The role of "extended reality" in sport & an overview of key global licensing considerations

Published 22 February 2018 | Authored by: Laura Jeffords Greenberg, Diana M. Martinez

The sports industry uses advances in technology to shape the fan experience, especially for fans not able to attend the live event, in a number of ways. Fans can access different types of sports content, such as the live game, highlights, and analyses because of online streaming services. Apps that offer league and team–generated content also help fans can also feel as though they are part of the game. For example, the Major League Baseball At Bat app offers customized home screens and icons, live updates on subscribers’ favorite teams, highlights, and team schedules and rosters. Teams have also developed official apps to offer team–specific content, such as Football Club Barcelona’s live updates on the club’s matches, videos, statistics, and team schedules. In both of these examples, the services are to some extent limited by the rights licensed by the club and/or league to third parties including broadcasters.

Emerging technology adds another dimension to the fan experience. This technology is known as extended reality, and refers to virtual, augmented, and mixed reality. This article will:

  • provide a primer on extended reality and its current and potential future uses in the sports industry; and

  • explain the necessary licensing considerations required in the U.S., Germany, UK, Brazil, and Japan; and

  • detail best practices for industry players incorporating this technology to alter the fan experience.

Extended Reality (XR) and its uses in the Sports Industry

XR refers to both virtual and augmented reality. Virtual reality (VR) places the user in an immersive environment that the user can explore using a head–mounted display. A content creator can create VR either as a game, or a 360 degree video. In contrast, augmented reality (AR) superimposes a piece of digital content on to the real environment all while the user is viewing the environment on a device. For example, the IKEA Place app allows the user to test out a piece of furniture by digitally placing that piece in the user’s desired living space.

Most recently, the sports industry has readily adopted XR to shape the fan experience, in both VR streaming and providing fans with AR content. We will look at each of these in turn.

VR Streaming

Streaming is a public service — which fans may or may not have to pay for — that provides pre–recorded content. Companies that provide these services include Netflix, Amazon, and Spotify. In the sports context, the NBC Olympics VR App will offer spotlights on athletes participating in the 2018 Winter Olympics in Pyeongchang.i On the other hand, broadcasting is a private service that fans must pay for — think NBC, ABC, and Fox — that provides live content. Every game of the 2017-2018 NBA season will be broadcasted in VR.ii Also, EuroSport will offer sports fans in Europe with 50 hours of live coverage of the 2018 Winter Olympics.iii While the lines may blur between streaming and broadcasting, the distinction is important because each type of service may have its own set of rules and regulations.

Analysts have speculated as to the future uses of VR in the industry. Companies could enhance broadcasting by selling virtual tickets to fans.iv Because these tickets would overcome the physical constraints of a stadium, franchises could sell an unlimited number of tickets.v Take the Super Bowl as an example. The stadium only has so many “box seats”, but if the NFL used virtual tickets, it could sell an unlimited number of box seats to virtual fans.

AR Content

The sports industry has slowly adopted AR to create league or team–generated content, including game statistics and analyses, face painting, and a giving the fans a chance to play the game. The MLB’s At Bat app enables fans to view a batter’s statistics by pointing the device at the field. Other franchises offer a face–painting app that features the team’s logo, such as the NFL’s Baltimore Ravens, and the MLS’ Toronto FC. The NBA’s Cleveland Cavaliers Pop A Shot game invited fans in the stadium to play the game during timeouts by pointing their smartphones at the scoreboard and swiping on the device to shoot basketballs into an AR hoop.

In terms of the future uses of AR in the industry, analysts have noted that AR can foster a sense of community among sports fans, especially on game day.vi For instance, Manchester City provided fans in the stadium with and interactive match day programs. Fans would scan a player’s photo in the program, and unlock a video featuring that player. Analysts also note that the industry could use AR to drive engagement both during and after game day.vii For the latter, Zappar partnered with Manchester City to give Man City fans “fan mail” that unlocked additional content after game day.viii Finally, leagues and teams could use AR to track consumer and fan behavior, and use that information as a basis for future marketing plans.ix

 

Licensing Considerations

XR can shape the fan experience both inside and outside of the stadium. But actually implementing XR either through VR streaming or AR content may require a license. This is because the party who owns the content has certain rights in the content, and the owner may not be the same party who offers either VR or AR services. To use these services, the licensor (the league, team, or another entity who owns the content) must license or give permission to the licensee (party who offers the service) to use the content.

The resulting contract is a licensing agreement. While drafting this agreement, the parties should consider the rights that are involved, who owns those rights, whether the law requires and/or imposes restrictions on these types of agreements and take precautions to avoid infringing the rights of broadcasters that may offer similar services to consumers.

There are four key areas of law that parties should keep in mind: trademark, copyright, the right of publicity, and media. The sections below outline the key considerations for each of these areas in the US, Germany, UK, Brazil and Japan.

United States

Trademark: In the U.S., trademark law protects marks or logos that identify the source of a good or service. For example, trademark protects Manchester City’s logo on a jersey because it signals to consumers that the Manchester City franchise produced that jersey. Once a licensee determines that a trademark is part of the content, the licensee must figure out who owns the trademark. Generally, leagues own the league logos, while individual teams own their respective team logos.

The parties should also consider licensing requirements and restrictions. There are no formal requirements for trademark licensing, nor are the parties required to register the license with the United States Patent and Trademark Office. The license agreement is governed by contract law, which varies from state to state.x In considering whether to license the trademark, a licensor should bear in mind that it is responsible for controlling the nature and quality over how the licensee uses the mark, otherwise the license may be invalid.xi

Copyright: Copyright protects an original work of authorship that is fixed in a tangible medium of expression. In the U.S., copyright protects a wide range of works, including movies, music, software, and certain sculptures. The copyright holder has a number of exclusive rights, including the right to make copies, distribute, create works based off of the original work, publicly perform and display the work.

Ownership can be complicated because the U.S. recognizes the concept of joint ownership, where authors own different parts of a copyrightable work. For example, the copyrightable parts of a movie include the music, the script, and the arrangement of creative elements, where X, Y, and Z own those parts, respectively.xii A licensee must consider whether joint authorship applies so that it obtains a license from the copyright holder(s).

In drafting the license agreement, parties should also be mindful of copyright license requirements and restrictions. There are two types of licenses: exclusive and non–exclusive.xiii Under an exclusive license, the licensor cannot license the content a party other than the licensee, whereas a non–exclusive license allows the licensor to license the content to other parties. Each type of license has its own set of requirements. If the parties opt for an exclusive license, the agreement must be in writing and signed by the copyright owner.xiv There are no requirements for a non–exclusive license.xv To further complicate matters, U.S. copyright law also recognizes the copyright owner’s ability to terminate the license within a certain period of time, and the owner cannot waive this right contractually.xvi

Right of publicity: The right of publicity is a person’s right to control how their name, likeness, and

personality is used for commercial purposes. Because law on right of publicity varies from state to state, it is important for a drafter to consider which state law applies.

Right of publicity ownership in the sports industry depends on the league because some leagues have established separate entities that own this right.xvii For instance, the NFL Licensing Form grants the NFLPA the exclusive right to use their name, likeness, signature and picture in licensing product programs involving five or more players.”xviii Therefore, a licensee has to consider whether the league or a separate entity owns the right, and obtain a license from that entity.

Media: Online services, such as VR streaming and AR content, are also governed by media law. The governing administrative body that oversees broadcasting and telecommunications is the FCC, but currently, it does not regulate online streaming services.xix Therefore, the licensee does not have to worry about getting a license from the FCC. Still, however, the parties must comply with the FTC’s rules and regulations that protect consumers from unfair business practices.xx A best practice is for the parties to contractually delegate one party to review the content and figure out whether it complies with the FTC.

Example: Let’s take the Sacramento Kings’ fan app as an example. Because the video includes the Kings’ logo, trademark law is involved. Copyright also comes into play because the video is a short film that features creative elements. The video displays one of the Kings’ players bouncing a basketball all while imposed on the real world, which triggers the right of publicity. Lastly, because the content is delivered over the internet, the FCC’s rules do not apply, but the content must comply with the FTC’s rules and regulations.

International Licensing: Because we live in a world where cross-border sporting events (think the Olympics and the World Cup) are commonplace, parties should also consider each country’s set of laws while drafting the license agreement.

The countries we will briefly explore are Germany, the UK, Brazil, and Japan.

Germany

Trademark: In Germany, a trademark is protected once a party registers the mark with either the German Patent and Trademark Office, or with the European Union Intellectual Property Office (EUIPO) or the World Intellectual Property Organization (WIPO).xxi This registration distinction is important for enforcing a license agreement. Even though parties do not need to register a trademark license, a license agreement that involves a mark registered with the EUIPO or WIPO is enforceable if the license registered with either office.xxii Therefore, parties should strongly consider registering the license with the appropriate office. There are also limitations on trademark license agreement that parties should keep in mind. The parties can contractually restrict the license in time and space, as the terms comply with Germany’s unfair competition law.xxiii

Copyright: While Germany has a few established licensing organizations, parties do not have to register a copyright license.xxiv Parties can form a license agreement either orally or in writing, but if must be in writing if the license is for an unknown type of use.xxv Parties can freely restrict the license in time, space, and content, but they should be cautious of drafting broad terms because German courts tend to construe license terms narrowly.xxvi Also, Germany’s copyright law protects an author’s personal rights that is inherent in the work, and the owner cannot license these rights.xxvii

Right of publicity: Germany indirectly protects the right of publicity through cases that recognize the personality right.xxviii Similar to trademark and copyright, the licensor can license this right to third parties through a contract.xxix

Media: In Germany, broadcasting is regulated by the Federal State media authority, from which broadcasters must obtain a license.xxx It is unclear whether online streaming services companies have to obtain a similar broadcasting license because online streaming may not qualify as broadcasting.xxxi However, the Federal State media authority shut down PietSmiet TV’s YouTube Channel because it did not apply for a broadcasting license.xxxii Therefore, the licensee should strongly consider applying for a broadcast license.

The UK

Trademark: Parties should keep in mind that the UK recognizes three types of trademark licenses: exclusive, sole, and non–exclusive.xxxiii Exclusive and non–exclusive licenses are defined the same way as under U.S. law. A sole license gives the licensor and the licensee the right to use the trademark.xxxiv For parties that opt for an exclusive license, the agreement is not enforceable unless it is in writing and signed by the trademark owner.xxxv Regardless of the type of license, trademark registration is not required unless a party is involved in a trademark infringement suit and wants to recover the costs.xxxvi

Copyright: Similar to trademarks, parties should consider the three types of licenses mentioned above, and the different requirements associated with each type of license.xxxvii Exclusive licenses must be in writing and signed by the licensor.xxxviii If parties do not meet these requirements, the licensee has the contractual right to use the work, but the agreement itself is not enforceable.xxxix Non–exclusive licenses, on the other hand, do not have any formalities.xl Regardless of the type of license, parties do not need to register the license.xli In figuring out ownership, the UK recognizes joint ownership, where authors own different parts of the work.xlii If the license involves joint ownership, the licensee might have to obtain a license from all of the copyright owners.xliii When drafting terms, parties should also consider limitations on personal rights, which the author can waive.xliv Other nuanced rights that parties should keep in mind are performers’ rights — in which performers have certain rights to their performance — and publication rights — where a party who publishes a copyrightable work first after it has expired owns the copyright.xlv

Right of publicity: The UK indirectly recognizes the right of publicity, from copyright, passing–off, trademark, data protection, advertising law, misuse of private information, and confidential information.xlvi Whether the licensor can license this right depends on which law applies. A party cannot license this right if it falls under data protection, but may otherwise license the right under the other areas of law.xlvii A best practice is for the licensor to contractually specify which law governs the right of publicity.

Media: In the UK, Ofcom is the main administrative body that oversees digital content distribution by broadcasters. It is unclear if parties who offer pre–recorded content qualify as broadcaster, but if they do, they must comply with Ofcom’s standards, and notify Ofcom of the online services it provides, but otherwise do not need to obtain a broadcasting license.xlviii Parties should contractually decide which party is responsible for ensuring that the content complies with Ofcom’s standards, along with providing Ofcom with notice.

Brazil

Trademark: Brazilian law does not specify different types of license agreements, nor are there any formal requirements. However, parties must record trademark license agreements with the Brazilian Patent and Trademark Office in order to enforce the agreement against third parties.xlix The parties should contractually delegate this task to make sure that the agreement is enforceable.

Copyright: In Brazil, a party can privately negotiate to license a copyrightable work.l The resulting license agreement is governed by Brazil’s contract law.li Even though there are no formal requirements for a copyright license, parties should have the license agreement in writing.lii Because Brazil recognize joint ownership, a licensee might have to negotiate with all of the authors of a single work.liii Also, parties should bear mind that Brazil’s copyright law protects moral rights, which cannot be licensed.liv

Right of publicity: Unlike the other countries discussed, Brazil recognizes a right that broader than the right of publicity known as image rights, which can be licensed.lv For broadcasting, Brazil’s Pelé Law determines the amount of compensation a network must pay in order to obtain the right to the player’s image right in broadcasting a sporting event, however, it is unclear whether online services qualify as broadcasting.lvi To err on the side of caution, parties can use Brazil’s Pelé Law as a guide for determining compensation.

Media: While Brazil has recently developed broadcasting regulations, it is unclear whether Brazil’s broadcasting regulations apply to online services, such as VR streaming and AR content.lvii

Japan

Trademark: Japan recognizes both exclusive and non–exclusive trademark licenses, and allows parties to opt for either type.lviii An exclusive license prevents the trademark holder from using the mark, unless the parties agree otherwise.lix Regardless of the type of license, parties must negotiate the terms and comply with Japan’s contract law.lx There are no licensing requirements, however, parties should strongly consider registering the license with the Japanese Patent Office, otherwise the agreement will not be enforceable.lxi

Copyright: Japan’s copyright licensing scheme is pretty lax compared to the other countries discussed because there are no formal license requirements and registration is not required.lxii There are no laws that impose restrictions on licensing, however, parties should consider having the agreement in writing.lxiii For ownership, parties should also keep in mind that Japan recognizes joint ownership.lxiv

Right of publicity: Japan recently recognized the right to publicity through its case law. This right has been inferred from Japan’s Constitutionlxv and the Civil Code,lxvi but most recently, the Supreme Court expressly recognized this right.lxvii There have been no other developments since that court decision, however, parties would be best advised to include the right of publicity in the licensing terms.

Media: Currently, it is unclear whether parties that offer online services are considered broadcasters under Japanese law.lxviii Whether these parties qualify as broadcasters determines which licensing regulations and standards apply.lxix Because of this uncertainty, parties should err on the side of caution and register with the Ministry of Internal Affairs and Communication, and also consider whether to allocate this responsibility contractually.

International treaties

Trademark: Along with each country’s trademark nuances, parties must also consider whether international treaties, such as the Madrid Protocol System, the Paris Convention, and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), apply.

Copyright: Similar to trademark, international treaties that address copyright protection and infringement, such as the Berne Convention for the Protection of Literary and Artistic Works, and TRIPS, may also come into play.

 

Best Practices for XR Content Creation

After dotting all of the i’s and crossing all of the t’s in the license agreement, the real fun begins: creating the XR experience. To create a truly immersive and engaging experience, there are a number of technical and commercial considerations for the content creator to keep in mind.

360 Degree Video

A 360 degree video, unsurprisingly, gives the user a 360 degree view of the environment. Because these videos form the basis of an XR experience, a content creator should implement best practices to ensure that, at its base, the experience is realistic, high quality, and keeps the user engaged. While shooting a video, the content creator should avoid excessive camera movement especially when shooting action scenes and level the horizon to prevent the user from experiencing motion sickness.lxx The content creator should also avoid panning and tilting, and use a slower pace than traditional videos.lxxi After shooting the video, the content creator has to stitch the footage together in order to create a 360 degree environment. This process requires investing in good quality stitching software.lxxii

Virtual Reality

If the content creator opts to add another dimension by creating a VR experience, there are a host of different factors to keep in mind to ensure that the user is engaged. The content creator should give allow the user to interact with the content in different ways, and guide the user by providing basic directional cues.lxxiii Google added to this list by conducting a study a couple of years ago, and found that giving the user an active role by allowing them to make decisions, enabling access to otherwise inaccessible spaces, and playing around with different camera angles can help ensure that the user is engaged.lxxiv

Augmented Reality

Alternatively, the content creator may opt for creating an AR experience. In designing the experience, the content creator should design and place the objects in a realistic manner, and think about the user’s comfort, i.e. how long they have to hold the device.lxxv The content creator should also anticipate spatial challenges for users in less-than-optimal physical environments.lxxvi In order to fully immerse the user, the experience should take up the entire display of the device, and perhaps provide the user with audio and haptic (tactile) feedback.lxxvii

 

Conclusion

It’s unsurprising that the sports industry has readily adopted XR through VR streaming and AR content. But in implementing XR, both content owners and service providers have to take a step back, and think about domestic and international licensing issues especially in the areas of trademark, copyright, right of publicity, and media law. After drafting a license agreement, a content creator must face logistical and creative decisions depending on the type of XR experience. Regardless of which experience the content creator opts for, XR has strong potential for the future by adding another dimension to the fan experience.

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About the Author

Laura Jeffords Greenberg

Laura Jeffords Greenberg

Laura is the Senior VP of Business & Legal Affairs at Little Star Media, Inc. in New York City, where she oversees business development and all legal matters. Previously, Laura worked as in–house counsel for Red Bull Media House in Austria. She also worked at a few law firms in Los Angeles, where she explored employment, entertainment, and sports law after graduating from Loyola Law School, Los Angeles.

T: +1 (347) 306-6803

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Diana M. Martinez

Diana M. Martinez

Diana is a third–year law student at Loyola Law School, Los Angeles, and a remote legal intern at Little Star Media, Inc. Born and raised in Toronto, she studied Psychology and specialized in Music Cognition at McMaster University. Her interest in extended reality piqued during the Pokémon Go phase, where her forthcoming law review article discusses data privacy issues in the AR context.

T: +1 (213) 357-8771

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