NFL, Reebok Accord Thwarts Apparel Competition, Suit Says

The National Football League, Adidas AG (ADS)’s Reebok and professional football teams were sued over claims they created a monopoly over team-themed apparel that drives up prices for consumers.

Team owners agreed to license their intellectual property only to an NFL affiliate that granted an exclusive license to Reebok for manufacturing jerseys, T-shirts, caps and other clothing, California resident Patrick Dang said in a complaint filed Oct. 24 in federal court in San Francisco.

Before 2000, the NFL granted licenses to as many as 27 entities to make clothing bearing team logos, according to the the lawsuit. NFL teams and the league agreed in December of that year to grant an exclusive license to Reebok, creating a monopoly in the licensing and manufacturing of NFL team apparel, according to the complaint.

The U.S. Supreme Court in 2010 exposed professional sports leagues to greater antitrust scrutiny when it revived a 2004 lawsuit over the NFL’s agreement with Reebok to sell clothing bearing team insignias.

The court unanimously ruled that the league should be treated for antitrust purposes as 32 separate teams, rather than as a group, in the way it licenses its trademark rights. Group treatment would have insulated the league from suits claiming its licensing practices thwarted competition and raised prices.

Team Caps

That lawsuit, filed by American Needle Inc., which used to sell team caps, is pending in federal court in Chicago.

Dang, of San Jose, seeks to represent buyers in California and nationwide who he says were overcharged because there is no competition in the market for NFL logo clothing. Dang seeks restitution for overcharges and a court order blocking violations of antitrust and unfair competition laws.

Brian McCarthy, an NFL spokesman, declined to comment in an e-mail. Jenny Shanley, a spokeswoman for Canton, Massachusetts- based Reebok, didn’t immediately return a voice-mail message seeking comment yesterday after regular business hours about the lawsuit.

The case is Dang v. San Francisco Forty Niners Ltd., 12-5481, U.S. District Court, Northern District of California (San Francisco).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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