David, Brody & Dondershine, LLP Experienced General Business Law Attorneys
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Reston, VA 20191
703-264-2220

Seek experienced counsel when navigating licensing agreements

Last time, we mentioned a new law Virginia law regulating the fantasy sports industry. A quick perusal of the headlines shows that fantasy sports regulation is an area where there is a lot of activity among the states right now.

At the end of February almost 30 states had bills in the works with proposals to regulate, prohibit or allow fantasy sports. In an industry which has largely avoided regulations for years, the changes are noteworthy. Much of the legislation which is actually backed by the fantasy sports injury would impose moderate consumer protection standards on the industry while exempting it from state gambling regulations. At the federal level, fantasy sports were exempted from an online gambling prohibition back in 2006. 

Most of the bills in the works would impose licensing and registration fees on the fantasy sports industry, as is the case with Virginia’s new law. The proposals vary in exactly what costs they impose, with some proposal relatively small one-time fees, to more sizeable one-time fees plus annual renewal fees. Virginia’s new law required fantasy sports companies operating in the state to pay $50,000 annually to register.

For businesses dealing in products and services related to professional sports teams, licensing is critical to helping build a brand. It has been established though court decisions that fantasy sports companies do not need to obtain licenses from professional sports teams to operate their leagues since the use of athletic information does not violate players’ right of publicity. Fantasy sports companies which charge for their services, though, do still routinely enter into licensing agreements to obtain publicity rights beyond statistics and names.

Whenever a company enters into any licensing agreement, of course, it is important that the agreement be well-negotiated and that the licensee understands both its rights and obligations under the agreement. This is critical, of course, when legal disputes arise.

Source: Kentlaw.edu, “The Right of Publicity and Fantasy Sports: Should Professional Athletes Wield Control Over Their Identities or Yield to the First Amendment?,” Micheal J. McSherry, 2009.

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