Thomas Fan Files Opposition to NBA’s Motion to Dismiss NBA Top Shot Lawsuit

News | June 12, 2024 By:

On Friday, May 31, 2024, Thomas Fan filed an opposition to the National Basketball Association’s (NBA) motion to dismiss his lawsuit in the US District Court for the Northern District of California. Fan claims that the NBA and Dapper Labs, the company behind the popular NBA Top Shot platform, formed a joint venture or partnership to create and operate the blockchain-based collectible highlights platform.

In his opposition filing, Fan argues that the relationship between the NBA and Dapper Labs extended well beyond a typical intellectual property licensing agreement. Fan alleges that the NBA contributed significant amounts of its intellectual property, brand and goodwill to help develop and promote the NBA Top Shot platform. NBA Commissioner Adam Silver is quoted stating that NBA Top Shot “is not some virtual world: it’s the NBA.”

Fan also claims that the NBA took an active role in controlling and guiding the strategic direction of NBA Top Shot. The filing states that the NBA had approval rights over key business decisions and meaningful input into discussions about the platform’s operations. Additionally, the NBA reportedly collected personal user data from the NBA Top Shot website for its own commercial purposes.

From a financial perspective, Fan argues that the NBA shared in both the profits and risks of NBA Top Shot through a profit-sharing model. Specifically, the NBA received a percentage of sales revenues from the platform. Since the NBA’s compensation was tied directly to the success of the business, the filing states that the NBA also shared in any potential losses. There is also an allegation that the NBA received equity ownership in Dapper Labs.

Legally, Fan asserts that several past court cases have held that video or digital content production partnerships can qualify as joint ventures – even if the parties attempt to disclaim that status contractually. One such case involved an agreement to produce and syndicate a TV show. Fan argues the nature of the NBA and Dapper Labs’ relationship reveals their intent to jointly develop and promote NBA Top Shot as a new platform, rather than maintaining an arms-length licensing deal.

In its motion to dismiss, the NBA argues that the parties’ agreement expressly disclaims the existence of any partnership or joint venture. It also claims the compensation it receives should be viewed simply as a royalty agreement for use of its intellectual property, citing the 2003 Dinaco v. Time Warner case. However, Fan’s opposition argues the NBA’s conduct and level of involvement in NBA Top Shot extended far beyond a typical IP licensing setup.

Fan concludes by stating the totality of evidence – including the NBA’s promotion efforts, financial stake, and active management role – is enough to plausibly allege intent by the parties to act as joint venturers under California law. As the case involves interpretation of the parties’ intentions based on their conduct, Fan argues these are questions of fact that should not be resolved at the motion to dismiss stage.

Please contact BlockTribune for access to a copy of this filing.