NFL Loses American Needle Fight In Supreme Court

It was covered all over the sports journalism landscape yesterday – The NFL lost its case in American Needle, Inc. v. National Football League.  It wasn’t just a loss, it was a unanimous loss (9-0).  The basic holding is that the NFL is not recognized as a single-entity.  Instead, for antitrust purposes, it is made up of thirty-two separate teams, all with separate motives and interests for their licensing of intellectual property, even though they all obviously share an interest in the long-term success of the NFL.

Here is a good quote from Justice Stevens, who delivered the opinion of the Court,

“Decisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions that ‘deprive the marketplace of independent centers of decisionmaking … and therefore of actual or potential competition,’ “

I first started covering the antitrust action back in February 2009, when I found out that the U.S. Supreme Court asked the Solicitor General’s Office to comment on the Cert Request for the case.  Here is some background for those of you who are not familiar with the basic facts of the case.

Reebok has an exclusive license with the NFL to outfit all of the NFL’s players with Reebok headwear.  The deal was struck in 2000 and lasts through 2010.  American Needle brought an antitrust action against the NFL claiming that the league is in violation of the Sherman Antitrust Act for allowing its member organizations (NFL teams) to give up their licensing rights to NFL Properties.  American Needle’s claim is that NFL Properties licensing of separate team properties was a contract, combination or conspiracy in restraint of trade. The U.S. Court of Appeals, Seventh Circuit found that nothing in the Sherman Antitrust Act prohibited the NFL teams from cooperating in order to compete with other forms of entertainment and held that the NFL and its teams operate as a single entity when it comes to apparel sales..

The Supreme Court’s ruling, rejecting the leagues position, should make many of my colleagues, including Michael McCann, Marc Edelman, and Gabe Feldman, who wrote excellent law review articles on this subject, very happy.

• McCann’s American Needle v. NFL: An Opportunity to Reshape Sports Law
• Edelman’s Single Entity Ruling: ‘Needle’ in Haystack
• Feldman’s The Puzzling Persistence of the Single Entity Argument for Sports Leagues: American Needle and the Supreme Court’s Opportunity to Reject a Flawed Defense

The decision is limited to intellectual property issues, specifically regarding licensing, but there are already many people clamoring that it may have much farther reaching consequences, including preventing teams from making collective decisions regarding key business matters like the hiring of employees, the compensation paid to players, and rules regarding free agency and the draft.  Sports attorney David Cornell thinks that the decision will, in fact, play a big role in collective bargaining and labor negotiations by keeping things the same.  And who knows what the NFLPA is saying?  Talk about a broad interpretation of the Courts holding.

And for your enjoyment, the opinion of the Court, in its entirety, is embedded below.

american needle