SBD/February 19, 2015/Marketing and Sponsorship

NFL Ready To Settle Long-Standing Licensing Lawsuit Filed By American Needle

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The NFL is poised to settle the decade-plus-long licensing lawsuit against the league brought by capmaker American Needle, sources said. The NFL will pay American Needle, which is attacking the league’s right to exclusively license caps, as part of the deal, sources said, but the settlement would leave the NFL’s licensing infrastructure intact. Reebok is also a party to the suit. It could not be determined how much the NFL would be paying. The case gained acclaim in '10 when it reached the U.S. Supreme Court, which ruled against the league’s position the case should be dismissed because antitrust law shielded the NFL from the claim. That meant the NFL returned to the lower courts to defend against the ongoing lawsuit. Even after the Supreme Court decision, the case held great import because an adverse ruling would undermine not just the NFL’s ability, but all sports leagues’ ability, to exclusively sell commercial categories -- be it hats, jerseys or sponsorships. “I am really kind of numb right now,” said American Needle staff counsel Jeffrey Carey, who has seen the litigation through since it was filed Dec. 1, 2004, in northern Illinois federal court. “The judge has set a new status conference in three weeks, on March 17, in the event the agreement is not finalized by then.” The case’s roots stretch back well over a decade. American Needle was one of several NFL cap licensees until '01, when a new solo deal with Reebok went into effect. The settlement ends a process that started more than 15 years ago, when the league first decided to grant exclusive deals. Judge Jorge Alonso earlier this week posted on a federal court website system that an agreement in principle had been reached as part of the latest round of settlement talks overseen by a magistrate judge. The sources cautioned the deal is not yet completed but expected the pact to be finalized in the near term.

NEW JUDGE THE MAIN REASON FOR A DEAL: The reasons for the settlement after a decade have little to do with the merits of the case and the two sides’ respective belief in their positions. Instead, it was the wildcard of a judge switch that forced the two sides to a deal, the sources said. Alonso, who is new to the federal bench, only came to the case last month, after the court reassigned more than 300 cases to him. That means an October trial scheduled by the previous judge was cancelled, as were all briefing and conference dates. Sources said that the two sides had no idea when Alonso would reschedule the case -- many of the 300 cases he received were criminal, so the expectation was that those would receive priority. The NFL declined to comment. The counsel for Reebok did not reply for comment. The NFL is represented in the case by Covington & Burling. American Needle handled the case in-house with Carey, other than for its appeals. The district and appeals courts had sided with the NFL that the case should be thrown out.
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