Monday the Supreme Court unanimously held the NFL's practice of collectively licensing the trademarks of all 32 individual teams is not immune from antitrust scrutiny under Section 1 of the Sherman Act. The NFL argued that because the marks are all licensed through a single entity, NFL Properties, there was no "contract, combination, . . . or conspiracy" under § 1, and therefore there could be no antitrust problem.
The Court disagreed. The Court first observed the question of whether there is a "single enterprise" is not dependent on the specific legal structure of the entities. As stated by the Court (internal citations omitted):
The relevant inquiry, therefore, is whether there is a "contract, combination . . . or conspiracy" amongst "separate economic actors pursuing separate economic interests," such that the agreement "deprives the marketplace of independent centers of decisionmaking," and therefore of "diversity of entrepreneurial interests," and thus of actual or potential competition.
Applying this framework, the Court held the existence of NFL Properties was not sufficient to prevent a "contract, combination . . . or conspiracy" and therefore avoid § 1 scrutiny. The teams are "sparately controlled, potential competitors with economic interests that are distinct from NFLP's financial well-being."
Despite holding the NFL's actions were subject to review under § 1, the Court did not pass on the merits, and noted some aspects of the NFL may provide a sufficient justification of its licensing practices under the Rule of Reason. Ultimately, it will be up to the district court to address the merits of the case and determine whether there is a § 1 violation.
Click below for more detail of American Needle, Inc. v. National Football League and links to media coverage of the case.