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From Antitrust Law Daily, September 11, 2018

Dismissal of photographers' antitrust claims against NFL, AP upheld

By Jeffrey May, J.D.

Professional sports photographers failed to allege an anticompetitive effect resulting from a purported antitrust conspiracy involving the National Football League (NFL), NFL teams, and the Associated Press (AP), their exclusive licensing agent for and distributor of commercial licenses for photographs that contain NFL intellectual property. The photographers contended that the collective licensing agreement "substantially reduced the output of stock photography for NFL events." However, this allegation did not identify an adverse effect in the relevant market, which was defined as the market for commercial licenses of NFL event photographs. Further, the photographers offered no data or other facts to support their conclusory allegation that prices increased for consumers of commercial licenses. Therefore, the U.S. Court of Appeals in New York City affirmed dismissal of the antitrust claims (Spinelli v. NFL Ventures, L.P., September 11, 2018, Lynch, G.).

The complaining photographers who had entered into contributor agreements with AP in order to secure access to NFL events and obtain licenses for the intellectual property contained in the event photos took issue with the NFL’s use of their photos without paying any royalties as a result of the challenged agreement. They filed suit. In a second amended complaint, they alleged copyright infringement, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, unconscionability, fraud, and violation of the Sherman Act. The district court dismissed the suit, and the appeal followed.

On appeal, the Second Circuit has now affirmed dismissal of the antitrust claims. However, it vacated portions of the district court’s judgment that dismissed copyright infringement claims against the AP and NFL, as well as claims for breach of the implied covenant of good faith and fair dealing and fraud against AP.

Anticompetitive effects. The appellate court explained that, because the NFL’s decision to jointly license its intellectual property was not per se illegal, the plaintiffs’ claims were subject to a rule of reason analysis, which required them to demonstrate that the challenged agreement was unreasonable and anticompetitive. However, the plaintiffs’ allegations of anticompetitive effect were insufficient, the court ruled.

According to the court, even if the plaintiffs plausibly alleged that fewer credentials were being given for particular NFL events and thus fewer photographs were being taken of those events, those allegations did not say anything about the relevant market—the market for commercial licenses of NFL event photographs. "Without a match between the injury alleged and the market described, Plaintiffs’ ‘reduced output’ allegation is insufficient to show an anticompetitive effect on the commercial licensing of NFL event photographs," the court held.

The photographers also did not support their allegation that the alleged antitrust conspiracy raised prices for consumers of commercial licenses for NFL event photographs. Although the photographers contended that there were instances of black market sales of their photographs by sports memorabilia dealers and retailers resulting from the high licensing fees demanded by AP and the NFL, these limited instances did not suffice to permit a plausible inference that the defendants’ alleged anticompetitive behavior increased prices in the market for commercial licenses for NFL photographs "as a whole," the court explained.

The case is No. 17-0673.

Attorneys: Kevin P. McCulloch and Nathaniel Kleinman (The McCulloch Law Firm PPLC) and William P. Ferranti (The Ferranti Firm LLC) for plaintiffs-appellants. Andrew L. Deutsch and Tammy Y. Duvdevani (DLA Piper LLP) and Jura C. Zibas (Wilson Elser Moskowitz Edelman & Dicker LLP) for Associated Press and Replay Photos, LLC. Jeffrey A. Mishkin and Anthony J. Dreyer (Skadden, Arps, Slate, Meagher & Flom LLP) for National Football League, NFL Ventures, L.P., Buffalo Bills, Inc. and Arizona Cardinals Holdings, Inc.

Companies: National Football League; NFL Ventures, L.P.; Associated Press

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