DraftKings' Legal Hurdle: MLB NFT Lawsuit Appeal Denied

DraftKings Inc. has encountered a significant legal setback as a federal judge has denied its request for an early appeal in a lawsuit concerning the use of Major League Baseball (MLB) players' images for non-fungible tokens (NFTs). The ruling allows the lawsuit from the MLB Players Association to proceed, raising questions about the use of athletes' likenesses in digital assets.

Key Takeaways

• DraftKings' request for an interlocutory appeal was denied by Judge Karen S. Marston.

• The lawsuit, filed by MLB Players Inc., challenges the use of player images for NFTs.

• The judge emphasized the need to avoid confusion and delays from piecemeal litigation.

Background of the Lawsuit

In 2024, MLB Players Inc. filed a lawsuit against DraftKings and Bet365 Group Ltd. in the U.S. District Court for the Eastern District of Pennsylvania. The lawsuit centers on the companies' alleged misappropriation of players' names, images, and likenesses for commercial gain through NFTs.

DraftKings contended that the publicly available information about players falls under newsworthiness exceptions, which should allow them to use these images without infringing on publicity rights. However, the court's recent ruling indicates that this argument will not suffice to dismiss the case at this stage.

Judge's Ruling

Judge Karen S. Marston's decision to deny the appeal was based on several factors:

1. Public Interest Exception: The judge noted that the case explores the boundaries of public interest exceptions to legal bans on misappropriating another's likeness, but this alone does not justify an immediate appeal.

2. Concerns of Delay: Marston expressed concerns that allowing an interlocutory appeal could lead to confusion and delays in the litigation process, which she deemed undesirable.

3. Standing of MLB Players Inc.: The judge also rejected DraftKings' argument regarding the standing of MLB Players Inc. to bring the lawsuit, stating that the issue was not adequately raised in the motion to dismiss.

Implications for DraftKings

This ruling represents a significant hurdle for DraftKings as it navigates the complexities of intellectual property rights in the rapidly evolving NFT market. The outcome of this case could set important precedents regarding the use of athletes' likenesses in digital formats, potentially impacting how sports organizations and companies engage with NFTs in the future.

Legal Representation

The legal teams involved in this case include:

• MLB Players Inc.: Represented by Winston & Strawn LLP and Langer Grogan & Diver PC.

• DraftKings: Represented by Royer Cooper Cohen Braunfeld LLC and Debevoise & Plimpton LLP.

As the case progresses, both parties will likely continue to prepare for a lengthy legal battle, with the potential for significant implications for the sports and digital asset industries.

Sources

• DraftKings’ Bid for Early Appeal Rejected in MLB NFT Lawsuit, Bloomberg Law News.