IBJNews

NFL must face antitrust suits, U.S. high court rules

Back to TopCommentsE-mailPrintBookmark and Share

The U.S. Supreme Court opened the way for greater antitrust scrutiny of professional sports leagues, reviving a suit over the National Football League’s agreement with Adidas AG’s Reebok to sell clothing emblazoned with team insignias.

The justices, unanimously overturning a lower court ruling, said the NFL and its franchises aren’t automatically entitled to act as a group in licensing their trademark rights. The majority said judges instead should consider on a case-by-case basis how the league’s business practices affect competition.

“The teams compete in the market for intellectual property,” Justice John Paul Stevens wrote for the court. “To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks.”

The ruling is a blow to pro sports leagues, which had sought to win a broad shield from antitrust claims over video-game licenses, television rights, franchise relocation and even player salaries. Only Major League Baseball is exempt from antitrust laws now. The decision may reduce the NFL’s leverage as it tries to negotiate a new contract with its players’ union and avoid a work stoppage after next season.

The case centers on a suit by American Needle Inc., which lost its right to sell team caps in 2000 when the league reached its accord with Reebok, a Massachusetts-based company later acquired by Adidas. American Needle sued the NFL, its teams, their licensing arm and Reebok.

Reebok employs 950 people at a manufacturing plant on the east side of Indianapolis. The facility manufactures and distributes apparel for the National Football League, National Basketball Association, National Hockey League, Major League Baseball and the NCAA.

Retail sales of NFL-licensed merchandise in the U.S. and Canada topped $3.2 billion in 2007, according to the Licensing Letter’s Sports Licensing Report, published by EPM Communications Inc. in New York. Sales of pro football, baseball, basketball, hockey and soccer products combined were more than $9 billion.

The NFL asked the Supreme Court to declare that franchises operate as a single entity when licensing trademark rights to apparel makers and other vendors. That would have shielded the league and its teams from suits under the federal antitrust law provision that bars conspiracies to restrain trade. The league said trademark licensing helps promote that on-field product.

American Needle, based outside Chicago, said the league structure shouldn’t exempt teams from the usual rule that independently owned businesses face antitrust scrutiny when they act in concert. The company says the Reebok agreement led to price increases.

The Obama administration took a middle ground, saying the NFL is a single entity for only some of its activities.

The 7th U.S. Circuit Court of Appeals in Chicago threw out the suit, saying collective licensing would help teams “compete against other entertainment providers.” The NFL took the unusual step of joining American Needle in requesting Supreme Court review.

The NFL had backing from the National Basketball Association, National Hockey League, the National Collegiate Athletic Association and other leagues. Major League Baseball isn’t involved.

Electronic Arts Inc. also supported the NFL. The video-game publisher has an exclusive license to produce video games using NFL players, teams and logos.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I never thought I'd see the day when a Republican Mayor would lead the charge in attempting to raise every tax we have to pay. Now it's income taxes and property taxes that Ballard wants to increase. And to pay for a pre-K program? Many studies have shown that pre-K offer no long-term educational benefits whatsoever. And Ballard is pitching it as a way of fighting crime? Who is he kidding? It's about government provided day care. It's a shame that we elected a Republican who has turned out to be a huge big spending, big taxing, big borrowing liberal Democrat.

  2. Why do we blame the unions? They did not create the 11 different school districts that are the root of the problem.

  3. I was just watching an AOW race from cleveland in 1997...in addition to the 65K for the race, there were more people in boats watching that race from the lake than were IndyCar fans watching the 2014 IndyCar season finale in the Fontana grandstands. Just sayin...That's some resurgence modern IndyCar has going. Almost profitable, nobody in the grandstands and TV ratings dropping 61% at some tracks in the series. Business model..."CRAZY" as said by a NASCAR track general manager. Yup, this thing is purring like a cat! Sponsors...send them your cash, pronto!!! LOL, not a chance.

  4. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

  5. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............

ADVERTISEMENT