THE LEGAL ENVIRONMENT DIMENSION What did the Court mean when it stated that “the agreement is likely to survive the Rule of Reason”?

THE ECONOMIC DIMENSION Does the Court’s ruling mean that the NFL teams’ activities with respect to the marketing of their intellectual property through the NFLP were illegal? Explain.

The National Football League (NFL) includes thirty-two separately owned professional football teams. Each team has its own name, colors, and logo, and owns related intellectual property. In 1963, the teams formed National Football League Properties (NFLP) to develop, license, and market their trademarked items, such as caps and jerseys. Until 2000, the NFLP granted nonexclusive licenses to a number of vendors, permitting them to manufacture and sell apparel bearing team insignias. American Needle, Inc., was one of those licensees. In late 2000, the teams authorized the NFLP to grant exclusive licenses, and the NFLP granted Reebok International, Ltd., an exclusive ten-year license to manufacture and sell trademarked headwear for all thirty-two teams. It thereafter declined to renew American Needle’s nonexclusive license. American Needle brought an action in a federal district court alleging that the agreements involving the NFL, its teams, the NFLP, and Reebok violated Sections 1 and 2 of the Sherman Act. In response, the defendants argued that they were incapable of conspiring within the meaning of Section 1 “because they are a single economic enterprise” as far as the marketing of trademarked goods was concerned. The district court granted summary judgment in favor of the defendants. American Needle appealed, and the U.S. Court of Appeals for the Seventh Circuit affirmed the trial court’s decision. American Needle appealed to the United States Supreme Court.