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On May 24, the U.S. Supreme Court held that the intellectual property licensing activities of the National Football League Properties (“NFLP”), the licensing arm of the National Football League, could constitute concerted action under § 1 of the Sherman Act. In so finding, the Supreme Court rejected the NFL’s argument that the NFLP is exempt from § 1 of the Sherman Act because it is a “single entity.”

The court found that the relevant inquiry must address the manner that the member teams of the NFLP operate, rather than a formalistic inquiry that only considers the form of the association. In particular, the court noted that in the context of intellectual property licensing, each of the NFL teams are independent businesses that compete with each other and

have objectives that are not always common. The case was remanded to see if the particular licensing activities were illegal under a rule of reason analysis.

Section 1 of the Sherman Act

Justice Stevens, writing for the unanimous court, explained that the question of whether any contract, combination or conspiracy is illegal under § 1 of the Sherman Act is resolved by determining whether it “unreasonably restrains trade.” Am. Needle Inc. v. N.F.L., No. 08-661, slip op. at 1 (U.S. May 24, 2010).

In particular, the court examined whether the activities of the intellectual property licensing entity formed by the 32 teams in the NFL as a separate corporate entity could fall within the Sherman Act’s prohibition against concerted action by way of contracts or conspiracies that restrain trade.

In this latest decision, the Second Circuit affirmed the district court’s dismissal of Tiffany’s trademark infringement claims (both direct and contributory) as well as Tiffany’s trademark dilution claim, but remanded Tiffany’s claim for false advertisement for further proceedings before the district court. See Tiffany (NJ), Inc. v. eBay Inc., No. 08-3947-cv, slip op. at 45 (2d Cir. Apr. 1, 2010).