Celebrity endorsements of products and companies have long been commonplace. However, where these celebrities were once paid with money, many are instead accepting equity. This is particularly true when it comes to celebrities endorsing start-ups and their products. 

Last week, The New York Times ran an article which stated that equity for endorsement agreements are gaining in favor with celebrities due to the recent explosion of the start-up scene, especially in California, and the deal's ability to create substantial income should the company become successful. This is especially true for professional athletes.

Professional athletes have particularly taken to equity for endorsement agreements. This is likely due to the potential of receiving a windfall and the players' understanding that athletic careers can be lost at any time. In recent years, several athletes have made headlines by entering into equity agreements. One of the most notable equity for endorsement agreements was David Wright's acquisition of .5% of Glaceau, the creator of Vitamin Water. When Glaceau was bought in 2007 by Coca Cola for $4.1 Billion, Wright's .5% was worth an estimated $20 Million. In 2010, Tom Brady entered into an equity deal with Under Armour, a now ubiquitous athletic apparel company. Most recently, in June, 2014, Richard Sherman entered into an equity for endorsement agreement with BODYARMOR SuperDrink.

However, accepting equity for endorsements has significant benefits and disadvantages for the endorsing athlete. 

Benefits

• Wealth building- Athletes have short playing careers and therefore have a short period of time to maximize their profits by capitalizing on their on-field success. Equity for endorsement agreements while the athlete is still playing can provide substantial income even after the athlete's playing days have ended. 
• Favorable tax treatment- Standard endorsement agreements for cash are taxed as income. However, equity for endorsement agreements are taxed as capital gains, which is generally a much lower rate than income tax, when the endorser sells the stock. 
• Potential windfall- As with David Wright, there is always the potential that the equity for endorsement agreement could result in an extremely large payday for the endorser. Of course, there are many factors involved in such an occurrence, most of which have nothing to do with the endorser. Researching the company and examining its financials (if possible) should allow the athlete a better prediction of the company's success.
• Risk of investment- There is no question that any investment involves some level of risk, and that many athletes' financial investments have previously led them to financial ruin. However, equity for endorsement agreements carry a fairly low level of financial risk because the athlete would not be investing money. Instead, the athlete is only investing the time necessary for the required appearances and commercials. Therefore, even if the company folds, the athlete would be in the same financial position as he started. The low risk-high reward potential of endorsement for equity agreements is a substantial benefit to the athlete.

Disadvantages

• Delayed payment- Equity agreements may not be suitable for athletes who aren't financially stable or otherwise require immediate payment. These agreements can require that the endorser hold the stock for a period of time (several years) before it can be sold, thus delaying when the endorser can receive money for their endorsement. 
• Stocks are subject to division at divorce- In many states, stocks acquired during a marriage are considered community property, or are otherwise subject to distribution upon a divorce. Therefore, a portion of any equity in a company gained during marriage can be lost through divorce. Of course, this may not be a problem if a prenuptial or postnuptial agreement is in place. By contrast, a standard endorsement agreement for money raises the endorsers income, which could have other effects within a divorce proceeding, but does not directly alter property distribution. 
• Risk of investment- Although the risk of investment can be partially mitigated through careful planning and research, it must be noted that there is a chance that the company can fold, leaving the endorser with nothing. This does not leave the endorser in any worse of a position than prior to the endorsement, but ultimately receiving nothing for the endorsements is certainly a disadvantage that must be weighed. 
• Being tied to the company- Equity agreements associate the endorsing athlete with the company for better or worse. These agreements can require a vesting period of several years, with little means of canceling the contract (unless a reverse morals clause is present) should the company or its founder do or say something which damages the business and its reputation. Potentially, the damage to the business' reputation can hurt the endorsing athlete's established brand through their association. 

Although athletes and celebrities may be agreeable to equity for endorsements due to the low risk/high reward potential, companies do not freely offer such opportunity. Many companies are protective of their equity, and within good reason. My next post will discuss the benefits and disadvantages of equity agreements to companies, who bear a much bigger risk when offering equity for endorsements.

Protecting one's intellectual property online can seem like an onerous task. This is especially the case with copyrighted content. However, content creators can help protect their copyrights by taking several actions.

Keep in mind that according to the U.S. Copyright Office, a copyright is a "form of protection grounded in the U.S. Constitution and granted by law for original works of authorship fixed in a tangible medium of expression. Copyright covers both published and unpublished works."  Notably, copyrights protect the expression of ideas, and not the ideas themselves. Additionally, copyrights attach immediately when the work is fixed in some form of tangible medium of expression (like a book, recording, painting, blog post, etc.) Although it is not necessary to register a copyright for protections to attach, a registered copyright has additional benefits should someone infringe. For more information on what a copyright is, see my earlier post here.

So what steps can you take to protect your creative, copyrighted works? 

Place a copyright notice on your work. In the context of protecting copyrights online, you can place a copyright notice alongside your work. This need not be complicated, and can simply state "Copyright (your business' name) 2014. All Rights Reserved." Although this isn't necessary, it informs potential infringers that you are aware of your rights with respect to the work, potentially discouraging them from infringing. For photos, this can be effectively accomplished by watermarking your images. 

Define others' rights in utilizing your work. Create a policy (and place a link to it on your site) that tightly defines how people may use your content with and without your permission. Effectively, this creates a route for potential infringers to utilize your work in a manner that respects your copyrights by offering them a limited license under terms you decide.  Even better, these terms establish how other people can freely advertise your work.

Consider registering your copyright. Some content, especially if used as a means of generating income, may warrant a Federal Copyright Registration. This is purely optional, although there are benefits to registering a copyright which primarily manifest during litigation. Some of the added benefits of registration include: the ability to sue for attorney's fees; the ability to sue for statutory damages (which is easier to prove than actual damages); a presumption (after 5 years) that the copyright is valid and all facts in its registration are true;  the registration itself constitutes notice that said content is copyrighted. Additionally, registration may allow you to transfer copyrights easier. 

Find out if your copyrighted material is being infringed upon. Once you are aware that your work is being infringed upon, you can take steps to have the infringing work taken down, or at least attribute credit to you, whichever you deem appropriate. There are many different tools you can use to find out if your works have been infringed upon. Not surprisingly, a Google search is a great place to start as the search engine has both text and image search capabilities. Sound recordings are much more difficult to police as there can be multiple copyrighted elements, in addition to the technical difficulties of searching audio recordings. 

Contact the infringer. Generally, there is some manner available to contact someone that improperly posts your content, be it via email, comment, or message. Utilize whatever method you believe to best contact the infringer and request that they remove your content, or point them in the direction of your use policy and request that they abide. If they fail to remove the content or fail to adhere to the policy, locate the website's ISP information. To do so, you can use this site or this site. Once you have the ISP's information, send a Takedown notice (free samples can be easily found through a Google search) to the ISP, which states that one of the sites it is hosting contains infringing material. The Digital Milennium Copyright Act allows for an ISP to be held liable for hosting infringing content. Generally, once the ISP is notified that they are hosting an infringing work, the website will be taken down so the ISP can avoid liability. 

When to hire an attorney. If the ISP fails to remove the content, or take down the website, then you may wish to hire an attorney to prosecute your claim of intellectual property infringement. If you have yet to register the copyright of your protected content, then you may have to do so before any litigation may commence. 

Following these steps will help you protect your copyrighted content online, allowing you to only worry about creating more content to share with the world. 

On September 8, 2014, TMZ Sports released the video of Ray Rice striking his fiance in the elevator of an Atlantic City Casino. Until this point, the NFL claimed it had not seen the video, despite requesting it from the police. Thus, the video played no part in determining Rice's initial two game suspension (which I initially discussed here). 

Although the NFL now faces questions about the sufficiency of its investigation process, the League should also be faced with a lawsuit. After TMZ released the video, Rice was released by the Baltimore Ravens. More importantly, the NFL indefinitely suspended RIce from the League, despite having initially suspended Rice for two games. In other words, the NFL punished Rice for the same offense twice. 

Conceptually, punishing a player twice for the same offense is a problem. This would allow the League's Commissioner to reserve seemingly unending power to exact punishment and then change his mind as he sees fit. Importantly, although the Commissioner is granted the authority to punish players under Article 46 of the Collective Bargaining Agreement ("CBA") entered into by the NFL and the NFL Players Association ("NFLPA"), which is further specified in the NFL Personal Conduct Policy, the CBA is silent as to multiple punishments by the Commissioner for the same offense. 

The Commissioner's second punishment should be challenged in court. In order for Rice to succeed in challenging that the Commissioner exceeded his authority by disciplining Rice a second time for the same offense, he would have to prove that the indefinite suspension was arbitrary and capricious. This burden of proof, although deferential to organizations as decision makers, may be achievable for Rice. 

In support of his claim, Rice would rely heavily on the NFL's investigation process which led to his first suspension. During the investigation, the NFL gathered evidence it deemed necessary to discipline Rice.  The NFL recently stated that it requested "any and all information about the incident, including the video from inside the elevator" and that "[The elevator] video was not made available to us and no one in our office ha[d] seen it until [TMZ released it]." 

Despite being aware of the existence of the elevator video and knowing the League had not seen it, the Commissioner decided to discipline Rice by suspending him for two games. Therefore, the Commissioner's second disciplining of Rice can be seen as arbitrary and capricious because there is no rational connection from the indefinite suspension to now seeing the contents of the video they implicitly rejected to pursue. In essence, the NFL cannot claim that the contents of the video are new evidence, as they were aware of the video's existence and chose not to ensure they saw the video before exacting discipline. 

Another point that Rice could raise, albeit a weaker one, is that he was disciplined a second time absent any investigation, which is arbitrary and capricious as the League violated its own rules. Within less than a day of the tape's release, the NFL suspended Rice indefinitely. The NFL Personal Conduct Policy states that "Upon learning of conduct that may give rise to discipline, the League may initiate an investigation" and "Upon conclusion of the investigation, the Commissioner will have full authority to impose discipline as warranted." The Personal Conduct Policy only discusses an expedited disciplinary process with respect to repeat offenders. However, Rice's single incident of known domestic violence is the only time his conduct had given rise to an investigation or discipline. Therefore, under its own terms, the NFL would be treating the viewing of the elevator video as a separate disciplinary incident due to the lack of an investigation. However, as the video portrayed the known actions in the same event as the first disciplinary matter, any additional discipline would be arbitrary and capricious. 

Further evidence that the NFL is treating the elevator video as a separate discipline-worthy incident comes from the recent changes to the Personal Conduct Policy. In the fallout from the perceived leniency of Rice's initial two game suspension, the Commissioner mandated that enhanced penalties for domestic violence be placed within the Personal Conduct Policy. Under these enhanced penalties, a second domestic violence offense mandated that the player would be indefinitely suspended from the NFL, and would only be allowed to apply for reinstatement after a year. Such discipline is identical to that received by Rice following the release of the elevator video. However, as noted above, the release of the elevator video cannot be effectively said to be a separate disciplinary event. 

Should Rice be able to meet the arbitrary and capricious burden, the Court would then overturn his indefinite suspension and instead, his previous two game suspension would hold. However, Rice may not wish to bring suit out of public relations concerns. Certainly, his image has been rightfully tarnished by his actions, and bringing suit to be reinstated in the NFL may create additional negative perceptions. However, the NFLPA has the ability to bring suit on his behalf.  The NFLPA is particularly interested in this matter because of the precedent that it could set on player discipline. Simply put, the NFLPA does not want the Commissioner to be able to discipline a player twice for the same offense. Should it bring the suit on behalf of Rice, he would still have the benefit of having his indefinite suspension overturned if the NFLPA succeeds. 

Although Rice's actions were truly despicable, League officials must be forced to correctly discipline players on their first attempt. Otherwise, no discipline is ever final.

Earlier today, I added a Media page to the website, where I will post videos and articles I am featured in. Currently, there are two videos and an article posted. Stay tuned for more, and also keep an eye on the blog for video posts. 

Below is the most recent video, which you can find on the Media page. In the video, I discuss my practice and the O'Bannon v. NCAA ruling on the Price of Business show on Business KTEK 1110 in Houston.