Headwear Maker Gains Remand from Supreme Court in NFL Antitrust Battle
The U.S. Supreme Court overturned decisions by a circuit court and an appeals court, and ruled that the antitrust laws apply to the National Football League and limit its ability to make contracts as a single entity, with potential implications for other national organizations cooperating to market a brand or enforce pricing policies.
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Exclusive Headwear Licensing Arrangement Triggered Lawsuit
From 1963 to 2000, the NFL granted nonexclusive licenses to vendors to manufacture and sell apparel with team logos, and one such licensee was American Needle, Inc. In December 2000, when the league’s teams voted to authorize National Football League Properties (NFLP) to grant exclusive licenses, NFLP granted Reebok International Ltd. an exclusive 10-year license to manufacture and sell trademarked headware for all 32 teams, and declined to renew American Needle’s nonexclusive license.
Plaintiff Argued Exclusive License Violated Antitrust Act
American Needle sued, alleging that NFLP’s agreement with Reebok violated sections 1 and 2 of the 1890 Sherman Antitrust Act. Section 1 declares illegal “[e]very contract…in restraint of trade or commerce among the several States, or with foreign nations;” section 2 makes it a felony to attempt to create a monopoly.
Lower Courts Saw League as a Single Competitive Entity
In the lower courts, the NFL successfully argued in its defense that it could not conspire in restraint of trade since it is a single entity. The Supreme Court, however, found that formalistic distinctions, such as whether the alleged conspirators are legally distinct entities, are less important than a consideration of how the alleged conspirators actually operate.
Supreme Court Remands Issue Back to Lower Court
The court ruled that the NFL plan should be evaluated for whether the restraint of trade is unreasonable and therefore illegal, and remanded the suit to the lower courts to resolve this point “in further proceedings consistent with this opinion.”
(American Needle Inc. v. National Football League et. al., decided May 24, 2010)