SAN FRANCISCO (CN) – The NFL and Reebok cannot sack claims that they conspired to fix the prices of team apparel sold to consumers, a federal judge ruled.
In an October 2012 federal complaint, Patrick Dang sued the National Football League (NFL), its licensing company, Reebok International, 26 teams and three other companies.
The putative class action allegedly that the NFL reached a merchandising agreement with Reebok in 2010 that violates two Californian trade laws, the Cartwright Act and Unfair Competition Law, and the Sherman and Clayton Antitrust Acts.
“Plaintiff bases his suit on an agreement that took place in December 2000,” U.S. District Judge Edward Davila explained. “During that time, the individual NFL teams, the NFL, and the NFLP [NFL Properties] jointly agreed to grant Reebok an exclusive license to manufacture NFL-branded apparel. The agreement, Plaintiff argues, marked a shift in the NFL’s licensing landscape. Before December 2000, he argues, NFL-related licensees had to compete against one another in order to obtain an NFLP license for the NFL or a particular NFL team. He also contends that the individual NFL teams competed against each other for the licensing of their own intellectual property. This arena of competition among both the individual NFL teams and the prospective licensees, Plaintiff argues, ‘ensured that the market for such apparel was subject to free market forces that served to provide the ultimate consumer of such apparel with superior product selection and competitive prices.’
“Plaintiff alleges that in November 2011, he purchased an item of apparel bearing an NFL team’s logo and other intellectual property from a sports merchandise retailer. Plaintiff asserts that he was an ‘indirect purchaser’ of this apparel product bearing the NFL team’s intellectual property. He argues that due to the allegedly anticompetitive and unlawful agreement among the Defendants, he paid an “anticompetitive overcharge for his purchase.”
The NFL and other defendants moved to dismiss, but Davila denied such relief Friday.
Part of the ruling hinged on finding that Dang met the requirement for stating a valid antitrust claim: “alleging that the defendant has market power within a legally cognizable relevant market.”
Dang’s alleged markets consist “solely of NFL-related brands to the exclusion of other sports and clothing brands could consist of a unique market unto itself,” according to the ruling.
It meets the standard because apparel products that bear NFL-related logos and trademarks “may be deemed valuable and relevant to consumers,” Davila wrote.
Davila similarly found no issue with Dang’s failure to include the team apparel of other sports leagues, colleges, entertainment providers and fashion brands.
“Plaintiff has established that NFL-logo-bearing apparel is ‘uniquely attractive’ enough so as to constitute its own relevant submarket sufficient to withstand defendants’ motion to dismiss,” the 21-page decision states. “The rationale for this lies in the notion that the reason why many consumers purchase a piece of NFL-logo-bearing apparel is precisely because that item bears the logo of the NFL team. Other, similar products without an NFL-related logo would not have relevance to them.”
Dang additionally has antitrust standing as an indirect purchaser in that he has bought NFL apparel from retailers and was allegedly injured by the high prices that incorporate the supracompetitive royalty rates, according to the ruling.
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