How Not to Apply the Rule of Reason: The O’Bannon Case

Abstract

The case of O’Bannon v. NCAA has received significant attention. On behalf of a class of student-athletes, former college basketball star Ed O’Bannon sued the NCAA, challenging rules that prohibited payment for the use of names, images, and likenesses (NILs) in videogames, live game telecasts, and other footage. A Ninth Circuit panel, in a 2-1 decision, found that this restraint had anticompetitive effects and procompetitive justifications. And it considered “less restrictive alternatives,” upholding payment for incidental educational expenses beyond tuition and fees, room and board, and required books, but rejecting a deferred $5,000 payment for NILs. Straddling the intersection of antitrust, intellectual property, and sports law, the O’Bannon case presents engaging and complex issues. Much of the complexity, however, is unnecessary. For it stems from a ruling that misconstrued antitrust law. In particular, the Ninth Circuit applied a version of the Rule of Reason that short-circuited the analysis and insufficiently deferred to a district court judge who presided over an exhaustive trial on amateurism.