Major League Baseball Properties, Inc. v. Salvino, Inc.

Southern District Court of New York

420 F. Supp. 2d 212 (S.D.N.Y. 2005)

Key Search Terms: anti-trust, trade dress, Sherman Act, rule of reason,
relevant market

Facts
Major League Baseball Properties (MLBP) licenses the rights to use MLB
intellectual property on retail products. Salvino, Inc. was making bean-filled
bears known as Bammers, featuring the logo of certain MLB Clubs. MLBP
argued that Salvino did not request a license to use MLBP intellectual property.
After learning of this, MLBP sent a cease-and-desist letter to Salvino. Salvino
then brought a claim against MLBP alleging violation of antitrust laws. MLBP
then brought trade dress, breach of contract, and unfair competition claims
against Salvino. Both parties moved for summary judgment.

Issue
Is the MLBP’s licensing of MLB intellectual property a restraint of trade?

Holding
To prove a violation of Section 1 of the Sherman Act, a plaintiff must
demonstrate: (1) a combination or some form of concerted action between at
least two legally distinct economic entities that (2) unreasonably restrains trade
under a per se or rule of reason analysis. For conduct to be illegal per se, it
must fall within the narrow range of behavior that is considered so plainly anti-
competitive and so lacking in redeeming pro-competitive value that it is
presumed illegal without further examination. MLBP’s role in licensing MLB
intellectual property is not per se anti-competitive because it is not a naked
restraint on trade. It facilitates the efficient protection and quality control of
MLB intellectual property. 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.
Using the rule of reason analysis, conduct is deemed illegal only if it
unreasonably restrains competition. Salvino failed to offer any evidence of
MLBP’s actual adverse effect on the market or its sufficient market power.
Thus, Salvino did not demonstrate under the rule of reason that MLBP placed
unreasonable restraints on trade, so MLBP’s motion for summary judgment on
Salvino’s antitrust claim was granted. Because MLBP demonstrated the non-
functional nature of the Bammers’ trade dress and because genuine issues of
fact existed with respect to the secondary meaning of the MLB Clubs’ trade
dress, Salvino’s motion for summary judgment on MLBP’s trade dress claim
was denied.
Summarized by: Leslie Adams