Letter from AmeriKat I - American Needle v NFL (Part 1 of 2)

This week the AmeriKat has yet again been battling further biblical drama at home. A few weeks ago she was swimming through her flat after a neighbor's pipe burst (flood). This week she is battling a troop of ants that have built a transport highway from her kitchen to the patio (swarm). Ants are not particularly fun for Kats to play with - they are too tiny and have a habit of becoming stuck in one's paw pads. (picture, left - the AmeriKat watching the Ants Marching in) Despite her distaste for ants inside the home, she still has respect for the tiny creatures in nature. Ants organize themselves in complex social structures each equipped with a predetermined role to help maintain the colony. Although a colony may be comprised of a plurality of thousands of ants, they only operate together as one entity - the colony. (Note - this post is split into two parts)

American Needle (9) - NFL (0) - Full Time

A plurality of teams that have been held by the Supreme Court as not operating as one entity is the National Football League (NFL) in this week's decision in American Needle v NFL (see previous reports here). Delivering the unanimous majority opinion the soon-to-be retiree, Justice Stevens, declared that despite common interests that ran through the NFL brand, the teams are "still separate, profit-maximizing entities, and their interests in licensing team trade marks are not necessarily aligned."

The NFL is an unincorporated association that includes 32 separately owned professional football teams, such as the Denver Broncos or Seattle Seahawks, each with their own team logo, colors, mascot and other IP. Prior to the formation of National Football League Properties (NFLP) in 1963, the teams entered into their own separate IP licences for team merchandise. After 1963, NFLP developed, licensed and marketed the teams IP itself. Up until 2000, NFLP granted non-exclusive licences to a number of companies to permit them to manufacture and sell apparel with NFL team logos, including to American Needle. However, in December 2000, the teams authorized NFLP to grant an exclusive licence to Reebok International for the right to manufacture and sell trade mark head wear for all 32 NFL teams for 10 years.

The previous non-exclusive licences were therefore not renewed prompting American Needle to file their claim in Illinois federal court alleging that NFLP violated sections 1 and 2 of the Sherman Act. The NFLP said that their actions fell outside these sections as they were a "single economic enterprise" and therefore fell foul of the plurality requirement. The Illinois District Court then granted summary judgment in favor of the NFL holding that that all 32 teams were a single entity because their operations were so integrated, more so than "joint ventures cooperating for a common purpose." The Court of Appeals for the Seventh Circuit affirmed the lower court's decision declaring that "NFL teams share a vital economic interest in collective promoting NFL football...[i]t thus follows that only one source of economic power controls the promotion of NFL football." American Needle then filed their writ of certiorari which was granted by the Supreme Court last year.

The question the Supreme Court had to decide was this: Whether the alleged activity by the NFL "must be viewed as that of a single enterprise for purposes of section 1 of the Sherman Act." Section 1 provides that

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.

Section 1 only applies to concerted action that restrains trade. Section 2 apples to both concerted and independent action if that action monopolizes or threatens to monopolize trade. Section 1 behavior is treated more strictly because concerted behavior, without independent action, is more at risk of being anti-competitive. Justice Stevens reiterated that in considering whether conduct is concerted the Court is not merely concerned with whether the parties are formally legally distinct entities, but instead examine the functions of how the parties operate- the "substance over form" distinction.(Copperweld Corp v Independence Tube Corp (1984)). The question therefore is whether there is a "contract, combination.., or conspiracy" amongst "separate economic actors pursuing separate economic interests" such that the agreement "deprives the market place of independent centers of decision-making and therefore of "diversity of entrepreneurial interests" and potential and actual competition.

Applying this criteria the Supreme Court held that

"The NFL teams do not possess either the unitary decisionmaking quality of the single aggregation of economic power characteristic of independent action. Each of the teams is a substantial, independently owned, and independently managed business. '[T]heir general corporate actions are guided or determined' by 'separate corporate consciousnesses' and '[t]heir objectives are' not 'common'" (Copperweld; North American Soccer League v NFL (1982))

........continued in Part II..........

IP and European competition law: a new book

Various members of the IPKat's blogging team are attending the launch this evening of a new and welcome publication, Intellectual Property and EU Competition Law, by London-based barrister Jonathan D.C. Turner (13 Old Square). The publisher, Oxfor University Press, describes the book as follows:

"This book explains the application of EU competition law to intellectual property, and the resulting regulatory framework for the exploitation and licensing of intellectual property rights [This is important: from the word 'and' in the title, it's not apparent whether this is explaining IP to competition lawyers, competition law to IP lawyers or seeking to integrate the two complementary disciplines].

* Provides a thorough yet accessible analysis of one of the more complex areas of EU commercial law [Competition law's not just complex: it's pretty verbose. The author has managed to get a lot into a relatively short space here];
* Explains the fundamental principles and policy on the interface between intellectual property and competition law, with detailed accounts of the key case-law and official guidance;
* Approaches the subject from a practical viewpoint, analysing its impact under the three broad headings of Technology, Culture and Branding [this tripartite approach works well, though the Kat bets that, when competition principles are finally applied to internet service providers, these broad headings will have to be merged]

The interface between intellectual property rights and competition policy is one of the most important and difficult areas of EU commercial law. The exploitation of exclusive rights can conflict with competition law, which aims to preserve competition as the driving force in efficient markets. These conflicts have to be resolved against the background of a complicated relationship between EU law, national laws and international treaties relating to intellectual property. There have been major developments recently in this area, including the new Technology Transfer Block Exemption, the Commission's Guidelines on Technology Transfer, and cases such as IMS and Microsoft concerning the circumstances in which exploitation of intellectual property rights is an abuse of a dominant position.

This book contains a detailed explanation of the application of EU competition law to all types of intellectual property, including recent developments, and the resulting regulatory framework for the exploitation and licensing of intellectual property rights. It has practical analysis of such issues as technology transfer and pools, research and development, and franchising and merchandising.It derives from a section in the looseleaf Law of the EU (Vaughan & Robertson, eds), and is made available here for the benefit of those who do not subscribe to the looseleaf".

This Kat would have read the entire book by now, but he was distracted by the distant sound of corks popping and crisps being crunched so he has had to put it down and head off to the reception. He looks forward to putting it through its paces and wishes both it -- and its author -- the very best of luck!

Bibliographic detail. Hardback 384 pages. Price £145. ISBN 978-1-90-450145-9. Web page here. Rupture factor: small.