Frederic J. Frommer
NFL asks for court ruling on merchandise case
WASHINGTON — In the legal equivalent of running up the score, the National Football League is going to the Supreme Court in search of a bigger victory in an antitrust tussle over team merchandise than it already won from a lower court.
The Supreme Court could decide as early as Monday whether it will hear the case, which involves American Needle Inc.’s challenge to the league’s exclusive contract for selling headwear such as caps and hats with team logos on them. American Needle of Buffalo Grove, Ill., is also urging high court review. Football team owners hope the high court will issue a broader decision that would insulate the NFL against what they contend are costly, frivolous antitrust lawsuits.
At the heart of the matter is whether the NFL’s teams constitute 32 distinct businesses or a single entity that can act collectively without violating antitrust law.
The case is important to other professional sports besides football. The National Basketball Association and the National Hockey League both filed friend-of-the-court briefs siding with the NFL.
Notably absent is Major League Baseball, which has an antitrust exemption thanks to a 1922 Supreme Court ruling.
“Member clubs of the NFL have no independent value, no purpose, indeed no meaningful reason for existence but for their participation in the league itself,” the NFL argues. It cited a ruling in an antitrust challenge involving the NBA, in which an appeals court wrote, “A league with one team would be like one hand clapping.”
The NFL argued that professional sports leagues should be deemed single entities for purposes of antitrust law, at least concerning core venture functions.
American Needle had been one of many companies that manufactured NFL headwear. In 2001, the league granted an exclusive contract to Reebok. American Needle sued the league and Reebok in 2004, claiming the deal violated antitrust law.
A federal district court disagreed, saying that the teams acted as a single entity in licensing their intellectual property. Last year, the 7th U.S. Circuit Court of Appeals in Chicago affirmed that ruling.
“Asserting that a single football team could produce a football game is less of a legal argument,” the court said, than “a Zen riddle: Who wins when a football team plays itself?”
The appeals court said that the league isn’t always a single entity, but that nothing in antitrust law prohibits the teams from cooperating so the league can compete against other forms of entertainment.
If the Supreme Court declines to take the case, the appeals court ruling would be left in place.
American Needle argued in its legal filing that the appeals court decision contradicted a 1957 Supreme Court ruling that refused to extend baseball’s antitrust exemption to professional football.
The solicitor general’s office, after being asked by the Supreme Court to weigh in on the current case, urged the court not to take it. The government said the lower court ruling does not conflict with any decisions by the Supreme Court or other appeals courts — contrary to arguments made by American Needle and the NFL.
Gary Roberts, dean of the Indiana University School of Law-Indianapolis and an expert on sports law, said that the NFL senses it has a pretty favorable Supreme Court makeup.
“They would like to have the Supreme Court resolve this single entity issue now,” said Roberts, a former lawyer for the NFL. “Even though they risk losing this case, the potential gain for all sports leagues from having the Supreme Court affirm the decision would be huge.”
On the Net:
Supreme Court: www.supremecourtus.gov/
Appeals court ruling: tinyurl.com/pq9z44
Government brief: tinyurl.com/pfqyul
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