Kathryn Picanso
Paper Topic
September 30, 2006
In American Needle, Inc. v. New Orleans Louisiana States, 385 F .Supp.2d 687 (N.D. Ill. 2005), an Illinois District Court denied the National Football League’s (NFL) motion to dismiss claims alleging anti-trust violations, and held that for the purposes of the suit, a relevant product market could potentially include headwear and apparel displaying the logos of league and league teams. The plaintiff in the action had previously been licensed by National Football League Properties, Inc., a corporation set up by the NFL, to use NFL team’s logos on their headwear and apparel. In 2000, however, the NFLP decided to enter into an exclusive licensing agreement with Reebok to manufacture, distribute, and sell headwear and apparel bearing the trademarks of NFL teams. American Needle’s trademark license with the NFLP expired in 2001 and was not renewed. While observing that courts have repeatedly rejected markets that are defined by a company’s trademark, the district court noted that sports merchandise could be distinguished from the products in the earlier cases because the sports logos could be viewed as the product itself, rather than as a source identifier. The court was also persuaded by the defendant’s argument that consumers intent on buying a shirt with a particular team’s logo on it, would not consider a generic t-shirt as a reasonable substitute.
This case provides a stepping off point to consider the development of merchandise rights, and how trademarks have transcended the traditional role of source identifier to become the product itself. In class we've discussed how this development has occurred along with a increased acceptance of trademarks as property rights. Viewing trademark law through an antitrust lens shows how the growth of trademark rights has arguably come at the expense of consumers, resulting in less competition and increased prices.
Although the monopoly theory of trademarks has been roundly criticized in the past, the recent American Needle case suggests a way in which the propertization of trademarks can be checked. In considering the court’s acceptance of a possible relevant market defined by a single trademark and its implications for merchandise rights, my paper will consider the traditional principles of trademark and antitrust law, both of which are grounded in the notion of benefiting consumers. The paper will look at ways in which antitrust law has been used in the past to limit trademark expansion, particularly in cases involving illegal tying in franchise licensing agreements. I will also describe how trademark protection, bolstered by dilution laws, has grown stronger in recent years. This will include a discussion of merchandise rights, particularly among sports leagues, and how courts view trademark owner’s merchandise rights under the law.