Supreme Court's Decision in American Needle Turns Back the Antitrust Clock on Joint Ventures

At the ballpark, Turn-Back-the-Clock Day is fun, not least because everybody knows it's just for today--the awkward 1920s flannels or goofy 1970s double-knits (and, alas, the 25-cent hot dogs and 50-cent beers) are just for one nostalgic afternoon. But when the Supreme Court goes back in time like it did Monday in American Needle, Inc. v. National Football League, No. 08-661 (U.S. May 24, 2010), the antitrust case law clock stays turned back--and prices go up, not down.

The NFL teams formed NFL Properties (NFLP) in 1963 in order to jointly license their trademarks. For decades, licenses were nonexclusive--both by the teams to NFLP, and by NFLP to licensees like the knit-hat maker American Needle. By the late 1990s, though, the teams had licensed their marks exclusively to NFLP, and in 2000, NFLP granted Reebok a 10-year exclusive license for insignia headware, allowing American Needle's license to expire. American Needle sued, contending that Reebok's license violated Sherman Act Section 1, and that the agreement to authorize NFLP to license exclusively violated Sherman Act Section 2. The district court granted summary judgment to the defendants on both claims; the core of the Section 1 decision was that NFLP is a single entity and thus cannot agree to anything on behalf of its teams. 496 F. Supp. 2d 941, 943. The 7th Circuit affirmed, holding that NFLP was acting as a single entity because licensing serves the league's "vital economic interest" in promoting NFL football. 538 F. 3d 736, 743.

Chris Kelly

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