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Wednesday, July 01, 2009
Just Sue It? SportsFuzion v. Nike and Basketball Hall of Fame

Deadspin has an interesting piece on a lawsuit brought by a small company named SportsFuzion against Nike and the Basketball Hall of Fame alleging breach of contract, tortious interference with contract, and fraud. The lawsuit concerns the following:

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Three years ago, a small company called SportsFuzion saw an opportunity. They convinced the Basketball of Hall of Fame to sell them "exclusive worldwide rights to the Hall of Fame's trade names, logos, trademarks, designs, and photos for use in sportswear." At the time, those rights didn't seem that valuable, because who buys a hat that says "Hall of Fame" on it? But SportsFuzion, was thinking ahead because they knew that in three years Michael Jordan would be in the Hall of Fame, and people will buy anything even remotely associated with Michael Jordan.

So, they took their idea—and their licensing rights—to Nike and made their pitch. And Nike passed. Michael Jordan and the Hall of Fame isn't really going to work for Brand Jordan. Thanks, but no thanks.

Then two months later, the Hall of Fame suddenly decides they don't want to be in business with SportsFuzion. They want to renegotiate their contract. Oh, and look at that ... Nike is now selling their own Jordan Hall of Fame gear!

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In a separate press release, the CEO of SportsFuzion says, "Having Nike and the Hall of Fame go behind our backs to cut us out of the deal has become my worst nightmare." SportsFuzion has retained a very notable intellectual property law firm, Fish & Richardson, to represent it.

We haven't yet heard Nike's side of the story. But when it tries to get the case dismissed, expect Nike to argue something to the effect of, even if SportsFuzion's facts are entirely correct, there is no legal remedy for SportsFuzion's harm -- the harm is simply the way the businessworld works. Along those lines, SportsFuzion will need to produce clear evidence of fraudulent conduct on the part of Nike and the Basketball Hall of Fame; Nike merely acting deceptively and prextually is not, in and of itself, illegal.


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