Adidas America filed an action for damages and injunctive relief
against the National Collegiate Athletic Association (NCAA) alleging violations of
Sections 1 and 2 of the Sherman Act; state law claims of tortious interference with
contractual relations, tortious interference with prospective economic advantage, breach
of contract; and violations of public policy and NCAA bylaws. The lawsuit, filed November
19, 1998, charged the NCAA with unfairly enforcing Bylaw 12.5.5, which mandates that there
be only one logo on a college athlete's uniform.
Since 1977, the NCAA rules on the use of logos on apparel have
continued to change. Currently, the NCAA's policy on the use of logos on equipment,
uniforms and apparel is put forth in Bylaw 12.5.5. Bylaw 12.5.5 requires that a
student-athlete institution's official uniform and all other apparel shall bear only
a single manufacturer's label or trademark, not to exceed 2 * square inches in area
including any additional material surrounding the normal trademark or logo.
The purpose of Bylaw 12.5.5 is to preserve the integrity of collegiate
athletics and to avoid the commercial exploitation of student-athletes. In addition, the
bylaw is designed to avoid excessive advertising that could potentially interfere with the
basic function of the student-athletes uniforms, which is to provide immediate
identification of the athlete's number and team. There is no commercial purpose
behind the creation and enforcement of the bylaw.
Adidas' trademark is three descending stripes down the sleeve or pant
leg of a piece of apparel. The NCAA has prohibited college athletes from wearing uniforms
that carry both the Adidas logo and three stripes. Therefore, the NCAA claims that an
Adidas uniform bearing a three-stripe design element larger than two and one-quarter
square inches, violates the bylaw. Furthermore, the NCAA considers such a design element
to be a second manufacturer's logo or trademark, which also violates the bylaw.
In order for Adidas America to obtain preliminary injunctive relief, it
had to demonstrate that (1) it will suffer irreparable injury in the absence of an
injunction; (2) the threatened injury to Adidas outweighed whatever damage the injunction
may cause to the NCAA; (3) the injunction, if issued, would not be adverse to the public
interest; and (4) there is a substantial likelihood that Adidas would eventually prevail
on the merits.
First, Adidas failed to establish that they will face irreparable harm
in the absence of a preliminary injunction. Adidas claimed that without a preliminary
injunction, it would suffer a diminution of its intellectual property and injury to its
reputation, its relationship with member institutions, its processing and manufacturing
partners, and the buying public. However, Adidas provided only business speculation and
conjecture, which is insufficient to make a clear showing of irreparable injury.
Adidas' evidence and testimony was speculative and largely without factual support.
Second, Adidas failed to show a likelihood that it would eventually
prevail on the merits of its claims. Adidas claimed that the NCAA had unreasonably
restrained trade, engaged in a group boycott, and attempted to monopolize in violation of
the Sherman Act. In determining if the NCAA had violated the Sherman Act, the court looked
to the purpose of Bylaw 12.5.5.
The court concluded that the NCAA and its member institutions are not
competitors of Adidas and do not realize any financial or competitive advantage by
limiting the amount of advertising allowed on the backs of student-athletes. Furthermore,
if Bylaw 12.5.5 places any restraint on the advertising market, it is an incidental
by-product of the NCAA's legitimate attempt to maintain the amateurism and integrity
of college sports, and it does not economically benefit the NCAA or its member
institutions.
The court further concluded that Bylaw 12.5.5 is noncommercial in
nature and purpose, and that the NCAA's enforcement of the bylaw is a noncommercial
activity not subject to the antitrust laws. Therefore, Adidas failed to show a likelihood
of success on the merits of its antitrust claims.
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You Make the Call. . . Index
"You Make The Call..." is a newsletter published four times per year (spring,
summer, fall, winter) by the National Sports Law Institute of Marquette University Law
School, PO Box 1881, Milwaukee, Wisconsin, 53201-1881. (414) 288-5815, fax (414) 288-5818,
munsli@vms.csd.mu.edu. (www.marquette.edu/law/sports/call.html).
This publication is distributed via fax and email to individuals in the sports field upon
request.
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Editorial Staff:
Paul M. Anderson, Editor & Designer
Kirsten Hauser, Associate Editor
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Copyright © 1999 -- All rights reserved.
