Daily Compliance Item- 11/22/13- Current Event

NCAA sues video game maker, licensing firm


The NCAA has sued video game manufacturer Electronic Arts and the nation’s leading collegiate trademark licensing firm, Collegiate Licensing Co., in connection with those companies’ intent to settle their parts of lawsuits concerning the use of college athletes’ names and likenesses.

The suit, filed in a Georgia state court on Nov. 4, alleges that EA and CLC breached various contractual obligations to the NCAA that have become factors in matters led by former UCLA basketball player Ed O’Bannon and former Arizona State and Nebraska football player Sam Keller.

For instance, the NCAA alleges that EA did not maintain liability insurance that was sufficient to cover “pending third-party claims, including for attorneys’ fees that the NCAA has already incurred in defending against those claims.”

The NCAA alleges that CLC failed to adequately supervise EA in this contractual obligation and that CLC failed to provide the NCAA “with access to documents and records that the NCAA is entitled to inspect.”

The NCAA is seeking to bar EA and CLC from going through with their proposed settlement.

It also seeks to have EA be required to cover the NCAA for any future judgement of liability relating to EA’s NCAA-themed video games; the NCAA’s “reasonable” legal fees incurred in defending against claims the association faces related to those games; and the NCAA’s costs and legal fees related to bringing this new suit against EA and CLC.

“CLC is caught in the middle of a dispute between NCAA and EA which should not involve us,” Andrew Giangola, a spokesman for CLC. “CLC has valued relationships with both the NCAA and EA and while we hope they can soon resolve their dispute, we see no reason for CLC to be involved.”

John Reseburg, a spokesman for EA, said the company had no comment on the suit.

NCAA spokeswoman Stacey Osburn said the association also had no comment.

Earlier this year, EA was not involved in just the O’Bannon and Keller cases, which also included CLC. It also faced presumptive federal class-action suits by former Rutgers football player Ryan Hart and former West Virginia football player Shawne Alston.

In late September, EA and CLC worked out a proposed $40 million settlement of the claims made in the O’Bannon, Hart and Alston cases – a deal that left the NCAA as the sole defendant in the O’Bannon and Keller cases.

In the suit filed in Georgia (CLC is headquartered in Atlanta), the NCAA alleges that EA and CLC reached the settlement “without notice to the NCAA” and that “despite the NCAA’s repeated requests,” they have refused to provide information to the NCAA regarding the settlement. According to the NCAA, CLC is required to do so under the terms of its licensing contract with the NCAA, and EA is required to indemnify the NCAA.

Because of that, the NCAA states that it “has been harmed, continues to be harmed, and will suffer future harm, from EA’s and CLC’s unlawful actions, including irreparable harm” if EA and CLC receive approval of a settlement under these circumstances.

The NCAA says it has spent “millions of dollars in attorney’s fees and costs” defending itself against the suits related to EA’s NCAA-themed video games.

It also says that with the proposed settlement, “EA has demonstrated that it will not perform its contractual duty” to cover the NCAA against clams related to the video games.

Meanwhile, the NCAA states, it “continues to defend itself in (the O’Bannon and Keller) litigation and still faces potential liability to plaintiffs and the putative classes they purport to represent.”

Thus, it wants EA to remain subject to that liability.

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