Supreme Court's American Needle Ruling Leaves Most Critical Questions Unanswered

The U.S. Supreme Court this week ruled that team logo licensing activities by the National Football League are not protected from antitrust scrutiny, finding that an agreement between the NFL and Reebok International was not "categorically beyond" the scope of Section 1 of the Sherman Act.  The ruling, says Gary I. Blackman, a partner in the Sports Law Practice at Levenfeld Pearlstein LLC (Chicago), demonstrates the Court's obvious concern about the ramifications of allowing powerful umbrella organizations like the NFL to create a legal fiction by arguing, as it did, that it was a "single entity" and could not be accused of "conspiring with itself".  It does not, however, bring any closure to the case.

"Justice Stevens rejected this argument, writing: "Each of the (32) teams is a substantial, independently owned, and independently managed business...Decisions by NFL teams to license their separately owned trademarks collectively and to only one vendor are decisions that the deprive the marketplace of…actual or potential competition," Mr. Blackman says. 

"This ruling does not end the dispute because the Court did not rule on whether the NFL could legally act in the manner it did," Mr. Blackman says.  "That will be left to the lower court which will now need to decide whether the NFL/Reebok deal unreasonably restricts competition. The importance of the ruling, however, goes far beyond the specific issue of whether the NFL can grant a vendor an exclusive license to sell team merchandise.  It effects all dealing by the NFL and leaves open the possibility of an antitrust claims and the scrutiny that follows in whatever it does, including in its dealings with its players. Antitrust laws have been a tool for the unions. The players union has always had the threat, for example, that it would disband and sue the league if ever it was locked out. Now, that tool is still in the toolbox."

Mr. Blackman is available for interviews on the Supreme Court's ruling in the American Needle case and the potential impact of the finding. [05/25/2010]