An appropriate decision for football season; the Court of Appeals for the 7th Circuit has affirmed, in an antitrust case, that the exclusive licensing of all professional football teams marks to one vendor is not a violation of the Sherman Act.
NFL Properties is an unincorporated organization of 32 separately owned teams. Each team owns it own trademarks – team names, logos, slogans, and so on. In 1963 the NFL created NFL Properties, Inc., a corporate entity
charged with (1) developing, licensing, and marketing the intellectual property the teams owned, such as their logos, trademarks, and other indicia; and (2) “conduct[ing] and engag[ing] in advertising campaigns and promotional ventures on behalf of the NFL and [its] member teams.”
(Brackets in original). NFL Properties is therefore the legal entity that licenses the trademarks of all the teams.
NFL Properties used to grant multiple nonexclusive licenses to a number of vendors, but in 2000 the teams authorized NFL Properties to enter into an exclusive license for headwear with one vendor. Reebok became that vendor, with a 10 year license. American Needle, an ousted vendor, sued the teams, NFL Properties, and Reebok under section 1 of the Sherman Act, claiming that the group licensing of the separately owned team trademark properties was a contract, combination or conspiracy in restraint of trade.
Professional sports leagues are not strangers to antitrust claims. The court of appeals noted:
We have yet to render a definitive opinion as to whether the teams of a professional sports league can be considered a single entity in light of Copperweld. The characteristics that sports leagues generally exhibit make the determination difficult; in some contexts, a league seems more aptly described as a single entity immune from antitrust scrutiny, while in others a league appears to be a joint venture between independently owned teams that is subject to review under § 1.
For example, from a fan’s perspective a league is a single source of entertainment, but the teams act individually when hiring and firing employees. Under Copperweld, the question is whether the collective action has deprived the market of competitiveness. The court of appeals held that for the purpose of licensing trademarks, the league is one source of economic power with the purpose of promoting NFL football through licensing the teams’ intellectual property, and thus immune from a claim of conspiracy in restraint of trade.
Once the court reached the conclusion that the league was a single entity, the exclusivity of the licensing survived a Section 2 claim as well.
American Needle Inc. v. National Football League, No. 07-4006, — F.3d —-, 2008 WL 3822782, 2008 U.S. App. LEXIS 17553 (7th Cir. Aug. 18, 2008). Opinion here; order correcting typo (“than” for “then”) here. Points to the reader who catches the typo without specifically looking for it.