Nike files lawsuit against Reebok over licensed jerseys

By Pankaj Ladhar of Manos • Alwine P.L.

Reebok was the official sponsor for the National Football League Players Association to produce and sell player apparel in Florida and throughout the country. That decade long contract expired before March 1 of this year. However, Nike will become the exclusive supplier of NFL jerseys and apparel for all NFL teams beginning in April. Reportedly, Nike paid $1.1 billion for the right to hold the official license for the next five years.

So what is the business dispute between these two competitors? The dispute surrounds Tim Tebow, the NFL quarterback who grabbed headlines last season. He was recently traded from the Broncos to his new team, the Jets.

Though Nike assumed that Reebok would only be selling off its remaining inventory, Reebok has decided to supply jerseys with Tebow’s name on them to retailers. Although these sales were for a limited period of time, Nike obviously expected to be the exclusive seller of these jerseys.

Nike certainly would like to protect its interests as the NFL’s official jersey seller, and especially of Tim Tebow apparel, which is obviously a hot commodity. In fact, Tebow jerseys were the second highest selling jersey for the entire league last year.

Did Reebok have authorization to sell these jerseys? Does their agreement with the NFL Players Association grant Reebok the license to sell this product? Or was Reebok taking advantage of this unique situation at the end of their licensing agreement?

Nike filed a lawsuit to have a court address these questions surrounding the shirts and other apparel that Reebok is selling featuring the name and number of Tebow. Nike claims that Reebok’s sales have caused Nike financial harm as they are now at a competitive disadvantage and have already lost substantial sales because of Reebok’s actions.

Source: The Wall Street Journal, “Nike Sues Reebok Over Tebow Shirts,” Chad Bray and Miguel Bustillo, March 28, 2012