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Nike v. Reebok: Reebok takes Advantage of Tebow-Mania

By Jenna Norys

While Jeremy Lin has created hysteria and cause for sportscasters all over the world to exhaust their creativity with Lin-puns, one would think that the previous sensation, the man that inspired YouTube to explode with "Tebowing", had finally lost steam to another. Oh how some of us underestimated the fanaticism that is Tim Tebow. On March 21st of this year, Lady Liberty herself was seen to kneel with her fist to her head as the New York Jets announced its acquisition of the clean cut Christian Quarterback. Jets fans all over the nation could not wait to get their hands on Jets t-shirts with Tebow's name proudly sprawled across the back. However, Tim Tebow's team affiliation was not the only thing that changed in the NFL. This year the NFL ended its longstanding relationship with Reebok as its official apparel company, and signed on to a 5-year deal with Nike.

These relationships give rise to the recent conflict between Nike and Reebok slated to be battled out -not on, but in the court of the Southern District of New York. While Reebok's rights were said to have ended prior to Tebow's move to the Jets, a complaint filed by Nike explains that as soon as the announcement was made, Reebok t-shirts bearing the name of Tebow were sold all over the nation. (Nike, Inc. and Nike USA, Inc., v. Reebok International Ltd. 12 cv. 2275, Complaint Available at: http://docs.justia.com/cases/federal/district-courts/new-york/nysdce/1:2012cv02275/393953/1/)

Nike's complaint came only one week after the purported sale. It claimed violations of the Lanham Act, misappropriation of rights of publicity, tortious interference with current and prospective business relationships, and unjust enrichment. On March 28th, Judge Kevin Castel granted Nike's request for a Temporary Restraining Order blocking Reebok from distributing, manufacturing or selling anymore Tebow gear.

Part of this case comes down to the licensing schemes of respective NFL entities. Reebok has had past licenses with the NFL for the use of its teams' trademarks, as well as a group license from the NFL Players Association for individual players. While Reebok is apparently allowed to sell off its remaining products, however, what it has purported to do in this situation is to take 2 previous licenses and lump them together where only one was permissible. This is a catch-22 in all senses: had Reebok sold its Jets t-shirts without Tebow's name, there would be no issue, yet there would not likely be an influx of sales either.

A Chargers fan myself, my thoughts went to Peyton Manning and his move to Denver as being the critical NFL player change this year (who wants Peyton anywhere near their division?!). Thinking this was big news, I thought why would Nike sue only on Tebow's name? Are Denver fans eating up Bronco shirts reading "Manning" just as fast? Apparently not, for as the Nike complaint points out, New York is the largest market for sports in the nation and the public interest in Tebow is a unique phenomenon that has made his jersey the second most popular of all NFL players in 2011, only second to Aaron Rogers.

There is a unique issue in this case, in that Nike did not actually acquire the rights to the NFL trademarks until April 1st, but has the licensing for Tebow individually. One concern is that neither Reebok nor Nike could have lawfully sold a Jets Tebow t-shirt from March 21st - April 1st due to the fact that each had rights to only one aspect of the product, Reebok having the Jets' rights and Nike having Tebow's.

Nike has alleged that it has been prevented from capitalizing on the market for New York-Tebow apparel in the immediate aftermath of the trade. While the arguments are persuasive in the complaint, it is clear that Nike would not be able to capitalize on the trade at the height of the event. It has only been 10 days since the trade, and since then there have been a number of people who are downplaying the trade as a PR stunt, and speculating whether Tebow will even play or if he was only drafted to neutralize the Jets' "bad boy" image (Associated Press Mar. 30, 2012 available at: http://espn.go.com/new-york/nfl/story/_/id/7757218/new-york-jets-tim-tebow-unsure-ever-starting-quarterback-again, Davenport, Gary, "Tim Tebow to Jets is Nothing More Than Publicity Stunt," Mar. 30, 2012, available at: http://bleacherreport.com/articles/1125723-tim-tebow-to-jets-is-nothing-more-than-publicity-stunt).

In the trend-driven environment that we all live in, instant gratification seems to drive the market. What makes this lawsuit intriguing is that Nike probably did not suffer so much from the sales as Reebok gained. This is because it is not clear that Nike would have actually kept the Tebow hype up until after its scheduled April 3rd grandiose jersey unveiling ceremony and it could not have sold the Jets-Tebow gear until April 1st. Additionally, it may be that the new style of Nike jerseys will lead to consumers throwing out those Reebok threads in favor of a newer sleek style. Of course that fact is somewhat irrelevant, as the claims are based on the unjust enrichment of Reebok, but it is interesting that where there was a market demand, legally speaking, these two parties cancelled each other out and could have prevented consumers from obtaining the product they wanted in that small window of opportunity. It will undoubtedly be interesting to see how Reebok responds as its answer is due on April 18, 2012.

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This page contains a single entry from the blog posted on April 2, 2012 5:07 PM.

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