Quarterback Tim Tebow garners a great deal of media attention, and as a result, he sells a lot of jerseys. So in March, when Tebow was traded to the New York Jets, and into the nation's largest media market, two of the world's most successful apparel companies took note of the revenue implications. Seeking to take advantage of a surge in Tebowmania, Reebok International Ltd. ("Reebok") immediately kicked into gear, preparing thousands of Tebow t-shirts and jerseys bearing his new team’s name. Nike, Inc. and Nike USA, Inc. ("Nike") responded quickly with an action filed in the United States District Court of the Southern District of New York. In its complaint Nike alleged that Reebok was unlawfully selling apparel bearing Tebow's name and associated intellectual property. Underlying the dispute is the interface between certain NFL-related license rights held by Reebok and those held by Nike.
In order to sell a product such as an NFL player jersey or a t-shirt that bears a player number, player name and team logo, a company must first have the right to use both the intellectual property of the National Football League (the "NFL") or an NFL team ("NFL Marks") and the name and number of an NFL player ("Player Marks"). The rights related to NFL Marks must be obtained through the NFL, and rights to use Player Marks can be obtained either directly from the player or through a group license from NFL Players Incorporated ("Players Inc.").
Although Reebok had a group license agreement with Players Inc., that license agreement expired prior to March 1, 2012, at which time Nike became the new owner of the group license. Nike also alleged that it has had an "exclusive right to use Tebow's name in connection with, among other products, athletic and casual apparel" since March 24, 2010. Although the group license was picked up by Nike, Reebok retained the right to sell products bearing NFL Marks until March 31, 2012. But, Nike alleged, this sell-off right alone did not allow Reebok to use NFL Marks and Player Marks, including Tebow's name, on the same product.
In its motion for a temporary restraining order and preliminary injunction against Reebok, Nike argued that if Reebok was allowed to continue to sell the products, the "unique consumer demand" arising from Tebow's trade would be satisfied or substantially reduced, and the opportunity for Nike to reap the benefits of this unique demand would be lost forever. The court agreed, and issued a temporary restraining order and show cause order against Reebok with respect to items that the court referred to as "Unauthorized Tebow Products." The court ruled that Reebok was restrained from manufacturing, taking orders and authorizing the delivery of Unauthorized Tebow Products. Furthermore, Reebok was ordered to advise all retailers and distributors carrying such products that they could no longer be sold because of the injunction, offer to repurchase the products and recall Unauthorized Tebow Products that were "currently in distribution channels controlled by Reebok[.]"
Reebok challenged Nike's arguments by claiming that it had received oral authorization to use Tebow's intellectual property and that its 150 day post-termination sell-off rights under its group license agreement with Players Inc., gave Reebok the right to sell the Tebow-related items. Nike responded by offering evidence that the oral authorization was not valid, and by arguing that Reebok's sell-off right only refers to products that were manufactured during the term of the Agreement which ended on February 28, 2012 (at which time Tebow was still a member of the Denver Broncos).
The court's temporary restraining order was followed by a Preliminary Injunction Order on April 5, 2012. Subsequently, after a settlement was reached between the parties, a Final Judgment was entered into by Nike and Reebok to close the matter, whereby Reebok agreed to abide by the terms of the temporary restraining order as described above, and no costs or attorney fees were awarded to either party.
This case was still ongoing when Nike unveiled its new NFL team uniform design on April 3, 2012, but the Final Judgment was entered far in advance of Nike making NFL jerseys available to the public via pre-orders. If Tebowmania continues on the same course, the Nike swoosh is likely to swamp the Reebok slash with no problem.