560 U.S. 183, 130 S. Ct. 2201 (2010)
The National Football League is an unincorporated association that includes thirty-two separately owned professional football teams.1 Each team owns its own name, colors, logo, and related intellectual property.2 Prior to 1963 the teams made their own arrangements for licensing their intellectual property and marketing trademarked items such as caps and jerseys.3
In 1963 the teams formed National Football League Properties to develop, license, and market their intellectual property.4 Between 1963 and 2000 NFLP granted nonexclusive licenses to several vendors, including petitioner American Needle, Inc., permitting them to manufacture and sell apparel bearing team insignias.5 Most but not all of the revenues generated by NFLP were given to charity or shared equally among the teams.6
In December 2000 the teams voted to authorize NFLP to grant exclusive licenses.7 NFLP awarded Reebok International Ltd. an exclusive ten-year license to manufacture and sell trademarked headwear for all thirty-two teams.8 NFLP thereafter declined to renew American Needle's nonexclusive license.9
American Needle filed this action in the United States District Court for the Northern District of Illinois against the NFL, its teams, NFLP, and Reebok.10 The complaint alleged that the agreements violated sections 1 and 2 of the Sherman Act.11 In their answer the defendants averred that the teams, the NFL, and NFLP were incapable of conspiring within the meaning of section 1 because they are a single economic enterprise.12
After limited discovery the district court granted summary judgment on the question whether the NFL and its thirty-two teams were acting as a single entity with regard to the exploitation of intellectual property rights.13 The Court of Appeals for the Seventh Circuit affirmed.14 The Supreme Court granted certiorari.15
Whether the NFL teams and NFLP are capable of engaging in a contract, combination, or conspiracy under section 1 of the Sherman Act with respect to the licensing of their intellectual property?16
Section 1 of the Sherman Act makes every contract, combination, or conspiracy in restraint of trade illegal.17 The meaning of that language is informed by the basic distinction between concerted and independent action that distinguishes section 1 from section 2.18 An arrangement must embody concerted action to be a contract, combination, or conspiracy under section 1.19 The inquiry is whether the agreement joins together separate economic actors pursuing separate economic interests such that it deprives the marketplace of independent centers of decisionmaking and therefore of diversity of entrepreneurial interests and thus of actual or potential competition.20
Yes. The thirty-two teams are each substantial, independently owned, and independently managed businesses.21 Their general corporate actions are guided by separate corporate consciousnesses, and their objectives are not common.22 The teams compete with one another not only on the playing field but to attract fans, for gate receipts, and for contracts with managerial and playing personnel.23 Directly relevant here, the teams are potentially competing suppliers in the market for intellectual property.24 When each team licenses its intellectual property, it is pursuing the interests of each corporation itself rather than the common interests of the whole league.25
Although the teams formed NFLP to centralize management of their intellectual property, NFLP remains an instrumentality of the teams.26 Its licensing decisions are made by the thirty-two potential competitors, each of which owns its share of the jointly managed assets.27 The teams remain separately controlled potential competitors with economic interests distinct from NFLP's financial well-being.28 NFLP's decisions affect each team's profits from licensing its own intellectual property.29
The NFL teams and NFLP are capable of engaging in a contract, combination, or conspiracy under section 1 of the Sherman Act with respect to the licensing of their intellectual property.30