American Needle Inc v NFL 130 S Ct 2201 (2010)

Abstract

The National Football League (“NFL”) is an unincorporated association of 32 separately owned professional football teams. The teams each own their name, colours, logos, trademarks and associated intellectual property. The teams formed National Football League Properties (NFLP) to exploit this intellectual property. Initially, NFLP granted non-exclusive licences to various sports manufactures (including American Needle) to manufacture and sell NFL team labelled sportswear. In December 2000, the teams authorised NFLP to grant exclusive licences, one of which was granted to Reebok International Ltd to produce and sell trademarked head wear for all 32 teams. American Needle Inc, whose licence had not been renewed at the material time, challenged the NFLP’s use of an exclusive licence as contrary to section 1 of the Sherman Act 1890 which makes “every contract, combination…or, conspiracy, in restraint of trade” illegal. The respondents argued that the nature of section 1 of the Sherman Act is that it requires two or more parties to participate in the stated manner and thus, given that the NFLP was a “single entity” a claim of anti-competitive activity could not be brought, save under section 2 of the Sherman Act (which addressed monopolisation or conspiracy to monopolise). American Needle Inc countered that the NFLP was not in form a “single entity”—noting that the courts have long been alert to sports leagues’ efforts to label various collective commercial arrangements as single entity; but rather it was in substance an arrangement that sought to veil ongoing concerted actions by separate and multiple parties with different corporate and economic interests. Guided by its decision in Copperweld Corp v Independence Tube Corp 467 US 752 (1984), the US Supreme Court held against the single entity argument and remitted the matter to the lower courts to determine whether a section 1 violation had occurred. Importantly, the US Supreme Court also acknowledged, as guided by NCAA v Board of Regents 468 US 85 (1984, that in order to have and maintain a sports league many forms of coordination and cooperation between and among competitors would have to take place. Whether such “coordination” might necessarily entail a violation of the Sherman Act would have to be assessed in light of the Rule of Reason i.e., only contracts or combinations that unreasonably restrain trade should be subject to antitrust law.