Hank's IP Brew — Issue #6

Howdy, y'all.

This week: the college sports commission is drawing a hard line on what counts as a real NIL deal — and 187 athletes found out the hard way what happens when a deal looks more like a workaround. Plus: a major music publisher just sued one of the biggest AI companies in the world, and the roster of artists whose lyrics are at the center of it reads like the Billboard Hot 100.

Let's go.

Between January and February of this year, the College Sports Commission reviewed more than 3,900 NIL deals. It approved 3,700+ of them, worth $39.3 million. The other 187, worth $14.36 million, got rejected.

The reason? The CSC called them "manufactured" — deals structured not because a company genuinely wanted to pay a specific athlete for their name, image, or likeness, but because someone was trying to funnel money to athletes in ways that look like NIL but function like pay-for-play.

The case attracting the most attention involves 18 Nebraska football players whose deals were rejected for something called "warehousing." In those arrangements, Nebraska's multi-media rights partner, a company called Playfly, purchased athletes' NIL rights not for immediate use, but to hold them for future endorsement and commercial opportunities. The CSC's position: that's not a real NIL deal — it's a mechanism to park money with athletes now and figure out what to do with the rights later.

The Nebraska players are fighting back through arbitration, which will likely set a precedent for how these disputes get resolved going forward.

Here's the practical takeaway for athletes: the gap between "technically allowed" and "actually approved" in NIL just got a lot narrower. The CSC has made clear it's going to scrutinize deals where the business logic doesn't hold up — where it's hard to explain why this company would pay this athlete this amount if the goal were anything other than topping up their compensation.

That scrutiny doesn't just apply to elaborate warehousing schemes. It applies to any deal where the structure is driven more by what you can get away with than by what a genuine sponsor relationship looks like.

Before you sign: make sure there's a real commercial rationale behind your deal. What is the company actually buying? How does your NIL benefit their brand in a way they could explain out loud? If the answer involves more than a couple of steps, get a second opinion before you sign.

On March 18th, music company BMG Rights Management sued Anthropic in California federal court, alleging that Anthropic scraped and reproduced hundreds of copyrighted song lyrics to train the Claude chatbot — and that Claude continues to reproduce those lyrics in its outputs.

The artists whose work is at the center of the lawsuit: the Rolling Stones, Bruno Mars, Ariana Grande, Justin Bieber. BMG, which holds the publishing rights for all of them, says Anthropic used those lyrics without authorization and without compensation.

This case has a few features worth paying attention to.

First, BMG isn't a small indie label hoping to land a settlement. It's one of the largest music publishing companies in the world. When BMG files a copyright suit, it does so with resources, deep licensing experience, and a clear theory of the case. The lawsuit alleges both that Anthropic used the lyrics to train Claude and that Claude generates those lyrics in response to user prompts — two distinct harms, and a deliberate choice to bring both claims together.

Second, the roster matters strategically. When your complaint includes "Satisfaction" by the Rolling Stones and Bruno Mars's "Uptown Funk," you don't need to explain to a judge — or a jury — why those lyrics are valuable. Everyone already knows. The star power isn't incidental; it's a litigation choice.

Third, notice what's different here from the music AI lawsuits of a year ago. The early suits against companies like Suno and Udio focused on AI systems that generate music in the style of known artists. The BMG suit is more direct: Claude was allegedly trained on lyrics, and Claude reproduces those lyrics. That's closer to the argument the New York Times made against OpenAI — not "you made something that competes with us," but "you copied us, and you're still copying us every time a user asks."

For musicians, songwriters, and anyone who has ever published lyrics anywhere online: your words are a licensable asset. BMG's theory of this case is that licensing is the correct path — and that copying without a license is infringement regardless of what you do with the copy afterward.

The case is in its early stages. But if BMG wins on even part of its theory, the AI training data landscape shifts again — this time with song lyrics explicitly in scope.

See you next time,

Hank

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