A trial over a trademark dispute relating to an unlicensed online retailer’s sale of apparel and other merchandise bearing historic or retro logos and images of universities has concluded. In 2021, the Pennsylvania State University (“Penn State”) brought suit against Vintage Brand (“Vintage”) for trademark infringement and other claims in federal court in the Middle District of Pennsylvania, styled as The Pennsylvania State University v. Vintage Brand, LLC et al., 4:21-cv-1091. Since that time, at least a dozen other schools have sued Vintage on similar grounds, but this was the first case to go to trial, and it has been watched intently by the trademark world as a bellwether case in the sports merchandising industry landscape and perhaps beyond.

The fundamental question at issue was whether designs reproduced on products serve as a source and quality indicator or are they merely aesthetic and ornamental and not an indicator of a product’s origin. Vintage’s business model is to source public domain artwork from vintage sports memorabilia and incorporate the historical artwork into its own product designs for t-shirts and the like. For example, Vintage would find old tickets, posters, and programs usually created by third parties, not the university or professional sports teams, scan these historical images, and reproduce them on merchandise. Because Vintage avoided the traditional license process with the university, the company does not have to meet any quality standards set forth by the university or pay any licensing fees to the university.

At trial, Vintage’s primary argument was its designs were ornamental to allow consumers to show support for Penn State and not an indication of the source of the merchandise. It also argued that Penn State’s infringement claims must fail because the historical designs used on its merchandise are in the public domain. Specifically, Vintage argued that consumers knew its products were not affiliated or endorsed by Penn State because they can see the hang tag on its clothing and its website and each product’s individual webpage made clear that the seller was not affiliated with or endorsed by Penn State. For these reasons, Vintage argued it was not possible for consumers to be confused by the products’ origin.

Collegiate licensing apparel is an annual multi-billion dollar industry and continues to grow each year. However, collegiate licensing apparel only accounts for a fraction of global licensing for all corporate brands and logos, such as DISNEY®, WARNER BROS.®, and POKÉMON®. This is one reason the Penn State case was being scrutinized as many believe its ruling could impact DISNEY® and other movie franchises. For example, if Vintage succeeded on its theory that if the consumers could not be confused as to the source of the goods, nothing may stop another online retailer from creating unlicensed t-shirts with DISNEY® characters imprinted thereon and sell to consumers while making clear the online retailer had no affiliation with DISNEY®. The argument being that the purchasers of such merchandise are only buying the t-shirts because they like the character not because the character is a DISNEY® character.

Turning to Penn State’s argument, it relied on the traditional model that it, like most universities, has a licensing program to manufacture and sell goods with its trademarks and Vintage was infringing its trademarks by selling merchandise using its name and seal without going through the typical licensing process, which would mislead consumers into thinking that Penn State was responsible for or endorsed Vintage’s goods. In other words, Penn State argued that if a consumer cannot tell from looking at the goods whether they were official Penn State licensed merchandise or unlicensed merchandise, it is a “per se” violation of trademark law regardless of whether Vintage was copying identical images that Penn State had registered with the United States Patent and Trademark Office.

Some of the pre-trial rulings made by Chief U.S. District Judge Matthew W. Brann who oversaw the trial as well, added some intrigue as to whether Penn State’s traditional argument relating to the mental association between a mark and a trademark owner would prevail. Specifically, in a decision on a motion to dismiss one of Vintage’s counterclaims, Judge Brann stated: “Under the Lanham Act, does a symbol identify the source of the goods if it merely creates an association between it and the trademark holder? Because the court finds that it does not, Penn State’s motion to dismiss is denied.”

Later, in ruling on the parties’ motion for summary judgment, Judge Brann discussed the history of trademark law and the contrasting views over merchandising rights for trademark holders. Specifically, Penn State’s preferred “per se” approach adopted by the Fifth Circuit Court of Appeals, wherein source-identification is satisfied because consumers inherently associate marks with a specific university and the Vintage favored “fact-intensive” approach adopted by the Ninth Circuit Court of Appeals, which requires a case-by-case analysis on whether consumers believe the trademark owner is the source of the goods. Judge Brann denied the motions ruling that while the historical images clearly incorporate Penn State marks, the images are not direct copies of registered marks and Vintage provided “numerous disclaimers” on its website disavowing any affiliation with Penn State. In doing so, he allowed the jury to determine whether disclaimers, public domain designs, and ornamental use of Penn State’s marks were sufficient to avoid consumer confusion.

After a six-day trial and following a day of deliberation, the jury came back with a verdict of willful infringement and compensatory damages of $28,000 on November 19, 2024. It also found against Vintage’s claim that Penn State’s trademark of its seal should be canceled because it was too close to the state seal of Pennsylvania and denied the affirmative defenses of nominative fair use and aesthetic functionality. The verdict adopted Penn State’s “per se” rule that a trademark violation can occur even without copying identical images subject to federal registration. While this federal district court jury verdict is not binding precedent and an appeal to the Third Circuit Court of Appeals is likely (and ultimately, the U.S. Supreme Court may get involved to resolve the circuit split on the issue of the “per se” and “fact-intensive” approach used in trademark infringement cases), this may be viewed as a win by trademark owners over their merchandise rights.

Following the verdict, Penn State filed a pair of motions seeking a permanent injunction blocking Vintage from selling merchandise that utilize Penn State’s infringed trademarks and attorney fees for willful infringement. In its motions, Penn State argued that these steps were necessary because nothing prevents Vintage from continuing to sell infringing merchandise without an injunction. Additionally, Penn State contended that Vintage is a “serial” infringer, making the case “exceptional” and warranting attorney’s fees under the Lanham Act. These motions have not been ruled upon at this time.