	Background and Introduction

The teams of the National Football League (NFL or League) formed NFL Properties (NFLP) in 1963 to aid in the promotion of the NFL brand, including the manufacture, licensing, and marketing of team- and league-logoed, trademarked clothing and merchandise. In 2000, the teams authorized NFLP to solicit bids for, and then grant, a single, exclusive license for the manufacture of headwear; when the license was awarded to Reebok, American Needle, one of the non-renewed, non-exclusive licensees, sued the NFL, NFLP, the individual teams, and Reebok, alleging, in pertinent part, that the teams' actions in creating NFLP violated Section 1 of the Sherman Act. The NFL/team response was the assertion that as subsidiary members of an unincorporated association, the teams were legally incapable of conspiring either with each other or with the League. The case had been carefully watched, given that a Supreme Court ruling endorsing the NFL's "single entity" argument would likely have had an impact on the application of the antitrust laws not only to other (professional) sports leagues and their decisions concerning, for example, player services, ticket pricing, stadium parking fees, and merchandise sales; but also to any business entity—especially those in such areas as financial services, real estate services, or health care—participating or contemplating participation in joint activities. Although Section 1 prohibits, without exception, contracts or conspiracies "in restraint of trade," the courts have created two classes of antitrust analysis— per se and rule of reason. Not surprisingly, therefore, an entity with multiple members would prefer to be considered as a single entity amenable to prosecution only under Section 2 of the Sherman Act (the position, in fact, advanced by defendant/respondent NFL), rather than as multiple, separate entities that are legally capable of unlawful cooperation or agreement, and so always amenable to civil suit and/or criminal prosecution under Section 1 (plaintiff/appellant American Needle's argument). Throughout the American Needle case both parties relied on interpretations of the language and holding in Copperweld Corp. v. Independence Tube Corp. to support their arguments. Copperweld addressed a situation in which a corporation (Copperweld) was alleged to have unlawfully conspired, in violation of Section 1 of the Sherman Act, with a division it created to house its acquisition of another corporation (Regal Tube). The officers of a single firm are not separate economic actors pursuing separate economic interests, so agreements among them do not suddenly bring together economic power that was previously pursuing divergent goals. Although the situation in Copperweld involved a corporate division, the Court also discussed the status of a corporation and its wholly owned subsidiar(ies), a scenario that the NFL sought to convince the American Needle Court was analogous to its own. American Needle in the Lower Federal Courts16

		The District Court

The United States District Court for Northern Illinois seemed to make much of the fact that plaintiff American Needle "did not claim that the NFL and its 32 teams [had] … acted improperly" in the initial creation of NFLP and the delegation to it of "the authority to grant licenses" for the teams' intellectual property; allegations of conspiracy in restraint of trade in violation of Section 1 were confined to the decision by NFL Properties to grant an exclusive license. Having already noted that there might well be "competing interests" among the entities involved, even among bona fide divisions of the same company, the court of appeals was not persuaded that the ability of the NFL teams to compete with regard to the merchandising of their intellectual property (logos et al.) American Needle v. NFL in the Supreme Court

A unanimous Supreme Court, per Justice Stevens, defined the issue:
As the case comes to us, we have only a narrow issue to decide: whether the NFL respondents are capable of engaging in a "contract, combination … or conspiracy" as defined by § 1 of the Sherman Act …, or, as we have sometimes phrased it, whether the alleged activity by the NFL respondents "must be viewed as that of a single enterprise for purposes of § 1." Copperweld …, 467 U.S. 752, 771 …. He emphasized the Court's view that "collective decisions" by the League and its teams are "perfectly sensible" given the "special characteristics" of the football industry. The need to examine the League/team collective action in licensing their respective and common trademarks under Section 1 led the Court to remand the case to the U.S. Court of Appeals for the Seventh Circuit, which will, in turn, likely remand to the U.S. District Court for Northern Illinois for trial.
In a decision that had the potential to upset decades of antitrust law, and also to have a broad impact beyond the immediate consequences for the litigating parties, the Supreme Court ruled, on May 24, 2010, that the intellectual-property licensing activities of the National Football League (NFL or League) and its member teams must be treated as those of separate entities whose cooperation and joint decisions are amenable to antitrust prosecution under Section 1 of the Sherman Act, which prohibits contracts or conspiracies "in restraint of trade" (American Needle, Inc. v. National Football League, 560 U.S. ___ (2010)). There had been some concern that a contrary ruling—a finding that the NFL's member teams are but "divisions" of an unincorporated NFL and so are incapable of ever conspiring with either each other or the League itself—could have affected existing antitrust jurisprudence concerning the status of entities in sports leagues generally, and also of those entities involved in cooperative or joint venture activity in such diverse areas as real estate services, financial services, and health care.
The immediate issues in the case were the teams' creation in 1963 of NFL Properties (NFLP) to license and market their team-owned intellectual property (primarily team logos); and their subsequent authorization for NFLP to replace the multiple, non-exclusive contracts it had awarded for the manufacture of team-logoed headwear with a single, exclusive contract. American Needle, a holder of one of the former, non-exclusive contracts sued, alleging violation of Section 1. Both parties relied on interpretations of the 1984 decision in Copperweld Corp. v. Independence Tube Corp. (467 U.S. 752) to support their arguments. The League successfully argued in both the U.S. District Court for Northern Illinois and the U.S. Court of Appeals for the Seventh Circuit that its structure should be considered analogous to the one analyzed in Copperweld; that case held that a parent corporation is incapable of conspiring, in violation of the antitrust laws, with its corporate division(s), or the divisions with each other, because all of those entities share a unity of economic interest. NFL teams, the League insisted, should be similarly viewed—as merely "divisions" of the unincorporated-parent NFL. American Needle had stressed the teams' status as "independently owned and controlled for-profit businesses that do compete, and are capable of competing with each other in numerous ways." The lower federal courts ruled in favor of the NFL because they believed that since team cooperation to produce the NFL product (football games) is indispensable, the teams, even though separately owned business corporations, are the practical equivalents of Copperweld's divisions of a corporate parent.
A unanimous American Needle Supreme Court disagreed with the NFL, reversing the lower-court decisions and remanding the case for trial. The Court was persuaded that the League's 32 teams, contrary to the NFL's characterization, are separately owned businesses that are engaged in competition for, for example, players, fans, and gate receipts; it quoted Copperweld to emphasize that because the teams are "separate economic actors pursuing separate economic interests," they cannot possess the unity of economic interest that would save them from Section 1 scrutiny: the antitrust legality of their cooperative activity must be judged under Section 1 of the Sherman Act, rather than under Section 2, which addresses the unilateral conduct of monopolists. At the same time, the Court specifically recognized that the teams' necessary and "perfectly sensibly justified" cooperation, for example, in the "production and scheduling of games," would provide the basis for rule of reason versus per se analysis of those or other cooperative agreements alleged to violate Section 1 of the Sherman Act. Moreover, the opinion observed, the League's activities are not necessarily doomed to violation-of-Section-1-status because "joint ventures and other cooperative agreements are … not usually unlawful … where the agreement … is necessary to market the product at all."