Supreme Court backs Buffalo Grove company in NFL suit

Buffalo Grove-based American Needle Inc. Monday won a major step in its ongoing David-and-Goliath licensing battle against the National Football League.

The U.S. Supreme Court unanimously agreed with the family-owned business that the NFL should be considered 32 separate teams and not one large business, thereby shooting down the NFL's request for antitrust law protection.

"The teams compete in the market for intellectual property," Justice John Paul Stevens wrote for the court. "To a firm making hats, the Saints and the Colts are two potentially competing suppliers of valuable trademarks."

But the case is far from over. It now returns to the U.S. District Court, and that could lead to a lengthy round of discovery, seeking information from the NFL about its practices on licensing merchandise. Then, the case could go to summary judgment or to trial with appeals, legal experts said.

"This could become a very intrusive and very expensive case," said James D. Smith, an antitrust lawyer with Bryan Cave LLP, a law firm with offices in Chicago, Phoenix and elsewhere. "But it also could lead to some new law."

The legal community has closely watched the case because this is likely the first time a company sued any league, whether football, baseball or some other sport. So the outcome could have wide-ranging effects on other areas, including collective bargaining, among other things, said Fred McChesney, a law professor at Northwestern University.

"This opens the possibility of some interesting suits growing out of this," McChesney said.

DeMaurice Smith, executive director of the NFL Players Association, said the ruling "is not only a win for the players past, present and future, but a win for the fans."

The NFL and players association are aiming to avoid a work stoppage after next season, and an NFL victory in this case would have removed the union's option to decertify and bring an antitrust suit against the league, said Gary Roberts, dean of the Indiana University School of Law in Indianapolis and co-author of a sports law casebook.

"The threat of that changes the bargaining a little bit," he said.

NFL spokesman Greg Aiello said the decision "has no bearing on collective bargaining, which is governed by labor law." He said the NFL is optimistic about winning the apparel lawsuit because the league's collective licensing approach is "reasonable, pro-competitive and entirely lawful."

American Needle President Robert Kronenberger did not have an immediate comment.

The 92-year-old company made licensed merchandise for the NFL, but had been knocked off the field when the league awarded an exclusive licensing deal to Reebok International Ltd. That forced American Needle to file a lawsuit in 2004 on antitrust grounds against the NFL. In January, the case reached the U.S. Supreme Court in Washington, D.C., where the Kronenberger family and their lawyers presented their argument.

American Needle was founded on Chicago's Northwest Side in 1918 by Ike Kronenberger, who handed it down to his son, Bruce Kronenberger. The company made visors for newspaper editors as well as baseball replica hats after World War II. By the 1950s, the company began license agreements with the NFL teams, eventually handling merchandise for all the teams.

When Bruce Kronenberger died in the 1980s, his sons took over. Robert Kronenberger of Deerfield is president and brother Ron of Buffalo Grove is vice president.

The company moved a couple of times, settling its headquarters in Buffalo Grove in the 1990s.

During its heyday, it had about 400 workers, but overseas competition had an impact, and the company eventually streamlined to about 50 workers in Buffalo Grove and about 20 in a downstate Illinois facility.

American Needle had been one of many companies that made NFL headgear until the league awarded an exclusive contract to Reebok in 2001. The NFL business had been about 25 percent of sales for American Needle. After that loss, American Needle was forced to look for other revenue streams. It continued to produce for other sports and eventually started a new clothing brand called Red Jacket, carried online and in department stores and sporting outlets.

In 2004, American Needle filed a lawsuit against the NFL, claiming the Reebok deal violated antitrust law. But the lower courts were not kind, throwing out the case and holding that nothing in antitrust law prohibits NFL teams from cooperating on apparel licensing in order to compete against other forms of entertainment.

American Needle sought to restore the suit in the lower courts, while the NFL wanted the Supreme Court to uphold the lower court's decision that it can be considered a single entity and apply that standard around the nation.

•Bloomberg News contributed to this report.