Penn State Trademark Case Calls Sports Merchandising’s Legal Foundation to Focus
In what seemed like a slam-dunk case of trademark infringement, Penn State has instead found itself in an interesting position in its case against online clothing retailer Vintage Brands. On July 14, Judge Matthew Brann denied Penn State’s motion to dismiss a counterclaim brought by Vintage Brand, a decision that is being called by some as one that challenges longstanding assumptions about trademark protection for logos, symbols, and other marks that distinguish sports teams.
Trademark law has been the center of several debates in the past, with companies like HanesBrands and North Face finding themselves in various similar situations. At the heart of this particular dispute between Penn State and Vintage Brands is whether consumers view school marks on apparel and other merchandise as a way of expressing support for a school or whether they believe those marks identify the school as the products’ source.
Penn State is arguing that Vintage is a “serial infringer” that “blatantly uses its website to sell infringing merchandise from many colleges and universities,” according to a news report shared by Yahoo! Sports. And they aren’t the only ones that think so. Arizona, Arizona State, Colorado, Oregon, Purdue, UCLA, USC, Utah, and Washington are among plaintiffs in other cases presenting the same basic grievance against Vintage.
However, Brann’s ruling allows Vintage to proceed with counterclaims that Penn State’s “ornamental” use of logos on merch fails to function as trademarks, and thus the (possible) disruption to trademark law. Vintage sells Penn State-associated products, without a license agreement or permission from Penn State, on its website. Penn State’s complaint, which was filed last year in a Pennsylvania federal district court, contains assorted screenshots of Vintage’s website selling Penn State-related products.
In his ruling, Brann noted that consumers have been conditioned to believe, possibly falsely, that you can’t reference a team on a shirt without a license from the team, according to a report on Bloomberg Law. He pointed to scholars who feel that trademark law wasn’t designed to grant rights to all decorative trademark uses, and who note that cutting off competition inherently results in higher prices.
It’s the terms “ornamental” and “decorative uses” that Vintage focuses on. The clothing retailer doesn’t dispute that it’s using Penn State-related properties. Instead, it claims it has a right to do so, saying its use of marks “is purely ornamental” and “for mere decoration.” The company is countersuing Penn State, asserting a group of school trademarks should be canceled in part because relevant images and logos are now in the public domain. Basically, when consumers see Penn State logos on Vintage’s merch, Vintage believes they simply see a way of expressing support for the school.
Penn State obviously disagrees. But to clarify, Brann’s ruling doesn’t determine the outcome of the case, which is in an early stage of litigation. He simply determined that Vintage has presented a plausible claim that shouldn’t face swift dismissal and warrants further review. Penn State could still defeat the claim and win the case, and could appeal a loss to the U.S. Court of Appeals for the Third Circuit.
The ruling is still significant, and according to Tim Kelliher, founder and president of Image Apparel Solutions and Apparelist advisory board member, is one worth following. “I don’t think the licensing of college logos will ever go away,” he says. “They may have to open it up to more competition at the bookstore or retail level.”
He points to the Name, Image, Likeness (NIL) issue as a recent example of disruption within this segment. “This story comes on the heels of the whole NIL issue and how to comply with that royalty program,” Kelliher says. “It seems that there may be small battles regarding licensing but overall, it is a very mature market that most of the players understand. With all that said, a few years ago the NIL issue started with a handful of college athletes challenging the status quo. Is this the beginning of changes? Only time will tell.”
