{
  "id": "R41294",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R41294",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 363987,
      "date": "2010-06-22",
      "retrieved": "2016-04-07T01:36:39.099461",
      "title": "NFL, Member Teams Not a \u201cSingle Entity\u201d Immune to Prosecution Under Section 1 of the Sherman Act: American Needle, Inc. v. National Football League ",
      "summary": "In a decision that had the potential to upset decades of antitrust law, and also to have a broad impact beyond the immediate consequences for the litigating parties, the Supreme Court ruled, on May 24, 2010, that the intellectual-property licensing activities of the National Football League (NFL or League) and its member teams must be treated as those of separate entities whose cooperation and joint decisions are amenable to antitrust prosecution under Section 1 of the Sherman Act, which prohibits contracts or conspiracies \u201cin restraint of trade\u201d (American Needle, Inc. v. National Football League, 560 U.S. ___ (2010)). There had been some concern that a contrary ruling\u2014a finding that the NFL\u2019s member teams are but \u201cdivisions\u201d of an unincorporated NFL and so are incapable of ever conspiring with either each other or the League itself\u2014could have affected existing antitrust jurisprudence concerning the status of entities in sports leagues generally, and also of those entities involved in cooperative or joint venture activity in such diverse areas as real estate services, financial services, and health care.\nThe immediate issues in the case were the teams\u2019 creation in 1963 of NFL Properties (NFLP) to license and market their team-owned intellectual property (primarily team logos); and their subsequent authorization for NFLP to replace the multiple, non-exclusive contracts it had awarded for the manufacture of team-logoed headwear with a single, exclusive contract. American Needle, a holder of one of the former, non-exclusive contracts sued, alleging violation of Section 1. Both parties relied on interpretations of the 1984 decision in Copperweld Corp. v. Independence Tube Corp. (467 U.S. 752) to support their arguments. The League successfully argued in both the U.S. District Court for Northern Illinois and the U.S. Court of Appeals for the Seventh Circuit that its structure should be considered analogous to the one analyzed in Copperweld; that case held that a parent corporation is incapable of conspiring, in violation of the antitrust laws, with its corporate division(s), or the divisions with each other, because all of those entities share a unity of economic interest. NFL teams, the League insisted, should be similarly viewed\u2014as merely \u201cdivisions\u201d of the unincorporated-parent NFL. American Needle had stressed the teams\u2019 status as \u201cindependently owned and controlled for-profit businesses that do compete, and are capable of competing with each other in numerous ways.\u201d The lower federal courts ruled in favor of the NFL because they believed that since team cooperation to produce the NFL product (football games) is indispensable, the teams, even though separately owned business corporations, are the practical equivalents of Copperweld\u2019s divisions of a corporate parent. \nA unanimous American Needle Supreme Court disagreed with the NFL, reversing the lower-court decisions and remanding the case for trial. The Court was persuaded that the League\u2019s 32 teams, contrary to the NFL\u2019s characterization, are separately owned businesses that are engaged in competition for, for example, players, fans, and gate receipts; it quoted Copperweld to emphasize that because the teams are \u201cseparate economic actors pursuing separate economic interests,\u201d they cannot possess the unity of economic interest that would save them from Section 1 scrutiny: the antitrust legality of their cooperative activity must be judged under Section 1 of the Sherman Act, rather than under Section 2, which addresses the unilateral conduct of monopolists. At the same time, the Court specifically recognized that the teams\u2019 necessary and \u201cperfectly sensibly justified\u201d cooperation, for example, in the \u201cproduction and scheduling of games,\u201d would provide the basis for rule of reason versus per se analysis of those or other cooperative agreements alleged to violate Section 1 of the Sherman Act. Moreover, the opinion observed, the League\u2019s activities are not necessarily doomed to violation-of-Section-1-status because \u201cjoint ventures and other cooperative agreements are ... not usually unlawful ... where the agreement ... is necessary to market the product at all.\u201d",
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      "typeId": "REPORTS",
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