What’s in a Name? Licensing Disputes in College Merchandising

What’s in a Name? Licensing Disputes in College Merchandising

What is a Trademark?

Trademarks are source identifiers — brand names, logos, phrases, and the like — that provide legal protection for a brand and help guard against counterfeiting and fraud.^[1] The purpose of trademark protection is, at its core, consumer protection, because it provides consumers with confidence that the brands from which they purchase are authentic.^[2]

Trademark protection grants companies the exclusive right to authorize production of goods and services in designated industry sectors using their protected mark.^[3] Trademark infringement occurs when a person “uses (1) any reproduction, counterfeit, copy or colorable imitation of a mark; (2) without the registrant’s consent; (3) in commerce; (4) in connection with the sale, offering for sale, distribution or advertising of any goods; (5) where such use is likely to cause confusion.”^[4]

The Leading Case: Dallas Cap

In the 1970s, in both professional sports and collegiate athletics, licensing regimes began to emerge under which leagues and schools licensed the use of their names and logos to manufacturers to produce memorabilia for sale to the public.^[5] Universities have tended to fiercely enforce their trademark rights, in order to preserve the value of their licensing regime.^[6]

Shortly thereafter, merchandisers began to offer unlicensed merchandise. Dallas Cap and Emblem Manufacturing, Inc., was one such manufacturer. Dallas Cap duplicated the logos of professional hockey teams onto patches, which were sold to consumers for application on clothing.^[7] In response, 13 professional hockey teams and the NHL sued Dallas Cap, alleging trademark infringement, false designation of origin, and common law unfair competition.^[8]

In what would become the leading case on sports merchandising for the next several decades, the Fifth Circuit Court of Appeals held Dallas Cap was violating plaintiff’s trademark rights under the Lanham Act.^[9] As a matter of law, they found that the first three elements of a claim of trademark infringement were clearly established.^[10] As to element (4), the requirement that the use be in connection with the sale of goods, “defendant would not have a market for his particular product among ice hockey fans” without plaintiff’s marks; with regard to element (5), the court made clear that confusion among the public, not the buyers, of allegedly infringing goods as to their source was sufficient to establish the element.^[11]

The Wrinkle: Penn State v. Vintage Brands

Since 1975, Dallas Cap has largely been treated as the leading case on collegiate merchandising.^[12]

Recently, however, the U.S. District Court for M.D. Pennsylvania departed from Dallas Cap’s legal conclusions regarding the source-identifying function of trademark usage in licensed goods.^[13] Vintage Brands argued that their usage of Penn State’s marks was purely ornamental — and that for Penn State to prevail, the usage must have a source-identifying function.^[14]

The court rejected the “per se” approach used in Dallas Cap, holding that a “fact-intensive inquiry” is required to weigh whether it is the symbol itself or the product as a whole that is tied to the trademark holder.^[15] The court goes on to further suggest that the proper remedy for unlicensed use of collegiate trademarks on merchandise should be a disclaimer acknowledging that the use is unauthorized, rather than an injunction barring the sale.^[16]

What Now?

Ultimately, at trial, which ended in November of 2024, the jury found that Vintage Brands willfully infringed on Penn State’s trademarks and awarded the university $28,000.^[17] The jury verdict largely maintains the status quo established in Dallas Cap.

As Penn State demonstrates, however, questions remain as to whether trademarked designs reprinted onto merchandise function primarily to show support for an organization or primarily to identify the item as being produced, approved of, or guaranteed to be of a certain quality by the trademark holder.^[18] The practical impact of these questions, thus far, has not made waves in the legal landscape of trademark licensing. In my opinion, these questions remain unanswered:

• Are ‘brands’ like universities that create and sell merchandise exclusively via licensing agreements unintentionally diluting their trademarks by defeating the “source-identifying” function of trademark protection?
• Does this new circuit split actually change the law? Under what circumstances might a jury find that a logo, when printed onto merchandise, does not identify the source of the goods?
• Will courts accept the Penn State court’s contention that disclaimer, not injunction, is a proper remedy for this type of trademark infringement?

Vintage Brands is involved in a number of lawsuits with other universities over their licensing practices, including Purdue University, the University of Illinois, and the University of Georgia.^[19] As these disputes move through the courts, the impact of Penn State will become clearer.