Earlier this week, Above The Law reported that the Supreme Court will likely decide to hear an anti-trust dispute between the NFL and one if its former licensees of merchandise.
American Needle had for more than 20 years held a non-exclusive license to design and manufacturer headgear furnishing the NFL teams’ names and logos. About 9 years ago, the NFL teams decided to offer an exclusive license for merchandising to Reebok, one of Needle’s main competitors. Needle sued the NFL under Section 1 the Sherman Act (which prohibits “contract, combination…or conspiracy in the restraint of trade or commerce”) alleging that their teams are illegally restraining trade in the NFL logo and merchandising market.
The NFL contends there is no violation because of a single-entity exemption of Section 1 of the Act which provides that there can be no conspiracy in restraint of trade where the defendant in a Section 1 suit is a single entity. The NFL has raised the single-entity defense on several occasions already and each time it has failed. The Northern District of Illinois and the 7th circuit in this case though have been decidedly more Pro-NFL. Both courts agreed that the NFL constituted one entity because, despite the competitiveness and separate ownership structure of each team, the joint licensing of the teams’ trademarks for many years through a subsidiary, NFL Properties, was enough to push them into single-entity status.
Some think Needle actually has a stronger legal argument but it is clear that the NFL has a stronger legal team. It will be interesting to see on what side the Supreme Court falls.