Litigation

American Needle v. NFL

By Ted Frank

American Needle v. National Football League isn't a tenth as important as everyone is going to be telling you over the next few days. Not only does it solely affect three or four sports entities, but nothing prevents those sports entities from reorganizing their structures to avoid the antitrust implications of this particular decision. For example, American Needle is suing the NFL because the latter (as it has done since 1963) pooled the 32 separate trademarks, owned by separate teams, into a single licensing deal. The NFL will face annoying litigation in the interim to defend this arrangement under the "Rule of Reason," but nothing prevents it from requiring teams from transferring ownership of team trademarks to the league as a condition of the franchise, and achieving the same economic result. SCOTUSWiki has lots of links, though not the lower court decision.

That said, it's a bad decision, albeit one consistent with earlier bad Supreme Court decisions on the subject of sports. Why not have a bright-line rule permitting sports leagues to act as one entity rather than expensive case-by-case determination? The odd judicially-created antitrust exemption for baseball hasn't protected that sport from the ravages of competition from other forms of entertainment. See also Sykuta's take.

Update: Deadspin suggests (h/t W.C.) that the ruling will affect exclusive deals with videogame makers. Not so. For example, the Madden series reflects not just deals for the team trademarks, but for the NFL trademarks and the NFLPA rights, which are unaffected by the ruling. Sure, Jerry Jones could individually sell the rights to a Dallas Cowboys game that doesn't mention the NFL or the other 31 teams or any of the players' names, but who is going to buy those rights? And that's before one gets to the Rule-of-Reason analysis that a videogame is much more valuable with all 32 teams' trademarks than with just 31 of them.

Full post as published by Point of Law on May 24, 2010 (boomark / email).