Jack Nicklaus Companies Landed Hole-In-One With Court’s Recent Injunction



Graphic of the Briefing by the IP Law BlogIn this 100th episode of The Briefing by the IP Law Blog, Scott Hervey and Josh Escovedo talk about a company founded by Jack Nicklaus that was awarded a preliminary injunction enjoining him from using his name, image, & likeness in commercial endorsement deals.

Watch this episode here.

Show Notes:

Scott:
A company founded by Jack Nicklaus, Nicklaus Companies, LLC has been awarded a preliminary injunction which enjoins Jack Nicklaus from using his name, image and likeness in commercial endorsement deals.  The judge who entered the ruling called it awkward, but its an interesting look at the interplay between non-compete clauses and the transfer of name, image and likeness rights.  We are going to discuss this case on this installment of the briefing by the IP law blog.

Scott:
In 2007, Jack Nicklaus and GBI Investors, a company owned and controlled by Jack Nicklaus, entered into an agreement with Nicklaus Companies, LLC. a company formed by real estate magnate Howard Milstein, whereby for $145m Nicklaus Companies purchased certain assets of GBI which included substantial portfolio of trademark registrations and applications related to Mr. Nicklaus’ name and signature and “Golden Bear” nickname in the United States and various other countries around the world – more than 600 in the US and 50 other countries.  Also included in the purchase was the exclusive right to the golf course design services rendered by GBI and marketing, promotional and branding businesses of GBI, which included the right to use Nicklaus’s name, image and likeness. The complaint alleges that Nicklaus Companies because the sole owner of and the rights to use all of the intellectual property related to Jack Nicklaus. GBI and Mr. Nicklaus became members of the Company, and Mr. Nicklaus became a manager.

Josh:
In 2017 Jack Nicklaus retired from his day to day involvement with Nicklaus Companies but, according to the complaint, he still provided services on Nicklaus Companies or its subsidiaries when required. However, the complaint alleges that after Jack Nicklaus retired he repeatedly participated in deals for the use of his name, likeness and trademarks, including personal endorsements outside of the Nicklaus Companies which included Jack Nicklaus being paid to promote a European Tour golf tournament, which included the tournament’s right to use certain Nicklaus IP.  The complaint also alleges that Jack Nicklaus attempted to steer a Nicklaus company opportunity for a marketing and endorsement relationship to a one-off personal appearance deal for his own personal benefit to the detriment of the Nicklaus Companies.  The complaint also alleges that Nicklaus is directly competing with the Nicklaus Companies for golf course design projects and he is personally negotiating to renew his endorsement deal with Rolex.

Scott:
In the plaintiff’s motion for the temporary restraining order, the plaintiff argues that the 2007 transaction resulted in the purchase of all   golf course design services branded and identified under the Nicklaus, Jack Nicklaus and Jack Nicklaus Signature brands, the various

marketing, promotional, and branding activities involving the use and licensing of Jack Nicklaus’ persona endorsements, other commercial rights to publicity, and intellectual property related to his identity and history as a recognizable public figure.  The transaction documents included a purchase agreement whereby GBI transferred the assets, rights and business interests to Nicklaus Companies, a non-compete agreement that Jack Nicklaus signed personally which restricted him from competing with the plaintiff, including providing his personal services as a spokesman or authorize the promotional use of his name or likeness for the business, products or services in competition with Nicklaus Companies for as long as GBI retains an ownership interest in the company, sufficient to elect at least two (2} members of the Board of Managers, but in no event for a period of less than ten (10) years after the date of the Closing”

Josh:
In opposition to the TRO, Jack Nicklaus argued that he is free to conduct his own business because the non-compete agreement he signed in connection with the 2007 transaction expired when he left Nicklaus Companies in 2017 and most certainly when GBI transferred all of its interests to in Nicklaus Companies back to the company in August 2022…which transfer the company contends is not valid.  Nicklaus argued that it was GBI that sold assets and businesses to the Plaintiffs, not him personally and that he was only bound by the non-compete.

Scott:
The crux of Jack Nicklaus’ argument was laid out by his counsel in the oral arguments on the TRO motion…that Jack Nicklaus personally never transferred any rights to the Nicklaus Companies personally, that GBI transferred whatever rights it had to the Nicklaus Companies and there was no transfer of Mr. Nicklaus’ name, image, and likeness to GBI before GBI made the transfer to the Nicklaus Companies.  His attorney argued that   The Nicklaus companies assumed that the initial transfer of rights between Jack Nicklaus and GBI occurred, but it didn’t, there’s no documentary evidence it occurred.

Josh:
So essentially, Jack Nicklaus’ attorney was arguing that, despite the transfer of all of the trademark rights and the rights to golf course design and endorsement and sponsorship business in the name of Jack Nicklaus, because Jack Nicklaus never transferred his name and likeness rights to GBI, once the non-compete expires he can use the name Jack Nicklaus to compete with the Nicklaus Companies in those business sectors.

Scott:
That’s right.  But it seems that argument did not resonate with the court.  After a 3 day hearing New York Supreme Court Justice Joel Cohen entered a preliminary injunction prohibiting Jack Nicklaus from using his name and likeness to compete with the Nicklaus Companies, although Jack Nicklaus can compete with the Nicklaus Companies for golf course design jobs, he can’t use his name and likeness in doing so.   While the non-compete has expired, the ownership of the Jack Nicklaus intellectual property is with the Nicklaus Companies, and that isn’t something that expires,” Justice Cohen said. “The exploitative value of his name as an endorser of products and the like is where the line is drawn.”

Josh:
The holding makes sense.  Where a public figure trademarks their name or nickname (such as “the Rock”) and then transfers those trademark rights, any right of publicity one may have in that name or nickname is subject to the trademark rights held by that third party.

Scott:
Agreed.  And this raises the question about how public figures should go about protecting their “brand”, especially when that brand becomes the brand of a business. It’s easy to address when that business is controlled by the celebrity, but when it’s no longer controlled by the celebrity or when the business takes out loans that are secured by business assets – which generally always include company trademarks, as seen in this case, it can become complicated and convoluted very quickly.