The National Football League didn't violate antitrust laws in granting Reebok International Ltd. an exclusive license to make hats featuring logos of the league's 32 teams, a federal appeals court ruled.
Rejecting cap maker American Needle Inc.'s argument that the NFL and its franchises illegally conspired to restrain trade, the Chicago-based U.S. Court of Appeals found the league speaks with one voice in its marketing.
``NFL teams are best described as a single source of economic power when promoting NFL football through licensing the teams' intellectual property,'' U.S. Circuit Judge Michael Kanne wrote today for the three-judge panel.
The league, its 32 teams and their licensing arm, NFL Properties LLC, were all sued in 2004 by Buffalo Grove, Illinois-based American Needle. The company had held a license to make NFL team logo hats for more than 20 years before sportswear maker Reebok won the exclusive contract in 2001, according to the appeals court ruling.
The licensing of league merchandise generates tens of millions of dollars per year in revenue, said attorney Jeffrey Kessler, outside counsel to the NFL Players' Association. He was not involved in the litigation.
American Needle's lawyer, Jeffrey Carey, said the appeals court's ruling was at odds with the decisions made in comparable cases by other federal circuit courts. He also said in a telephone interview that he would seek reconsideration or possibly petition the U.S. Supreme Court for review.
`Effectively Monopolizes'
Carey said that while he didn't dispute the teams' right to use NFL Properties as a ``common licensing agent,'' the decision to make Reebok an exclusive licensee ``effectively monopolizes'' the industry.
``That has really hurt consumers,'' he said.
NFL spokesman Brian McCarthy said he couldn't immediately comment on the ruling. Josie Stevens, a spokeswoman for Reebok, also said she couldn't immediately comment.
Reebok, based in Canton, Massachusetts, was acquired in 2006 by Adidas AG of Herzogenaurach, Germany.
The ruling may have little value outside the context of this lawsuit, said Kessler, the players' association lawyer. Kessler, who specializes in antitrust litigation, is co-chairman of global litigation for New York-based Dewey LeBoeuf.
`Very Fact-Specific'
Kessler represented the players' association in free-agency litigation against the league in 1992. He called today's ruling ``very fact-specific.''
``The court found a single entity for this particular claim,'' he said. ``I don't think it has a lot of precedential effect for the NFL or for other leagues.''
Washington antitrust litigator Sean Boland agreed.
``It is a league. You can't have a game by yourself,'' said Boland, a partner in the law firm Howrey LLP. That difference sets organized sports leagues apart from the general business community when being viewed through the prism of antitrust laws, he said.
``For certain purposes they can band together and act as a single entity,'' Boland said.
Today's ruling upheld a pair of decisions issued last year by U.S. District Judge James B. Moran in Chicago.
The case is American Needle Inc. v. National Football League, 07-4006, U.S. 7th Circuit Court of Appeals (Chicago).
(Source: Bloomberg)
