- Seyfarth Shaw attorney analyzes Penn State trademark case
- Pre-trial rulings will have costly impact on trademark holders
Whether a sports fan who purchases a sweatshirt branded with their favorite school's logo believes the school produced or guaranteed that hoodie will be at the crux of a trademark trial scheduled for November. No matter what the jury finds, trademark owners, including universities, are likely to face higher costs in efforts to protect their marks.
Pennsylvania State University is suing Vintage Brand LLC alleging the company willfully infringes various Penn State trademarks by selling products featuring those marks on its website.
Vintage Brand doesn't deny selling products that incorporate the Penn State trademark. Instead, the company argues that its use of the Penn State trademark is only ornamental. In other words, consumers purchase university-branded merchandise to show support for the school, not because they believe the university has produced, approved, or guaranteed the quality of the items.
Earlier this year, the court issued a mixed ruling on cross summary judgment motions. The court agreed with Vintage Brand that the Penn State marks at issue appear to fall within the ornamental category, but the court also found that Penn State had submitted sufficient evidence that consumers may also consider the use to be source identifying for the goods.
The court also said that Vintage Brand might be able to show that consumers aren't confused as to the source of Vintage Brand products—products which have a Vintage Brand tag—even though they bear Penn State's marks.
The court ordered Penn State to put its infringement claims before a jury, where Vintage Brand can argue that its use is ornamental and doesn't serve to designate the source of its products. The jury would resolve issues of fact surrounding whether consumers purchase merchandise with team logos because they believe the merchandise is endorsed or affiliated with the team, or whether they purchase the merchandise merely to show support for the team.
Prior to this case, neither the US Court of Appeals for the Third Circuit nor the US Supreme Court had squarely addressed the standard for likelihood of confusion when the product being sold is the trademark on merchandise or apparel. This has resulted in a split among the courts on whether trademark owners are entitled to prevent all third-party use of their marks on apparel and merchandise.
Notably, the US Court of Appeals for the Fifth Circuit and the Trademark Trial and Appeal Board have established per se rules finding that this use constitutes a likelihood of confusion and is therefore a violation of the trademark owners' rights.
In one of the earliest decisions on this issue, the Fifth Circuit found that trademarks inherently identify the trademark owner as the source or sponsor of merchandise bearing those goods and ruled in favor of the trademark owner without requiring proof of actual confusion.
Taking a slightly different approach, the Trademark Trial and Appeal Board has reasoned that consumers would necessarily believe that the apparel and merchandise is a secondary source identifier for the trademark owner, and therefore approved of by the owner. The adoption of these per se rules is a power tool for the trademark owners, as it allows quick, and less expensive, resolution of these matters in court.
In other jurisdictions, the courts require a trademark owner to prove that consumers believe that apparel and merchandise bearing a trademark comes from, is sponsored by, or otherwise affiliated with the trademark owner. Ultimately, the trademark owner generally prevails in cases, but only after incurring the added expense and effort meeting their burden of proof.
In Penn State, the district court rejected the per se rule, requiring the plaintiff to prove likelihood of confusion. As a result, even if plaintiff ultimately prevails in showing a likelihood of confusion, this decision may change the balance of power between trademark owners and third parties in the Third Circuit and fuel a trend of requiring costly litigation by trademark owners to enforce their rights.
While most merchandising cases deal with sports teams or leagues, there also doesn't appear to be any reason that the Penn State approach would be so limited. If consumers are purchasing merchandise solely because they want to show support for a favorite company or brand, but not because they believe the merchandise itself is affiliated or endorsed by the company or product, then a similar result should follow.
The case is Pennsylvania State University v. Vintage Brand LLC, No. 4:21-cv-01091, M.D. Pa., trial scheduled 11/12/24.
Originally published by Bloomberg Law.
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