video games. The Fourteenth Circuit Court of Appeals below erred in its application of the Transformative Use Test. Applied correctly, the Transformative Use Test protects EA s use of Respondents likenesses because the expressive works in question contain significant transformative elements, so that the game is primarily constituted of EA s own creative expression, and it merely uses Respondents likenesses as raw materials. However, since the Transformative Use Test is extremely difficult to predict and apply because it requires courts to make aesthetic judgments regarding the degree of the artistic transformation required for a work to qualify for First Amendment protection, this Court should, as a matter of first impression, instead adopt the clearer, more predictable and less chilling twopart test established by Rogers v. Grimaldi. EA triumphs under therogers test because its use of Respondents likenesses is neither wholly unrelated to content of the work, nor is it merely a disguised advertisement for the sale of the work. Respondents failed to state a claim for a violation of the Sherman Act on the part of Petitioner NCAA because Respondents failed to carry the burden of identifying a relevant, plausible market in their pleadings. And even if this Court were to find that Respondents properly alleged a relevant market, the Respondents complaint fails to plead that any restraint resulting from the NCAA Bylaws at issue is unreasonable in light of the goal of integrating athletics with academics and preserving the amateur nature of NCAA sports as a distinct product from minor and major league professional sports. Courts have consistently found that NCAA 2
eligibility rules create a net benefit to competition by allowing a unique product to exist and should therefore by presumed procompetitive. Because Respondents did not allege any reason to deny the presumption in this case, the district court was correct in dismissing the complaint for failure to state a claim. STATEMENT OF THE CASE Respondent Electronic Arts is a worldwide leader in the video game industry. Its titles, including NCAA Football 2004, 2005, 2006 and 2009 are highly creative expressive works that allow players to experience college football in an interactive way. In the virtual experience of EA s NCAA Football games, users can not only control their teams at different stages of the games by selecting lineups from thousands of players or creating virtual players of their own, but they can also execute plays by controlling the virtual football players on the field in real time. Additionally, players can construct narratives that span dozens of games in Dynasty mode, where players act as coaches, creating their own stories of their programs development by performing the year-round responsibilities of a college coach, such as recruiting virtual high school players out of a randomly-generated pool of athletes. Matt Lauer and Al Roker are former college football players for Ole Tulania, a team included in EA s NCAA Football games. Lauer and Roker are represented in the game by two of the thousands of available avatars, and they are identifiable by their attributes and statistics (such as height, weight, speed, jersey number, etc.). Also, a photograph of Lauer throwing a pass to Roker is part of a montage that plays when a user selects Ole Tulania as his or her favorite team. Petitioner NCAA governs intercollegiate sports, and athletes participation is conditioned on their compliance with NCAA s bylaws. NCAA Bylaw 12.5.2.1 states in relevant part that a 3
student athlete is ineligible to play if he or she 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. This bylaw is intended to ensure amateurism in college sports and preserve the tradition of the student-athlete in higher education. ARGUMENT In this case, two former college football players seek to restrict the ability of content creators like Electronic Arts Inc. ( EA or Petitioner ) to exercise their First Amendment right of free expression by limiting the First Amendment s protection of expressive works and expanding the economic rights of celebrities that are protected by the right of publicity. Matt Lauer and Al Roker ( Respondents ) allege that EA violated their right of publicity by using their likenesses as the bases for two among the thousands of virtual football players available to players in its video games NCAA Football 2004, 2005, 2006 and 2009 ( NCAA Football ). EA is not liable, no matter whether this Court adopts the narrow standard the Transformative Use Test applied by the Fourteenth Circuit Court of Appeals below, or the broader two-part test established by Rogers and adopted by the Restatement (Third) of Unfair Competition. Thus, the ruling of the Fourteenth Circuit should be reversed. This Court has yet to provide guidance to lower courts on the law as it applies to the friction between the First Amendment and the economic interests that give rise to the state law right to privacy, and can take this opportunity to ensure that expressive works are adequately protected from the attacks of overreaching right of publicity claims. In order to achieve this end, the Court should apply the Rogers test, which is clearer, more predictable and easier to apply than the Transformative Use Test, which requires a court to make an aesthetic judgment regarding the degree of the artistic transformation required for a work to qualify for First Amendment protection. Under the 4
broader Rogers test, the First Amendment bars right of publicity claims arising from the use of a plaintiff s name or likeness in an expressive work, unless the use is either (1) wholly unrelated to the content of the work; or (2) simply a disguised commercial advertisement for the sale of goods or services. Rogers v. Grimaldi, 875 F.2d 994, 1004 (2d Cir. 1989). The Rogers test affords creative expression the breathing space it needs to flourish, and avoids the chilling effect that comes with the more subjective and unpredictable Transformative Use Test. It is undisputed that EA s use does not run afoul of either prong of the Rogers test, and is thus protected if the Court adopts this standard, which affords creative expression the breathing space it needs to flourish, and avoids the chilling effect that comes with the more subjective and unpredictable Transformative Use Test. However, both tests are satisfied when, like in NCAA Football, a plaintiff s likeness is used as one of the raw materials from which an original work is synthesized and it contains enough other creative elements so that the work, as a whole, is something more than simply a depiction of the plaintiff. Comedy III Productions v. Gary Saderup, Inc., 25 Cal. 4th 387, 406 (2001); Winter v. DC Comics, 30 Cal. 4th 881, 888 (2003). NCAA Football is protected because it incorporates a plethora of significant transformative elements including realistic, but nonetheless original, imagery and game scenarios, as well as an interactive player interface and customization options. The game is primarily constituted of EA s creative expression, and it merely uses Respondents likenesses as raw materials for two of the thousands of available playable characters. Because all of EA s additional elements contribute to the virtual experience of the game and players ability to construct their own narrative of their teams development, Respondents likenesses are far from the sum and substance of the work. 5
If adopted, Respondents formulation of the test will have the perverse result of protecting only highly fanciful or surreal works, which runs contrary to the reasoning that [n]o author should be forced into creating mythological worlds or characters wholly divorced from reality and thus precluded from creating works that accurately reflect the world even if they incorporate their own creative expression into the works. See Guglielmi v. Spelling-Goldberg Productions, 25 Cal. 3d 860, 869 (1979) (Bird, C.J., concurring). For these reasons, EA respectfully requests that this Court affirm the district court s order dismissing all of Respondents claims. Petitioner NCAA is an unincorporated voluntary association of universities and regional sports conferences. Record at 12. NCAA exists to be the rule-making body for intercollegiate sports, and in doing so engages in two main types of rule-making. First, the NCAA regulates game-related activities, such as equipment standards, and eligibility to play on NCAA member teams, such as the requirement that players have a high school diploma or attend class full-time. Second, the NCAA regulates off-field activities, like broadcasting rights and post-season eligibility. While both elements of NCAA rule-making are subject to the Sherman Act, see McCormack v. NCAA, 845 F.2d 1338, 1343 45 (5th Cir. 1988) ( [a]ssuming, without deciding, that the antitrust laws apply to the eligibility rules ), courts have continually held that eligibility rules do not unreasonably restrain trade whereas certain off-field activity rules have been invalidated. See NCAA v. Board of Regents of University of Oklahoma, 468 U.S. 85 (1984) (finding television broadcast restrictions unreasonably restrained trade in the market for college sports broadcasts); but see Association for Intercollegiate Athletics for Women v. NCAA, 735 F.2d 577 (D.C. Cir. 1984) (NCAA expansion of eligibility to include women s sports, driving women s intercollegiate sports organization out of business subject to antitrust; however, new 6
regulations were lawful under reasonableness analysis). The rules challenged by the Respondents were correctly categorized by the courts below as eligibility and amateurism rules. R. at 12, 17; Agnew, 683 F.3d at 342-343. They go to the heart of NCAA sports in maintaining the amateurism of the athletes and leveling the playing field amongst colleges. Respondents Lauer and Roker alleged that the NCAA s eligibility rules were an unreasonable restraint on trade in violation of the Sherman Act. R. at 12; 15 U.S.C. 1. Petitioners NCAA and EA moved for dismissal for failure to state a claim, which the District Court granted, on the grounds that decades of precedent in this Court and in the Circuit Courts of Appeal have held that NCAA eligibility rules are procompetitive as a matter of law. The Fourteenth Circuit Court of Appeal reversed the grant of Petitioners motion because the issue of whether the NCAA bylaws were anticompetitive under a Rule of Reason analysis was worth looking into. R. at 15. Because the NCAA Bylaw prohibiting the sale of a student-athlete s likeness in order to maintain the ideals of amateurism in college sports do not unreasonably restrain trade in the alleged market for a college education as a matter of law, Petitioners respectfully request that this Court overturn the holding of the Fourteenth Circuit Court of Appeal and find that the District Court correctly applied stare decisis in dismissing the complaint under the Federal Rules of Civil Procedure 12(b)(6). I. No Matter Whether This Court Applies The Rogers Test Or The Transformative Use Test, Petitioner Has A Complete First Amendment Defense Against Respondents Right Of Publicity Claims Courts have implemented strict constitutional limitations on the right to publicity because of its potential for frustrating expression protected by the First Amendment. Comedy III, 25 Cal. 4th 387, 397 (2001). Protected expressive works including video games commonly incorporate the names or likenesses of real-life individuals, and so courts have implemented tests 7
to ensure that individuals economic rights, asserted in right of publicity claims, do not infringe the protection of or chill speech protected by the First Amendment. See E. Volokh, Freedom of Speech and the Right of Publicity, 40 Hous. L. Rev. 903, 904, 908 (2003). Right of publicity claims that target expressive works are fundamentally constrained by the... constitutional interest in freedom of expression. Restatement (Third) of Unfair Competition 47 cmt. c. Because this Court has only ruled on one case involving the right of publicity, and in that ruling, declined to promulgate any specific balancing test, different tests have developed in lower courts right of publicity jurisprudence. Zacchini v. Scripps-Howard, 433 U.S. 562, 574-575 (1977). In Zacchini, this Court considered whether the First Amendment defeated a plaintiff s right of publicity claim when the defendant broadcast his entire human cannonball act. Id. It did not outline a test; rather, it merely held that [w]herever the line in particular situations is to be drawn between media reports that are protected [against right of publicity claims] and those that are not, we are quite sure that the First and Fourteenth Amendments do not immunize the media when they broadcast a performer s entire act without his consent. Id. Zacchini focused only on the unusual right of publicity scenario where a defendant broadcasts the plaintiff s entire act, a claim that the Court pointed out is much like a copyright claim, though applicable under state law to unfixed works. Volokh, 40 Hous. L. Rev. at 906. The Court twice stressed that it was not deciding the broader question of when a plaintiff may sue the defendant for using plaintiff s name, likeness, or other attributes of identity the standard right of publicity claim. Id., citing Zacchini, 433 U.S. at 573 n.10, 576. The Restatement (Third) of Unfair Competition, as well as many scholars and courts, apply the two-pronged test articulated in Rogers v. Grimaldi. See, e.g., Rogers v. Grimaldi, 875 8
F.2d 994, 1004 (2d Cir. 1989) (applying two-prong test to right of publicity); Parks v. LaFace Records, 329 F.3d 437, 461 (6th Cir. 2003) (applying the same); Matthews v. Wozencraft, 15 F.3d 432, 440 (5th Cir. 1994) (applying to right of publicity and content of work); Romantics v. Activision Publishing, Inc., 574 F. Supp. 2d 758, 766 (E.D. Mich. 2008) (applying the same); Seale v. Gramercy Pictures, 949 F. Supp. 331, 336-38 (E.D. Pa. 1996) (applying the same); Ruffin-Steinback v. depasse, 82 F. Supp. 2d 723, 730 (E.D. Mich. 2000) (applying the same), aff d, 267 F.3d 457 (6th Cir. 2001); Montgomery v. Montgomery, 60 S.W.3d 524, 530 (Ky. 2001) (applying the same). See also E.S.S. Entm t 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095, 1099 (9th Cir. 2008) (applying to content of work); ETW Corp. v. Jireh Publ g, Inc., 332 F.3d 915, 927 (6th Cir. 2003) (applying the same); J. Thomas McCarthy, The Rights of Publicity and Privacy, 8:72; Volokh, 40 Hous. L. Rev. at 915-16. In Rogers, the Second Circuit ruled that that the use of a celebrity s name in a motion picture title is protected from a right of publicity claim unless a defendant s use is either (1) wholly unrelated to the content of the work; or (2) simply a disguised commercial advertisement for the sale of goods or services. Rogers, 875 F.2d at 1004. The Restatement states that the use of a celebrity likeness in entertainment and other creative works is permitted, unless the name or likeness is used solely to attract attention to a work that is not related to the identified person. Restatement (Third) 47, cmt. c. See also Parks, 329 F.3d at 461 (adopting the Rogers test for right of publicity analysis in part because [t]his test is supported in the context of other expressive works by comment c of 47 of the Restatement (Third) of Unfair Competition ). Some other courts have adopted the Transformative Use Test, a product of the California Supreme Court s ruling in Comedy III Productions v. Gary Saderup, Inc., which held that the 9
appropriate balancing test asks whether the work in question adds significant creative elements so as to be transformed into something more than a mere celebrity likeness or imitation. Comedy III Comedy III, 25 Cal. 4th at 391. The present case gives this Court the opportunity to instruct the lower courts how to properly apply the law because no matter which test this Court ultimately applies, EA s First Amendment defense prevails over Respondents right of publicity claims. A. The Rogers Test Is Less Prone To Misinterpretation And More Protective Of Free Expression Than The Transformative Use Test Is, And As A Matter Of First Impression, Should Be Adopted In Right Of Publicity Cases. The Transformative Use Test is extremely difficult to predict and apply because it requires a court to make an aesthetic judgment regarding the degree of the artistic transformation required for a work to qualify for First Amendment protection. 2 MacCarthy 8:72. The Rogers test is clearer, more predictable and more protective of expressive works that are attacked by overreaching right of publicity claims. See Volokh, 40 Hous. L. Rev. at 908. For that reason, the Rogers test has already been adopted by most federal courts when adjudicating cases involving Lanham Act claims involving use in expressive works. See D. Kelley & L. Jordan, Twenty Years of Rogers v. Grimaldi: Balancing the Lanham Act with the First Amendment Rights of Creators of Artistic Works, 99 Trademark Rep. 1360, 1373-1374 (2009). It has come into favor with courts adjudicating right of publicity claims likely because the cases are functionally similar, but [t]he rationales underlying recognition of a right of publicity are generally less compelling than those that justify rights in trademarks. Restatement (Third) 47 cmt. c. In Rogers, Ginger Rogers brought, inter alia, Lanham Act and right of publicity claims against the producers of a film titled Ginger and Fred. Rogers, 875 F.2d at 996-997. The title of 10
the film referred to the partnership and collaborations of Ginger Rogers and Fred Astaire. Id. The film was about two impersonators whose act was modeled after Ginger and Fred. See id. Addressing Rogers right of publicity claim, the court cautioned that such claims pose a threat to suppressing free speech, reasoning that the right of publicity... is potentially more expansive than the Lanham Act. Id. at 1004. Perhaps for that reason, courts delineating the right of publicity... have recognized the need to limit the right to accommodate First Amendment concerns. Id. Borrowing heavily from its Lanham Act analysis, the court held that the law would not permit the right of publicity to bar the use of a celebrity s name in a movie title unless the title was wholly unrelated to the movie or was simply a disguised commercial advertisement for the sale of goods or services. Id. (citation omitted). On that test, the court held that Rogers right-of-publicity claim was barred by the First Amendment. Id. at 1004-1005. Applying the Rogers test to a football player s Lanham Act claim against EA s use of his likeness as a virtual football player in a video game a claim functionally identical to Respondents right of publicity claims in this case the Ninth Circuit ruled that under the Rogers test, EA s First Amendment interest defeated the player s claim. Brown v. Elec. Arts, Inc., 724 F.3d 1235, 1239 (9th Cir. 2013). This Court should similarly adopt the Rogers test for right of publicity claims. Doing so would provide lower courts with a straightforward, predictable standard that would prevent right of publicity claims from encroach[ing] upon the zone protected by the First Amendment. Mattel v. MCA Records, 296 F.3d 894, 900 (9th Cir. 2002). B. It Is Undisputed That Petitioner Prevails Under The Rogers Test. The facts of this case are indistinguishable from those of Brown, where the Ninth Circuit ruled that the plaintiff football player s challenge did not satisfy the Rogers Test. In that case, 11
the court ruled that EA s use of the plaintiff s likeness as a virtual player on one of the teams in the game (1) had artistic relevance to the game, and was thus not wholly unrelated to the expressive work; and (2) was not misleading in a way that made it a disguised advertisement for the sale of the game. Brown, 724 F.3d at 1243. The facts of this case are indistinguishable from those of Brown, and following the reasoning of Brown, the Respondents right of publicity claims clearly fail. Analyzing the first prong, it is clear that EA s use of Respondents likenesses is not wholly unrelated to the game. In NCAA Football, a game predominantly played by controlling virtual football players, EA used Respondents likenesses as bases for virtual players on the teams for which Respondents actually play. Considering the second prong, EA s use of Respondents likenesses is not simply a disguised commercial advertisement for the sale of the game. Just like in Brown, Respondents are only two of the thousands of virtual football players available in NCAA Football, and Respondents have alleged no facts that would support a claim that their likenesses were used in the title of, or as advertising for, the game. See id. at 1245-46. Following the reasoning of Brown, it is clear that EA s use cannot be sufficient to satisfy either prong of the Rogers test. Therefore EA s First Amendment interest in freedom of expression outweighs Respondents economic interests and defeats their right to publicity claims. C. The Transformative Use Test Requires That Courts Consider The Entirety Of The Expressive Work In Question, Not Merely Whether The Plaintiff s Likeness Itself Was Altered. The facts of this case are indistinguishable from those of Brown, where the Ninth Circuit ruled that the plaintiff football player s challenge did not satisfy the Rogers Test. In that case, the court ruled that EA s use of the plaintiff s likeness as a virtual player on one of the teams in the game (1) had artistic relevance to the game, and was thus not wholly unrelated to the 12
expressive work; and (2) was not misleading in a way that made it a disguised advertisement for the sale of the game. Brown, 724 F.3d at 1243. The facts of this case are indistinguishable from those of Brown, and following the reasoning of Brown, the Respondents right of publicity claims clearly fail. Analyzing the first prong, it is clear that EA s use of Respondents likenesses is not wholly unrelated to the game. In NCAA Football, a game predominantly played by controlling virtual football players, EA used Respondents likenesses as bases for virtual players on the teams for which Respondents actually play. Considering the second prong, EA s use of Respondents likenesses is not simply a disguised commercial advertisement for the sale of the game. Just like in Brown, Respondents are only two of the thousands of virtual football players available in NCAA Football, and Respondents have alleged no facts that would support a claim that their likenesses were used in the title of, or as advertising for, the game. See id. at 1245-46. Following the reasoning of Brown, it is clear that EA s use cannot be sufficient to satisfy either prong of the Rogers test. Therefore EA s First Amendment interest in freedom of expression outweighs Respondents economic interests and defeats their right to publicity claims. A. The Transformative Use Test Requires That Courts Consider The Entirety Of The Expressive Work In Question, Not Merely Whether The Plaintiff s Likeness Itself Was Altered. The Rogers test affords creative expression the breathing space it needs to flourish, and avoids the chilling effect that comes with the more subjective and unpredictable Transformative Use Test. See McCarthy 8:9. However, even if this Court rules that the Transformative Use Test is the correct approach to right of publicity cases, EA still prevails. When analyzing a work under the Transformative Use Test, the salient question is whether the entire work is 13
transformative and whether the transformative elements predominate rather than whether an individual persona or image has been altered. Comedy III, 25 Cal. 4th at 407. As acknowledged by the District Court below, the Transformative Use Test was formulated by the California Supreme Court in Comedy III, where the court reasoned that when an artist is faced with a right of publicity challenge to his or her work, he or she may raise an affirmative defense that the work is protected by the First Amendment inasmuch as it contains significant transformative elements or that the value of the work does not derive primarily from the celebrity s fame. Id. at 407. The court emphasized that the inquiry is 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. We ask, in other words, whether a product containing a celebrity s likeness is so transformed that it has become primarily the defendant s own expression rather than the celebrity s likeness. Id. (emphasis added). The test was revisited in Winter v. DC Comics, where the court reiterated that the outcome of the Transformative Use Test analysis turns on whether the works in question in this case, comic books... contain significant creative elements that transform them into something more than a mere celebrity likeness. Winter, 30 Cal.4th at 885. According to Winter, transformative works can take many forms, from factual reporting to fictionalized portrayal, from heavyhanded lampooning to subtle social criticism. Id. at 888 (citations omitted). In that case, although the defendant s illustrations of the Winter brothers were highly transformative and may have been sufficient to constitute a First Amendment defense on their own the court held that the Transformative Use Test protected the comic books as a whole because the 14
plaintiffs likenesses were merely part of the raw materials from which the comic books were synthesized. Id. at 890. Unfortunately, the Transformative Use Test was misinterpreted by a California Court of Appeals in an opinion both the lower court and Respondents cite, No Doubt v. Activision Publishing, Inc. There, a court stated in its reasoning that it understood the Transformative Use Test of Comedy III to mean that a work is insulated by First Amendment only where added creative elements significantly transform the celebrity depiction. No Doubt v. Activism Pub., Inc., 122 Cal. Rptr. 3d 397, 410 (Cal. Ct. App. 2011). This formulation is inconsistent with the California Supreme Court s reasoning in Comedy III and Winter. In those cases, the court stated that the Transformative Use Test does not turn on whether the likeness itself is physically transformed and that the inquiry is in a sense more quantitative than qualitative, asking whether the literal and imitative or the creative elements predominate in the work. Comedy III, 25 Cal. 4th at 407. It expressly defined expression as concerning something other than the likeness of the celebrity. Id. at 406 (emphasis added). Therefore, both the lower court and Respondents err in urging this Court to consider the Respondents likenesses in isolation. A more instructive case comes from the Sixth Circuit, ETW Corp v. Jireh Publishing, where the defendant painted Tiger Woods at the Masters tournament and was sued by Woods licensing agency. ETW Corp. v. Jireh Pub., Inc., 332 F.3d 915, 938 (6th Cir. 2003). The defendant painted Woods realistically and in three different poses where he was engaged in the activity that garnered him his fame, golfing, and the court held that the plaintiff s painting was entitled to First Amendment protection. Id. The court reasoned that the painting did not capitalize solely on a literal depiction of Woods. Rather, [the defendant s] work consist[ed] of a collage of images in addition to Woods s image which are combined to describe, in artistic form, 15
a historic event in sports history and to convey a message about the significance of Woods s achievement in that event. Id. Because the defendant s painting ha[d] substantial transformative elements, Woods s right of publicity must yield to the First Amendment. Id. As the Sixth Circuit acknowledged, the proper focus of the Transformative Use Test is on whether the expressive work as a whole is transformative. See id. And while the transformation of a plaintiff s image alone may suffice to satisfy the test in some cases, it never is a requirement for constitutional protection against right of publicity claims. D. Petitioner Prevails Under The Transformative Use Test Because The Creative And Transformative Elements of Petitioner s Games Predominate Over The Commercial Use Of The Likenesses Of The Athletes Within The Games. No author should be forced into creating mythological worlds or characters wholly divorced from reality. Guglielmi, 25 Cal. 3d at 869 (Bird, C.J., concurring). The restrictive view advocated by Respondents would limit its application to cases involving fanciful or nonliteral representations of individuals. Applied correctly, the Transformative Use Test protects EA s use of Respondents likenesses because NCAA Football the expressive work in question contains significant transformative elements, so that the game is primarily constituted of EA s own creative expression, and it merely uses Respondents likenesses as raw materials. Comedy III, 25 Cal. 4th at 407. Just like the defendant s painting in ETW, NCAA Football features a plethora of original elements that transform the work from a mere imitation, and causes its value to lie primarily in the elements added to the depiction. ETW Corp., 332 F.3d at 938. Just like ETW, it contains realistic but nonetheless original imagery, and beyond that, NCAA Football adds original game scenarios, as well as an interactive player interface and several customization options. In game modes such as Dynasty, the player can construct a narrative of a 30-season career as a football coach and effectively rewrite history by customizing 16
the teams and, based on skill, win games that were actually lost or vice versa. In view of these creative elements of the game, which are in fact more transformative than the limited additions made to the static recreation of Woods at the Masters in the painting in ETW, Respondents likenesses cannot be even remotely considered the sum and substance of the game. II. The District Court Properly Dismissed Respondents Sherman Act Claims Because the NCAA s Eligibility Rules Are Presumptively Procompetitive As a Matter of Law Complainants must allege facts sufficient to state a claim for which relief can be awarded to avoid dismissal at the pleading stage. Fed. R. Civ. P. 12(b)(6). In order to state a claim under Section 1 of the Sherman Act, a complaint must allege, (1) a contract, combination, or conspiracy; (2) a resultant unreasonable restraint of trade in the relevant market; and (3) an accompanying injury. Agnew v. NCAA, 683 F.3d 328, 335 (7th Cir. 2012). Petitioner concedes that the NCAA Bylaws constitute an agreement for Sherman Act purposes. However, Respondents failed to carry the burden of pleading a relevant, plausible market. Id. at 337-338 ( To succeed in its challenge of the district court s dismissal, plaintiffs must prove two points: (1) that there is a cognizable market on which the NCAA s actions could have had anticompetitive effects ; and (2) that plaintiffs did, in fact, identify that market in their complaint. ). Were this Court to agree with the Fourteenth Circuit Court of Appeal and find that the Respondents properly alleged a relevant market, the Respondents complaint fails to plead that any restraint resulting from the NCAA Bylaws at issue is unreasonable in light of the goal of integrating athletics with academics and preserving the amateur nature of NCAA sports as a distinct product from minor and major league professional sports. McCormack v. NCAA, 845 F.2d 1338, 1345 (5th Cir. 1988). Because the Respondents did not meet the burden of pleading that the NCAA Bylaws unreasonably restrain trade in a relevant market, the district court correctly dismissed the complaint for failure to state a claim. The Petitioner respectfully requests 17
that this Court affirm the district court s ruling, and overturn the ruling of the Fourteenth Circuit Court of Appeal. A. Respondents Complaint Failed to Allege a Plausible, Relevant Market and Thus Did Not State a Claim under the Sherman Act In order to state a claim for a violation of the Sherman Act, a complainant must identify the relevant market. Respondents complaint contends that these eligibility rules restrain competition in the college education market. R. at 14. In finding that a relevant market had been properly pled, the Court of Appeal based its argument on non-binding dictum in Agnew that were plaintiffs to allege that the relevant market was the market to attract student-athletes, then that would meet the requirement for a Sherman Act violation. Id.; Agnew, 683 F.3d at 340. The language cited by the court of appeal for support constitutes dictum because it did not decide any facts in the case specifically in facing the court in that decision. Agnew, 683 F.3d at 340, 345-46; Michael Abramowicz & Maxwell Stearns, Defining Dicta, 57 Stan. L. Rev. 953, 953 (2005) ( A holding consists of those propositions along the chosen decisional path or paths of reasoning that are actually decided, are based upon the facts of the case, and lead to the judgment. A proposition in a case that is not holding is dicta. ). Furthermore, not all courts agree with the dicta in Agnew. In Banks, the same court noted that the way in which colleges allegedly compete as alleged purchasers of labor could not constitute a market since the prices were based on the costs of tuition and room and board, not on the value of the athlete. Banks v. NCAA, 977 F.2d 1081 (7th Cir. 1992). In Smith, the Third Circuit held that since the eligibility rules are not related to any commercial interest of the NCAA, and therefore could not constitute a relevant market, that the Sherman Act could not apply. Smith v. NCAA, 139 F.3d 180, 183 (3d Cir. 1998) vacated and remanded on other grounds, 525 U.S. 459 (1999). Because the complaint failed to allege a relevant market, no proof of the procompetitive nature would be 18
necessary to sustain dismissal of the Respondents claim, and the Petitioner therefore respectfully requests that this Court overturn the contrary holding of the Fourteenth Circuit. Agnew, 683 F.3d at 339. B. NCAA Eligibility Bylaws Are Presumptively Procompetitive as a Matter of Law, and the Respondents Failed to State Facts Sufficient to Overcome the Presumption Should the Court find that the Respondents properly pled a relevant market in their complaint, the Petitioner contends that Lauer and Roker have not alleged facts sufficient to show that the challenged rules unreasonably restrain trade in the alleged market. The lower court and Respondents argue that, while the eligibility rules at issue may have some procompetitive benefits, Plaintiffs plausible allegations to the contrary must be accepted as true at the pleading stage. R. at 15. This argument fails on several counts. First, Respondents plausible allegations to the contrary constitute nothing more than a formulaic recitation of the elements of the cause of action, insufficient to overcome a motion to dismiss under Federal Rule 12(b)(6), that such rules restrain competition. R. at 14; Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Second, this allegation fails to allege how the complained of restraint on the market for a college education created by the NCAA Bylaws is unreasonable given the nature of the NCAA s product, intercollegiate competition, and its goal of preserving that product s unique amateur character through reinforcing the role of the student-athlete. To the contrary, decades of precedent from this Court and the Circuit Courts of Appeal have held that most if not all NCAA eligibility guidelines are presumed procompetitive as a matter of law. Agnew, 683 F.3d at 343. The proper method of analysis for NCAA Sherman Act claims is to analyze under a Rule of Reason test what net effect the restraint has on trade in the relevant market. NCAA v. Board of Regents, 468 U.S. 85, 103 (1984); see also Hennessey v. NCAA, 564 F.2d 1136, 1152-53 (5th Cir. 1977) ( regulations by non-profit organizations to further the purposes of those 19
organizations have been reviewed for reasonableness, rather than under the per se tests. ). While the district court below incorrectly stated the test in the introduction of its ruling as a per se test, the analysis applied by the court still looked to reasonableness as a matter of law under the precedent of this Court and of the Circuit Courts of Appeal. R. at 17, 27-29. Under a rule of reason analysis, courts have consistently found that NCAA eligibility rules create a net benefit to competition by allowing a unique product to exist and should therefore by presumed procompetitive. Agnew, 683 F.3d at 342-43; Smith v. NCAA, 139 F.3d at 187; McCormack v. NCAA, 845 F.2d at 1343-44. Because the Respondents did not allege any reason to deny the presumption in this case, the district court was correct in dismissing the complaint of failure to state a claim. In NCAA v. Board of Regents, this Court found that intercollegiate sports is an industry in which horizontal restraints on competition are essential if the product is to be available at all. Board of Regents, 468 U.S. at 101. The product at issue, athletic competition between member universities, requires mutual agreement by the member universities or else risks creating an unlevel playing field amongst schools prohibited by law, under Respondents analysis of the Sherman Act, from agreeing to eligibility rules that would maintain equality and amateurism. Id. at 101-02 ( if an institution adopted such restrictions unilaterally, its effectiveness as a competitor on the playing field might soon be destroyed. ). By ensuring that college sports maintain their student-athlete character, the NCAA creates a product for the market that would otherwise be unavailable. Id. at 102. While the case at issue in Board of Regents dealt with rules regarding television broadcasting, which falls into the off the field activities category of rulemaking, the decision made clear that eligibility rules, such as those at issue in the present case, were necessary to create the product and therefore created greater consumer choice for fans 20
and athletes. Id. Therefore, eligibility rules have been held presumptively procompetitive. Id. citing with approval Justice v. NCAA, 577 F. Supp. 356, 379-383 (D. Ariz. 1983) and Jones v. NCAA, 392 F. Supp. 295, 304 (D. Mass. 1975). Moreover, the first court of appeal to directly address the reasonableness of NCAA eligibility and amateurism rules upheld dismissal of a complaint alleging income restrictions on student-athletes were unreasonable restraints on trade. In McCormack v. NCAA, the Fifth Circuit held that the eligibility rules restricting the income of college football players did not constitute illegal price-fixing. McCormack, 845 F.2d at 1343. Based on the finding in Board of Regents that horizontal price fixing is a necessity in college athletics, the court held that eligibility rules to create and maintain the distinct product of college sports were necessary for its survival in the face of commercializing pressures. Id. at 1345. Because the goal of the NCAA is to integrate athletics with academics, the rule restricting income for student-athletes above the costs of education reasonably furthered this goal and had a net procompetitive benefit. Id. McCormack directly applies to the case at hand. In both cases, players challenged eligibility rules restricting student-athlete income as a means of maintaining the amateur nature of college sports. Id.; R. at 27. Because there is no meaningful distinction between McCormack and the case at hand, the district court correctly held that Respondents claim was precluded as a matter of law and the proper subject of dismissal under Federal Rule of Civil Procedure 12(b)(6). R. at 31. Furthermore, the Seventh Circuit twice found that NCAA eligibility and amateurism rules were presumptively procompetitive as a matter of law. Banks v. NCAA, 977 F.2d 1081, 1089-90 (7th Cir. 1992); Agnew, 683 F.3d at 342-43. In Banks, the complainant challenged eligibility rules prohibiting student-athletes from signing up for a major league draft and subsequently participating in NCAA sports. Banks, 977 F.2d at 1089-90. Because the no-draft rule 21
represents a desirable and legitimate attempt "to keep university athletics from becoming professionalized to the extent that profit making objectives would overshadow educational objectives," the no-draft rule and other like NCAA regulations preserve the bright line of demarcation between college and "play for pay" football. Id. at 1090 citing Board of Regents, 468 U.S. at 123 (White, J. dissenting). Similarly, the rule at issue here keeps student-athletes from focusing on selling themselves commercially while attending and playing for an NCAA member university and preserves the demarcation between amateurism and professionalism that makes college athletics attractive. R. at 27. Furthermore, in Agnew, the Seventh Circuit held that, Most if not all eligibility rules fall comfortably within the presumption of procompetitiveness afforded to certain NCAA regulations. Agnew, 683 F.3d at 342-343. Affirming the holding in McCormack, the court agreed that bylaws eliminating the eligibility of players who receive cash payments beyond the costs attendant to receiving an education clearly protect amateurism. Id. The Agnew court recognized that NCAA Bylaws aimed at preserving the distinction between college and professional sports or the nature of the student-athlete will be presumed procompetitive as a matter of law because the NCAA, under Board of Regents, must be allowed ample latitude to determine such matters. Id. citing Board of Regents, 468 U.S. at 120. The rules at issue in this case, unlike in Agnew, fall squarely into the realm of amateurism rules that will be presumed procompetitive because they eliminate the eligibility of players who receive payments above the cost of an education and maintain the line between professional athletes and student-athletes. Id.; R. at 27. Therefore, the ruling of the district court dismissing Respondents claim that such rules unreasonably restrict trade should be upheld. The Third Circuit has followed suit with the Fifth and Seventh Circuit Courts of Appeal in holding that, the NCAA s eligibility rules allow for the survival of the product, amateur 22
sports, and allow for an even playing field. Smith v. NCAA, 139 F.3d at 187. In Smith, the Court upheld the dismissal of a student s Sherman Act claim alleging that the rule prohibiting students from allocating any of their 4 total years to play in NCAA to a graduate institution unless it is the same as their undergraduate institution as a means of discouraging inducement by graduate and professional schools and strategic postbaccalaureate placement by students who did not get their first choice in undergraduate education. Id. Because the rule maintained a fair playing field among schools, the court found its so clearly survives a rule of reason analysis that we do not hesitate upholding it. Id. The eligibility rules at issue in this case serve a purpose similar to those in Smith. While the rules in Smith regarded graduate school poaching of players by larger or more popular institutions, NCAA Bylaw 12.5.2.1 keeps undergraduate schools from using undue monetary influence in attracting student-athletes in an effort to level the playing field for less well-endowed universities. Id., R. at 27. A fortiori, unlike the rules in Smith which only affected the equality between colleges with graduate or professional schools, the rules in the present case maintain a wider level of fairness by applying to every NCAA member university. Id. Beyond the courts of appeal to have looked at the issue, three major district court cases have also held that NCAA eligibility rules are procompetitive and do not unreasonably restrain trade. In Jones v. NCAA, a student who had received compensation for playing hockey prior to attending college and had been denied eligibility by the NCAA could not allege sufficient facts to sustain a motion for a preliminary injunction against the NCAA. Jones v. NCAA, 392 F. Supp. at 304. Any limitation on access to intercollegiate sports is merely the incidental result of the organization s pursuit of its legitimate goals. Id. In Justice v. NCAA, the court held that NCAA sanctions imposed for violating the rule against compensation for student-athletes were 23