NFL not immune from antitrust laws when licensing IP rights
United States of America
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In American Needle Inc v National Football League Inc (Case 08–661, May 24 2010), in a unanimous decision, the US Supreme Court has clarified when participants in a joint venture may face antitrust liability for their joint activities. The court ruled that the National Football League (NFL) and its member teams were not immune from the antitrust laws when licensing the teams’ IP rights (eg, their names, colours, logos and trademarks) jointly through a single entity. Instead, the antitrust laws do apply, and the teams’ or the NFL’s conduct must be analyzed to determine whether it can be an agreement in restraint of trade violating the antitrust laws.
The American Needle decision has broad application to joint ventures and other collaborations involving competitors across all industries. This is because the Supreme Court held that participants to a joint venture are not categorically immune from the antitrust laws, even if they form one entity to conduct their joint activities. Rather, the antitrust laws will still apply and courts must apply the "rule of reason", which requires weighing the pro- and anti-competitive effects of the joint venture’s activities to analyze whether they violate the antitrust laws.
The Supreme Court stated that the test for whether antitrust laws relating to agreements in restraint of trade applies to a joint venture’s conduct focuses on whether the conduct at issue involves separate decision makers whose joint activities would rob the marketplace of “independent centres of decision making” and, therefore, actual or potential competition. To make that determination, courts should focus on “competitive realities” and whether the participants to the joint venture still have separate competing economic interests that are not necessarily aligned. Courts should do this even if participants have formed one entity through which they act, and even if participation by competitors in the joint venture is necessary to produce a product or service. The fact that a joint venture that undertakes some conduct for which participation by competitors is required to offer a new product or service enables it to receive rule of reason, rather than per se, analysis, but does not render it immune. The case was remanded for that 'rule of reason' analysis.
The Supreme Court’s decision - the first decision it has granted in favour of a private antitrust plaintiff since the early 1990s - provides a timely opportunity to remind businesses to re-examine their joint ventures and other collaborations involving competitors that may subject them to risk under the antitrust laws. Companies should take a fresh look at their participation in these activities and determine whether certain modifications would reduce their risk of liability under the antitrust laws.
Jon B Dubrow and Stephen Wu, McDermott Will & Emery LLP, Washington DC and Chicago
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