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 Post subject: SCOTUS bitch-slaps the NFL
PostPosted: Mon May 24, 2010 3:35 pm 
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The Supreme Court has ruled against the National Football League (NFL) in an antitrust suit involving the NFL's exclusive apparel licensing deal with Reebok/Adidas. The court held that the NFL was not a single business entity, but rather 32 separate business entities.

http://www.supremecourt.gov/opinions/09pdf/08-661.pdf

I expect this to have a ripple effect regarding other aspects of the NFL and other sports associations.

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 Post subject: Re: SCOTUS bitch-slaps the NFL
PostPosted: Mon May 24, 2010 3:39 pm 
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Can NASCAR-advertising on the helmet and shoulder pads be far behind!?

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 Post subject: Re: SCOTUS bitch-slaps the NFL
PostPosted: Mon May 24, 2010 10:26 pm 
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Willton, are you into IP stuff? If so, maybe you can answer a quick question on this.

The NFL also has an exclusive agreement with EA Sports to make the Madden franchise. Will this holding have an effect on that as well? I would imagine that it would, but I haven't read the whole opinion and really don't have a knowledge base on the IP end of things so I don't know the intricacies.

This is really just a holding stating the NFL isn't immune to the Sherman Act, correct?


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 Post subject: Re: SCOTUS bitch-slaps the NFL
PostPosted: Tue May 25, 2010 12:03 pm 
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The opinion essentially allows the case filed by American Needle to proceed in the US District Court for the Northern District of Illinois (federal court) after the district court and 7th Circuit Court of Appeals found in favor of the NFL. It concludes that the NFL is not a single entity and is comprised of 32 independent teams. It also concludes that the formation of NFL Properties does not immunize the NFL from engaging in conduct subject to Section 1 of the Sherman Act.

If there is a trial, the NFL's actions in forming NFL Properties and the various underlying reasons will be examined by the court and/or jury. It will be examined under what is called the "Rule of Reason" and the Supreme Court's opinion does not find that the NFL violated the Sherman Act or is violative of laws against anti-competitive behavior. Nonetheless, the opinion is a "loss" for the NFL.

While it has been some time since I took Antitrust Law and Law & Economics, one of the professors cited prominently in the SC's opinion, Herbert Hovenkamp, was my professor in law school and for a couple of undergrad cross-over courses. I don't have a crystal ball but if this ultimately leads to a practice where all 32 teams have the right to market and sell their trademarked property . . . I'm thinking that certain owners of certain teams (Jerry Jones) are privately celebrating this decision as it may open the door to less "shared" revenue and more revenue in the pockets of the "popular" national teams like Dallas, Pittsburgh, etc. If the NFLP does not have to distribute 1/32 of every dollar that comes in the door for the sale of a Tony Romo jersey and Jerry Jones can pocket the entire amount . . . . . owners of the "popular" teams stand to gain immensely.

With respect to NDL's question regarding Madden football. I definitely think that the opinion affects this agreement but it is distinctly different than an exclusive license for manufacturing apparel. Madden football is a "league" football game. I would think that teams cannot individually go out and contract with EA Sports to produce a video game for the individual team. There would be no market for that product. So . . . it "reasons" that the NFL would contract with a company like EA to produce a NFL game. Now . . . whether signing an exclusive deal with EA Sports to the exclusion of others is violative of the Sherman Act is a tougher question which would likely generate a ton of billable hours and lots of business for lawyers.

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 Post subject: Re: SCOTUS bitch-slaps the NFL
PostPosted: Tue May 25, 2010 12:11 pm 
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Heard a NFL commentator say all this really means is a new approach to a labor agreement. If the NFL had "won", they could share revenue as before, and force some issues on the union. Now, the sharing will have to negotiated into the new CBA.

ZM

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 Post subject: Re: SCOTUS bitch-slaps the NFL
PostPosted: Tue May 25, 2010 12:38 pm 
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To follow up on what No. 9 said, the case basically says that the NFL cannot pretend that it is a single entity when it comprises 32 separately owned corporations. This will likely extend to all other sports associations, including the MLB, whose antitrust exemption likely does not extend to the marketing and manufacturing of MLB merchandise and the licensing of its intellectual property.

I don't think that the Madden football franchise is in jeopardy largely because in order to make the game (or at least make it marketable), EA Sports needs cooperation from all teams within the NFL. An agreement like this will probably be viewed as a joint venture to create a new and otherwise unavailable product. Such agreements are "not usually unlawful. . . where the agreement. . . is necessary to market the product at all." Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1, 23 (1979). As to the exclusionary nature of it, that may be a different story.

This decision may affect other industries too, particularly those in electronic content publishing, digital media and consumer electronics. For instance, in the currently pending Princo Corp v. Int'l Trade Comm'n case (which involves patents directed to CD-R and CD-RW technology), the Court of Appeals for the Federal Circuit is now considering antitrust issues in the scope of patent pools and standard-setting organizations. I expect the NFL case will have an influence on the decision made here.

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Last edited by Willton on Tue May 25, 2010 12:43 pm, edited 1 time in total.

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 Post subject: Re: SCOTUS bitch-slaps the NFL
PostPosted: Tue May 25, 2010 12:40 pm 
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Now playing running back... No. 32 with the Pepsi helmet and WD40 shirt....

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 Post subject: Re: SCOTUS bitch-slaps the NFL
PostPosted: Tue May 25, 2010 1:58 pm 
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Thanks guys. I think you have answered my question.

My issue is with EA's exclusive license to make an NFL game. The Madden franchise itself won't be in jeopardy and I realize that. The exclusive agreement, on the other hand, is where I become very interested. I don't like these exclusive agreements because they really defeat any competition.

2K Sports made a really good NFL game the year before the agreement went into effect and they were no longer allowed to make that game on multiple platforms because of the new agreement. The MLB has a similar agreement with 2K. The Show is only made on one platform so it isn't subject to the exclusive agreement.

I'm doing IP work this summer and know nothing about it. Looks like a learning experience.


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 Post subject: Re: SCOTUS bitch-slaps the NFL
PostPosted: Tue May 25, 2010 2:46 pm 
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NDL wrote:
My issue is with EA's exclusive license to make an NFL game. The Madden franchise itself won't be in jeopardy and I realize that. The exclusive agreement, on the other hand, is where I become very interested. I don't like these exclusive agreements because they really defeat any competition.

2K Sports made a really good NFL game the year before the agreement went into effect and they were no longer allowed to make that game on multiple platforms because of the new agreement. The MLB has a similar agreement with 2K. The Show is only made on one platform so it isn't subject to the exclusive agreement.

I agree with you on the exclusive licensing issue. I have been wanting a decent MLB game for a console ever since 2005, and MLB's exclusive deal w/ 2K has been a significant roadblock to that. However, as much as I may not like it, exclusive licensing of IP is generally legal.

Intellectual property provides the owner of such property a right to exclude. In the case of trademarks, the owner of a trademark may exclude others from using that mark on goods or services that are similar to the trademark owner's goods or services. For instance, the Pittsburgh Pirates have the right to be the sole user of its logo in the field of sports entertainment in order to differentiate its product from those of others. In turn, the Pirates may sue another party for trademark infringment over any unauthorized use of that logo as a trademark.

With that right to exclude, the owner of a particular piece of IP may pick and choose who may use that IP. That means that the owner can license his IP to one entity, many entities, or no one at all. This is what allows IP owners to engage in exclusive licensing contracts with licensees: the owner agrees to license his IP to only one licensee in exchange for a higher licensing fee than he would otherwise normally get with a non-exclusive license.

As seen in the NFL case, these sorts of agreements can place IP law in tension with antitrust law. I sometimes view IP and antitrust on polar opposites: one area seeks to constrain competition, while the other seeks to protect or encourage it. And in my VERY humble opinion (I'm only one year out of law school, after all), the confluence of these two areas of law will see a significant amount of action in the near future.

Quote:
I'm doing IP work this summer and know nothing about it. Looks like a learning experience.

Cool. I hope you enjoy it; I know I do. If you find it interesting, I suggest you take the core classes in that field (patents, copyrights, and trademarks) next year.

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 Post subject: Re: SCOTUS bitch-slaps the NFL
PostPosted: Wed May 26, 2010 12:30 am 
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It sounds like there is an awful lot of tension between antitrust law and IP law. I just really hate these exclusive rights agreements because I think they unfairly trample competition. I guess I just see them as crossing the line into what I conceive antitrust laws to be able to protect. Since I don't know anything about the stuff it's really just personal opinion, though.

I got a pretty nice gig this summer, albeit unpaid. I'll be working for a corporation that does web design and sells hosting packages, etc. I'm pretty happy about it all in all because the market is absolutely brutal right now in terms of finding employment. Nobody wants to pay an associate let alone a 2L.

I'm actually not going to law school next year, either, because I am going to be going to business school to complete the requirements for a joint JD/MBA.


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