Major League Baseball Properties, Inc. v. Salvino, Inc.

Judge SOTOMAYOR concurs, in a separate opinion.

Defendant Salvino, Inc. (“Salvino”), appeals from so much of a final judgment of the United States District Court for the Southern District of New York, Richard Conway Casey, Judge, as dismissed its counterclaims alleging that the organization and activities of plaintiff Major *294League Baseball Properties, Inc. (“MLBP”), as the exclusive licensing agent for Major League Baseball (or “MLB”) clubs’ intellectual property, violate § 1 of the Sherman Act, 15 U.S.C. § 1, and asserting “related state law claims” (Salvino brief on appeal at 2). The district court granted MLBP’s motion for summary judgment dismissing those claims on the grounds that MLBP’s operations should be analyzed under the rule of reason, and Salvino (a) failed to adduce evidence to show that the challenged organization and activities have an actual adverse effect on competition or that MLBP has sufficient market power to inhibit competition market-wide, and (b) failed to offer any evidence to support its state-law claims. On appeal, Salvino challenges the dismissal of its § 1 antitrust claim, contending that the court should not have required evidence with regard to market power or actual adverse effect on competition but should instead have held MLBP’s activities either illegal per se or illegal under a “quick-look” analysis. With regard to Salvino’s state-law claims, its brief on appeal contains no argument as to why the district court’s dismissal was incorrect, and we therefore regard any challenge to the dismissal of those claims as abandoned, see generally Hobbs v. County of Westchester, 397 F.3d 133, 147 (2d Cir.), cert. denied, 546 U.S. 815, 126 S.Ct. 340, 163 L.Ed.2d 51 (2005); Day v. Morgenthau, 909 F.2d 75, 76 (2d Cir.1990); Fed. R.App. P. 28(a)(9). For the reasons that follow, we reject Salvino’s contentions and affirm the dismissal of its antitrust claim.

I. BACKGROUND

Viewed in the light most favorable to Salvino, as the party against which summary judgment was granted on the claim at issue on this appeal, the following facts are not in dispute.

A. The Parties and the Licensing Dispute

MLBP is a wholly-owned subsidiary of Major League Baseball Enterprises, Inc. (“MLBE”), an entity in which each of the 30 current MLB clubs (the “Clubs”) owns an equal interest. MLBP is, with limited exceptions, the exclusive worldwide agent for licensing the use of all names, logos, trademarks, service marks, trade dress, and other intellectual property owned or controlled by the MLB Clubs, MLB’s Office of the Commissioner (“BOC”), and MLBP (collectively “MLB Intellectual Property”), on retail products. MLBP also acts as agent for the Clubs with respect to, inter alia, trademark protection, quality control, design services, royalty accounting, and auditing.

Salvino is a California corporation that produces, sells, and distributes sports collectibles, including stuffed plush animals that are usually identified with sports celebrities. Between 1989 and 2001, Salvino obtained licenses from MLBP to use Club marks and other MLB marks on figurines of baseball players in uniform. In the license agreements, Salvino promised not to use the marks in any manner other than as licensed.

In the spring of 1998, Salvino developed a line of plush, bean-filled bears that it called “Bammers.” Salvino obtained licenses for sports-personality Bammers from, inter alia, National Football League (“NFL”) Properties, Inc., National Basketball Association (“NBA”) Properties, Inc., National Hockey League (“NHL”) Enterprises, L.P., the NHL Players’ Association, and companies representing several professional figure skaters, as well as from various individual NBA players, retired NFL players, current and retired MLB players, and drivers in the National Asso*295ciation for Stock Car Auto Racing (“NASCAR”).

Salvino produced baseball Bammers without Club logos for sale to commercial outlets such as hobby shops, Hallmark stores, and other retail chains. In 1998 and/or 1999, it sold Bammers in uniforms bearing Club logos to at least seven MLB Clubs, and sold Bammers with Club logos only on the sales tags to two MLB Clubs, for retail sale in their stadia or for free stadium giveaways. Salvino obtained licenses to use baseball player names and numbers from the Major League Baseball Players’ Association, Inc. (“MLB Players’ Association”). However, despite discussing a possible license from MLBP for the use of MLB Club logos on Bammers in early 1999, the only license for a Bammer that Salvino obtained from MLBP was an April 1999 license for a Hank Aaron Bam-mer commemorating the 25th anniversary of Aaron’s breaking Babe Ruth’s home run record.

In October 1999, MLBP learned that Salvino had sold Bammers to the Arizona Diamondbacks baseball club with the Diamondbacks logo on them; Salvino had not obtained an MLBP license to use that logo. MLBP sent Salvino a cease-and-desist letter stating that Salvino was in violation of its existing license agreement with MLBP, in which “Salvino [had] represent[ed] and warranted] that it would not, during the license period or any license period thereafter, use the Logos except as licensed under the [license ajgreement” (Letter from MLBP to Salvino dated November 3, 1999, at 1). The letter stated that

[i]n addition, the unauthorized use of the trademark constitutes trademark infringement. The Arizona Diamondbacks have informed [MLBP] that, although they reviewed artwork demonstrating the appearance of the proposed product, they never gave express consent to use the Arizona Diamondbacks’ logo featured thereon, nor are they being compensated by Salvino (in the form of a royalty or otherwise) for the use of the Logo.

(Id. at 1-2.)

Salvino responded by commencing an action against MLBP and MLBE in federal court in California (the “California action”), alleging that MLBP’s activities violated §§ 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, as well as § 7 of the Clayton Act, 15 U.S.C. § 18, and various state laws. As it related to the § 1 claim, Salvino’s complaint in that action alleged principally that

[b]ecause [MLBP] distributes the income from its exploitation of trademarks equally to each member club — even though a relatively small number of clubs generated] the bulk of the revenue — the incentive of many major league clubs to invest in and promote and compete through its [sic ] trademark has been diminished and suppressed. As a result, the [agreement between MLBP and the Clubs] ... has reduced output, diminished the quality of product offered to the public, diminished the choice of product offered to the public, reduced and suppressed price competition leading to higher prices to the public and reduced market efficiency to the detriment of the public.

(Salvino’s California action complaint ¶ 13.)

In April 2000, MLBP commenced the present action against Salvino, asserting claims under federal and state law for, inter alia, trademark and trade dress infringement arising out of Salvino’s unauthorized use of MLB marks. Salvino’s California action was transferred to the Southern District of New York, where it was consolidated with the present action, with Salvino’s California action claims be*296coming counterclaims in the present action.

B. MLBP’s Motion To Dismiss Salvino’s § 1 Counterclaim

Eventually, all of the parties’ respective claims, except Salvino’s counterclaims against MLBP for alleged violation of § 1 of the Sherman Act and for alleged unfair competition and tortious interference with contract under California and New York law, respectively, were either abandoned or settled. In the meantime, to the extent pertinent to this appeal from the district court’s dismissal of Salvino’s § 1 counterclaim, MLBP moved, following some three years of discovery, for summary judgment dismissing that claim.

In support of its summary judgment motion, MLBP submitted, pursuant to Rule 56.1 of the Local Rules for the Southern District of New York (“Rule 56.1” or “Local Rule 56.1”), a statement of facts that it contended were undisputed (“MLBP Rule 56.1 Statement”). MLBP contended that the undisputed facts, analyzed under the rule of reason, revealed that its conduct did not violate the Sherman Act. In support of its factual assertions, MLBP generally cited documents (filed under seal, and hereby deemed unsealed to the extent described in this opinion), and submitted deposition testimony or sworn declarations to show the admissibility of the cited documents.

Salvino, in its response pursuant to Rule 56.1 (“Salvino Response”), principally took the position that many of the facts set out by MLBP, while expressly “undisputed,” were “not material,” apparently on the theory that rule-of-reason analysis was inappropriate. (Salvino also contended that some of the documents cited by MLBP were objectionable on grounds of hearsay and lack of foundation, objections that are unmeritorious (see Part II.A.3. below).) The following facts, in addition to those described in Part I.A. above, are among those that are undisputed.

1. Major League Baseball

The Major League Baseball teams together produce an entertainment product — the “MLB Entertainment Product”— that consists of approximately 2,400 interrelated, professional baseball games per year played by the 30 MLB Clubs, leading to separate playoff games for the American and National Leagues and culminating each season with the World Series between the champion Clubs from the two Leagues. This entertainment product can be produced only by the Clubs operating together in the form of a league; it cannot be produced by any one individual Club, or even a few Clubs. While squads of players from a single Club could play each other, the organization of the Clubs into a nationwide league with geographic diversity and a common championship goal, pursued in a structured manner employing uniform rules of play, has created a vastly different and more marketable product than is created by scrimmages between squads of players from a single Club or even by ad hoc “barnstorming” games between Clubs outside of a large league structure. (See Salvino Responses to MLBP Rule 56.1 Statement ¶¶ 41, 42.)

The MLB Entertainment Product, for which cooperation among the Clubs is essential, affects the value of MLB Intellectual Property. For example, during the baseball players’ strike in 1994 and 1995, revenues generated by sales of MLBP-licensed products decreased; after the strike ended and MLB games resumed, those revenues increased. (See Salvino Responses to MLBP Rule 56.1 Statement ¶¶ 44, 45.)

*2972. MLBP’s Licensing and Policing Activities

MLBP was incorporated in 1966 by the then-existing MLB Clubs (under the name Major League Baseball Promotion Corporation) as a wholly-owned subsidiary of MLBE. Each of the current MLB Clubs owns an equal interest in MLBE and shares equally in its profits. Prior to the formation of MLBP in 1966, there had been no centralized source for the licensing of MLB Intellectual Property, a fact that was cited to MLBP by potential licensees as the reason for baseball’s exclusion from certain marketing programs. (See Salvino Response to MLBP Rule 56.1 Statement ¶ 20.) For example, at a December 1966 meeting of the executive committee of MLBP’s board of directors, representatives of the Coca-Cola Company described a football-related under-the-cap promotion that Coca-Cola had begun three years earlier with the NFL. The representatives stated that Coca-Cola had been unwilling to consider such a promotion using baseball team logos because MLB’s structure, on a nationwide basis, was “ ‘entirely too cumbersome.’ ” (Id. ¶ 22.) According to the minutes of that meeting, the representatives stated that Coca-Cola became willing to consider an under-the-cap promotion using MLB Intellectual Property once the company learned that the Clubs were creating an entity that could negotiate an agreement on behalf of all of the Clubs.

When created in 1966, MLBP was given (a) the exclusive right to market and promote the official name and logo of Major League Baseball, (b) a non-exclusive right to license the names and logos of the National and American Leagues, and (c) the right to submit licensing proposals for Club marks to the Clubs for their approval. (See Salvino Response to MLBP Rule 56.1 Statement ¶ 16.) Since 1984, MLBP’s operations and the relationships between MLBP and the Clubs have been governed by a series of three-to-five-year agency agreements, collectively called the “Agency Agreement.” In 1984, the Agency Agreement increased MLBP’s authority by giving it the exclusive right — subject to limited exceptions — to license Club names and logos for use on retail products for national and international (ie., not merely local) distribution. (See id. ¶ 17.) In 1987, the Agency Agreement further expanded MLBP’s authority, granting it the exclusive right (again with limited exceptions) to license Club names and logos for use on products to be sold at retail within the Clubs’ respective local markets. (See id. ¶ 18.) Thus, since 1987, the retail sale of any products bearing an MLB Club’s name or logos must be licensed by MLBP, even if the products are sold at a concession stand inside the Club’s stadium.

From 1966 until 1987, MLBP had relied on the Licensing Corporation of America (“LCA”) as its subagent to license MLB Intellectual Property. LCA, however, also marketed the intellectual property of a number of other groups, including the NHL and NHL teams. And, in addition, as a division of Warner Communications, LCA licensed intellectual property relating to numerous cartoon and comic book characters. (See Salvino Responses to MLBP Rule 56.1 Statement ¶¶23, 24.) In 1987, when MLBP’s exclusive right to grant licenses for use of the Clubs’ intellectual property on retail products was expanded to encompass the Clubs’ respective local markets, MLBP ceased to grant licenses through LCA and began licensing MLB Intellectual Property directly. (See id. ¶ 25.) In that year, total revenues from the licensing of MLBP Intellectual Property more than doubled; and between January 1, 1987, and October 24, 1988, MLBP increased the number of its licensees from 100 to 250. (See id. ¶¶ 26, 28.) By August *2982003, when it filed its Rule 56.1 Statement, MLBP had outstanding more than 300 licenses for the production of some 4,000 different products for retail sale in the United States bearing or reflecting MLB Intellectual Property (see id. ¶35), and had issued licenses to some 170 licensees for such products to be sold outside of the United States (see id. ¶ 36).

The Agency Agreement and the Operating Guidelines that are incorporated in it leave the Clubs free to grant licenses with respect to their own intellectual property to a limited extent. For example, a Club is allowed to issue licenses for the use of its intellectual property on products that it gives away at a home game; intellectual property of the visiting Club in such a game may also be used on the “giveaway” product with the approval of the visiting Club and MLBP. (See Salvino Responses to MLBP Rule 56.1 Statement ¶¶ 12, 14.) No other MLBP license or approval is required for such giveaways so long as they do not include the marks of another MLB Club, MLBP, or the BOC. (See id.)

In addition, a Club may use its own marks or license others to use its marks to create home video products about the individual Club, to be sold or given away within the Club’s home broadcasting territory (as defined for each Club in the Operating Guidelines). MLBP licenses the use of BOC and MLBP marks for use in such home videos at the request of the Club. The Operating Guidelines also provide that a Club may license the use of its marks on hot dogs and similar items distributed or sold within its home broadcasting territory; MLBP has no authority to grant licenses for such items without obtaining the Club’s prior approval. A Club also has the right, within its home broadcasting territory, to use and license others to use its marks to advertise and promote the Club’s cruises and fantasy, educational, or summer camps.

Under the Agency Agreement, MLBP is also responsible for, inter alia, protecting and licensing logos and trademarks owned by the MLB Clubs, such as the “SF” logo of the San Francisco Giants, and protecting and licensing logos and trademarks owned by the BOC and MLBP itself, such as the “Major League Baseball” word mark, the World Series logos, and the famous silhouetted batter logo. (See Salvi-no Response to MLBP Rule 56.1 Statement ¶ 3.) The Agency Agreement provides that, as the exclusive licensor of the Clubs’ intellectual property for use on products to be sold at retail, MLBP guarantees to the Clubs that all licenses will impose quality controls and will enhance the image of MLB, and that MLBP will protect and preserve the intellectual property of the Clubs and the goodwill that that property represents.

Infringing parties often use the trademarks of multiple Clubs, with the result that more than one Club’s intellectual property rights are infringed simultaneously. (See Salvino Response to MLBP Rule 56.1 Statement ¶ 66.) As a centralized licensing agent, MLBP is able to identify from its own records whether a particular product bearing MLB Intellectual Property is licensed and thus to determine efficiently whether or not it infringes on MLB Intellectual Property. (See id. ¶ 71.) In order to protect that property, MLBP sends or causes to be sent more than 100 cease-and-desist letters every year. (See id. ¶ 67.)

3. The Market in Which MLBP Licenses Compete

MLBP asserted the view, which Salvino criticized as “a self-serving view,” that other sports leagues such as the NBA, the NFL, the NHL, and the Women’s Nation*299al Basketball Association, as well as non-sports entertainment purveyors such as Nickelodeon and Disney, are among MLBP’s competitors in the licensing of intellectual property for use on retail products. (See Salvino Responses to MLBP Rule 56.1 Statement ¶¶ 50, 52.) For example, Team Beans, a competitor of Salvino that obtained licenses for MLB Intellectual Property from MLBP for use on plush toys, also held licenses to use trademarks from a variety of other licensors, including the Olympics, the NFL, the NHL, the MLB Players’ Association, and NASCAR. (See id. ¶ 57.)

A market research study conducted for MLBP, whose goals included increasing game attendance, media audiences, and sales of MLB Intellectual Property, found that baseball does not compete with just one sport, or even only with sports. It found that the competitive arena for baseball is “ ‘a wide range of leisure and entertainment options that vary with target group and lifestyle.’” (Salvino Response to MLBP Rule 56.1 Statement ¶ 55.) Thus, the MLBP 1996 Business Plans’ list of MLBP’s major competitors for intellectual property licensing included the following: branded apparel manufacturers such as Nike, Reebok, Russell, Champion, Big Dog, and No Fear; other sports entities such as the NBA, the NFL, the NHL, NASCAR, collegiate groups, and the 1996 Summer Olympics; and entities, such as Warner Brothers and Disney, that offered licenses to use intellectual property relating to, e.g., Looney Tunes, Power Rangers, Peanuts, Nickelodeon, Batman, SpaceJam, and Goosebumps. (See id. ¶ 56.)

In 1998, Salvino itself sold Bammers that were licensed by, among others, the MLB Players’ Association, NFL Properties, Inc. (“NFL Properties”), and the NHL Players’ Association. (See Salvino Response to MLBP Rule 56.1 Statement ¶ 101.) Salvino, which had had total sales of less than $1 million in 1997, developed the Bammer in the spring of 1998 and had revenues of $17 million from the sale of Bammers in 1998; in 1999, Salvino had revenues of $80 million. (See id. ¶¶ 100, 101,102.)

In a September 1999 marketing plan that Salvino submitted to MLBP, Salvino stated that it had sold Bammers licensed by the above sports organizations, as well as “Muhammad Ali” Bammers, Ice Bam-mers, and Basketball Bammers, and various other individually licensed Bammers. Seeking an MLBP license for MLB Intellectual Property for use on a photo ball and photo bat, Salvino stated that it proposed to sell those items in the same target market in which it sold Bammers. (See Salvino Response to MLBP Rule 56.1 Statement ¶ 107.) Salvino described its target market as retailers that have the potential to carry “sports licensed products.” (Id.) Salvino stated that its primary targets included stadium concessionaires and sporting goods retailers and that its secondary targets were “retailers of licensed sport products who have the capacity to purchase in volume”; it stated that “ ‘our most important competition comes from companies that currently distribute sports licensed products. These products compete directly for limited shelf space devoted to this product category.’ ” (Id.)

Thus, in addition to selling its Bammers to MLB Clubs and stadium concessionaires (see Salvino Response to MLBP Rule 56.1 Statement ¶ 112), Salvino sold Bam-mers to “hobby shops, sports collectible shops, Hallmark stores and retail chains” (id. ¶ 111). Rick Salvino, Salvino’s president since 1988, testified that the Bam-mers competed with everything in the store for shelf space (see id. ¶¶ 93, 113): “ ‘Everybody is a competitor. Anybody in a gift store that sells a product is a com*300petitor of mine, because we’re all fighting for shelf space, for any store for that matter (Id. ¶ 114.) Wayne Salvi-no, Salvino’s vice president from at least early 1989 until December 2001, testified that Salvino competed with numerous other producers of plush items, as well as ‘“anybody who produces sports licensed products; anybody who produces, you know, signed products, collectibles, memorabilia; anybody who produces licensed key chains, zipper pulls, non-licensed key chains, zipper pulls.’ ” (Id. ¶¶ 94, 116.) Similarly, in its sales presentations to the MLB Players’ Association, NFL Properties, and NBA Properties, Inc. (“NBA Properties”), Salvino stated that the market for Bammers licensed by those sports organizations would be the “ ‘sports collectibles hobby’ ” market. (Id. ¶¶ 117, 118, 119.) In its proposal to the MLB Players’ Association, for example, it stated that “ ‘[a]n additional market which would be targeted for distribution would be the general collectibles market. This market is represented by thousands of gift stores, specialty stores, major department stores, catalogs, and other forms of direct marketing through the mass media that currently market this category of product.’ ” (Id. ¶ 117.) The business plan that Salvino submitted to NFL Properties described Salvino’s Bammers as falling within the “ ‘novelty and memorabilia market.’ ” (Id. ¶ 118.) And in the plan it submitted to NBA Properties, Salvino stated that its products, including Bammers, were in both the “ ‘sports collectibles hobby’ ” market and the “ ‘general retail market.’ ” (Id. ¶ 119.) Salvino’s Bammers brochure declared Bammers to be “ ‘America’s Number 1 Sports Collectible’ ” with respect to its entire product line of Bammers, e.g., baseball, football, boxing, basketball, ice skating, hockey, and NASCAR. (Id. ¶ 120.)

MLBP also asserted, without meaningful disagreement from Salvino, that other professional sports groups, like MLB, employ centralized marketing entities. For example, Salvino did not dispute that the MLB Players’ Association, the union that represents MLB players, states that it is the exclusive holder of all right, title, and interest in the group licensing of names, nicknames, likenesses, and signatures of any group of three or more active MLB players. (See Salvino Response to MLBP Rule 56.1 Statement ¶ 4.) Nor did Salvino dispute that, according to their respective standard licenses, (a) NFL Properties has the exclusive right to license for commercial purposes the trademarks of the NFL and its member teams; (b) NBA Properties has the exclusive right to license for commercial purposes the use of certain names, logos, symbols, emblems, designs, and uniforms, etc., of the NBA, along with the names, nicknames, photographs, likenesses, signatures, and other identifiable features of current NBA players; and (c) NHL Enterprises, L.P. (“NHL Enterprises”), has the exclusive right to license for commercial purposes the names, nicknames, logos, colors, and uniform designs, etc., of the member teams of the NHL, the numbers appearing on NHL players’ uniforms, the name, initials, insignia, and other indicia of the NHL itself, and the name and likeness of the Stanley Cup. (See id. ¶¶ 5, 6,7.)

Wayne Salvino testified at his deposition that one advantage to Salvino of the NFL’s centralized licensing structure was that NFL Properties offered a package of certain players and all team logos, allowing that entity to serve as a “ ‘one-stop shop.’ ” (Salvino Response to MLBP Rule 56.1 Statement ¶ 49.)

4. The Views of the Parties’ Respective Economists

Toward the end of the discovery period, MLBP had taken the deposition of Salvi-*301no’s expert economist, Louis A. Guth, who had prepared a report in which he opined that MLBP functions as an “economic cartel” (Expert Report of Louis A. Guth dated February 27, 2003 (“Guth Report”), ¶ 6; see, e.g., id. ¶¶ 17-19). The Guth Report stated that “MLBP quite likely exercises sufficient control over pricing licenses for use of club marks for plush toys and similar products so that these constitute a relevant market.” (Id. ¶ 23.) In his deposition testimony, discussed in greater detail in Part II.C.4.C. below, Guth stated that MLBP limits output and sets prices (see generally Deposition of Louis A. Guth, March 26, 2003 (“Guth Dep.”), at 140), and he opined that efficient licensing of MLB Intellectual Property could be accomplished through the use of less restrictive alternatives (see id. at 78-79). He testified that the relevant market could be determined by conducting a “discrete choice survey” of consumers to determine whether changes in the prices of various products would affect the consumers’ product preferences (id. at 25-27); however, Guth had conducted no empirical studies of any kind (see id. at 23-24, 34-36, 46, 50, 137-38).

MLBP, in support of its motion for summary judgment, presented the April 11, 2003 report of its expert economist, Professor Franklin M. Fisher (“Fisher Report”), analyzing MLBP’s functions and the product market within which MLBP operates, and disputing the views of Guth. Fisher opined, inter alia, that MLBP is not a cartel and should instead be viewed as a joint venture; that the relevant product market consists at the very least of licenses for all sports and entertainment intellectual property, rather than just for MLB Intellectual Property; and that the centralization of MLB Intellectual Property licensing and other functions in MLBP produces procompetitive efficiencies.

Fisher pointed out that “[t]he customers [for] MLB Intellectual Property are prospective licensees that use MLB Intellectual Property to sell products.” (Fisher Report ¶ 8.) Although Guth had suggested that the relevant market could be determined by conducting a survey to ascertain whether the product preferences of consumers were responsive to retail price variations, Fisher stated that “it is important to be clear that the relevant customers for MLB Intellectual Property are the prospective licensees of intellectual property and it is their demand and the alternatives that they face that determine the boundaries of the relevant market” (id. ¶ 18 (emphases in original)). “The demand of ultimate consumers for goods such as plush toys ... that use intellectual property ... is relevant only because such demand influences the derived demand of direct customers, the licensees.” (Id.)

Fisher stated that “[available to these customers [i.e., potential licensees] is a wide array of intellectual property li-censors, ranging from the different sports leagues, to entertainment companies like Warner Brothers and Disney, to clothing designers like Calvin Klein and Tommy Hilfiger, to name a few.” (Fisher Report ¶ 8.) He opined that MLB competes with numerous other entertainment entities, including the NFL, the NHL, the NBA, and NASCAR, as well as Major League Soccer, the Professional Golfers Association, the Ladies Professional Golf Association, the Association of Tennis Professionals, the Olympics, motion pictures, television and radio programming, and a host of other sports and entertainment producers with respect to the licensing of intellectual property for retail products. (See id. ¶ 15.) He stated that “[t]he relevant antitrust market in which MLBP competes is the worldwide market for the licensing of intellectual property for use in the production of consumer goods and services”; but *302even if the market were defined “as only the licensing of the intellectual property related to sports and certain entertainment products,” MLBP lacks power in this relevant market. (Id. ¶ 10.)

Within the relevant market, Fisher opined that the interdependence of the MLB Clubs and the way in which MLBP operates reveal that MLBP functions as a joint venture, not a cartel:

Despite Mr. Guth’s assertion to the contrary, MLBP is not a cartel. Rather, it functions as a joint venture. Mr. Guth bases his conclusion that MLBP is a cartel on the observation that a cartel would seek authority over many of the same activities over which MLBP has authority. However, as Mr. Guth acknowledged at his deposition, this observation (or his characterization of MLBP as a “cartel”) is an insufficient basis for concluding that MLBP is acting anti-competitively. This is because legitimate joint ventures need to have control over the very activities identified by Mr. Guth. Here, such control is necessary in order for the Clubs and the league as a whole to compete adequately against other sports and entertainment products. The MLB Clubs jointly produce their product and jointly create and enhance the value of MLB Intellectual Property. It is entirely natural and, indeed, procompetitive that they should exploit that value together ....

22. Mr. Guth states in his report that otherwise independent firms become “members of a cartel [and choose to] forego individual benefits [or their independence] in order to reduce competition among the members.” By contrast, a joint venture consists of a group of interdependent firms that could not otherwise function as productively. Indeed, an important difference between a legitimate joint venture comprised [sic ] of constituent parts and a cartel among competitors stems, in part, from the degree of integration among the constituent parts of the organization. Where the constituent parts of an organization are highly integrated and interdependent, it is appropriate to view the organization as a joint venture. Only where the constituent members of an organization are not highly integrated, but are independent sources of economic power with respect to the business of the entity, could it be appropriate to view the organization as a cartel.

(Fisher Report ¶¶ 21, 22 (footnotes omitted) (emphases added).) Here, the Clubs are interdependent, even in relation to MLB Intellectual Property:

[T]he value of MLB Intellectual Property is derived in large part from the value of the MLB Entertainment Product created jointly by Major League Baseball. As a result, the popularity, and hence any economic power, of a particular Club stems from, and is dependent on, the Club’s membership in MLB and the marketing efforts of MLB. For example, no matter how successful the Yankees have been, the Yankees marks would have little value over time if the Yankees no longer competed with other Clubs in Major League Baseball. Indeed, the drop in popularity of former Club names, such as the Washington Senators, the Houston Colt 45s, and the St. Louis Browns, demonstrates this fact. The individual trademarks, trade dress, service marks, and other intellectual property that make up MLB Intellectual Property would have little or no value in the absence of their association with the MLB Entertainment Product. Thus, unlike a collection of otherwise independent firms that join together to form an *303anticompetitive cartel, MLB Clubs are highly interdependent.

(Id. ¶ 24.)

Fisher noted further that a cartel would seek to maximize its profits by charging high prices to some licensees and low prices to others, depending on the ease with which a particular licensee could substitute another product for that offered by the cartel. He pointed out that MLBP, in contrast, sets a standard royalty percentage for a product using a given type of any Club’s intellectual property, irrespective of variations in the Clubs’ popularity as reflected by their respective fan bases. (See Fisher Report ¶ 29.)

In this context, it is important to note that Major League Baseball fans are separable based on their loyalty to a particular Club. In this situation, a monopoly or cartel would surely set separate royalty rates to maximize profits. Contrary to the assertions of Mr. Guth, the very fact that MLBP does not do this indicates that it faces competition from other entertainment products and is not a cartel.

(Id. ¶ 30 (emphasis added).) In addition, while “a cartel serves to decrease output,” MLBP had instead increased, not decreased, the retail sales of MLB-licensed consumer products. (Id. ¶ 27.) Fisher noted that MLBP business records showed that “[pjrior to the creation of MLBP, MLB had only limited commercial development and protection of its intellectual property.” (Id.)

Fisher opined that the Clubs’ use of MLBP “aehieve[s] numerous efficiencies and procompetitive benefits that would not exist if each Club managed and licensed its intellectual property independently.” (Fisher Report ¶ 31.) For example, benefiting the Clubs, MLBP negotiates and signs licenses on their behalf and manages the day-to-day relationships with the licensees. (See id. ¶¶ 33, 52.) Among the efficiencies benefiting licensees is the availability of “one-stop shopping,” for no individual Club could grant a license to use the intellectual property of another Club or of MLBP or the BOC; in contrast, MLBP can grant a license for any one, or any combination, or all of those entities’ intellectual property. (Id. ¶ 32.) Fisher stated that

[i]n the absence of one-stop shopping, licensees would incur substantial additional transaction costs; for some, these additional costs would be sufficiently large so as to prevent the licensees from producing some or all of the MLB-related products that they currently produce. Clubs would also incur greater expenses in the form of additional personnel costs to handle the added licensing functions for which they currently rely on MLBP and its centralized administration. Thus, the absence of one-stop shopping may well reduce output in the markets in which those licensees compete.

(Id. ¶ 34 (footnote omitted) (emphasis added).) In consequence, he concluded,

one-stop shopping helps broaden the product offerings of MLB Intellectual Property, both to include products that require the use of intellectual property of all 30 MLB Clubs as well as to include product lines that Clubs would normally not spend the money to develop or license. Because it has centralized control over all consumer product licenses, MLBP can ensure that MLB Intellectual Property is licensed for use on a broad array of consumer products. Over the years, this has meant that MLBP has licensed MLB Intellectual Property for use in products such as video games, women’s apparel, and household goods. Given the difficulties associated with product licensing and *304administration, absent MLBP, it is unlikely that the Clubs would ensure such a broad product offering.

{Id. ¶ 37.)

Fisher also opined that centralization of MLB Intellectual Property licensing tasks in MLBP also creates efficiencies in quality control and in the effective protection of the Clubs’ trademarks. For example,

[s]tate, federal and international laws require trademark owners to police and enforce their marks in order to retain them. The centralization of MLB Intellectual Property licensing enables MLBP to undertake extensive enforcement activities that the individual Clubs would not have the capacity to undertake if left to protect their intellectual property o[]n their own. If the Clubs could not protect all of their intellectual property, they would risk losing some, if not a great deal, of those rights. Moreover, if those rights were not protected, the licenses for those rights would have much less value, if any value at all.

(Fisher Report ¶ 38; see also id. ¶ 39 (protection of MLB Intellectual Property against infringers also benefits MLBP’s licensees, who would otherwise fear that their promotional efforts would be eroded by unfair competition from products that were unlicensed or counterfeit).) Having MLBP carry out the enforcement function avoids a multiplicity of overlapping efforts by the 30 Clubs to, for example, register all of their trademarks in each country in which such intellectual property might be used, and enforce their respective intellectual property rights throughout the United States and around the world. (See id. ¶¶ 41, 43.)

Fisher took issue with Guth’s less-restrictive-alternatives hypothesis — referred to as a “but-for” world — in which Guth proposed that each of the 30 Clubs would negotiate its own licensing agreements, set its own royalty rates, and perform its own quality control, and MLBP would be responsible only for enforcement, maintaining a centralized database of royalty rates and payments, and acting essentially as a referral service for prospective licensees. (See Fisher Report ¶ 76.) Fisher stated that centralized licensing

simplifies the task of determining whether a potentially infringing product is in fact licensed by MLBP or the Clubs. Responsible for retail product licensing, MLBP knows from its own records and history whether or not a particular product is licensed. In the apparent “but-for” world envisioned by Mr. Guth, where MLBP would retain only certain of its functions, MLBP would either need to track all licenses entered into by any Club or to contact every Club in order to determine whether products bearing Club marks are licensed or counterfeit. This significantly adds to the cost of enforcement. In addition, Mr. Guth’s scenario ignores that time is often of the essence when dealing with enforcement activities, in that there is often a need to respond immediately to a call or complaint about counterfeit goods.

(Id. ¶ 42.)

Further, as to quality control, Fisher maintains that centralization of licensing in MLBP benefits the licensees of MLB Intellectual Property because they are, inter alia, able to obtain the necessary quality approvals from a single source, rather than having to obtain approvals from myriad separate control centers, including from some Clubs that may take lengthy periods of time to respond. (See Fisher Report ¶ 49.) In addition, licensees can be confident that all MLBP licensees will be held to the same standard, thereby eliminating the possibility that competitors who are less quality-oriented will free-ride on the *305efforts and investments of licensees who are conscientious. (See id.) Centralized quality monitoring also benefits the Clubs and MLB because it assures a uniform standard of excellence that will reflect appropriately on the image of Major League Baseball and each of the MLB Clubs. (See id. ¶ 46.)

According to Fisher, use of MLBP for centralized licensing also provides other efficiencies, administrative and creative. For example, having developed substantial expertise as to how well various product lines are likely to succeed in the marketplace, MLBP spends substantial time working with its licensees to help them develop new products and determine how best to market their existing products. (See Fisher Report ¶ 52.) Centralization in MLBP avoids the necessity for each of the 30 individual Clubs to spend the time and money that would be needed to develop its own sales and marketing expertise in order to provide sales and marketing support to licensees of Club intellectual property. (See id. ¶ 58.) The use of a central repository where licensees report sales and pay royalties also avoids the need for each Club to develop and maintain its own collection system, as well as the need for licensees to learn varied reporting requirements that would likely be entailed by different royalty rates for each Club and to keep track of the multiple royalties required for products that use more than one mark. (See id. ¶ 60.)

Fisher opines that all of the efficiencies gained by the centralization in MLBP of the licensing, enforcement, monitoring, and administrative functions with respect to MLB Intellectual Property

translate directly into cost savings that can be passed on to licensees and, in turn, consumers of MLBP licensed merchandise. If Clubs were to handle these functions separately, their costs would increase and, consequently, so too would the royalty rates needed to recoup these costs. Indeed, higher costs would force Clubs to either raise their royalty rates or simply decide not to license certain products out of concern for covering costs.

(Fisher Report ¶ 31; see also id. ¶¶ 41, 50.)

Finally, Fisher also opined that because the value of MLB Intellectual Property is dependent on the popularity of the MLB Entertainment Product, and the popularity of the MLB Entertainment Product depends in turn on the integrated efforts of the Clubs, the absence of centralized licensing could lead to various occurrences of what economists refer to as the “free-rider” problem, i.e., one entity’s cashing in on the efforts of another. For example, if the Clubs granted licenses directly, a Club that was popular because of its on-field success could cash in on its popularity even though its victories obviously could not have been achieved without the participation of other Clubs. Or if a Club granted a license to one entity to use its logo on a certain product and MLBP granted such a license to a competing entity for the same product, and only one of the licensees invested in the promotion of that product, the non-promoting licensee would gain sales based on the conscientious licensee’s efforts. (See Fisher Report ¶¶ 67-70.)

Fisher concluded that Guth’s view that individual Clubs should set their own royalty rates, thereby allowing the more popular Clubs to set higher rates than the less popular Clubs, ignored the interdependence of the Clubs in providing the MLB Entertainment Product and the need for

competitive balance, which reflects the expected equality of opportunity to compete and prevail on the field. Competitive balance also relates to the fans’ expectations that each team is a poten*306tial champion — i.e. that each Club has a reasonable opportunity to win each game and also to compete for a championship.

(Fisher Report ¶ 14.) “Mr. Guth’s preferred distribution of licensing royalties would foster a competitive imbalance by over-compensating the popular team for the joint efforts of all Clubs.” (Id. ¶ 81.) The resulting imbalance would “ultimately harm all Clubs by leading to a less interesting MLB Entertainment Product, which would make it difficult for MLB to compete against other sports and entertainment products.” (Id.)

Salvino, in opposition to MLBP’s summary judgment motion, submitted a rebuttal report and declaration by Guth in response to the Fisher Report (see Expert Rebuttal Report of Louis A. Guth dated May 8, 2003 (“Guth Rebuttal Report”); Declaration of Louis A. Guth dated September 22, 2003 (“Guth Decl.”)), reiterating views set out in the initial Guth Report (see, e.g., Guth Decl. ¶¶ 2, 6). Guth argued that the efficiencies and procompetitive effects that the Fisher Report opined resulted from centralization of MLB Intellectual Property licensing in MLBP could be achieved by less restrictive means. (See, e.g., id. ¶¶ 8-18.)

Salvino presented no factual evidence to refute the evidence cited in MLBP’s summary judgment motion. For example, while Salvino posited that any increased licensing by MLBP was caused simply by a boom in consumer demand (see, e.g., Salvino Responses to MLBP Rule 56.1 Statement ¶¶ 34-36), citing paragraph 4 of the Guth Declaration, the Declaration cited no facts, did not opine as to causation, and was equivocal as to whether there had even been such an increase in demand. That paragraph stated only that the increases in the number of licenses granted by MLBP over the years “would appear to be more consistent with a general increase in consumer interest in licensed retail merchandise of all sorts” (Guth Decl. ¶ 4 (emphasis added)), and then stated that MLBP’s increase in revenues “may well not reflect higher demand,” but might instead reflect higher prices resulting from “an overall shift out in demand for such merchandise” (id. (first emphasis in original; second emphasis ours)).

Instead of attempting to show that there were genuine disputes of material fact, Salvino took the position that MLBP’s factual evidence, submitted in support of rule-of-reason analysis, was largely irrelevant. It urged the court, instead of applying the rule of reason, to apply the per se or “quick-look” standard of liability.

C. The Decision of the District Court

In an Opinion and Order dated November 16, 2005, report