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MHR University - Supreme Court Edition (American Needle Inc v. NFL)


Not much good comes from missing the playoffs. Well, okay. There ARE some good things. For one, we get higher draft picks. And for another, we get back to MHR University (Yeah, I'd rather be in the playoffs, too).

Readers and trolls (and may it please the court): Comes now before the court a question of antitrust and intellectual property law involving the National Football League. This Wednesday a case will be heard before the Supreme Court of the United States (hereafter referred to by the common acronym SCOTUS) that may have some interesting ramifications for the pro football world (and even other leagues). Here's a small tidbit on what to watch for.

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My degrees are in political science, and I have always been fascinated with SCOTUS and constitutional law. In fact, were it not for the costs associated with law school, and the time away from my family that I would want to invest to dive into it, I would love to go to law school (even at my "older" age). Instead, I follow some cases here and there by reading the oral arguments in SCOTUS cases and watching (with fascination) the careers of those who sit on the highest court.

From comes this excellent background on the case we'll be discussing:

Facts of the Case:

American Needle Inc. filed suit in an Illinois federal district court against the National Football League ("NFL") and Reebok International Ltd. alleging that the teams' exclusive licensing agreement with Reebok violated the Sherman Antitrust Act. American Needle argued that because individual NFL teams separately own their team logos and trademarks, their collective agreement to authorize NFL Properties to award the exclusive headwear license to Reebok, was in fact a conspiracy to restrict other vendors' ability to obtain licenses for the teams' intellectual property. The district court disagreed and dismissed the case.

On appeal, the U.S. Court of Appeals for the Seventh Circuit affirmed. It held that NFL teams were a single entity for purposes of antitrust laws, and thus could not have conspired to restrict trade. Therefore, the court stated that the teams were free to license their intellectual property on an exclusive basis.


1) Are the NFL and its members a single entity for the purposes of antitrust laws?

2) Is the agreement of NFL teams with Reebok subject to Section 1 of the Sherman Antitrust Act, when teams own and control the use of their separate logos and trademarks and, but for their agreement not to, could compete with each other in the licensing and sale of team products?

On Wednesday a case will be argued called "American Needle Inc. v. NFL" (docket 08-661 for you political and law junkies). Basically, American Needle is a company that used to make products for teams in the NFL, but they lost out when the League decided that Reebok would carry the official endorsement of the NFL for products that American Needle used to make. So far, the NFL has won every lower court ruling in this case. American Needle doesn't like the rulings, and have taken their case to the very top court.

On the surface, it seems to me that a small company lost its business to a competitor, got jealous, and tried to get the government to intervene on the side of the "little guy" to force the NFL to make a decision for American Needle. In fact, I still believe that. However, at the root of the case is a constitutional question that makes the case more important than the parties involved in the dispute. The question is, "Is the NFL one big entity, or 32 franchised entities that have some reasonable amount of autonomy"? Beyond that is the question, "Is the agreement of NFL teams with Reebok subject to Section 1 of the Sherman Antitrust Act"? Beyond who wins the dispute in a business sense (Reebok or American Needle), the ruling may impact things well beyond the products made by American Needle.

For example, issues dealing with free agency, labor negotiations, pay for coaches, team relocation, etc. may hinge on the decision. All of this comes up this week, oddly in the same year that the NFL faces another big hurdle: the Collective Bargaining Agreement for 2010 and beyond. Maybe the Broncos are out of the playoffs, but the off-season is still going to be interesting.

I put together a reading list for those of you who might want want to delve deeper into the antitrust case. This way, you can go toe to toe with your friends who like to talk football (or law) and hold your own.

SCOTUS WIKI - Here is the best summary of anything at all you want to know about this case. There are links to explain every step of the process for this case, and the arguments on both sides. This is the best source out there in my opinion, but it is also very technical reading (within the links).

Forbes Magazine - For the layman, this is the best article I've found. (Disclosure - the article is biased towards the NFL in the dispute, as I am). The author is clearly taking a side (the magazine is geared towards those in the business sector), but he lays out the case in easily understood terms. The author believes the NFL has the upper hand, and nothing will change if the NFL wins.

The New York Times- This article is also a very good review of the case. Like the Forbes article, it slants a little - but more towards the American Needle side. Still, I think both articles are fair overall, and make the issues a little clearer.

Here are some of the arguments I anticipate being made at the fan level (based on which side a fan is for, American Needle or NFL):


AN - If the NFL wins, prices could increase for everything from tickets to merchandise.

NFL - The NFL should determine its own prices without government dictating to the market. The NFL is in the business of making money. (There is also the argument that prices would stay the way they are, since the status quo before the ruling favors the NFL anyway).


AN - Teams should be allowed to make more decisions apart from the NFL.

NFL - The teams are franchises, and the ownership of each team gets 1 out of 32 votes in running the League as a whole, anyway. Only owners like Al Davis and Jerry Jones want to buck the system.


AN - If AN wins, free agency may be done away with. Players should have more control over where they play.

NFL - Teams pay ridiculous salaries to players to play football. Those teams (and the NFL) have the right to run their own business, and not to have players dictate to the NFL how to run their business. Playing in the NFL is a privilege, not a right.

There are good arguments to be made either way, and where one stands likely depends on what one's political philosophy is. Clearly, I am biased in the above arguments. For example, I hate the BCS system, and think that a playoff system would be more fair; however, I don't think it is the constitutional place of the government to dictate that policy to the NCAA. I favor the rights of businesses to run themselves instead of being run by employees or the government. I also like any court ruling that sticks it to Al Davis. As a consumer, I don't like high prices, but as an American, I think businesses should set their own prices and suffer or thrive based on their own decisions. However, there are folks who believe that there is a role for employees and/or the government to dictate to businesses (beyond obvious roles such as safety and the preservation of the civil liberty rights of employees). I respect these arguments, and think we can all discuss them here in a narrow manner.

So let's lay some ground rules out. Let's discuss the case, but in the narrow terms of what could happen to the NFL. For example, don't argue for or against the value of labor unions, the need for or against government intervention, etc. Also, let's try to stay away from examples outside of football. Instead, let's discuss how the game would be improved or worsened if the NFL had more or less power to run itself. Has the League been doing well over the last few years, or going in the wrong direction? Are players overpaid, are tickets overpriced, is Al Davis a jerk? Do you feel the commissioner has more power than the owners, or do you think the commissioner is the guy the owners have selected to run their franchise? Has free agency been good for football?

Or, if you really, REALLY want to score extra credit points, discuss the case itself. Can you discuss the merits of American Needle's case (or the NFL's) without getting too far astray of football? We like to avoid politics and religion at MHR, since those are issues not germane to football and can lead to a lot of hateful comments by folks on every side of those issues. However, in this instance, our dearly beloved game has injected itself into the political world by becoming a part of the federal legal process. A discussion of the constitutional laws governing the case are risky fare for our MHR family, so I ask each of us to take particular care while we share our thoughts on this case and the implications for our game.

Next week at MHR-U, a look at how abortion, whaling, and gay marriage are issues that enter football on a weekly basis.

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Jabar Gaffney, seen here slapping (in his own words) a mosquito from Brandon Stokley's face mask. The behavior led to Stokley's hospitalization, and Gaffney's ejection for assaulting his teammate. AP photo - Jack Dempsey