ABSTRACT

Universities sued T-shirt maker over shirts that incorporated school colors together with other facts and indicia about the schools, such as sports accomplishments and geographic location.  The Fifth Circuit upheld the district court’s finding that the T-shirt maker’s use of those elements constituted trademark infringement, even if neither the school names nor other school-related marks or logos were included on the products.

CASE SUMMARY

FACTS

Louisiana State University, the University of Oklahoma, Ohio State University, and the University of Southern California, together with their licensing agent (collectively the “Universities”), brought a trademark infringement action against Smack Apparel Company (“Smack”) alleging that Smack’s use on T-shirts of their respective school color schemes, together with references to other facts about each school, created a likelihood of confusion.  The Universities, each with established and successful athletic programs, particularly American football, argued that Smack infringed their trademark rights by using their century-old color schemes on T-shirts, together with references to one or more of:  (1) well-known athletic events in which the university participated, (2) the university’s opponent in a particular event or a known rival, (3) the geographic area in which the event took place, (4) titles and honors bestowed on the university as a result of the event, (5) the university’s past athletic accomplishments, and/or (6) the geographic area in which the university was located.  The Universities alleged that Smack’s products were identical to and competed directly with the Universities’ own officially licensed products.  The Eastern District of Louisiana agreed, granting summary judgment in favor of the Universities and holding that Smack’s use of the schools’ color schemes and other indicia constituted trademark infringement.  Smack appealed.  The Fifth Circuit, reviewing the grant of summary judgment de novo, affirmed the district court’s decision. ANALYSIS

Noting that colors—both alone and in combination with other elements—may be protectable trademarks, the Fifth Circuit evaluated the Universities’ arguments under its eight-factor likelihood-of-confusion test.

In view of Smack’s concession that the Universities’ color schemes were well known and used to identify the respective plaintiffs, and the fact that their respective color schemes had been in use for more than 100 years, the court found the Universities’ marks to be strong.  Notwithstanding that “all third party use of a mark, not just use in the same industry as a plaintiff, may be relevant to whether a plaintiff’s mark is strong or weak,” the court rejected Smack’s argument that third-party uses of similar color schemes weakened the Universities’ rights in their marks, finding Smack’s evidence to fall short of the “extensive” use required to weaken a trademark and negate a likelihood of confusion.

Evaluating the similarity of the marks and the similarity of the goods, the Fifth Circuit rejected Smack’s attempt to distinguish between the parties’ respective “marks” based upon the fact that none of its T-shirts were identical to those licensed by the Universities and its text was less conservative and more creative than what was available on the Universities’ licensed merchandise.  The court held that the colors used by Smack were identical to the Universities’ color schemes and that the schools themselves also used indicia such as references to events, game scores, and humorous taunts against rivals on identical merchandise.

Regarding the issue of intent, while Smack conceded that it used the colors and other indicia to identify each respective school, it argued that an intent to copy is not the same as an intent to confuse.  The court rejected this argument, finding that Smack did not hope to sell its T-shirts based on quality or design differences, but rather to capitalize on the popularity of the Universities’ football programs and the appearances of the schools’ teams in the various bowl games.  The court further held that the adoption of a mark “with the intent of deriving benefit from the reputation of the mark holder” qualifies as strong evidence of a likelihood of confusion.

Smack further argued that it did not intend to infringe because the inclusion of its own mark and name on products distinguished them from the Universities’ licensed products and acted as a form of disclaimer, negating any intent to confuse.  The court rejected this argument as well, noting that all merchandise licensed by the Universities must include the name of the licensee, making it more likely that a consumer seeing the Smack label would believe that Smack was an official licensee.

The court also carefully considered the degree of care exercised by the parties’ consumers.  Noting that the parties agreed that their T-shirts are inexpensive impulse items offered in identical channels of trade, which increases the risk of confusion, the court rejected Smack’s claim that the Universities should be required to show that consumers prefer officially licensed T-shirts over unlicensed products.  Importantly, the court distinguished the well-known decision of Supreme Assembly, Order of Rainbow for Girls v. J.H. Rey Jewelry Co., 676 F.2d 1079 (5th Cir. 1982), which held that retailer J.H. Rey did not infringe the fraternal organization’s registered trademark when it sold necklaces bearing its official Rainbow emblem.  The court here found that consumers expect the Universities to license merchandise, whereas consumers do not expect fraternal organizations to do so.  Accordingly, unlike in Rainbow for Girls, use of the school colors together with the other indicia would lead consumers to believe that the goods were endorsed, sponsored, or approved by the Universities.

After analyzing the relevant likelihood-of-confusion factors and finding in favor of the Universities, the court considered and ultimately rejected each of Smack’s defenses.

The court first rejected Smack’s arguments that the Universities’ marks were functional and thus not protectable as trademarks, noting that the doctrine of aesthetic functionality—the only form of functionality that might apply to the Universities’ color scheme marks—has been rejected in the Fifth Circuit.  Indeed, the court disparaged Smack’s reliance on TrafFix v. Marketing Displays, Inc., 532 U.S. 23 (2001), for the proposition that aesthetic functionality was recognized by the Supreme Court, noting that the TrafFix decision has been widely criticized as mischaracterizing the opinion in Qualitex Co. v. Jacobsen Products Co., 514 U.S. 159 (1995).

The panel also rejected Smack’s nominative fair use defense, holding that although Smack used the Universities’ color scheme combination marks to identify the Universities as the subject of the T-shirts, it did so in a way that “improperly suggested affiliation, sponsorship, or endorsement.”  Finally, notwithstanding the fact that one of the schools actually sold certain Smack T-shirts in its on-campus student bookstore, the court held that Smack’s intentional copying—a form of bad faith—precluded the application of a laches defense.

Finally, the appellate court upheld the district court’s decision to deny the Universities’ request for attorney’s fees, holding that this case was not “exceptional” within the meaning of the Lanham Act because it involved novel legal issues.

CONCLUSION

The Fifth Circuit’s analysis provides a blueprint for companies seeking to use sports-team color schemes in connection with unlicensed products or services.  It is important to note that because Smack’s products also contained specific information and indicia relating to each school, the court did not address the issue of whether use of the Universities’ color schemes alone, without the other indicia, would have constituted infringement.