Competing Single-Entity Tests in American Needle v. NFL and Their Implications for Sports Leagues and Other Joint Ventures

Gregory Pelnar, Mar 26, 2010

American Needle v. National Football League has been variously dubbed the “most important case in sports history,” , “an opportunity to reshape sports law,”  “a case that could have far-reaching consequences throughout the law of Sherman Act Section 1,”  and “a case that might fundamentally change professional sports and rewrite sports antitrust law.”  The forthcoming U.S. Supreme Court decision in the case could potentially affect not only how sports leagues operate, but also the operation of other joint ventures that have nothing to do with sports, such as payment systems (e.g., Visa, Mastercard) and medical care providers.

The central issue that the Court has been asked to decide is whether the Appeals Court of the Seventh Circuit erred by upholding the district court’s finding that the National Football League (“NFL”) and its member clubs are a “single-entity” with respect to the collective licensing of club trademarks and logos.  Since, according to the district court, the activities of the NFL and its member clubs occurred within a “single-entity,” those activities cannot be an antitrust conspiracy in violation of Section 1 of the Sherman Act because a conspiracy, by definition, requires the participation of more than one entity. As a result, after permitting discovery only on the single-entity issue, the district court granted summary judgment to the NFL, and the Seventh Circuit upheld the decision.

The basic question raised by American Needle is: Are the NFL and its member clubs a single-entity with respect to their trademark licensing activities? In answering this question, an even more basic question is raised: By what criteria can a single-entity be identified? There is profound disagreement on the answer to this question, not only between the litigants, but also among the courts, economists, and legal scholars as well.