A few weeks ago we published a post griping about how long the U.S. Supreme Court has made us wait for decisions which could have a major impact on American commerce and free enterprise. The Court came to a unanimous resolution on the #5 case on our list, American Needle v. NFL, today, which had been pending for 131 days. More on that in a moment. The tally for the other four cases from our past post is as follows (which will grow as there are no more opinions expected this week):
1. Bilski v. Kappos, patentability of non-physical inventions: 196 days
2. Stop the Beach Renourishment Inc. v. Florida DEP, judicial takings of private property: 173 days
3. Free Enterprise Fund v. PCAOB, SOX, public accounting oversight, and separation of powers: 168 days
In American Needle, Justice Stevens held for all nine justices that the NFL’s team joint licensing of the use of trademarks on clothing and other consumer goods may be challenged under the Sherman Antitrust Act’s section 1.
The NFL’s teams are independent entities:
Each of them is a substantial, independently owned, independently managed business, whose “general corporate actions are guided or determined” by “separate corporate consciousnesses,” and whose “objectives are” not “common.” Copperweld, 467 S., at 771.
Which compete with one another:
They compete with one another, not only on the playing field, but to attract fans, for gate receipts, and for contracts with managerial and playing personnel. See, e.g., Brown v. Pro Football, Inc., 518 U. S. 231, 249. Directly relevant here, the teams are potentially competing suppliers in the market for intellectual property.
And are not one entity pursuing common interests:
When teams license such property, they are not pursuing the “common interests of the whole” league, but, instead, the interests of each “corporation itself.” Copperweld, 467 U. S., at 770. It is not dispositive, as respondents argue, that, by forming NFLP, they have formed a single entity, akin to a merger, and market their NFL brands through a single outlet. Although the NFL respondents may be similar in some sense to a single enterprise, they are not similar in the relevant functional sense. While 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.
Thus, the NFL is subject to anti-trust under the Sherman Act:
Because some of these restraints on competition are necessary to produce the NFL’s product, the Rule of Reason generally should apply, and teams’ cooperation is likely to be permissible. And depending upon the activity in question, the Rule of Reason can at times be applied without detailed analysis. But the activity at issue in this case is still concerted activity covered for §1 purposes.