There Is a Lot at Stake for the NFL

In mid-February we predicted the National Football League and the players would reach an impasse, based on the owners' willingness to renegotiate their royalty deal for IP rights licensed to Madden NFL. We now have an owner lockout of the players.

Just last week we blogged about the emergence of the Justice Department in IP cases. Now comes news from professional football that the players have taken the bold step of decertifying their union so that they can remove the shackles of the NLRB and carry the antitrust banner into the courts, suggesting it is anticompetitive for the owners to refuse to deal fairly.

Tom Brady et al v. NFL was filed March 11 in the U.S. District Court in Minneapolis. The complaint alleges refusal to deal, unreasonable restraint of trade and price fixing, but here is what is key for intellectual property (though it does get rather convoluted).  The players contend the owners’ lockout of the players constitutes “an unreasonable restraint of trade under the rule of reason.”

Why is that key? Beth Hutchens, of the Hutchens Law Office, PLLC, tells us in It appears American Needle used to have some of the clothing business in the NFL. The league owners decided a league-wide contract to Reebok made more sense.  American Needle sued, claiming intentional anticompetitive practices (in essence, “all 32 NFL teams worked together to freeze it out.") The dispute made it all the way to the top, and here is what the Supreme Court said about it in sending it back to Appeals. “Although NFL teams have common interests such as promoting the NFL brand, they are still separate, profit-maximizing entities, and their interests in licensing team trademarks are not necessarily aligned.” The 7th Circuit is now charged with deciding whether the league’s licensing practices harmed competition under the “rule of reason.”

Here’s what to watch. If American Needle prevails, it calls into question all trademark deals the league made in lieu of allowing each team to seek their own level. So while others may be watching Tom Brady, the IP valuation community will keep a closer eye on American Needle.