Supreme Court: NFL sports apparel suit can proceed

By James Vicini

WASHINGTON (BestGrowthStock) – The U.S. Supreme Court ruled on Monday, in a dispute over an exclusive licensing deal for sports merchandise, that a lawsuit against the National Football League under federal antitrust law can go forward.

Unanimously deciding the closely watched sports law case, the justices overturned a ruling by a U.S. appeals court in Chicago that threw out the lawsuit against the league over its deal on the sale of NFL-branded items like caps and other apparel.

The high court’s ruling was a victory for American Needle Inc, a clothing manufacturer in Buffalo Grove, Illinois, which argued that the NFL and its 32 teams can be sued under the antitrust laws for signing an exclusive licensing deal with Reebok International in 2001.

“We conclude that the NFL’s licensing activities constitute concerted action that is not categorically beyond the coverage of” federal antitrust law, Justice John Paul Stevens wrote in the court’s 20-page opinion.

American Needle, a former licensee of the NFL, challenged a deal that offered Reebok an exclusive license for 10 years. American Needle argued the NFL was 32 separate business entities and not a single entity as the professional sports league said.

Germany’s Adidas AG bought Reebok in 2006 for $3.8 billion in a move to boost its U.S. presence.

The high court refused to grant the NFL the broad antitrust law protection it sought.

Instead, Stevens sent the case back to a lower court to determine if the deal at issue had been unreasonable and therefore an illegal restraint of trade.

The Obama administration had partly sided with American Needle and had urged the Supreme Court to rule that judges should review sports antitrust disputes on a case-by-case basis. It had urged that the case be sent back to Chicago for further proceedings.

Reacting to the decision, sports industry intellectual property attorney Daniel Glazer said, “This ruling confirms that when the NFL’s teams act collectively, those actions remain subject to scrutiny under federal antitrust laws.”

The NFL argued the league’s decision about how best to promote football was by a single entity and that, as a result, the lawsuit had been properly dismissed by the lower courts.

But attorneys for the NFL Players Association have said the 32 teams are separately owned business entities that compete vigorously against one another in numerous markets.

Of the $7.6 billion in total revenue generated in 2008 by the NFL, about $4.5 billion came from revenue sources with prices independently set by individual teams, they said.

The National Basketball Association and the National Hockey League supported the NFL before the Supreme Court. The case would not affect Major League Baseball, which already has an antitrust exemption on many issues.

The Supreme Court case is American Needle v. National Football League, No. 08-661.

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(Reporting by James Vicini, Editing by Gerald E. McCormick and John Wallace)

Supreme Court: NFL sports apparel suit can proceed