[B]On Wednesday, the NFL asked the U.S. Supreme Court to think of its 32 teams as a single business entity where licensing deals are concerned. If the Court agrees, the league would enjoy wider protection against antitrust lawsuits over exclusive agreements, potentially including videogames.[/B]
The NFL made its argument in response to a suit brought by American Needle, Inc., which lost its right to sell team caps in 2000 when the NFL signed an exclusive deal with Reebok. Lawyers for American Needle claim that because each franchise is an independently owned business, they should face antitrust scrutiny when they act in concert.
Although the case centers around caps, the Court's ruling will have a much broader affect. "Make no mistake about it, this case is about more than just hats," said DeMaurice Smith, executive director of the National Football League Players Association.
The case is interesting, because it closely mirrors what happened five years to Visual Concepts. In 2004, EA signed a five-year exclusive license with the NFL that wilted rival Visual Concepts' rival ESPN NFL 2K franchise almost overnight. In 2008, the EA and the NFL extended their agreement through 2012.
A key issue in Wednesday's session was how important licensed clothing sales are to the league's core functions. Gregg H. Levy, the NFL's lawyer told the Court that licensed goods are a means of promoting the on-field product, an argument that failed to impress Justice Antonin Scalia.
"The purpose is to make money," Scalia said. "I don't think that they care whether the sale of a the helmet or the T-shirt promotes the game."
Retail sales of NFL-licensed gear hit $3.2 billion in 2007.
Justice Stephen Breyer was similarly dismissive of the league's claim, saying he aw no reason why the NFL's teams couldn't separately license their logos for use on clothing.
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