Major League Baseball Properties v. Salvino

Major League Baseball Properties, Inc. (plaintiff, appellee) v. Salvino, Inc. (defendant, appellant)
542 F.3d 290, 2008.

Facts: Salvino, Inc. made and sold toy plush bears identified with sports celebrities featuring the logo of certain baseball clubs. Major League Baseball Properties, Inc. (MLB Properties), is the exclusive licensing agent for these baseball organizations’ intellectual property.
Procedure: MLB Properties brought a claim in U.S. District Court for the Central District of California for infringement of trademark and trade dress, breach of contract, and unfair competition. Salvino counterclaimed alleging antitrust, unfair competition, and tortuous interference. All claims settled except for the counterclaim for antitrust in violation of the Sherman Act. The claim was transferred to the Southern District of New York. This is Salvino’s appeal of summary judgment was granted to MLB Properties on Salvino’s counterclaim.
Issue: Whether the district court should have evaluated the antitrust claim under the rule of reason requiring evidence of actual adverse effect on competition or instead should have held MLBP's activities either illegal per se under a “quick-look” analysis.
Holding: Summary judgment affirmed.
Reasoning: The rule of reason evaluates the business practice alleged to have violated the Sherman Act for whether the restraint merely regulates and may even promote competition or, alternatively, suppresses and may even destroy competition. Under the rule of reason the party bringing the claim has the initial burden of demonstrating that the challenged behavior has actual adverse effect on competition. Under the Sherman Act, certain business practices are presumed unreasonable and in violation of the act because of their pernicious effect on competition and lack of any redeeming value. This per se treatment is appropriate once the court has enough experience with a particular market restraint as to enable it to predict that the rule of reason will condemn the business practice. Per se treatment is not appropriate where the economic and competitive effects of a challenged practice are unclear. The quick look approach is applicable when there is a great likelihood of anticompetitive effect which can be easily ascertained by this abbreviated analysis of the rule of reason. This is only for business practices with effects so plainly anticompetitive that the court need only undertake a cursory evaluation before imposing antitrust liability. The district court found that the centralization of intellectual property rights in MLB Properties had several potential economic benefits and was similar to blanket licensing and not per se unlawful. This is correct, and rule of reason analysis is the applicable standard here. Salvino’s response to MLB Properties’ motion for summary judgment failed to contend that the factual assertations in the motion were untrue and was insufficient to show a genuine issue of material fact. The district court properly applied the rule of reason standard and Salvino failed to present any genuine issue of material fact to be tried and failed to present evidence of any actual adverse effect on competition caused by the centralization of intellectual property in MLB Properties.
Sotomayor Concurrence: Judge Sotomayor concurs in judgment, but finds the majority’s view of price fixing overly formalistic in that it overlooks the lack of intellectual property price competition between the baseball clubs. She would reach the same result through the doctrine of ancillary restraints because Salvino presented no evidence of actual adverse effect on competition in the relevant market, and so the court does not need to rule on the Sherman Act antitrust claim.

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