Fantasy Sport and the IPR Law in India

June 7, 2022 by Essay Writer

Introduction

“Fantasy sports” happens to be a stormy amalgamation of four laws: sports law, intellectual property rights, Constitutional law, and cyber law (it’s mostly digital, hence). The third question has been very recently discussed by an Indian High Court, and the platform seems to have passed the test. Cyber law aside, the platform has its problems within the first two domains. IPR law in India is more codified than sports law, with the former being governed by central government legislation. However, both are heavily unequipped to handle a platform such as fantasy sports. This paper restricts itself to the conflict between fantasy sports and IPR. The legal changes that fantasy sports require are overwhelmingly large. However, IPR jurisprudence has numerous built-in mechanisms to spur its growth with an exercise in legislation. Hence, the primary focus of this paper is to analyze the limits within which fantasy sports-platforms could operate within India, without licensing. The analysis will solely look at copyright and trademark laws, the only contentious areas in this regard. The demands for rights essentially relate to: commercial identity (all marks of indicia pertaining to players/leagues); and facts (statistics and performance metrics).

Why Combat Imagery Between Fantasy Sports and IPR?

The utilization of statistics and other performance metrics have seen multiple challenges from Copyright Law in the US. The facts involved in a fantasy platform are gleaned from publicly available sources. These are then used with the names of the players and reflect their true factual information. In India, Section 13 of the 1957 Act protects, among other things, literary work and broadcaster’s rights. Literary work as per Section 2(o) would be inclusive of tables, compilations, and computer programs as well. Now statistical work could be literary work or a compilation. But here the expression-idea dichotomy comes into the picture. India has recognized this universal principle wherein the same idea could be expressed differently. It does not violate copyright law. This also happens to be a settled case law for (speculated) football fixtures in the common law.

So the facts already available in the public domain do not get protection under copyright law. In India, specifically, there needs to be some labor and skill spent on its reproduction. This is the “sweat of the brow test”. The one problematic area seems to be what becomes a compilation, since it Is not defined in the Indian copyright law. Borrowing from the US law, it would be a collection of available data in another arrangement. This would then be original literary work. This test is the Indian version of the “modicum of creativity” test developed in the US. The difference between the two is that the latter exists only for reproduction of statistics. Compilations have to be arranged so as to indicate some amount of minimal effort to be able to qualify as original, as per this concept. A direct copy without “any addition” on part of the reproducer invites the copyright claims of either a player’s league or a broadcaster.

As of now, European jurisprudence grants the same protection to an original compilation if it is premised upon facts that pre-exist in a haphazard manner. The compilation of football teams’ statistics would itself be an intellectual creation. Applying this to the realm of fantasy sports, it is clear that facts and performance-related data have to be re-arranged. Even if it is not (it is not possible to meddle with the player’s statistics, as it would destroy the premise of the game), it could possibly be an exception to copyright. This is primarily because the facts are in the public domain. India has recognized the hot news doctrine according to which time-sensitive data could be reproduced freely (after a certain threshold time limit). This has been recognized in India. Therefore, the law will not interfere if a) the information relayed by the broadcaster is publicly available and b) is rearranged in a sufficiently innovative and original manner. In fact, in another case, it was held that this doctrine is sufficient to protect the reproduced data from copyright claims, unjust enrichment allegations as well as from tortuous claims, like those of unfair competition.

Hence, the fantasy sports platform needs to be cautious as to the direct copy of statistics. In fact, they generally have a workaround for this. If one skims through the decision of Varun Gumber or looks at their game structure generally, the entire point is to avoid re-enacting an actual game. These sports platforms have built-in checks so that they avoid the label of betting. For instance, they usually have a cap on the number of original players in the virtual team, so that the real composition is not recreated within the game. Or, these platforms generally have an in-game currency equivalent in the form of fantasy points. These points are derived at by using real-time statistics, but not the exact copy of the data. (The function of these points is to work as a shorthand reference point for the real-time player’s overall value within the game and is dynamic in nature) Also, note that there exists an exemption for fair use in the Indian act. Section 52 (1) (ac) talks about computer programs designed only for observation and testing. Section 52 (1) (h) provides an exemption to the publication of non-copyrightable literary works. This again works in favor of fantasy sports. The former should more specifically apply to such platforms since it is nothing but a simulation, to a great extent.

The bigger issue for fantasy sports is with respect to trademarks. This, in fact, is divided into two sub-issues: the usage of logos and names; and player’s publicity rights. The area of sports has seen rapid consolidation of trademarks in logos, names, fixtures, team-affiliated colors, etc. by merchandisers, player leagues and broadcasters. The Indian Trademark Act, 1999 talks about infringement of registered marks in Section 29. Succinctly put, it requires that the infringer has to use the registered mark for the same goods and services likely causing confusion amongst the consumers. The usage in identical goods and services is a point emphasized by Indian courts repeatedly. The same is then subjected to the test of causing confusion in the consumer base. Now this deception has to be such that it is most likely to perpetuate the image of the proprietor for a product not associated with it.

All this means that there will be no infringement if the goods and services are not identical in the first place. However, Section 29 (4) recognizes the principle of dilution in India. This essentially means that the deceptive or misleading usage need not be in identical services to be a violation. It would be sufficient if such usage would be detrimental to the proprietor, or takes unfair advantage of her mark. This has been construed to mean deterioration in the trademark’s identification value. For instance, if a renowned car company’s brand-name is used for a product in the footwear industry, it could be taken as dilution. (On grounds of unfair advantage;) Going one step further, the requirement of confusion in the consumer base is also done away with here. The only effect should be a compromise with the mark’s value in indicating (or rather, not being able to indicate) the source of services or goods. Please note that dilution claims are mostly brought when registered proprietors belong to outside the country.

However, dilution should not be much of an issue for fantasy sports. Support for this could be demonstrated by using the US example. Under American law, the main law on the subject is the Lanham Act. Mere infringement under the Act would only involve the “likelihood” of confusion, and the infringement need not take place in identical goods or services. For instance, creating jerseys by simply using the name of a league could invite an infringement claim successfully. Adding to this is the legislation Trademark Dilution Revision Act, 2006. This gives the proprietor a preventive injunction even in the absence of economic damage or diminishment of the mark. Despite these provisions in place, none of the actions brought against fantasy sports operators has, in fact, alleged their violation. The European jurisprudence has, on the contrary, laid down an explicit criterion to attract dilution. It should happen only if the claimant is able to show a changed economic behavior in her consumer base. Applying these to fantasy sports, it is seen that none of the infringement claims can be easily made.

Firstly, in India, the requirement of Section 29 is not met. Fantasy-sports is not identical to the service provided by the league or the players. It’s an entirely different sector, even if it is argued that both belong to the larger set of entertainment. It is a digital venture (mostly). Even when it is not, names and logos of the players do not suggest endorsement by the individual players or leagues (this point will be elaborated upon in a bit). As a consequence, there is no likelihood of confusion in the audiences. Even if Indian courts apply the dilution standards of the US, these platforms remain unhindered. There is no tarnishment of the distinctive symbols or names, which are used solely for the purposes of reference. In fact, this usage is an endorsement for the players and the leagues (and hence constitutes an advantage). This kind of usage is indispensable for the accuracy of results within a fantasy sports game. This brings us to the issue of using the identity of players, which is better known as personality/publicity rights in trademark law.

It is for the above-mentioned reasons that claims for passing off cannot be brought against such operators as well. The essential requirement to allege this is that the infringer somehow gives the impression that the proprietor has authorized her to use the mark. Using logos in advertisements has been a subject of scrutiny by Indian courts in the past, with injunctions against the defendants. To understand this, one should look at the test prescribed in D.M. Entertainment Pvt. Ltd. v. Baby Gift House and Ors. The merchandise, in that case, was of such a nature that it most likely misled the consumers into believing that the concerned personality had endorsed it. But at the same time, the Delhi High Court has held that mere usage of a personality’s name could not be passing-off. What the claimant needs to prove is not a mere suggestion of passing-off; an overt act on behalf of the defendant, misleading the public (not only “consumers”) has to be shown to satisfy the balance of probabilities standard. The court’s stance is extremely reasonable since otherwise, the standard would be preponderance. Also a note of caution, the author is assuming that the court consciously used the term “public”.

In the US, the Lanham Act has been used for advancing claims for publicity rights. The legislation states that any false impression as to the origin of names or likeliness of public identities so as to exploit commercial benefits would be barred. India does not distinguish between public and personal identities for personality rights though. The US legislation is, however, broader and clearer in all other aspects and bars any false affiliation with regards to sponsorship or approval of the commercial identity of public persona.

But unlike India, fantasy-sports has been vehemently challenged by players and leagues alike, under the head of personality rights. The courts have, however mostly held in the operator’s favour. It has been held usage of logos, or names only provide an informational function. It is not suggestive of sponsorship. This is further codified as the defense of denominative fair use. Simply put, it means the usage of a symbol or mark to identify the proprietor or his product. The landmark case law on the subject is New Kids on the Block v. News Am. Publishing Inc. The said case has been recognized in India by the Madras High Court. One of the primary requirements for this defense is that the usage has to be reasonably necessary for identification. Furthermore, no suggestion of sponsorship should exist. In another case, the Delhi High Court has explicitly stated that if the focus is an “activity” of the proprietor, it is only denominative in drawing the consumer’s attention to it.

Please note that the relevant provision in the Lanham Act states that the defense will be available only if it is in good faith. The courts also refer to it as the nominative fair use and permit it if it was the one practical method for reference. This principle has been recognized in more or less the same words in Section 30(2)(d) of the Indian Act.

It is not possible for fantasy sports to operate without associating the names of players with their performance metrics. Hence, it is purely functional in nature. The same logic extends to the usage of a logo of a team. Another argument that can be made is that the point is to focus on the player’s/team’s activity. Viewed any which way, both are used for reference purposes.

However, the law on publicity rights is extremely chaotic. There is no statutory provision for the same. It was first recognized by the Delhi High Court in 2003. It gave a broad interpretation to it, saying that any facet of the personality would have its basis in privacy and is purely her commercial discretion to use it. In further cases, it was laid down that as soon as the above criterion is met, there is no need for proving deception or falsehood. These are criteria for determining the decree in these cases, and the courts have been much more eager to grant injunctions in cases involving personality rights. Added to this is the Supreme Court’s impetus to exclusive right to commercial usage of one’s own identity to the person herself. The underlying logic being that the person herself should have the choice to portray her image to the world (and hence a part of her decisional autonomy, one of the three elements of privacy).

This obviously does not come across as a conclusive framework for publicity rights vis-à-vis fantasy sports. However, this is jurisprudentially settled as far as the US is concerned. Before its analysis, please note that while discussing personality rights, the Delhi High Court stated that these rights cannot have a chilling effect on other parties. It is this aspect that turned the tables for fantasy sports in the US.

The premise behind publicity rights, as they are referred to in the US, is that there shall be no commercial harm to the personality’s identity. This is the most crucial factor to be looked at while determining passing-off in the US. Early on, the courts there too rejected the idea that players lose such rights on possessing a public persona. The first adaption of any player’s performance metrics was in the form of board games or trading cards. The courts discussed the player’s personality rights and stated that their personal characteristics and likeness cannot be made use of without a license. However, statistics and performance data is essential to the commercial viability of board games or other platforms. The California Court of Appeals then expanded the above interpretation and stated that such information has significant public interest involved. This particular case involved players’ alleging that the concerned baseball league violated their personality rights by furnishing their information on its website.

But this reasoning apart, the most interesting protection to fantasy sports was explicitly provided in CBS Interactive Inc. v. National Football League Players Association, 2009 WL 1151982 (D. Minn.) Firstly, it rejected the transformative use test, which states that if the likeness of the personality is converted to some other form, it is not passing off. However, in cases like these, only the information pertaining to the player is being used, as opposed to most other cases wherein the doctrine is applied (the test has been applied by the courts in video game-cases where a graphical representation of the player is involved). But then the court invoked free speech rights under the First Amendment and stated two further reasons for its conclusion. It stated that firstly that the law on publicity rights varied from state to state, contributing to the uncertainty. Secondly, it stated that this trail of information left by a player has no other commercial value except for determining her quality as a player. Its analysis, the court says, falls within the realm of discussion, and an illogical extension of personality rights would be when the player injuncts someone from scrutinizing her data, even when the commentary is not defamatory. The first part of the court’s reasoning was based on a decision in Cardtoons, L.C. v. Major League Baseball Players Association wherein it was held that trading cards (related to baseball) do nothing but provide a “social commentary” on player profiles. The basis of this line of reasoning goes back to the very first case on publicity rights in common law, namely, Haelan Laboratories, Inc. v. Topps Chewing Gum, Inc., wherein newsworthy facets were held to be an exception.

The reasoning is very recently solidified by the decisions in Marcus Gastineau v. National Football League and James Marshall v. National Football League. (The former cited in the latter) The court states that an image of a team sport would involve the personality rights of several (in this case, football) players. Apportionment of publicity rights is then an absurd expectation. This damage is extremely speculative in nature. Although the court does not use the phrase “chilling effect”, it states that this vagueness cannot be thrust upon reporters, broadcasters, and the like.

Conclusion

The platform of fantasy sports has been subjected to heavy scrutiny in other jurisdictions. Mostly, under both copyright law and trademark law, it faces no potential problems. Fair use under copyright law grants sufficient immunity to these platforms. In India, data simulation in the software industry is fairly well protected, and fantasy sports (even the offline versions) are no different. For the rest, the hot news doctrine is sufficient to protect the compilation of data that is already public.

The bigger challenge comes in the trademark regime. In India, a fuller analysis of free speech rights as against the chilling effect is yet to take place, as far as publicity rights are concerned. Unlike the US, group licensing is not a practice in India. Most of the issues regarding player’s image rights are resolved in such licensing arrangements as well as player contracts. India has a nebulous set-up for image rights specifically, making it extremely uncertain for fantasy sports to operate. One solution is to follow both common law and European judicial standards in trademark law. Both regimes have high thresholds for a violation to be established. The presumption of no endorsement by celebrities has already been adopted by some of the Indian High Courts. However, these standards need to be codified since there appears to be an emerging challenge that even the US has not yet fully dealt with: digital privacy clauses in player contracts. The effect is to circumvent “good faith” protections under the Lanham Act and restrict the use of player’s commercial identity without authority. Indian IPR regime is even more unequipped in this regard.

Source

Read more