College Product Licensing in Danger?

Product licensing at the academic level is a great source of revenue for colleges and universities. A recent trademark case could have real world implications on its continued viability.

PSU's Trademark Infringement Lawsuit

In Pennsylvania State University v. Vintage Brand, LLC, Pennsylvania State University (PSU) sued an online retailer for trademark infringement. The online retailer counterclaimed, challenging PSU’s marks on grounds they were purely ornamental. After a thorough analysis, the U.S. District Court in Pennsylvania denied PSU’s motion to dismiss the online retailer’s counterclaim holding that collegiate loyalty is not inherently source identifying and rejecting a per se approach for a fact-intensive approach.

Trademark Perception Is a Question of Fact

In arguing PSU’s marks were purely ornamental, the online retailer asserted that “consumers believe that the essence of these marks is to signal their support for the University, not that the University has produced, approved, or guaranteed the quality of the item” and therefore “the marks do not ‘identify and distinguish’ Penn State as the source of the goods.” PSU responded, “it would be unimaginable that using PENN STATE, the University, or the Pozniak Lion Logo on a good, no matter how prominently, could be perceived by the consuming public as anything other than an identification of Penn State as the source or second source of the good.”

The court denied PSU’s motion to dismiss and allowed the online retailer’s counterclaim to continue because whether consumers “believe that the trademark indicates that the trademark holder is the source, sponsor, or is otherwise affiliated with the good” is “a question of fact.” As the court phrased it: “Whether consumers believe that a university is the source, sponsor, or authorizer of merchandise bearing its marks should—minimally—turn on just that: what the consumers believe. And for that reason, Penn State's motion to dismiss is denied.”

Possible Implications for Other Trademarks

Reliance on consumer belief can be a subjective standard, risking the value of future licensing royalties. The core function of a trademark is source designation. In academic licensing, the trademarks are affiliated with educational services, but generate revenue for commercial items.

Protecting Trademarks and Licenses

This area remains unsettled case law and there are uncertainties in collegiate licensing that will need to be resolved in the future. Dominion over the quality of the licensed goods may be a strong factor to consider, so any licensing agreement needs to include strong quality control provisions.

The more control you keep over the quality of licensed items, the stronger your position to counter that the use of the mark is merely for an affiliation. Instead, you can assert the quality of the goods is an extension of the quality associated with your brand and concurrent with the goodwill of your academic programs.

If you have questions about your trademark protections or licensing agreements, please contact a member of the WRVB Intellectual Property practice team.