Blawgletter hesitates, prudently we think, to criticize the rulings of judges, especially those of the near-omnipotent federal kind. And yet yesterday a ruling by the Seventh Circuit tempted even the cautious us.
The case, we think, related to caps. The plaintiff, American Needle, once proudly stitched National Football League teams' logos onto headgear, but the NFL halted logo-stitching permission when a big-time athletic soft goods supplier (Reebok) agreed to pay lots of money for exclusivity. American Needle thus went the way of the dinosaurs, cranium-covering wise, and sued the NFL and others for shutting AN out of the logo-stitching biz.
The district court granted summary judgment on AN's antitrust claims, holding that the NFL teams worked as a unit to protect their intellectual property and therefore couldn't possibly conspire to hinder competition for use of the NFL IP. The court thus extended the rationale of Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984), in which the Court held as a matter of law that a subsidiary corporation can't conspire with its parent.The Seventh Circuit affirmed. It held that a professional sports organization enjoys antitrust immunity when its members jointly strive to exploit intellectual property that the league's very existence makes valuable. "Simply put", the court simply put its ruling, "nothing in section 1 [of the Sherman Act] prohibits the NFL teams from cooperating so the league can compete against other entertainment providers." Am. Needle Inc. v. Nat'l Football League, No. 07-4006, slip op. at 17 (7th Cir. Aug. 18, 2008).
Does that explain anything? No. No. No.
Section 1 prohibits all contracts and conspiracies in restraint of trade. Copperweld held that the owner of a corporation can't conspire with the thing the owner owns; they are legally one. But extending that to say that the Dallas Cowboys = New England Patriots, the Cincinnati Bengals = Miami Dolphins, and the Green Bay Packers = New York Jets and that the teams have no existence, no consciousness, no purpose IP-wise beyond milking the baseball cap trade for all it's worth strikes us as -- to use the Seventh Circuit's word -- "silly".
Perhaps American Needle's case deserved to fail for another reason. But, please, let's not start giving sprawling enterprises a pass by pretending that they're the same as their ever-bickering owners.
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