Intellectual Property Blog

NIL Deals: What Needs to Be in the Contract (and What Gets Missed)

An athlete’s identity is a commercial asset. From the high school track star to the Olympic gold medalist, athletes’ names, images, likenesses, signatures, and other personal attributes carry legal protections and economic value. They appear on jerseys, trading cards, and promotional materials, yet the trademark and right of publicity laws governing these rights offer the ability to sell, license, assign, or transfer any aspect of an athlete’s personality. This makes it all the more important to clearly identify and address both at the outset to avoid disputes.

Two Legal Frameworks Governing a Single Identity

The right of publicity protects an individual’s ability to control the commercial use of their identity. These rights are governed by state law and vary from each jurisdiction: some have robust statutes while others rely on common law developed in the courts, and states differ on whether the right survives death. Importantly, the right of publicity protects not only economic interests but also personal dignity and autonomy.

Trademark law, by contrast, is almost entirely commercial. Trademarks protect what are called “source identifiers” that indicate from what maker a product originated and are governed by both state law and the federal Lanham Act. When the trademark is a person’s name, the analysis becomes more complex. Surnames are generally not registrable unless they acquire secondary meaning, but famous athletes can usually meet that standard immediately.

The key distinction: trademark rights and publicity rights are separate, and one does not automatically include the other. Trademarks protect commercial goodwill. Rights of publicity protect both commercial value and personal identity. Because of this dual nature, courts in trademark disputes hesitate to assume that an individual intended to surrender their publicity rights unless the contract is explicit. When a name functions as both a brand and a personal identifier, clarity becomes essential.

Exclusive vs. Non‑Exclusive Licensing

Licensing plays a central role in how identity rights are used and enforced. A non‑exclusive license allows the licensee to use the intellectual property while the licensor retains ownership and control. If the licensor keeps any rights—approval, quality control, the right to sue—the license is non‑exclusive. An exclusive license, on the other hand, transfers all rights to the licensee and often functions like an assignment. Only exclusive licensees typically have standing to enforce rights of publicity. This distinction is critical in sports, where multiple parties often seek to use an athlete’s identity across different product categories.

While the concept of clarifying license agreements to explicitly describe which rights are being transferred, in practice it can be more complicated, as some litigants have found.

• Pirone v. MacMillan

Babe Ruth’s heirs owned the trademark “BABE RUTH” for certain goods. When MacMillan published a calendar featuring Ruth’s photos, the heirs sued. The court rejected the trademark claim, holding that Ruth’s image in a calendar was subject matter, not a source identifier. The case illustrates that trademark rights in a name do not control all uses of a person’s image.

• Fighters Inc. v. EA

Professional boxers granted Fighters Inc. broad rights to use and license their identities, but because Fighters could sublicense those rights, the agreement was deemed non‑exclusive. As a result, Fighters lacked standing to sue EA for right‑of‑publicity violations. The case reinforces that only exclusive licensees can enforce publicity rights.

• The Traeger Litigation

The Traeger family sold their grill company and assigned “all right, title and interest” in various intellectual property, including “personal goodwill.” When family members later appeared in competitor advertising, two courts reached opposite conclusions about whether their publicity rights had been transferred. One found the contract ambiguous and refused to infer a transfer; the other held that “personal goodwill” necessarily included their “good name.”

The lesson: ambiguous language produces unpredictable results.

When Licensors Launch New Ventures Under Their Own Name

A particularly thorny issue arises when someone who has sold or licensed rights in their name later wants to launch a new business using that same name. JA Apparel Corp. v. Abboud highlights the problem.

Joseph Abboud sold the rights to use his name and related marks to JA Apparel. After the sale, he announced a new fashion line under his own name. JA Apparel sued for trademark infringement and argued that Abboud’s right of publicity had been transferred as well.

Both the appellate court and the district court on remand found the contract ambiguous on whether Abboud’s publicity rights had been assigned. Neither court was willing to decide whether such a transfer was even possible or what it would mean for Abboud’s ability to work or appear in public.

On the trademark claims, the court held that Abboud could use his name to describe himself, provided he included a clear disclaimer of affiliation with JA Apparel. More confusing uses were not protected. Abboud’s own right‑of‑publicity claim failed for lack of evidence that consumers associated JA Apparel’s ads with him personally.

The case underscores a crucial point: selling trademark rights in a name does not automatically prevent the individual from using their own name in commerce unless the contract clearly says so.

Conclusion: Precision in Drafting Is Essential

Across all these cases, one principle stands out: courts will not infer that rights of publicity or trademark rights in a person’s name were transferred unless the contract explicitly says so.

Ambiguous terms like “personal goodwill” or “all rights” may not be enough. Contracts involving a person’s identity must clearly specify:

• Whether rights of publicity are included
• Whether trademark rights in the name are included
• The scope of exclusivity
• Who has enforcement rights
• How the individual may use their own name going forward

In sports where identity is often an athlete’s most valuable asset clarity is not optional. It is the only way to avoid litigation and ensure all parties understand exactly what rights are being transferred.

Peter J. Rosene is a Member of McBrayer law. Mr. Rosene focuses his practice in the area of intellectual property, copyright, trademarks and infringement litigation.  He is in the firm's Louisville office and can be reached at prosene@mcbrayerfirm.com or at (502) 327-5400, ext. 2306.

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This article does not constitute legal advice.