The NBA has notified Cleveland Cavaliers guard J.R. Smith that he could face a fine for each game he fails to cover-up a new tattoo on his right leg. In August, Smith debuted a new tattoo on the back of his right leg displaying the company logo of Supreme, an American clothing brand. Smith has taken to Instagram to complain about the NBA’s warning. However, as explained below, the NBA not only has the right to fine Smith but may have obligations in sponsorship contracts to do so. Also, given that NBA players collectively share in revenue generated by the league’s apparel contracts, those players likewise have a financial stake in the NBA protecting the intellectual property rights of sponsors—even when such protection limits the tattoo autonomy of individual players.

You might not be familiar with Supreme. James Jebbia, a British fashion designer, founded the company in 1994. At the time, Supreme marketed clothing and skateboards mainly to skateboarders. Over the years, the brand has grown considerably in popularity and now appeals to additional constituencies, including to those in the hip-hop and music industry. Supreme has stores in New York, Los Angeles, London, Tokyo and Paris and it recently launched a collaboration with Louis Vuitton. According to Complex, Supreme has become a billion-dollar streetwear brand and expects continued growth on a global scale.

Smith seems to regard the NBA’s warning as something of an invasion of privacy. He complains, “these people in the league office are something else!” In most contexts, Smith would have a valid point. In general, the NBA can’t forbid a player from displaying a tattoo. And in general, the NBA wouldn’t want to forbid a player from displaying a tattoo.

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This is already borne out: most NBA players are tattooed and display those tattoos proudly—and the NBA has made no attempts to change that. In 2014, 356 Mission Gallery Director Ethan Swan tracked every tattoo in the NBA and found that 55% of NBA players are tattooed. Some NBA players have been tattooed multiple times. Los Angeles Clippers forward Mike Scott, for example, says he has over 20 tattoos, most of which are of emojis. The popularity of tattoos with NBA players is consistent with broader social trends. Tattoos have become more prevalent in the U.S., particularly among adolescents and young adults. Suffice to say, the NBA has no plans to ban tattoos or discourage players from being tattooed. Tattoos are part of the NBA culture and they are here to stay (both literally and figuratively).

The difference with Smith’s tattoo, which is of a company logo, is that it runs afoul of the collective bargaining agreement signed by the NBA and Smith’s union, the National Basketball Players’ Association. Article XXXVII concerns player appearances and uniforms. Article XXXVII unambiguously states:

Other than as may be incorporated into his Uniform and the manufacturer’s identification incorporated into his Sneakers, a player may not, during any NBA game, display any commercial, promotional, or charitable name, mark, logo or other identification, including but not limited to on his body, in his hair, or otherwise.

This language is not new. It was also contained in the CBA that governed NBA players between 2011 and 2017. This language was used by the NBA in 2013 when it forbid New York Knicks guard Iman Shumpert from shaving an Adidas logo into his hair. The NBA also utilized this language last year when it asked Washington Wizards forward Kelly Oubre to remove his Supreme leg sleeve. Terms in the CBA govern the employment of players and are clearly enforceable by the NBA.

As a supplemental source of authority, the league can cite the NBA’s official rulebook. Comment H to the rulebook concerns “player/team conduct and dress.” This comment expressly states that “the only article bearing a commercial ‘logo’ which can be worn by players is their shoes.” While there may be a linguistic argument over whether a tattoo—which is a permanent body modification and not an article of clothing—is “worn” by a player, the spirit if not the language of Comment H supports the league’s decision to restrict Smith’s appearance.

NBA may have no choice but to enforce intellectual property rights

The NBA might be contractually required to enforce Article XXXVII against Smith. The NBA, like other pro leagues, has entered into sponsorship agreements with assorted companies, including those that are competitors or potential competitors of Supreme. Nike, for example, signed an eight-year deal with the NBA in 2015. The deal is reportedly worth about $1 billion and it made Nike the official sponsor of NBA uniforms. The fact that the NBA has a contractual relationship with Nike likely explains why the league permits Los Angeles Clippers center Marcin Gortat to display his leg tattoo of the Michael Jordan “Jumpman” logo. The logo and the Air Jordan brand are Nike properties and therefore do not interfere with the NBA’s sponsorship arrangement with Nike. The NBA has also allowed the individual 30 teams to sell jersey sponsorships, with logo patches locatable on the left shoulder of uniforms. With that in mind, NBA teams have signed deals with companies like General Electric, Goodyear, Harley Davidson many others. It is common in sponsorship deals that the sponsored party—in this the NBA and NBA teams—be required to enforce sponsors’ intellectual property rights. This is particularly true when sponsors’ rights risk being diluted or compromised by an inadvertent promotion of a rival company.

Whether Supreme (which is reportedly worth about $1 billion) is a competitor of Nike (which, according to Interbrand, has a brand value alone of $27 billion) may warrant debate. However, there is no debate that both companies produce and market streetwear and skateboarding apparel and thus compete for the same kinds of customers. If the NBA fails to protect sponsors’ rights and interests, the league could be required to return money on existing sponsorship deals. The league would also lose bargaining leverage in future negotiations given that sponsors would have developed concerns that the league is unable to adequately protect sponsored brands.

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NBA players’ interests are not necessarily aligned with those of Smith

NBA players also have a financial interest in the league enforcing intellectual property rights, even when the league does so to the detriment of one particular player. NBA players and NBA owners share “basketball-related income,” better known as BRI. BRI includes revenue generated by apparel contracts, as well as revenue generated by NBA broadcasts, arena signage and other properties. NBA players receive between 49% and 51% of BRI. A higher BRI translates into a higher salary cap for NBA teams and thus higher salaries for players. If the NBA loses money in sponsorship deals because a player’s tattoo compromises a sponsorship agreement, NBA players will share in that loss. While some NBA players may be sympathetic to Smith on a philosophical level, they are collectively better off if the league protects players’ financial interests.

Supreme may be the actual winner of this controversy, but the NBA still has to act

While the NBA is within its rights to require Smith to cover his Supreme tattoo, and while the league may, in fact, be contractually compelled to make this requirement of Smith, Supreme has become more known to NBA fans through this controversy. This is one of the drawbacks of a well-known company like the NBA enforcing its intellectual property rights—doing so can have the unintentional consequence of promoting a company that has not paid for the right to associate with the well-known company. In that respect, Supreme can “free ride” off the attention Smith has generated over his tattoo.

The NBA no doubt realizes that Supreme gains notoriety through Smith publicly airing his grievances. That said, if the league takes no action against Smith, it would fail to deter other NBA players from adopting the same scheme. The league knows that non-sponsored companies seeking attention on NBA games have financial incentives to encourage players to wear tattoos bearing companies’ logos. Doing so would allow those companies to market their brand on NBA games while circumventing the obligation to pay the NBA for the right to do so. Likewise appealing to those non-sponsored companies, they can use NBA players’ tattoos to dilute the value of rival companies’ sponsorships with the NBA.

At the end of the day, if the NBA doesn’t protect its brand, it hurts its brand.

Michael McCann is SI’s legal analyst. He is also Associate Dean of the University of New Hampshire School of Law and editor and co-author of The Oxford Handbook of American Sports Law and Court Justice: The Inside Story of My Battle Against the NCAA.