Antitrust Law Daily Wrap Up, TOP STORY—S.D.N.Y.: Photographers’ antitrust claims against NFL, AP, Getty dismissed, (Mar 31, 2015)

By Jeffrey May, J.D.

Antitrust claims raised by professional sports photographers against the National Football League (NFL) and its teams, as well as licensing agents Getty Images (US), Inc. and the Associated Press (AP), have been dismissed by the federal district court in New York City. The photographers failed to adequately allege that the NFL, in concert with Getty and the AP, “conspire[d] to create a monopoly in favor of NFL in order to illegally restrain trade and otherwise fix and control the market for commercial licensing of NFL-related ‘stock’ photos.” Claims against Getty were ordered to proceed in arbitration (Spinelli v. National Football League, March 27, 2015, Sweet, R.).

Background. The plaintiffs photographed events for the NFL and individual NFL clubs. Generally, they took the photos “on spec,” meaning that instead of being paid flat fees for their work, they retained ownership of the copyrights in the photos that they took during an event and then earned income by licensing their photos.

The NFL entered into licensing agreements, first with Getty between 2004 and 2009, and then with the AP with respect to NFL images. During the period of the NFL-Getty agreement, the plaintiffs entered into agreements with Getty (Getty Contributor Agreements) under which the plaintiffs became contributing photographers for Getty, and Getty received the right to license the plaintiffs’ NFL photos. Following the expiration of the NFL-Getty agreement, the plaintiffs entered into license agreements with AP (AP Contributor Agreements) and transferred their existing images of NFL content from Getty to the AP photo library. Among other things, the plaintiffs take issue with their licensing agents' granting the NFL “complimentary” use of the plaintiffs’ photos.

Antitrust claim. The plaintiffs claimed that the NFL and its teams conspired to restrain trade in two ways: (1) the NFL’s collective licensing arrangement with a single licensing company to market and sell commercial licenses for all stock photography of NFL-related photos, which prevented Getty and the AP from negotiating licensing agreements with individual NFL teams on better terms; and (2) the NFL’s “illegal” exclusive licenses to Getty and later the AP, which prevented the plaintiffs from obtaining fair market value for commercial uses of their NFL photographs and undermined their ability to bargain fairly with Getty Images and the AP to obtain more favorable terms in their contributor contracts. The NFL defendants and the AP moved to dismiss, and their motion was granted. Getty moved to compel arbitration of the photographers' claims, and its motion was granted.

Antitrust standing. As a “threshold matter,” the court ruled that the plaintiffs lacked standing to pursue their antitrust claim. The plaintiffs were not “efficient enforcers of the antitrust laws,” in the court's view. Courts typically limit antitrust standing to direct competitors or consumers, and the plaintiffs were neither consumers nor competitors in the alleged market for commercial licensing of NFL-related photographs. Moreover, the plaintiffs’ purported injury—personal economic loss resulting from underpayment of royalties—was at most an indirect result of the challenged agreements and was not the result of the challenged conduct. The court pointed out that the plaintiffs challenged the NFL's collective licensing arrangement and exclusive licensing agreements with Getty and the AP, but acknowledged that any royalty payments for the commercial use of their NFL-related photographs stemmed from their contributor agreements with Getty and the AP. Furthermore, there were more efficient enforcers, such as Getty’s and the AP’s competitors, and the plaintiffs' injuries were too speculative to support antitrust standing and damages would be too difficult to identify and apportion, according to the court.

Relevant production market. Even if the plaintiffs had adequately established standing, they still failed to allege a relevant product market in which the anticompetitive effects of the challenged activity could be assessed. The court rejected the plaintiffs' proposed “market for commercial licensing of NFL-related stock photographs.” The court questioned why photographs for professional baseball or basketball were not reasonably interchangeable with the commercial licensing of NFL-related photographs. The plaintiffs did not plausibly allege that “consumers” in the market—commercial enterprises licensing NFL-related photos—would not simply substitute different, less costly sports photographs to promote their products.

Challenged agreements. The court also rejected the plaintiffs’ challenges to the alleged agreements. Neither the collective licensing theory nor the exclusive licensing theory could support an antitrust claim against the NFL defendants.

The plaintiffs contended that the NFL teams engaged in an antitrust conspiracy by allowing the NFL to “control and make decisions relating to each NFL Team's independently owned intellectual property.” However, the plaintiffs failed to plausibly allege collective action by the NFL defendants to restrain trade.

Also rejected was the allegation that the NFL defendants’ granting of exclusive licenses to Getty and then AP violated Section 1 of the Sherman Act. Because the benefits of exclusive licensing agreements were well-recognized, these arrangements are deemed “presumptively legal,” the court noted. Thus, the plaintiffs had to allege foreclosure in a properly defined relevant market and harm to competition. Assuming a market encompassing the commercial licensing of all sports-related photographs and taking into account the limited “exclusivity” granted to Getty and the AP, the plaintiffs could not allege foreclosure. The court also pointed out that the agreements did not foreclose competition based on their limited durations. Furthermore, “[a]n exclusive license, which merely confers upon the licensee the ability to exploit the licensor’s exclusive intellectual property rights, does not violate the antitrust laws,” the court explained.

Thus, the plaintiffs failed to overcome the presumption that the NFL and AP’s exclusive license agreements were legal. Consequently, the antitrust claim against AP had to be dismissed.

Arbitration agreement with Getty. The plaintiffs were required to pursue their federal antitrust claims against Getty in arbitration before the American Arbitration Association. The Getty Contributor Agreements required arbitration of any disputes arising in connection with the agreements. The court rejected the plaintiffs' contention that the Getty Contributor Agreements as a whole were procedurally and substantively unconscionable. Moreover, arbitration of the antitrust claims against Getty was not foreclosed by the plaintiffs' inability to pursue their claims against the other defendants in arbitration. Also rejected was the plaintiffs' contention that their antitrust claims were collateral to any contracts with Getty and did not depend on the interpretation of the Getty Contributor Agreements. The court concluded that the antitrust claims “touch and concern” the Getty Contributor Agreements.

The case is Case 1:13-cv-07398-RWS.

Attorneys: Danial A. Nelson (Nelson & McCulloch LLP) for Paul Spinelli. Jeffrey A. Mishkin (Skadden, Arps, Slate, Meagher & Flom LLP) for National Football League. Jura Christine Zibas (Wilson Elser Moskowitz Edelman & Dicker LLP) for Replay Photos, L.L.C. Bruce S. Meyer (Weil, Gotshal & Manges LLP) for Getty Images U.S., Inc. Andrew Lawrence Deutsch (DLA Piper US LLP) for the Associated Press.

Companies: National Football League; Associated Press; Replay Photos, L.L.C.; Getty Images U.S., Inc.

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