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SCHUTT ATH. SALES CO. v. RIDDELL

December 21, 1989

SCHUTT ATHLETIC SALES COMPANY and ATHLETIC HELMET, INC., Plaintiffs,
v.
RIDDELL, INC., Defendant


James B. Zagel, United States District Judge.


The opinion of the court was delivered by: ZAGEL

JAMES B. ZAGEL, UNITED STATES DISTRICT JUDGE.

 I. FACTS

 The plaintiff Schutt Athletic Sales Company ("Schutt") is a Delaware corporation with its principal place of business in Litchfield, Illinois. The plaintiff Athletic Helmet, Inc. ("AHI") is a Delaware corporation with its principal place of business in Knoxville, Tennessee. In April, 1987 Schutt purchased AHI, which was the successor to the football helmet business of Bike Athletic Company. *fn1" The majority of the plaintiffs' business is in manufacturing and servicing football helmets. Schutt also manufactures a limited amount of other sports equipment. The defendant, Riddell, Inc. ("Riddell"), is a competing manufacturer of football helmets, which comprises approximately 75% of its business. The balance of Riddell's business is devoted to the manufacture of sports equipment, largely body pads for use in football.

 The National Football League ("NFL") is an association of 28 member clubs each of which owns a professional football team. The National Football League Properties, Inc. ("NFLP") is a corporation jointly owned by the NFL teams and is responsible for the marketing and promotion of the NFL through the licensing of trademarks of the NFL and its member clubs to independent companies for use on products sold at retail and in approved promotional programs.

 Both the plaintiffs and the defendant manufacture and market two basic types of football helmets: varsity helmets marketed to institutional purchasers such as high schools, colleges, and professional teams; and youth helmets marketed to the junior varsity and "Pop Warner" level. Varsity helmets are a clearly defined and separate market from youth helmets. It is not advised for high school players to use junior helmets because the junior helmets would not withstand the harder hitting that occurs at the more advanced level of play.

 The number of firms manufacturing and selling football helmets in the United States has been steadily declining in the past decade, apparently in part due to the increased risk of tort liability stemming from injuries to players wearing the helmets. Also, the increase in the price for varsity helmets has exceeded the rate of inflation in the last ten years. Schutt alleges this price increase is due to Riddell's "leadership" in the helmet business. However, no evidence supports this allegation.

 Neither party has introduced sufficient evidence to delineate clearly market share in any market discussed herein. We can, however, make some general observations. Riddell is the largest manufacturer of all football helmets in the United States. Also, both Riddell and Schutt have significant shares of the varsity football helmet market. With respect to the NFL, by February 1989, NFLP concluded a survey of NFL teams inquiring, among other things, the percent of Riddell helmets used by the NFL team. Written responses from 22 teams indicated that 60% of the NFL players used Riddell helmets. The NFLP telephoned the remaining six teams. The results of this survey indicated that 60-70% of all NFL players used Riddell helmets. With respect to the overall varsity helmet market consisting of the NFL, colleges, and high schools, Schutt submitted testimonial evidence that Riddell had approximately 50% of the market in 1988, in terms of the 200,000 total units sold. Both Riddell and Schutt have relatively minor shares of the youth football helmet market even though almost half of the helmets sold by both parties since 1987 have been youth helmets.

 Both Riddell and Schutt use a small number of independent sales representatives who market the helmets to independent dealers who in turn sell their helmets almost entirely to teams at the professional, college, high school, junior high school, and "Pop Warner" levels. All professional teams and the majority of college teams employ equipment managers and trainers, who along with team coaches are experienced and sophisticated buyers of football equipment. These buyers purchase helmets in bulk for their respective teams and, the evidence suggests, consider comfort, quality, and price as the most important factors in their purchasing decisions. It is not unusual for high school football teams not to employ equipment managers and trainers. Thus the purchasing decisions with respect to football helmets are often made by individual athletic directors and football coaches.

 The evidence indicates that varsity football helmets are rarely purchased individually over a retail counter. The evidence also indicates that typically at the junior high school and "Pop Warner" levels, coaches, who are often parents of players, purchase junior helmets in bulk either for teams or for leagues. It is also not uncommon for a parent to purchase in retail a junior helmet for his or her child. However, Schutt has not introduced any evidence demonstrating the percentage of junior helmets purchased singly rather than in bulk. Rather, Schutt's best evidence of the percentage of single junior helmet purchases was the testimony of a single, albeit a large, dealer located in Seattle, half of whose youth helmet sales were single purchases by individuals.

 On April 11, 1988 Riddell and the NFLP entered into an Agreement (the "Agreement") stating briefly that in return for providing free helmets, pads and jerseys to each NFL team, Riddell would receive the exclusive right to display its logo during NFL games on the helmets of those players who choose to wear the Riddell brand. The tradename -- the word "Riddell" -- can be seen in the front of the helmet on the "nose bumper", on the side of the helmet on the chin strap, and in the back of the helmet at the helmet's base. While NFL players remain free to wear the helmet of their choice, the Agreement stipulates that manufacturers' logos other than Riddell's must remain covered during league play. Also, the responsibility of enforcing the Agreement with each NFL team lies solely with Riddell and not with the NFLP.

 Riddell contends that it contracted with the NFLP for the exclusive right to display its logo during NFL play in order to advertise and promote a separate line of retail products that it will soon market to the general public. Riddell also contends that it signed the Agreement to enhance its ability to license the Riddell trademark for athletic footwear and athletic clothing to be sold in the future at retail for general public use. At the time of trial, Riddell did not have a separate line of retail products, retail footwear, or retail athletic clothing.

 From 1987 until the signing of the Agreement, some NFL teams had a policy of covering the trademarks that appeared on the nose bumper of football helmets with the team name or logo. If a team did not have such a policy, then the various trademarks of the helmet manufacturers would be visible during NFL games. Neither before nor after the signing of the Agreement had any NFL team a policy regarding the uniformity of helmets worn by players. The NFL also has no such standard or rule.

 The parties disagree on the effect the Agreement has had and will have on the sale of football helmets. First, Schutt claims that what NFL players wear will have a significant influence on what equipment is purchased for and used by youth league players. Although Schutt introduced evidence that tended to demonstrate that youth players may be influenced by what helmets NFL players wear, Schutt produced insufficient evidence to establish that those who actually purchase helmets -- team coaches and parents -- will be influenced by what helmets NFL players wear. *fn2" With respect to individual youth helmet sales to parents, Schutt sought to establish that a youth player's preference for a football helmet will influence the purchasing decision of his parent. Although expert testimony demonstrated that Riddell's trademark appearing on NFL helmets will influence the youth players' preferences for helmets, Schutt presented no evidence linking those preferences to actual purchasing decisions of the youths' parents. While it may be conceivable, for example, that a child's preference for a brand of baseball may substantially influence his parent's purchasing decision, Schutt does nothing to convince us this is true for the considerably more important decision of buying protective headgear used in contact football.

 With respect to bulk purchases in the youth market, the evidence indicates that size, fit, quality, price and service were the most important factors that youth team coaches and league coordinators considered in deciding which helmets to purchase. Schutt's contention that these purchasers are generally parents of youth players does not convince us that the advertisement of Riddell's logo during NFL game play will change their helmet purchasing preference.

 With respect to the sale of varsity helmets to high school teams, Schutt introduced evidence of several high school football coaches and athletic directors who testified that their helmet purchasing decisions are influenced in part by what helmets professional players wear. It is noted that the Agreement does not dictate which helmets the players will wear. One of Schutt's arguments in this respect is that coaches will largely or exclusively see "Riddell" logos on NFL players' helmets and erroneously conclude that all players wear Riddell helmets. Consequently, as this argument goes, coaches will be influenced to purchase Riddell helmets. We do not believe high school coaches and athletic directors are this prone to confusion. In addition, even if coaches are influenced by what helmets NFL players wear, the exclusive display of Riddell's logo during NFL play is not the only source from which coaches may determine what helmets NFL players wear. As Schutt itself notes with respect to Riddell's sales techniques: "Salesmen will also tell high school coaches or purchasing agents that the helmets they are selling are used by the pros." Schutt, as well as Riddell, employs salesmen.

 With respect to varsity helmets sold to the NFL, the evidence is undisputed that each NFL player selects his brand of football helmet. Schutt argues, however, that the Agreement will put pressure on players to wear Riddell helmets. We note that in the Agreement, in order for an NFL team to be eligible for all the free and discounted equipment from Riddell, at least 90% of its players must use Riddell helmets. The free and discounted equipment totals less than $ 50,000 per team. In light of the substantial operating budgets of NFL teams, including the salaries paid to the players, we find it unlikely that individual teams will have sufficient incentive to apply pressure to force players to change helmet brand preference or use. Even if there were sufficient incentive pressure, Schutt has not produced any evidence to convince us this is so.

 Schutt did not offer sufficient evidence that the Agreement will substantially affect its ability to promote and market its helmet. We recognize that the advertising value of the Agreement for Riddell is substantial. However, numerous other avenues of advertisement are available to Schutt, such as catalogues and similar promotional and sales materials. Some of these alternatives include print media directed specifically at helmet purchasers, such as coaches and equipment managers, and advertisements that include endorsements and photographs of players using Schutt's helmets. The evidence did not rule out the possibility that Schutt might deal with the College Football Association (or its members) as Riddell did with the NFLP. Although Schutt may be correct that the Agreement gives Riddell a marketing advantage, we do not find today that Schutt is incapable of successfully marketing its helmet.

 Schutt also asserts without sufficient evidentiary support that prospective customers of helmets, upon seeing unbranded NFL helmets, will be confused into believing that unbranded helmets, in fact all NFL helmets, were manufactured by Riddell. We note that Schutt's AIR helmets contain a visible back sizer (a pad inside the helmet that protects the neck and base of the cranium), whose bottom edge uniquely resembles a saw-tooth design. No other helmet contains this feature, which seems to distinguish Schutt's helmet from others. We consequently find that potential purchasers of helmets, especially sophisticated purchasers such as college coaches, trainers and equipment managers, and high school coaches and athletic directors, will likely not be confused that the unbranded helmets are Riddell helmets.

 II. DISCUSSION

 This court has jurisdiction of the parties and of the subject matter of this proceeding under the Sherman Act, sections 1 and 2 (15 U.S.C. sections 1 and 2), the Clayton Act, sections 4 and 16 (15 U.S.C. sections 15 and 26), the Federal Trademark Act, section 39 (15 U.S.C. section 1121), and 28 U.S.C. sections 1331, 1337, and 1338. Jurisdiction is also based on the doctrine of ...


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