The US Supreme Court has said the NFL can’t avoid antitrust laws when dealing with team jerseys.
“The last place one would expect to find the US Supreme Court is on the football field, but there they are, dealing with the sale of NFL team jerseys and hats. It was actually an interesting case and may well set precedent for the future,” remarked David Alden Erikson, a Los Angeles business litigation attorney.
The core nugget of the case decision was that the National Football League isn’t exempt from antitrust laws relating to the sale of team jerseys and hats. The decision said the NFL could be sued by someone who formerly supplied the NFL with clothing who alleged the NFL participated in “illegal restraint of trade” because they gave an exclusive licensing agreement to one company for their 32 teams.
At first, it looked like the case may have been lost at a federal appeals court when they ruled the 32 teams were acting as a single entity in offering a licensing agreement. That meant the league as a whole was then protected from restraint of trade accusations. The supplier, American Needle, took their case to the Supreme Court because they did not agree with the Chicago Federal Court ruling.
“As it turns out, that was a smart tactical move, as the Supreme Court reversed the lower court by indicating that the teams don’t just compete on the field. Indeed, they compete when it comes to dealing with trademark issues and with intellectual property. Put another way, every team has/is a source of a valuable trademark, as they are not all the same,” explained Erikson.
“So the bottom line here is that the initial idea by the NFL to license their 32 separate trademarks in a collective manner to just one person ultimately took away the independence of each team’s decision making and quashed any actual or potential competition,” Erikson clarified.
This case is also interesting for the fact that it is the first time a private plaintiff won an antitrust case since 1992. Having said that, this isn’t over yet because the case has now been shuttled back down to the lower courts to take a look at whether the NFL acting collectively to create jerseys, hats, and other items complies with antitrust laws. The NFL may still pull a goal out of this situation.
What we can say for sure here is that the NFL isn’t granted immunity, but they do ultimately get a chance to present an argument saying that the anticompetitive benefits of joint licensing outweigh anticompetitive harms.
To learn more about David Alden Erikson, Attorney at Law, visit http://www.daviderikson.com.