Posted: May 6th, 2012
By Joseph Norman *
‘Win while the world is watching’ is Nike’s objective for success in sports marketing. Last week, Gary Way, general counsel of Nike Global Sports Marketing, let a group of Wake Forest law students in on the strategy. The objective is to have the world’s best athletes wear Nike while they are performing on the world’s biggest stage. For example, when Maria Sharapova and Serena Williams face off in the Wimbledon finals. Or when a popular quarterback is traded from the Broncos to the Jets. It seems that Nike follows this same strategy when enforcing its IP licensing rights.
The world has definitely been watching the NFL’s change over from Reebok to Nike as the league’s official on-field apparel provider. Reebok reportedly paid $250 million for ten years of exclusive licensing rights, so the switch to Nike was highly anticipated. Nike has not released the terms of its five-year deal, but reports say it could be worth up to $1.1 billion.
Reebok’s licensing agreement ran out on March 31, 2012.
But on March 25, just days before losing the NFL apparel licensing rights, Reebok attempted to capitalize on Tim Tebow’s headline-generating trade from Denver to New York by releasing Tebow Jets jerseys.
Two days later, on Tuesday, March 27, Nike filed suit in Federal District Court for the Southern District of New York alleging that Reebok unfairly tried to take advantage of “the unique, short-lived” opportunity to sale the second most popular NFL jersey of 2011 after his trade to New York. Nike brought the suit under the Lanham Act (15 U.S.C. §1125(a)) for dilution, and under the common law causes of action: misappropriation of rights of publicity, tortious interference, and unjust enrichment
The next day, Wednesday, March 28, Nike won a temporary injunction from Federal District Court Judge Kevin Castel of the Southern District of New York. The order prevented Reebok from manufacturing or selling any “Unauthorized Tebow Product,” which includes any New York Jets apparel with Tebow’s name. Under the temporary restraining order, Reebok retained the right to sell its existing inventory of Tebow Broncos jerseys.
Less than a week later, on April 3, Nike released its new slate of NFL jerseys for all 32 teams.
Ending the battle over Tebow, Nike and Reebok entered a settlement agreement and stipulated judgment on Tuesday, April 10. Under the agreement Reebok must recall the Tebow Jets jerseys and repurchase those already shipped to retailers. The company also agreed not to donate the Tebow jerseys.
Nike’s quick reaction and strong defense of its rights under the new NFL licensing agreement shows that the company is committed to winning in every venue.
* Joseph Norman is a third-year law student at Wake Forest University School of Law. He holds a Bachelor of Science in Management from North Carolina State University and an MBA in Finance from the McColl School of Business at Queens University of Charlotte. Prior to enrolling in law school, Mr. Norman worked for Wells Fargo Wealth Management in Equity Research. Upon graduation in May 2012, Mr. Norman will practice corporate law.