Jury delivers verdict against non-licensed collegiate merchandise company
College sports licensing is big business. With rabid fans and loyal alumni, there is an enormous market for school spirit merchandise. Universities, like many brand owners, work hard to maintain the positive public perceptions of their brands.
That’s one reason a recent case testing a university’s control over its brands caught the attention of enthusiasts of both sports and trademarks.
In November, a Pennsylvania jury found college sports merchandise seller Vintage Brand, merchandise manufacturer Sportswear Inc., and both companies’ founder Chad Hartvigson, liable for infringement of Penn State University’s trademarks and awarded Penn State $28,000 in damages.
The result maintains the status quo in university control over brand licensing, but also highlights trademark remedies other than monetary damages alone.
The lawsuit
Vintage Brand’s business is built upon sales of so-called “retro” college and professional sports images. The company often uses retired college logos and images of memorabilia like tickets, which it prints onto new merchandise including apparel, housewares, and more. According to a news report from the trial, Chad Hartvigson testified that the images on Vintage Brand merchandise come from his personal collection of sports memorabilia.
In 2021, Penn State sued Vintage Brand for trademark infringement in the U.S. District Court for the Middle District of Pennsylvania. It claimed infringement of its marks PENN STATE and THE PENNSYLVANIA STATE UNIVERSITY, as well as multiple versions of its lion logo.
Throughout the litigation, Vintage Brand claimed that it was not actually using Penn State’s trademarks, but rather that Vintage Brand using the Penn State-related images ornamentally. The company argued that consumers would not believe that Penn State is the source of Vintage Brand products, and it had the right of “nominative fair use,” which allows a party to accurately and factually reference another company’s trademark.
Despite Vintage Brand’s arguments to the contrary, the jury found that the defendants had willfully infringed Penn State’s marks. The jury also rejected Vintage Brand’s claim of nominative fair use.
What’s in a trademark remedy?
In December, Penn State filed motions requesting its attorneys’ fees and for a permanent injunction preventing Vintage Brand from “using Penn State’s trademarks on or in connection with any online store or commercial website” as well as requiring Vintage Brand to destroy or turn over to Penn State materials using the Penn State marks or used in preparing merchandise or advertising, such as digital image files. Vintage Brand has opposed those motions.
Penn State’s post-trial motions illustrate the importance of various remedies for trademark infringement. Under U.S. trademark law, money damages for infringement can include defendant’s profits, any damages sustained by the plaintiff, and the costs of the action. While the verdict form completed by the jury did not break down the basis for the $28,000 damages award, Vintage Brand’s profits from sales of the Penn State products apparently was less than $25,000. Therefore, the damages award appears to be within that range.
Therefore, Penn State’s win at trial is certainly a positive, but the damages award certainly did not cover the expense of years of litigation. That’s where the post-trial motions, which include a request for attorneys’ fees, which are available in “exceptional cases,” come in. Penn State’s request for an injunction to stop Vintage from future use of its trademarks, is another important remedy to continue to protect the goodwill in a brand. A brand owner considering litigation should carefully consider the goals and potential outcomes of litigation, particularly as actual damages can be difficult to prove or may be negligible.
The future of collegiate licensing?
The verdict in this case was not a foregone conclusion. In 2022, the court denied Penn State’s motion to dismiss Vintage Brand’s counterclaims seeking to cancel the university’s trademark registrations. The court denied the motion on a relatively narrow basis, but also delved into what appeared to be a critical view of the collegiate licensing industry. “The modern collegiate trademark- and licensing-regime has grown into a multibillion-dollar industry,” the opinion concluded. “But that a house is large is of little matter if it’s been built on sand.”
Other universities have sued Vintage Brand in courts across the country. The verdict in this matter sends a strong signal that Vintage Brand’s arguments that its use is not subject to trademark law prohibitions may not be accepted. But because this was a district court case, the verdict is not binding on these other courts. Does the 2022 ruling’s skepticism of the collegiate licensing industry signal a chink in the armor of university licensing? Time will tell.