Marketing NIL Rights in an NFT World

Who’s Who Legal featured this article by Ben Natter on Name, Image, and Likeness (NIL) in July 2021.

Name, image, and likeness (NIL) rights and non-fungible tokens (NFTs) are two ideas that have been the topic of much discussion this year, particularly in collegiate and professional sports. This article will provide a brief overview of each of these ideas, how they intersect, and some of their potential implications for intellectual property law.

Introduction to NIL Rights in the United States

In the US, NIL rights are grouped under the right of publicity, which generally “prevents the unauthorized commercial use of an individual’s name, likeness, or other recognizable aspects of one’s persona. It gives an individual the exclusive right to license the use of their identity for commercial promotion.” There is no federal law recognizing the right of publicity, or NIL rights, but a majority of states recognize a right of publicity by statute, case law, or both. Consent is generally a defense to conduct that would otherwise infringe interests protected by the right of publicity. “Consent can be communicated through a formal agreement such as a license,” which is a common method of granting permission to use NIL rights. In addition to the right of publicity, athletes and celebrities have protection for the elements of their personas and brands through trademark, copyright, and contract law.

Two states with the most developed case law regarding the right of publicity are New York and California. New York’s right of publicity has traditionally been covered by its right of privacy laws, Civil Rights Law §§ 50 and 51. § 50 provides that it is a misdemeanour to use a living person’s name, portrait, or picture for advertising or trade purposes without first obtaining his or her written authorisation. “Portrait or picture” has been interpreted to mean “any recognizable likeness.” § 51 provides that any aggrieved person may maintain an equitable action to prevent such unauthorized use and may also sue to recover damages sustained as a result. However, § 51­ should not be construed “as to prevent any person, firm or corporation from selling or otherwise transferring any material containing such name, portrait, picture or voice in whatever medium to any user of such name, portrait, picture or voice . . . for use in a manner lawful under this article.” New York recently codified a limited statutory right of publicity that allows the descendants of deceased individuals to protect against the commercial exploitation of the individual’s name, picture, voice, or signature after their death. The law also “creates new penalties for publishing sexually explicit depictions of individuals.”

California Civil Code § 3344(a) provides that “[a]ny person who knowingly uses another’s name, voice, signature, photograph, or likeness, in any manner, on or in products, merchandise, or goods, or for purposes of advertising or selling, or soliciting purchases of, products, merchandise, goods or services, without such person’s prior consent, or, in the case of a minor, the prior consent of his parent or legal guardian, shall be liable for any damages sustained by the person or persons injured as a result thereof.” § 3344.1 protects a deceased personality’s name, voice, signature, photograph, or likeness from unauthorized use, and provides that these rights are “property rights, freely transferable or descendible.” California also has a common law right of publicity, which has four elements: (1) defendant’s use of the plaintiff’s identity; (2) appropriation of plaintiff’s identity for defendant’s advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury.