American Needle v. NFL

The Supreme Court has accepted a case involving the National Football League's exclusive licensing deal for sports merchandise.

American Needle Inc. designs, manufactures and sells apparel and hats with the names and logos of professional sports teams. For many years, the company held a non-exclusive license from the NFL to produce and sell merchandise bearing the logos of the league's 32 teams.

The NFL eventually did away with its practice of granting multiple trademark licenses and instead gave Reebok International Inc. exclusive rights to sell NFL apparel and headwear, court records say.

American Needle filed suit against Reebok, the NFL, the owners of the 32 NFL teams and the league's licensing arm, National Football League Properties Inc. The suit, filed in the U.S. District Court for the Northern District of Illinois, alleged the defendants violated the Sherman Act by illegally restraining trade and attempting to monopolize the market for NFL apparel and headwear.

The lower court granted summary judgment for NFL, finding that the Sherman Act was not meant to apply to parent-subsidiary relationships such as that found between the NFL and its individual teams.

Last August, a three-judge panel on the 7th U.S. Circuit Court of Appeals affirmed the lower court's decision, finding that the facts showed that the NFL teams shared a common economic interest in licensing its intellectual property. The court found that nothing in the Sherman Antitrust Act prohibited the NFL teams from cooperating in order to compete with other forms of entertainment.

"Asserting that a single football team could produce a football game is less of a legal argument," the court noted, than "a Zen riddle: Who wins when a football team plays itself?"

The NFL, along with American Needle, has asked the Supreme Court to hear the case in the hopes that the justices will reach an even broader decision to insulate the NFL for future antitrust lawsuits.

"Member clubs of the NFL have no independent value, no purpose, indeed no meaningful reason for existence but for their participation in the league itself," the NFL argued in the brief.

The NBA and the NHL both filed friend-of-the-court briefs siding with the NFL.

The solicitor general's office, after being asked by the Supreme Court to weigh in on the current case, urged the court not to take it. The government said the lower court ruling doesn't conflict with any decisions by the Supreme Court or other appeals courts -- contrary to arguments made by American Needle and the NFL.

Question presented: Whether NFLP, the NFL, and the teams functioned as a “single entity” when granting the company an exclusive headwear license and therefore could not violate Section 1 of the Sherman Act, 15 U.S.C. 1, which requires proof of collective action involving “separate entities.”

A unanimous Supreme Court ruled today that the National Football League could be subject to antitrust action with regards to its exclusive licensing deal for sports merchandise.

American Needle Inc. designs, manufactures and sells apparel and hats with the names and logos of professional sports teams. For many years, the company held a non-exclusive license from the NFL to produce and sell merchandise bearing the logos of the league's 32 teams.

The NFL eventually did away with its practice of granting multiple trademark licenses and instead gave Reebok International Inc. exclusive rights to sell NFL apparel and headwear, court records say.

American Needle filed suit against Reebok, the NFL, the owners of the 32 NFL teams and the league's licensing arm, National Football League Properties Inc. The suit, filed in the U.S. District Court for the Northern District of Illinois, alleged the defendants violated the Sherman Act by illegally restraining trade and attempting to monopolize the market for NFL apparel and headwear.

The lower court granted summary judgment for NFL, finding that the Sherman Act was not meant to apply to parent-subsidiary relationships such as that found between the NFL and its individual teams.

Last August, a three-judge panel on the 7th U.S. Circuit Court of Appeals affirmed the lower court's decision, finding that the facts showed that the NFL teams shared a common economic interest in licensing its intellectual property. The court found that nothing in the Sherman Antitrust Act prohibited the NFL teams from cooperating in order to compete with other forms of entertainment.

"Asserting that a single football team could produce a football game is less of a legal argument," the court noted, than "a Zen riddle: Who wins when a football team plays itself?"

The NFL, along with American Needle, has asked the Supreme Court to hear the case in the hopes that the justices will reach an even broader decision to insulate the NFL for future antitrust lawsuits.

"Member clubs of the NFL have no independent value, no purpose, indeed no meaningful reason for existence but for their participation in the league itself," the NFL argued in the brief.

The NBA and the NHL both filed friend-of-the-court briefs siding with the NFL.

The solicitor general's office, after being asked by the Supreme Court to weigh in on the current case, urged the court not to take it. The government said the lower court ruling doesn't conflict with any decisions by the Supreme Court or other appeals courts -- contrary to arguments made by American Needle and the NFL.

On May 24, 2010, a unanimous Supreme Court reversed and remanded the lower court order in an opinion by Justice John Paul Stevens.

"Although NFL teams have common interests such as promoting the NFL brand, they are still separate, profit-maximizing entities, and their interests in licensing team trademarks are not necessarily aligned," Stevens wrote.

Question presented: Whether NFLP, the NFL, and the teams functioned as a “single entity” when granting the company an exclusive headwear license and therefore could not violate Section 1 of the Sherman Act, 15 U.S.C. 1, which requires proof of collective action involving “separate entities.”