The National Football League appealed to the United States Supreme Court regarding a broad antitrust protection that would have declared the league a single entity, versus the 32 teams that is. The Court rejected that notion, however.
“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,” remarked Justice John Paul Stevens, who wrote the majority opinion for the court, in a unanimous decision.
It is a decision that the Court decided to reverse from a lower court decision that ruled in favor of the NFL.
American Needle Inc. sued the NFL claiming that the league did not act properly and could not use the protection of antitrust when the league canceled their contract with the company. The NFL gave their exclusive hat contract to Reebok for 10 years.
The lower court ruled in favor of the NFL, and American Needle appealed the ruling. The NFL went along with it however, in hopes of establishing a larger antitrust protection.
Currently, only Major League Baseball sports antitrust protection on the grand scale. The other major leagues in the United States, the NHL, NBA, NCAA and NASCAR were all interested parties in the Supreme Court’s ruling.
“Directly relevant to this case, the teams compete in the market for intellectual property,” Stevens said in the opinion of the court.. “To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks.”
American Needle was not the only company to make headwear for the NFL prior to the Reebok contract.
“Decisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions that ‘deprive the marketplace of independent centers of decisionmaking … and therefore of actual or potential competition,’ ” Stevens stated.
“Just because NFL teams have a single organization, the National Football League Properties, to jointly develop, license and market its logos does not mean it can escape antitrust scrutiny,” Stevens added. “If the fact that potential competitors shared in profits or losses from a venture meant that the venture was immune from” antitrust law, Stevens said, “then any cartel” could evade the antitrust law simply by creating a ‘joint venture’ to serve as the exclusive seller of their competing products.”
The NFL contested that a decision not in favor of their position would “would convert every league of separately owned clubs into a walking antitrust conspiracy.”
However, the high court did not buy the argument.
“The fact that NFL teams share an interest in making the entire league successful and profitable, and that they must cooperate in the production and scheduling of games, provides a perfectly sensible justification for making a host of collective decisions,” Stevens said.
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