According to the complaint, in 2011, just after being drafted to the NBA, Leonard created a logo that included elements that were meaningful and unique to him. He alleges that he traced his notably large hand, and inside the hand, drew a stylized version of his initials “KL” and the number “2”, which he had worn for much of his career.
In October 2011, Nike and Leonard entered into an endorsement deal. According to the complaint, at some point during the term of the agreement, Nike began discussions with Leonard about creating a unique logo to affix to merchandise to be sold under the Nike agreement. The complaint alleges that Nike provided ideas to modify the logo Leonard had created, but Leonard rejected those ideas for the most part. The complaint alleges that Leonard forwarded Nike the logo he had created and told Nike he would permit them to use the logo during the term of the agreement under his supervision and control. The complaint further alleges that in early Summer 2014, Nike provided a proposal to Leonard with modifications to the logo that he accepted and that Leonard “granted Nike permission to affix that logo, based upon [Leonard’s original logo], on Nike merchandise during the term of the Nike agreement.” The complaint further alleges that “Leonard’s representatives confirmed that Leonard continued to own the [Leonard Logo].” According to the complaint, “Leonard never transferred the rights to the Leonard Logo to Nike” and claims that communications between the parties evidence that Leonard permitted Nike to use the logo for the “specific purpose of effectuating the Nike Agreement for the term of the contract.”
Leonard alleges that he continued to use the logo on non-Nike goods, including apparel and merchandise used for basketball camps, appearances and charity events, even while Nike was affixing the logo to Nike merchandise. Leonard further alleges that “consistent with Nike’s position as a party without any ownership in the Leonard Logo, Nike refused to act several times when Leonard’s representatives learned that third-parties were using the Leonard Logo without authorization.”
Leonard alleges that unbeknownst to him and without consent, Nike obtained a copyright registration for the logo and falsely represented in the application that Nike had authored the logo. Leonard informed Nike of his intent to use the logo in connection with clothing lines, footwear and on other products, but Nike has objected to such uses.
After the copyright registration was issued, Leonard filed trademark applications in the U.S. for the logo and for “KL2” as a word mark. Two of those applications (both for apparel) have since registered.
Leonard is no longer affiliated with Nike and the complaint alleges that now Nike has claimed that it owns all intellectual property rights in the logo and demanded that Leonard cease and desist from his use of the logo. The complaint further alleges that Leonard intends to use the logo in connection with apparel and footwear that he is actively developing and intends to use the logo in connection with items he plans on distributing at sports camps and charity events, as well as other products to be determined. Interestingly, Leonard is now under contract with New Balance; thus, it is no surprise that Nike wants to prevent one of its competitors from using the logo. It will remain to be seen how Nike responds to the complaint and what the underlying agreements say as to the ownership of the logo.
TAKEAWAY: When parties enter into agreements with one another concerning intellectual property, whether the parties are companies, athletes, celebrities, designers, artists, developers, or others, they need to ensure that the contract explicitly states who will own the intellectual property rights and establishes each party’s rights to use the intellectual property during and after the expiration of the agreement. If certain intellectual property is just being licensed, that should be clearly set forth in the agreement. If the intellectual property is meant to be assigned, that should be clearly stated in the agreement as well. Working out ownership issues related to intellectual property at the outset will help to avoid controversies like the one that has been created between Leonard and Nike.