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Thursday, July 18, 2013

NCAA ending deal with video game maker EA

NCAA ending deal with video game maker EA, The NCAA announced Wednesday it is not renewing its licensing contract with Electronic Arts for a college football video game, citing legal and business concerns.

The NCAA, EA and the nation's leading collegiate trademark licensing and marketing firm, Collegiate Licensing Co., are co-defendants in at least two federal lawsuits concerning the use of college athletes' names and likenesses. EA is the defendant in another, similar case.

EA is the defendant in another, similar matter involving former Rutgers quarterback Ryan Hart. Wednesday, U.S. District Judge Freda Wolfson in New Jersey ordered that case reopened for further proceedings after the Third Circuit Court of Appeals overturned her dismissal in May and recently denied EA's bid to have that decision reviewed by the Third Circuit's full panel.

Hart's attorney, Timothy McIlwain, told USA TODAY Sports on Wednesday that he will pursue class certification and has verbal commitments from more class representatives, including a current college athlete he declined to identify.

Michael Hausfeld, the lead attorney for former UCLA basketball star Ed O'Bannon and others in a case against NCAA, EA and Collegiate Licensing Co. (CLC), has said he plans to add an active college athlete as plaintiff by Friday.

In a statement about its decision regarding EA, the NCAA said: "We are confident in our legal position regarding the use of our trademarks in video games. But given the current business climate and costs of litigation, we determined participating in this game is not in the best interests of the NCAA."

Warren Zola, who teaches sports law at Boston College's Carroll School of Management, said the NCAA's decision indicates "they are no longer able to handle a jury decision against them. They are taking precautions against a judgment causing them significant financial hardship."

Zola said that a decision by the NCAA to continue its licensing arrangement with EA "would allow more members into the (prospective class of plaintiffs) able to claim damages."

The NCAA's agreement with EA pertains only to the use of the NCAA's name and logo -- not those of the individual schools depicted -- and its statement pointed to a more serious question: "Member colleges and universities license their own trademarks and other intellectual property for the video game. They will have to independently decide whether to continue those business arrangements in the future."

EA Sports and CLC issued statements saying that EA will continue to develop and market college football games featuring the teams and leagues customers "expect."

However, University of Kansas athletics department spokesman Jim Marchiony -- who identified his school as a CLC client -- said KU officials will want to digest the NCAA's decision. Marchiony said Kansas' agreement with EA, via CLC, for the current version of NCAA Football expires June 30, 2014.

"I'm not surprised CLC and EA Sports have a Plan B and we're looking forward to hearing from them about it, to see how we'll proceed in the future," Marchiony said. "We will certainly talk about it, where we go from here."

Stanford deputy athletics director Patrick Dunkley, who said his school also is with CLC, expressed similar sentiments. He said that prior to the NCAA's announcement Wednesday, the issue "was not on our radar."

Now, "given that the NCAA is taking the position that the legal risk outweighs the benefit, it's only prudent for us to analyze what the perceived risks are," Dunkley said.

One of the lawsuits against the NCAA, EA and CLC is awaiting U.S. District Judge Claudia Wilken's ruling on whether to certify the case as a class action. That case currently involves a group of former college football and men's basketball players headed by O'Bannon.

If Wilken certifies the suit as a class action, it could allow thousands of former and current football and men's basketball players to join the case. That could create the possibility of a damages award in the billions of dollars. In addition, if the plaintiffs were to get everything they have said they are seeking, it would force the establishment of an entirely new compensation arrangement for current NCAA Bowl Subdivision football players and Division I men's basketball players -- one under which "monies generated by the licensing and sale of class members' names, images and likenesses can be temporarily held in trust" until their end of their college playing careers.

Another case that had been before Wilken pits former Arizona State and Nebraska quarterback Sam Keller against EA, the NCAA and CLC. That matter currently is pending before the Ninth U.S. Circuit Court of Appeals, with the defendants hoping to overturn Wilken's refusal to dismiss the case.

If the Ninth Circuit rules in Keller's favor, his lawyers likely also will seek class certification.

The NCAA said its current contract with EA expires in June 2014, "but our timing is based on the need to provide EA notice for future planning. As a result, the NCAA Football 2014 video game will be the last to include the NCAA's name and logo."

Gabe Feldman, director of the Tulane University Law School's sports law program, said "as long as the game continues to have the names and logos of the schools" it remains viable because "that's why a consumer buys the game."

Asked how the NCAA's decision not to continue allowing its name and logo to be associated with the game might affect individual schools, Feldman said: "There's no question the schools have been monitoring all of this and (the NCAA's decision) may factor into their decisions going forward."

"But," he added, "the really essential part of the game is the players. ... A separate issue continues to be what (EA) will do with the players. Will they make the players completely generic, with no numbers? If they do that, there's no legal liability. There may be room somewhere between the game as we know it today and no game at all.

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