In American Needle, Inc. v. National Football League, a 2010 case, the United States Supreme Court unanimously held that the National Football League (NFL) clubs’ centralized and exclusive licensing of their individual trademarks through a wholly owned league subsidiary is not immune from judicial scrutiny under §1. This landmark decision has broad implications because its rationale suggests that all collective decisions by a U.S. professional sports league’s member clubs that reduce intrabrand economic competition among themselves (e.g., joint decisions regarding the ownership, number, and geographical location of teams, restrictions on the sale of broadcasting rights, labor relations issues, etc.) are subject to §1. Before describing and analyzing American Needle, this chapter explains how U.S. major professional sports leagues are structured and governed and briefly surveys the rulings of lower courts, which generally rejected the single entity defense. It concludes by reviewing how lower courts have applied American Needle to subsequent sports antitrust litigation and scholarly commentary regarding its future application to professional sports leagues.Mitten comments that -
One of the most difficult issues affecting legal regulation of the United States professional sports industry is whether (and, if so, how) §1 of the Sherman Act, a provision of the U.S. antitrust laws prohibiting concerted action that unreasonably restrains interstate trade or commerce, applies to professional sports league rules and internal governance decisions. In other words, are league clubs separate economic entities whose collective action is subject to § 1, or is a sports league and its clubs an economically integrated single business enterprise whose conduct is not covered by § 1 (the basis of the “single entity defense”)? If the later, what is the appropriate standard for determining if the challenged concerted action unreasonably restrains trade?
In American Needle ... the United States Supreme Court unanimously held that the National Football League (NFL) clubs’ centralized and exclusive licensing of their individual trademarks through a wholly owned league subsidiary is not immune from judicial scrutiny under §1. ... Acknowledging that a sport’s league’s member clubs must cooperate to produce on-field athletic competition, the Court reaffirmed: “When ‘restraints on competition are essential if the product is to be available at all,’ per se rules of illegality are inapplicable, and instead the restraint must be judged according to the flexible Rule of Reason.’”