Apr 11

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Reebok agrees to pull Tebow apparel from shelves in licensing dispute

Reebok and Nike have reached a settlement in their dispute over sales of Tim Tebow merchandise.  Nike had filed suit in March, alleging that Reebok was improperly selling sporting apparel referencing the football superstar’s new team affiliation (Tebow was traded from the Denver Broncos to the New York Jets in March).

Nike asserted that it was the only company authorized to capitalize on the huge surge in demand for such merchandise that followed the trade, which occurred during a transition period of rights to sell certain licensed NFL apparel.  The Reebok deal with the NFL for players’ names apparel had expired March 1, but the Nike deal had not yet begun.  Nike quickly obtained a temporary restraining order against Reebok to stop making products with the Tebow name.  The court also ordered Reebok to tell retailers to pull the existing product from its shelves (with Reebok re-purchasing them).  The court noted that any sales would expose Reebok to liability.  Such liability and resulting damages would most likely take the economic form of (i) lost profits to Nike or (ii) disgorgement of Reebok’s profits.

Reebok has agreed to stop all production of the disputed items.  Although the settlement agreement expressly states that no costs or attorney’s fees were awarded to either side, it is not clear whether there will be any cash payment related to damages.

About the author

Renee Howdeshell

Renee Howdeshell is a founding member of Fulcrum Inquiry, an accounting, finance and economic consulting firm that performs damage analyses for commercial litigation, forensic accountings, royalty & distribution audits, financial investigations, and business valuations. Ms. Howdeshell holds a degree in Finance and Marketing from the University of Virginia's McIntire School of Commerce and is a Certified Public Accountant (CPA) and a Certified Fraud Examiner (CFE). She has testified as an expert witness in federal court, CA state court and arbitration regarding the results of her work. She can be reached at (213) 787-4112 and her resume is available at www.fulcrum.com.

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