Jun 29, 2009
Top US court agrees to hear case on NFL licensing
Jun 29, 2009
CHICAGO, June 29 (Reuters) - The U.S. Supreme Court said on Monday 29 June it would decide whether the National Football League should be treated as a single entity under federal antitrust law in a dispute over an exclusive license to make caps and other headgear.
Photo: AFP/File/Tim Clary
In a case that could affect other sports leagues, the court agreed to hear an appeal from American Needle Inc, of Buffalo Grove, Illinois, on whether the NFL and its 32 teams can be sued under federal antitrust laws for signing an exclusive licensing deal with Reebok International in 2001.
"It is a case that involves sexy stuff," said Gary Roberts, dean of the law school at Indiana University in Indianapolis. "It could be huge."
The case will be argued during the court's upcoming term which begins in October. A decision is expected in the first half of next year.
American Needle, a former licensee of the NFL, challenged the deal, which offered Reebok an exclusive license for 10 years according to court documents, claiming the NFL was 32 separate business entities and not a "single entity" as the popular professional sports league said.
Germany's Adidas AG (ADSG.DE) bought Reebok in 2006 for $3.8 billion in a move to boost its U.S. presence.
In its original lawsuit, American Needle had charged the NFL with unlawful restraint of trade and monopolizing the team products licensing, manufacturing and wholesale markets by violating antitrust laws by working too closely together. The cost of basic fitted caps jumped to $30 from $19.99, American Needle said in court documents.
American Needle lost the case in U.S. District Court as well as in the federal appeals court in Chicago in 2008.
"American Needle has pursued this litigation because it feels that if it could compete for the use of NFL trademarks in selling hats that it could provide lower-priced merchandise than is currently available on the market," said Glen Nager, an attorney at Jones Day, which is representing American Needle.
The NFL also had urged the Supreme Court to take the case in the hope of winning a national victory, as it and other sports leagues have lost similar cases in other appeals courts.
"We look forward to the opportunity to explain why the court should confirm and extend on a nationwide basis the favorable rulings of the Court of Appeals on the application of the antitrust laws to the unique structure of a sports league," NFL spokesman Brian McCarthy said in an email.
The Chicago appeals court's decision was at odds with decisions made by appeals courts in the first, second and ninth circuits, said Roberts, who did work for the NFL in the late 1970s and early 1980s.
If the court rules the NFL and other sports leagues are single entities, it would basically change the law with respect to internal sports league governance as there have been dozens of cases over the years where courts ruled sports leagues as a collection of separate businesses that are conspiring, he added.
The National Basketball Association and the National Hockey League filed briefs supporting the NFL with the Supreme Court, while Major league Baseball, which has an antitrust exemption on many issues, did not.
A ruling for the NFL would largely put other sports leagues on equal footing with baseball, Roberts said.
The U.S. Justice Department had urged the Supreme Court not to hear the case, saying neither American Needle nor the NFL had presented a question warranting review by the justices.
The case is American Needle v. National Football League, No. 08-661. (By Ben Klayman. Additional reporting by James Vicini in Washington; Editing by Tim Dobbyn and Matthew Lewis)
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