UPDATE 1-Top US court agrees to hear case on NFL licensing

* American Needle wants ruling NFL violated antitrust laws

* NFL argues it is one co., not many separate businesses

* Case to be argued in upcoming term that starts October
(Adds law professor's comments, other details)

By Ben Klayman

CHICAGO, June 29 (Reuters) - The U.S. Supreme Court said
on Monday it would decide whether the National Football League
should be treated as a single entity under federal antitrust
law in a dispute over an exclusive license to make caps and
other headgear.

In a case that could affect other sports leagues, the court
agreed to hear an appeal from American Needle Inc, of Buffalo
Grove, Illinois, on whether the NFL and its 32 teams can be
sued under federal antitrust laws for signing an exclusive
licensing deal with Reebok International in 2001.

"It is a case that involves sexy stuff," said Gary Roberts,
dean of the law school at Indiana University in Indianapolis.
"It could be huge."

The case will be argued during the court's upcoming term
which begins in October. A decision is expected in the first
half of next year.

American Needle, a former licensee of the NFL, challenged
the deal, which offered Reebok an exclusive license for 10
years according to court documents, claiming the NFL was 32
separate business entities and not a "single entity" as the
popular professional sports league said.

Germany's Adidas AG ADSG.DE bought Reebok in 2006 for
$3.8 billion in a move to boost its U.S. presence.

In its original lawsuit, American Needle had charged the
NFL with unlawful restraint of trade and monopolizing the team
products licensing, manufacturing and wholesale markets by
violating antitrust laws by working too closely together. The
cost of basic fitted caps jumped to $30 from $19.99, American
Needle said in court documents.

American Needle lost the case in U.S. District Court as
well as in the federal appeals court in Chicago in 2008.

"American Needle has pursued this litigation because it
feels that if it could compete for the use of NFL trademarks in
selling hats that it could provide lower-priced merchandise
than is currently available on the market," said Glen Nager, an
attorney at Jones Day, which is representing American Needle.

The NFL also had urged the Supreme Court to take the case
in the hope of winning a national victory, as it and other
sports leagues have lost similar cases in other appeals
courts.

"We look forward to the opportunity to explain why the
court should confirm and extend on a nationwide basis the
favorable rulings of the Court of Appeals on the application of
the antitrust laws to the unique structure of a sports league,"
NFL spokesman Brian McCarthy said in an email.

The Chicago appeals court's decision was at odds with
decisions made by appeals courts in the first, second and ninth
circuits, said Roberts, who did work for the NFL in the late
1970s and early 1980s.

If the court rules the NFL and other sports leagues are
single entities, it would basically change the law with respect
to internal sports league governance as there have been dozens
of cases over the years where courts ruled sports leagues as a
collection of separate businesses that are conspiring, he
added.

The National Basketball Association and the National Hockey
League filed briefs supporting the NFL with the Supreme Court,
while Major league Baseball, which has an antitrust exemption
on many issues, did not.

A ruling for the NFL would largely put other sports leagues
on equal footing with baseball, Roberts said.

The U.S. Justice Department had urged the Supreme Court not
to hear the case, saying neither American Needle nor the NFL
had presented a question warranting review by the justices.

The case is American Needle v. National Football League,
No. 08-661.
(Additional reporting by James Vicini in Washington; Editing
by Tim Dobbyn and Matthew Lewis)