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About two years ago, a federal trial court judge in Pennsylvania issued a preliminary decision that scared major colleges and other big brands. The court's ruling threatened their monopoly on producing fan gear using their logos and school colors.
That case recently went to trial, and the jury ruled in favor of the plaintiff, Penn State University. The jury found that a sports apparel maker had committed trademark infringement by selling fan gear bearing old Penn State logos without a license from Penn State.
Can major brand holders now take a knee in victory formation?
The defendant is Vintage Brand, which sells sports fan gear featuring past logos of major universities such as Penn State. It does this without the schools' approval.
Penn State sued for trademark infringement. It probably thought it would get an easy win. Previously, some courts had followed a "per se rule" that any use of a college's name, logos, or colors on fan merchandise without permission is infringing.
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The Pennsylvania court scared the university sports apparel licensing community by rejecting that rule. It held that a university plaintiff must prove that a material fraction of the purchasing public would believe that either the school made the sportswear or granted the manufacturer a license to do so.
With that background, if you see someone wearing a Penn State T-shirt, what do you think? Does the T-shirt indicate only that the person is a Penn State fan, or does it also signify that Penn State either made the T-shirt or licensed its manufacture?
It's trademark infringement only if the public thinks there is some official connection between the T-shirt maker and Penn State. Vintage Brand banked on that. It argued that purchasers and viewers of its goods would interpret them as only supporting the referenced universities, not as a statement of who made them. In fact, Vintage Brand put disclaimers on its hangtags indicating it had no relationship to the universities.
Nice try, Vintage Brand, but you got sacked. The jury found the public is likely to be confused -- that the public is likely to perceive that whoever made the goods sold by Vintage Brand had a license from Penn State.
This verdict likely arose from a circular reasoning problem identified by the court. Most of the public mistakenly thinks that trademark law requires you to have a license to put a famous brand on fan merchandise, such as a Penn State logo on a T-shirt. Because of this mistaken belief, when the public sees a university logo on fan gear, it thinks the gear was either made by or licensed by the university.
That mistaken belief is proof of trademark infringement -- which is creating the appearance that something was made or licensed by the trademark owner when it wasn't.
This circular reasoning problem is fueled by the aggressiveness of universities and other big brands in taking legal action to stop unauthorized manufacturers and sellers of fan gear from displaying their logos. Many unauthorized manufacturers and sellers have little money, so they can't afford to fight back and leave the marketplace. Thus, the public is accustomed to a marketplace where almost all fan gear is officially licensed, which drives their mistaken belief that a license is required.
That was the challenge Vintage Brand faced at trial: How do you break that circle? Penn State relied on survey evidence showing that the public thought Vintage Brand's goods were officially licensed. That put the burden on Vintage Brand to prove factually that this public perception reflected in survey evidence was based upon a misunderstanding of the law and that, if one could strip away that misunderstanding, the public would not presume a licensing relationship. That's hard to do, and Vintage Brand got stuffed.
The case isn't over yet. Vintage Brand can appeal, but there is a good chance the case settles.
Because Vintage Brand got favorable rulings from the trial court on what the law is, it has only a low chance of winning on appeal, but Penn State has a lot to lose if the verdict is reversed.
For example, what if the appellate court holds that disclaimers on hangtags and packaging disavowing any relationship with the university are sufficient to prevent trademark infringement? That could unleash a tsunami of non-licensed fan apparel bearing disclaimers, wrecking the merchandising profits of big universities and brands.
I hope this case doesn't settle. We need a clear appellate opinion so everybody involved has clear rules to follow -- universities, other major brand holders, and fan gear entrepreneurs.
Eventually, a case such as this one should make it to the Supreme Court. It presents an important question in the tension between intellectual property rights and free expression. This case might not have enough juice to cross that judicial goal line, but a future ballcarrier (err, independent sportswear company) might break through and reach the appellate endzone.
John B. Farmer is a lawyer with Leading-Edge Law Group PLC, which specializes in intellectual property law. He can be reached at www.leadingedgelaw.com.
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