Court Tackles Product Market Definition For NFL-Licensed Apparel Case

Beginning in 1922 with the Supreme Court's decision in Federal Baseball Club of Baltimore v. National League of Professional Baseball, professional sports leagues have been involved in antitrust litigation. In those cases, the parties often disagree about the relevant product market, and particularly whether the relevant product is the league as a whole that competes against other sports leagues and forms of entertainment, or whether the relevant product is the individual team that competes with other individual teams in the league?

The Northern District of California recently addressed this question in a challenge to the NFL's licensing practices in Dang v. San Francisco Forty Niners, 2013 WL 3989946, at *1 (N.D. Cal. Aug. 5, 2013). Historically, the NFL had licensed, on a non-exclusive basis, teams' collective trademarks and logos to clothing apparel manufacturers. In December 2000, however, the NFL entered into an exclusive licensing agreement with a single apparel manufacturer. The plaintiff in Dang, a retail purchaser of NFL-licensed apparel—the complaint did not identify the item purchased—alleged that the exclusive licensing agreement created both an unlawful horizontal conspiracy (among the NFL and the individual teams) and an unlawful vertical conspiracy (among the NFL, the individual teams, and the apparel manufacturer) to restrain competition in the markets for NFL licenses and NFL-licensed apparel.

The defendants moved to dismiss the complaint on the grounds, among others, that the plaintiff had alleged an impermissibly narrow, single-product relevant market of NFL-licensed apparel. According to the defendants, the relevant product market must also include other licensed apparel, such as for other professional sports teams, college sports teams, or popular designer name clothing.

The district court accepted the plaintiff's argument that it had plausibly alleged that, absent the anticompetitive conduct, each individual NFL team would compete with other teams for licensing revenue from clothing apparel. Thus, the plaintiff had properly "allege[d] a market consisting of the intellectual property of at least thirty different and competing professional football teams as well as the intellectual property owned by the NFL itself." Id. at...