Just before the end of the 2020 legislative session, Michigan Governor Gretchen Whitmer signed two bills prohibiting colleges and universities from interfering in a student athlete’s efforts to commercialize their name, image or likeness (NIL)—also known as their “right of publicity.” This makes Michigan the sixth state in less than a year to pass similar legislation, accelerating the national trend toward allowing student athletes to profit from the same types of endorsement deals that professional athletes enter into. California passed the first such state law in March 2020.
Notably, the new laws—which were originally introduced as H.B. 5217 and 5218—do not directly create or recognize students’ NIL rights. Instead, they regulate the schools and universities for which the students play, forbidding these institutions from following rules, promulgated by the National College Athletic Association (NCAA) or any other organization, that would have prevented the schools from allowing players to enter into promotional deals. Traditionally, the NCAA has banned such agreements in order to avoid corruption of college sports. In recent years, however, the tide of popular opinion on this issue has shifted, with many now seeing such rules as unfairly depriving students of lucrative opportunities—especially in light of the money being made in sports video games and other digital media.
Multiple federal courts have already ruled that college athletes have a right to control how their NILs are used in video games. Another court has ruled that the NCAA’s attempt to regulate these agreements violates antitrust laws—a decision of enough importance that the United States Supreme Court recently agreed to review it. The NCAA itself has agreed to loosen its rules, beginning with the 2021-2022 academic year. Michigan’s new laws do not take effect until December 31, 2022, and include a provision for keeping the legislature informed on changes in NCAA policy—presumably to determine whether such changes render the new laws unnecessary or outdated.
The new laws also contain a few other details of which schools and students should take note. For instance, students are required to give their educational institution seven days’ notice before signing a promotional agreement so the school has time to review it. Students may not commit to wear commercial apparel or content on the field if doing so would violate team rules. The bills further clarify that they do not grant students the right to use their school’s trademarks without permission. Sports agents will also be relieved that HB 5218 repeals a provision of the Michigan Penal Code that had made it a crime for them to induce a student to sign promotional contracts.
Although these new laws will be welcomed as progress by many, they also represent a missed opportunity to codify the nature and scope of NIL/publicity rights under Michigan law. The right of publicity itself remains a concept under development. Several states do not recognize it at all. Others have passed laws spelling out exactly who owns NIL rights and what they protect. And then there are states like Michigan, where the right of publicity is a common law right recognized only by court decisions. That means no one knows anything about the right—such as exactly what the right protects, who may enforce it, what it is worth or what defenses are available to an infringement claim—until someone files a lawsuit and a court decides it. Even then, the court decision is subject to change if a higher court or legislature disagrees. This is an expensive way to develop law and provides little guidance to those who would otherwise stand to profit from business deals to commercialize NIL rights. Unfortunately, the Michigan legislature has repeatedly turned down attempts to pass a right of publicity statute, and has now punted once again. Ironically, the rights that these recent bills attempt to safeguard will remain less valuable for student athletes than they could have been.
Fortunately, Warner’s Higher Education Industry Group is on top of this changing legal landscape and is able to guide institutions of higher learning through them. And Warner's Intellectual Property Enforcement and Litigation Practice Group has experience litigating right of publicity claims under Michigan common law, and Warner Partner Brian Wassom recently spoke on publicity rights for NCAA athletes to a national audience for the American Intellectual Property Law Association. However these issues affect you, Warner is ready to provide you with expert advice. Contact Jason Byrne, Brian Wassom or one of Warner’s practice or industry group team members at any time to discuss further.
