On March 27, 2012, Nike filed a lawsuit against Reebok in the United States District Court for the Southern District of New York.
The Basis of the Lawsuit
Nike’s lawsuit against Reebok stems from what Nike alleges is Reebok’s “unauthorized and improper use of Tim Tebow’s name on New York Jets-related apparel. . .” After Tebow was traded by the Denver Broncos to the New York Jets on March 21, 2012, Reebok introduced into the market Jets apparel with Tebow’s name and the number 15.
Nike asserted that Reebok was not authorized to introduce this merchandise into the market, as it was not licensed to do so. According to Nike’s complaint, introduction of a product bearing an NFL player’s name on a team-identified product requires that one receive the “. . . right to use the trademarks of the NFL and/or its member clubs. . .” and also obtain the right to use a player’s name and number through either the player or from the NFLPA. The crux of this case, lies in Nike’s allegation that Tebow did not grant Reebok the right to use his name and number on merchandise, nor did Reebok have a valid group license with the NFLPA to use Tebow’s name on March 21, 2012. Rather, Nike alleges that it not only has been granted the right to use Tebow’s name on apparel from Tebow himself, but also that as of March 1, 2012, Nike was granted a group license by the NFLPA.
Filing of the lawsuit was arguably prompted by what Nike saw as a limited opportunity to fully capitalize upon Tebow’s trade to the Jets. Reference to this is made in several places within the lawsuit. For instance, the lawsuit alleges, “Mr. Tebow’s high-profile trade to the New York Jets has garnered around-the-clock national news media coverage, and generated an immediate and short-lived intense consumer demand for Tim Tebow-identified New York Jets-branded apparel. Additionally, the lawsuit references Nike’s scheduled April 3 unveiling of its new NFL uniforms and the company’s new spot as the NFL’s exclusive provider of on-field apparel. Nike alleged that although the release of the new Nike NFL uniforms would be expected to increase sales of Nike apparel with Tebow’s name on it, Reebok’s distribution of Tebow Jets apparel will limit Nike from optimizing its sales in this regard.
Ultimately, the lawsuit alleges four causes of action: Violation of the Lanham Act under 15 U.S.C. section 1125 (a) (alleging that the Reebok Tebow Jets apparel is likely to cause confusion, mistake or to deceive as to Tebow’s approval of such goods); misappropriation of Tebow’s rights or publicity (which Nike asserts it has standing to raise as an exclusive license holder of Tebow’s name for apparel); tortious interference with current and prospective business relationships (alleging that Nike’s sales of Tebow Jets apparel was disrupted and diminished by Reebok’s actions) and unjust enrichment.
Nike seeks preliminary and permanent injunctions, compensatory damages, punitive damages and attorney’s fees. Additionally, if Nike is successful in recovering under the Lanham Act, it is entitled to treble damages (three times the amount of damages).
Movement in the Case
On March 28, a judge in the Southern District of New York issued a temporary restraining order against Reebok. Temporary restraining orders are granted when a plaintiff faces an immediate and irreparable harm as a result of the alleged actions of the defendant. Thus, the judge must have determined that if sales of the Reebok Tebow Jets apparel, Nike’s interests would be immediately and irreparably damaged. From reports, the temporary restraining order prevents Reebok from selling and producing any further Tebow Jets apparel, and Reebok must also recall that Tebow Jets apparel which it entered into commerce.
What Will Happen Next
The lawsuit will proceed through the course of civil litigation. An answered will be filed by Reebok. Thereafter, the parties will engage in discovery. While there is always the chance that the parties will settle out of court, a settlement in this case is unlikely to occur unless Reebok is enjoined from distributing or selling unlicensed Tebow Jets apparel in the future. Given the unlikelihood that Reebok would voluntarily agree to this, the case will most likely proceed through the court system. Nike will need to obtain a permanent injunction against Reebok in order to permanently stop Reebok from selling unlicensed Tebow Jets apparel. Furthermore, as noted above, Nike will seek to obtain monetary damages in the lawsuit.
What to Watch For
Moving forward, there are several things to pay attention to. First, is the possible addition of plaintiffs to the lawsuit, namely Tebow and the NFLPA. In its lawsuit, Nike alleges that Tebow’s right to publicity has been violated. In order to avoid a standing defense raised by Reebok to this allegation (meaning, that Nike doesn’t have the right to raise this claim in Tebow’s place), Tebow should be joined as a plaintiff. Additionally, the NFLPA may be joined as a plaintiff, as Reebok arguably violated its intellectual property rights by selling apparel with an NFL player’s name on it without a license from the NFLPA.
There are likely several defenses Reebok will raise. As noted above, expect a standing defense to be raised by Reebok to the right of publicity claim. Another issue which Reebok will likely raise, is that it is licensed to manufacture NFL apparel through March 31, 2012. The NFL has licensed Reebok up until that date to manufacture and sale NFL apparel. Reebok will likely argue that this license granted it the right to manufacture and sale the Tebow Jets apparel. However, as noted above, Nike will likely counter this defense by asserting that Reebok not only need a license from the NFL, but also a license from Tebow or the NFLPA. Nike will assert that Reebok lacked this secondary license required to produce the merchandise.
In its lawsuit, Nike notes that Tebow “. . . has attracted unprecedented public interest and attention from the media. . .” This lawsuit is sure to only add to that public interest and media attention.