The Southern District of New York has granted a motion for summary judgment filed by Major League Baseball Properties, Inc., effectively dismissing an antitrust claim brought by a maker of novelty goods.
Salvino, Inc., which produces and sells small, plush, bean-filled bears that feature the logo of certain MLB Clubs, had claimed that MLBP’s role as the worldwide agent for licensing the use of intellectual property rights owned or controlled by MLBC, the Baseball Office of the Commissioner, and MLBP on retail products, violated the Sherman Antitrust Act.
The district court also provided another victory to MLBP by denying Salvino’s motion for summary judgment on MLBP’s counterclaim of trade dress, breach of contract, and unfair competition.
The court began its analysis by noting that MLBP has been the worldwide agent for licensing the use of intellectual property rights owned or controlled by MLBC, the BOC, and MLBP on retail products since 1987. MLBP’s contention, wrote the court, is that it “provides efficient protection, quality control, and design of MLB’s intellectual property, as well as efficiencies in promotions, advertising, sales, administration, and licensing operations.”
In 1989, Salvino started obtaining licenses from MLBP to use MLB intellectual property on baseball figurines. One of those licenses, in 1998, involved the sale of the aforementioned Bammers.
“MLBP contends that Salvino never requested a license to use MLBP intellectual property on the Bammers, but did obtain a license from the MLB Players Association to use MLB player names on them,” wrote the court. “Salvino claims it tried to obtain a license from MLBP to use MLB logos and other intellectual property on its Bammers,” which were sold “to retailers, including MLB Clubs and stadium concession stands.” MLBP claimed it never received a license application from Salvino.
In March 1999, MLBP did grant a non-exclusive license to Team Beans, Inc. to use certain MLB intellectual property on bean-filled bears. Team Beans also obtained an exclusive license for the use of Club marks on plush bears with sewn-on authentic uniforms and a non-exclusive license for other categories of bears, including bean-filled bears similar to Bammers.
“MLBP claims Salvino tried to make its Bammers match Club uniforms as much as possible, including, for example, using color matches provided in the MLBP Style Guide that Salvino received in conjunction with its previously obtained MLBP licenses,” wrote the court.
In October 1999, MLBP learned that Salvino was making and selling Bammers with the Arizona Diamondbacks logo to the Diamondbacks Club store without a MLBP license, and sent a cease-and-desist letter to Salvino. Salvino responded by filing a lawsuit against MLBP and MLBP’s corporate parent Major League Baseball Enterprises in the Central District of California on November 23, 1999.
MLBP then brought its trade dress, breach of contract, and unfair competition action against Salvino in the Southern District of New York. The California court subsequently transferred the Salvino action to New York. Pre-trial motions for summary judgment followed.
Addressing MLBP’s motion for summary judgment on Salvino’s antitrust claims first, the court noted that each side had dug in on how they wanted it to analyze the claim — MLBP argued for the rule of reason analysis, while Salvino argued for use of the per se rule.
The court declined to use of the per se rule, finding that “MLBP’s role in licensing MLB intellectual property is not a naked restraint on trade. Like the license agreement in Broadcast Music, it also facilitates the efficient protection and quality control of MLB intellectual property.
“Moreover, courts have declined to apply the per se rule to sports leagues where cooperation among competitors ‘can under some circumstances have legitimate purposes as well as anticompetitive effects.’ N. Am. Soccer League v. Nat’l Football League, 670 F.2d 1249, 1258-59 (2d Cir. 1982) (applying rule of reason analysis to NFL’s cross-league ownership ban); see also Nat’l Collegiate Athletic Ass’n v. Bd. of Regents of the Univ. of Okla., 468 U.S. 85, 99, 104 S. Ct. 2948, 82 L. Ed. 2d 70 (1984) (declining to apply the per se rule to ‘an industry in which horizontal restraints on competition are essential if the product is to be available at all’).”
The court was clearly moved by MLBP’s expert, who identified “several procompetitive justifications for MLBP’s arrangement, including the benefits of one-stop shopping for MLB intellectual property, and the efficiencies of enforcement, quality control, and coordinated promotion, design, sales, and marketing support.”
Faced with a higher threshold, Salvino failed to offer “any evidence of an adverse effect on competition resulting from MLBP’s licensing authority. Indeed, Salvino did not respond to MLBP’s arguments regarding the rule of reason analysis and instead urged the Court to analyze its claims under the per se rule or quick look doctrine, neither of which would require Salvino to make a showing of adverse effect on the market.” The court granted MLBP’s motion.
It then turned to Salvino’s motion for partial summary judgment on MLBP’s claim that Salvino infringed and diluted its trade dress under §§ 43(a) and (c) of the Lanham Act.
First, the court found that MLBP “has sufficiently demonstrated the non-functional nature of the Bammers’ trade dress. Then, it found that “the evidence cited by MLBP is sufficient to establish the existence of genuine issues of fact to be tried with respect to the secondary meaning of the MLB Clubs’ trade dress.
“As such, summary judgment on MLBP’s Lanham Act claim is inappropriate.”
Major League Baseball Properties, Inc. v. Salvino, Inc.; S.D.N.Y.; 00 Civ. 2855 (RCC), 00 Civ. 4153 (RCC); 11/17/05
Attorneys of Record: (For Major League Baseball Properties, Inc.) Gary A. Adler, Joshua Dorchak, Bingham McCutchen LLP, New York, NY; James T. McKeown, Rebecca E.W. Wegner, Foley & Lardner, Milwaukee, WI.
(For Salvino, Inc.) Donald R. Pepperman, Maxwell M. Blecher, Blecher & Collins, Los Angeles, CA; Harold L. Jackson, Jackson Law Corporation, Tustin, CA; Thomas A. Catalano, Lester, Schwab, Katz & Dwyer, L.L.P., New York, NY.
(For Major League Baseball Enterprises, Inc., Major League Baseball Properties Inc.) Eric Jay Eichenholtz, NYC Law Department, Office of the Corporation Counsel, New York, NY; Gary A. Adler, Bingham, Dana L.L.P., New York, NY; James T. McKeown, Foley & Lardner, Milwaukee, WI; James D. Nguyen, Jon M. Wilson, Foley & Lardner, Los Angeles, CA.
(For Major League Baseball Enterprises, Inc., Major League Baseball Properties Inc.) Gary A. Adler, Bingham, Dana L.L.P., New York, NY; James T. McKeown, Foley & Lardner, Milwaukee, WI; James D. Nguyen, Jon M. Wilson, Foley & Lardner, Los Angeles, CA.
(For Salvino, Inc.) Donald R. Pepperman, Maxwell M. Blecher, Blecher & Collins, Los Angeles, CA; Harold L. Jackson, Jackson Law Corporation, Tustin, CA; Thomas A. Catalano, Lester, Schwab, Katz & Dwyer, L.L.P., New York, NY.
