American Needle And The NHL

ARTHUR:
Everyone in the sports world seems to be talking about the Supreme Court's ruling today in American Needle Inc., v. National Football League et al. I'm particularly intrigued by the ruling, both as a lawyer who practices in Intellectual Property and as a person who was working for 2K Sports (then ESPN Videogames) when Electronic Arts obtained an exclusive license with the NFL for its Madden series.

For those that haven't heard or don't rightly understand the ruling, I definitely suggest you read it. I was originally going to break down Justice Stevens' opinion, but I figure I'll just re-state it the way every other news outlet has and move on to actual implications.

Basically, the Supreme Court decided that for the purposes of marketing the NFL teams' individually owned intellectual property (i.e. designs, logos etc.), the NFL teams are separate entities with separate economic interests, and any deal they make as a collective is subject to the Sherman Antitrust Act, which makes any agreement in restraint of trade illegal. The Court didn't deny that there were cooperative agreements necessary to the NFL or any sports league which should not be subject to the Sherman Antitrust Act, but it specifically excluded the collective marketing of intellectual property as one of those agreements.

So what does that mean when practically applied? Well, for now, it means open season on "exclusive license" intellectual property deals in the sports world. That extends not only to Reebok's exclusive clothing licenses (which were at issue in American Needle), but to Electronic Arts' exclusive NFL license for its Madden series. We may see the return of 2K's NFL series yet.

The NHL will undoubtedly be affected by the ruling. In 2004, Reebok purchased Hockey Company Holdings, Inc. (the marketer/manufacturer of CCM, Koho and Jofa) in order to enter the hockey business, and the NHL granted them an exclusive license to market and manufacture all authentic, replica and practice jerseys. The company has that same deal with the CHL, AHL and ECHL. Whatever bonus revenues the league was hoping to gain from a continued exclusive deal, and perhaps whatever revenues Reebok was hoping to recoup through that same deal, are now in question.

But does it have any implications for the players' unions? Not really. While players' unions would certainly have been harmed if the Court had said that the ALL of the NFL's cooperative decisionmaking was not subject to antitrust scrutiny, the Court also doesn't say that all of the NFL's cooperative decision making IS subject to antitrust scrutiny:

The fact that NFL teams share an interest in making the entire league successful and profitable, and that they must cooperate in the production and scheduling of games, provides a perfectly sensible justification for making a host of collective decisions. But the conduct at issue in this case is still concerted activity under the Sherman Act that is subject to §1 analysis. - American Needle Inc. v. National Football League, et al

So the biggest impact of today's ruling really comes down to the consumer. The league can no longer license its trademarks and copyrights to the detriment of the average customer. But for all things necessary to the function of the league, gouge away.

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