On Monday, the Supreme Court unanimously ruled that the National Football League’s collective licensing of team logos should be subject to scrutiny under the antitrust laws. This decision has potentially important implications for parties to joint ventures, IP licensing consortia, and other entities that involve collaboration among competitors or industry participants.
The NFL’s 32 teams market their intellectual property through a joint venture called NFL Properties. The joint venture acts as a single licensing agent for all 32 NFL teams. For years, NFL Properties granted nonexclusive licenses to a number of competing apparel manufacturers, who incorporated team logos into fan apparel. In 2000, NFL Properties changed its policy and granted Reebok a 10-year exclusive license to sell trademarked headwear for all 32 teams. American Needle, a licensee whose agreement with NFL Properties was not renewed when Reebok received the exclusive license, sued, alleging that the agreement between the NFL, its teams, NFL Properties, and Reebok constituted a restraint of trade that violated Section 1 the Sherman Act.
The NFL defendants argued that Section 1 of the Sherman Act did not apply to them because NFL Properties was a single entity and Section 1 only applies to conduct involving multiple parties. They argued that under Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771 (1984), they were incapable of conspiring with one another in violation of Section 1 because they were a single economic enterprise, at least with respect to the challenged conduct. In Copperweld, the Court held that the coordinated activity of a parent corporation and its wholly owned subsidiary must be viewed as that of a single enterprise for purposes of Section 1. The Court this week declined to extend Copperweld protection to the NFL because “[w]hen each NFL team licenses its intellectual property, it is not pursuing the common interests of the whole league but is instead pursuing interests of each corporation itself.” The Court’s ruling only addresses whether the joint licensing is covered by Section 1 of the Sherman Act. It does not address whether the license is legal. The case will now return to the district court, where American Needle must prove that the licensing practice unreasonably harms competition.
The ruling makes it clear that joint ventures comprising separate economic actors will not enjoy blanket immunity and instead will be analyzed according to how their collective actions affect competition. (Am. Needle, Inc. v. NFL, No. 08-661, Slip Op. (May 24, 2010))