After recently defeating one of the greatest NBA dynasties on the court, Raptors star and NBA Finals MVP, Kawhi Leonard is set to take on one of the world’s largest brands off the court. On June 3, in the middle of the NBA Finals, Leonard filed a lawsuit in the U.S. District Court of California against Nike for allegedly stealing an original design he claims he created before signing an endorsement deal with Nike. Although commonly referred to as the “Klaw” logo, Nike’s US copyright registration of said logo refers to it as the “Kawhi Leonard Logo.” The logo, a nod to Leonard’s famously large hands, includes an outline of his hand in a stylized fashion containing both his initials and his jersey number. Leonard claims he contemplated and conceived a personal logo in college and later refined the logo in late 2011 before signing with Nike.
The conflict began not long after Leonard’s endorsement deal with Nike ended and he became the face of New Balance’s relaunched basketball program in November. In December, Nike contacted Leonard’s representatives and demanded that he cease all use of the logo on all non-Nike merchandise. In response, Leonard, who owns two trademarks consisting of and inspired by the logo, requested that Nike rescind its copyright in the logo. However, Nike countered that it owned all intellectual property rights in the logo and demanded that all use of the logo cease immediately.
According to the suit, “as part of an endorsement deal with Nike, Leonard allowed Nike to use on certain merchandise the logo he created while Leonard continued to use the logo on non-Nike goods.” However, the suit goes on to claim that Nike, without Leonard’s knowledge or consent, obtained a copyright registration and claimed ownership of the visual material as a work for hire.
Endorsement deals, such as the one Leonard signed with Nike, do not immediately transfer ownership of previously designed works. For Nike to claim ownership of the work, there would have had to be language somewhere within the agreement between Leonard and Nike that specifies it as a work for hire. While a copy of the agreement between Leonard and Nike has not been made public, the claim does however indicate that Nike referred to the logo as “Kawhi’s logo” in written communications and that the company refused to act on several occasions when third-parties were using the logo without authorization.
Endorsement deals can mean big money for athletes, and no endorsement deal is more significant in the NBA than the one between a player and a sneaker company. For example, the Jordan brand reportedly generated $3.1 billion in revenue for Nike in 2017 – $100 million of which went to Michael Jordan himself. Another example is rookie sensation, Zion Williamson, who is likely to reportedly draw between $9-10.5 million annually from a shoe deal before he even sets foot on an NBA court.
The timing of the lawsuit makes sense when considering the increasingly competitive battle for endorsers in the basketball footwear market. In 2015, estimates indicated that Nike controlled roughly 93% of the U.S. basketball shoe market, but with brands like Puma and New Balance recently reentering the market, and more established brands like Adidas and Under Armour gaining more endorsers, it is likely that Nike’s control over the market is going to shift. In addition, creative source identifiers like Leonard’s “Klaw” logo add value to brands and provide a competitive advantage, but since December, when Nike demanded Leonard cease all use of the logo, he and New Balance have been unable to take advantage of the logo in one of the most exciting playoff runs in recent NBA memory.
As a result, Kawhi Leonard will be looking to clear ownership of his logo this off-season in the hopes to better capitalize on his “Jordan-esque” play in the future.
Written by Alexandre Dumais, IPilogue Editor and JD Candidate at Osgoode Hall Law School. Alexandre is also the Director of Sports, Osgoode Entertainment and Sports Law Association.