On May 24, the U.S. Supreme Court unanimously held that the National Football League’s licensing program for hats is subject to the federal antitrust law(s). The NFL had set up a licensing subsidiary that had licensed the teams’ logos exclusively to Reebok. That program cut off an apparel manufacturer, American Needle, Inc., that had previously sold licensed products.

American Needle sued and lost in the trial court and in the Court of Appeals, which held for NFL under the so-called “Copperweld Doctrine.” That doctrine — named after a 1984 Supreme Court case involving the Copperweld Corporation — held that a parent corporation could not “conspire” with its wholly owned subsidiary; they were in essence the same entity, which could not “conspire with itself.” Over the last quarter-century the lower courts had expanded the Copperweld Doctrine to find no conspiracy possible, for instance, for certain activities among athletic teams affiliated into a sports league and among a medical certifying board and its members.

The Supreme Court took a different view. It rejected the NFL’s defense that the teams’ group licensing activity was immunized from antitrust scrutiny by the Copperweld Doctrine. In the market for selling trademark licenses to apparel manufacturers, the teams were competitors, the Court found. “To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks,” the Court said. Those teams could not hide under the NFL’s umbrella to avoid the antitrust laws.

The NFL case serves as a reminder that the antitrust cop is still on the beat for trade associations. American Needle may still lose its case. (The Supreme Court noted that the “Rule of Reason” would apply to Needle’s attempt to prove its case; that standard still allows substantial defenses to the NFL.) However, the NFL case teaches that trade associations should not count on the courts to use the Copperweld Doctrine as a reason to look the other way when group marketing practices are reviewed. Incidentally, we note that the Court seemingly went out of its way to reject a suggestion by Solicitor General Kagan as amicus curiae that a more association-friendly test might apply. See our article on General Kagan — now herself nominated to the Supreme Court – elsewhere in this issue.