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MAJOR LEAGUE BASEBALL PROPERTIES INC. v. SALVINO INC.

November 8, 2005.

Major League Baseball Properties, Inc., Plaintiff,
v.
Salvino, Inc., Defendant. Salvino, Inc., Plaintiff, v. Major League Baseball Enterprises, Inc. and Major League Baseball Properties, Inc., Defendants.



The opinion of the court was delivered by: RICHARD CASEY, District Judge

OPINION & ORDER

These disputes arise out of Salvino, Inc.'s ("Salvino") production and sales of small plush bean-filled bears, known as Bammers, featuring the logo of certain Major League Baseball ("MLB") Clubs. Major League Baseball Properties ("MLBP") is responsible for licensing the rights to use MLB intellectual property on retail products. On November 3, 1999, after learning Salvino was making and selling Bammers with MLB Club logos, MLBP sent it a cease-and-desist letter. In response, Salvino filed a complaint in November 1999 in the U.S. District Court for the Central District of California against MLBP and MLBP's corporate parent Major League Baseball Enterprises ("MLBE"). Salvino alleges that the organization of MLBP and its licensing activities violate antitrust laws. MLBP then brought its trade dress, breach of contract, and unfair competition action against Salvino in this Court. The California court subsequently transferred the Salvino action here. MLBP and MLBE now move for summary judgment on Salvino's antitrust, California unfair competition, and tortious interference claims. Salvino cross moves for partial summary judgment on MLBP's trade dress claims. For the reasons explained herein, the motion by MLBP and MLBE is granted, and Salvino's motion is denied. I. Background

Unless otherwise indicated, the following facts are not in dispute. Since 1987, with limited, and irrelevant, exceptions, MLBP has been the worldwide agent for licensing the use of intellectual property rights owned or controlled by MLB Clubs, the Baseball Office of the Commissioner ("BOC"), and MLBP on retail products. (MLBP 56.1 Stmt. ¶¶ 2, 18, 25.) A series of agreements known as the Agency Agreement govern MLBP's operations and relationships with the Clubs. (Id.) The Agency Agreement distinguishes between products sold at retail and those that Clubs give away as part of a promotion at a game. (MLBP 56.1 Stmt. ¶ 11.) Retail items — even if they are sold at a concession stand inside a MLB stadium — must be licensed through MLBP. (Id.) "Giveaways," however, do not require a license from MLBP as long as they do not include the marks of another Club, MLBP, or the BOC. (MLBP 56.1 ¶ 12.) Similarly, Clubs may sell products not licensed by MLBP at stadium concession stands provided the products do not use any marks owned by MLBP or the BOC. (MLBP 56.1 ¶ 13.)

  Prior to MLBP's assumption of all licensing responsibility and authority, potential licensees had to approach each Club separately to obtain a license for MLB intellectual property. (MLBP 56.1 Stmt. ¶ 20.) For example, in 1965, the Houston Astros refused to permit Topps Chewing Gum to make or sell a baseball card with an Astros team photo. (MLBP 56.1 Stmt. ¶ 21.) Similarly, Coca-Cola did not include MLB Clubs in an "under the cap" promotion it ran in the 1960s because it was "too cumbersome" to obtain licensing rights from each Club individually. (MLBP 56.1 Stmt. ¶ 22.) MLBP contends that its current organization provides efficient protection, quality control, and design of MLB's intellectual property, as well as efficiencies in promotions, advertising, sales, administration, and licensing operations. (MLBP 56.1 Stmt. ¶ 19, 78-81). Salvino claims there are less restrictive ways to achieve efficient licensing operations. (Salvino Resp. to MLBP 56.1 Stmt. ¶ 37.)

  Between 1989 and 2001, Salvino obtained licenses from MLBP to use MLB intellectual property on baseball figurines. (MLBP 56.1 ¶ 92.) Under the MLBP license agreement signed by Salvino, Salvino promised it would not "use the Logos in any manner other than as licensed. . . ." (MLBP 56.1 ¶ 95). In 1998, Salvino began selling plush bean-filled bears known as Bammers. (MLBP 56.1 ¶ 96.) MLBP contends that Salvino did not request 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. (MLBP 56.1 ¶ 97.) Salvino claims it tried to obtain a license from MLBP to use MLBP logos and other intellectual property on its Bammers. (Salvino Resp. to MLB 56.1 ¶ 98.) Salvino sold its Bammers to retailers, including MLB Clubs and stadium concession stands. (MLBP 56.1 ¶¶ 111-12.)

  Colin Hagen of MLBP assumed responsibility for the Salvino account in late 1998. (MLBP 56.1 ¶ 121). He met with Wayne Salvino, Salvino's vice president, to discuss the possibility of a license for Club trademarks on Bammers in the spring of 1999. (MLBP 56.1 ¶¶ 94, 123-24.) MLBP claims it never received a license application from Salvino. (MLBP 56.1 ¶¶ 126-27.) Salvino claims that Wayne Salvino personally delivered a completed license application to Hagen, although it has not produced a copy of the completed from. (Salvino Resp. to MLB 56.1 ¶ 126; MLB 56.1 ¶ 128.) Regardless, MLBP did not issue Salvino a license to use MLB intellectual property on Bammers.

  In March 1999, MLBP granted a non-exclusive license to Team Beans to use certain MLB intellectual property on bean-filled bears. (MLBP 56.1 ¶ 130.) 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 56.1 ¶ 131). MLBP claims Salvino tried to make its Bammers match Club uniforms as much as possible, including, for example, by using color matches provided in the MLBP Style Guide that Salvino received in conjunction with its previously obtained MLBP licences. (MLBP 56.1 ¶¶ 136, 139-40.) In 2000, Salvino placed the city or state name across the chest of certain of its Bammers. (MLBP 56.1 ¶ 141.) The parties dispute whether Salvino told Clubs and retailers that it had an MLBP license for its Bammers. (MLBP Resp. to Salvino 56.1 ¶ 8.)

  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. (MLBP 56.1 ¶ 145.) Salvino claims the Diamondbacks ordered these Bammers. (Salvino Resp. to MLBP 56.1 ¶ 145.) Regardless, MLBP sent a cease-and-desist letter to Salvino and Salvino responded by filing a lawsuit against MLBP in the Central District of California on November 23, 1999. (MLBP 56.1 ¶¶ 146-47.) This consolidated litigation followed.

  II. Discussion

  A. Summary Judgment Standard

  Summary judgment is appropriate where the parties' submissions demonstrate "that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In evaluating a summary judgment motion, the court must resolve all ambiguities and draw all inferences in favor of the non-moving party. Anderson, 477 U.S. at 255. The party seeking summary judgment bears the initial burden of showing that no genuine issue of fact exists. Celotex, 477 U.S. at 323. Once such a showing is made, the opposing party must present "specific facts showing there is a genuine issue for trial." Fed.R.Civ.P. 56(e). However, the non-moving party "may not rely on conclusory allegations or unsubstantiated speculation." Scott v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998).

  B. MLBP's Motion for Summary Judgment on Salvino's Antitrust Claims

  Section 1 of the Sherman Act prohibits "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States." 15 U.S.C. § 1.*fn1 The Supreme Court has limited § 1 of the Sherman Act "to prohibit only unreasonable restraints of trade." Nat'l Collegiate Athletic Ass'n v. Bd. of Regents, 468 U.S. 85, 98 (1984); Metro. Intercollegiate Basketball Ass'n v. Nat'l Collegiate Athletic Ass'n, 337 F. Supp. 2d 563, 569 (S.D.N.Y. 2004). "Independent conduct falls outside the purview of this provision." Id. "To prove a § 1 violation, 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 or reason analysis. Geneva Pharms. Tech. Corp. v. Barr Labs. Inc., 386 F.3d 485, 506 (2d Cir. 2004); see also Metro. Intercollegiate Basketball Ass'n, 337 F. Supp. 2d. at 569.

  The parties disagree over how the Court should analyze Salvino's Sherman Act claim. MLBP argues that a rule of reason analysis is required. Salvino contends that the per se rule should be applied, but that even a quick look would demonstrate that MLBP's organization places unreasonable restraints on competition. "[T]he categories of analysis of anticompetitive effect are less fixed than terms like `per se,' `quick look,' and `rule of reason' tend to make them appear. . . . The essential inquiry remains the same ...


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