League Briefs Say NFL "A Single Entity"

(Find Law) The National Football League and its member teams constitute a single entity for antitrust purposes, the league asserts in a brief filed with the U.S. Supreme Court.

The league is asking the high court to affirm the 7th U.S. Circuit Court of Appeals' opinion that "the NFL teams acted as one source of economic power ... to license their intellectual property collectively."

Plaintiff American Needle Inc., which once held licenses with individual teams to market NFL products, contends an exclusive license granted to Reebok International was an illegal restraint of trade in violation of the Sherman Act.

American Needle is a manufacturer of caps and other headgear.

The U.S. District Court for the Northern District of Illinois dismissed American Needle's claims against the NFL, its independently owned member teams and Reebok, saying the defendants were individually incapable of conspiring to violate antitrust laws because they "act as a single entity in licensing their intellectual property."

American Needle appealed, and the 7th Circuit affirmed the District Court's judgment last year. Am. Needle v. NFL et al., No. 07-4006, 2008 WL 3822782 (7th Cir. Aug. 18, 2008).

The Supreme Court granted American Needle's petition June 29.

The plaintiff says that while a parent company and its subsidiaries are incapable of an illegal conspiracy under Section 1 of the Sherman Act, "competition between separately owned and controlled entities is at the core of Section 1."

"[A]greements among such entities are 'inherently fraught with anti-competitive risk' and fall squarely within Section 1's coverage," the company said, quoting from Copperweld v. Independence Tube Corp.

In the Supreme Court said antitrust liability is appropriate when "there is enough separation between ... [a parent corporation and its wholly owned subsidiary] to make treating them as two independent actors sensible."

In a response brief filed Nov. 17 the NFL argues that it is not a collaboration among independent sources of economic power.

"A sports league produces a single entertainment product, a structured series of athletic competitions leading to a championship that no member club could produce on its own," the brief says.

The league says the Sherman Act limits coordination among independent sources of economic power but is not meant to chill competition by a single firm.

In a brief filed the same day, Reebok also asks the court to affirm the 7th Circuit's judgment.

The company says American Needle profited from a license that covered the trademarks and logos of all NFL clubs for more than two decades.

American Needle claimed a violation of antitrust laws only after the NFL allowed that license to expire and instead granted that license to a competitor, Reebok says.

"Having failed to win its license renewal in the marketplace, [American Needle] cannot now use the antitrust laws to compel a different result," Reebok argues.

The Supreme Court has set argument for Jan. 13.  By KENNETH BRADLEY, ESQ.

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