The NCAA News - News and Features

The NCAA News -- April 12, 1999

Association benefits from two major legal rulings

Adidas' challenge to logo policy denied

The NCAA has prevailed in a major legal case involving its authority to establish standards for logos appearing on uniforms.

A U.S. district court judge on March 26 denied a motion by Adidas America Inc. for a preliminary injunction that would have prevented the Association from enforcing a bylaw that limits the size of logos on uniforms.

Judge G.T. VanBebber ruled that Adidas had failed to show sufficient likelihood that it faced irreparable harm without a preliminary injunction or that a lawsuit would prevail on the merits of its claims.

Adidas challenged NCAA Bylaw 12.5.5, which restricts member schools to limiting a manufacturer's logo or mark on apparel to 21/4 square inches.

"We are pleased the court did not preclude the NCAA from using the bylaw," said NCAA General Counsel Elsa Cole. "The judge supported our position that the rule's purpose is to preserve the amateur nature of college sports and protect student-athletes from exploitation."

In addressing whether Adidas would face irreparable harm without the injunction, VanBebber said the company offered "only business speculation and conjecture to establish its irreparable injury. ... Adidas did not provide evidence sufficient to show that it has suffered irreparable injury in the past or that it is currently suffering irreparable injury. Adidas also failed to establish a likelihood that it will suffer irreparable harm in the future by continuing to adhere to the status quo."

VanBebber also noted that Adidas had "placed itself in harm's way" by failing to use an apparel design review process provided by the NCAA membership services staff.

Regarding the likelihood of success of Adidas' claim, VanBebber rejected the company's assertion that the NCAA's enforcement of Bylaw 12.5.5 violates the Sherman Antitrust Act.

VanBebber observed that Congress did not intend for the Sherman Act to reach every activity that might affect competition or business. He noted that many federal circuit courts have recognized that the noncommercial activities of certain organizations are outside the scope of antitrust laws.

He cited a 1990 case, Gaines v. NCAA, which challenged NCAA eligibility rules on antitrust grounds.

"The court found that the overriding purpose of the eligibility rules was not to provide the NCAA with commercial advantage," VanBebber wrote, "but rather to prevent commercializing influences from destroying the unique 'product' of NCAA college football and to preserve the unique atmosphere of competition between 'student-athletes'...

"In this case, the NCAA argues that, for antitrust purposes, Bylaw 12.5.5 is indistinguishable from its noncommercial eligibility rules. According to the NCAA, Bylaw 12.5.5 should not be subject to Sherman Act scrutiny because the bylaw, like the eligibility rules, has neither the purpose nor the effect of giving the NCAA or its member institutions an advantage in any commercial transaction. The court agrees."

Adidas also challenged the permitted use of the NCAA Football logo, which is not subject to the Bylaw 12.5.5 restriction. Adidas claimed that the NCAA is effectively competing with Adidas and other manufacturers. However, VanBebber ruled that Adidas failed to provide evidence that the NCAA is a competitor in the sports apparel market or that the enforcement of Bylaw 12.5.5 gives the NCAA a competitive or economic advantage in its promotion of the NCAA Football logo.

The court also concluded that the bylaw supports the NCAA's principle of maintaining the integrity and uniqueness of intercollegiate sports "by preventing member schools from turning their student-athletes into billboards in the pursuit of advertising revenues."

The judge said that by limiting commercial display, the bylaw helps preserve the basic function of the uniform, which is to provide identification of number and team to other teammates or referees.

"Our members want to protect student-athletes," Cole said. "This ruling allows us to strike a balance in containing commercialism in college athletics, yet permitting relationships between schools and manufacturers to continue."