Category Archives: Trademark Law

Jerry Jones’ 1995 Risk Allows The Dallas Cowboys To Become Leaders In The Growing Women’s Sports Apparel Market

Risk taking is necessary for a business to grow.  For Dallas Cowboys owner Jerry Jones, a risk that he took in 1995 has had a significant payoff in his team’s ability to enter into the growing business of women’s sports apparel.

Seven years before Jones became the Cowboys’ owner, NFL owners voted to create the NFL Trust.  This resulted in each team transferring the exclusive right to use its club marks for commercial purposes to the NFL Trust.  The NFL Trust then entered into license agreements with NFL Properties to provide NFL Properties the exclusive right to license the trust’s property.  The motivation behind creating the NFL Trust was the thought that when placed into the market together, the value of all NFL team marks would be higher than if teams attempted to negotiate licensing deals on their own.

In 1993, NFL owners began capitalizing upon their decision to create the NFL Trust.  That year, Coca-Cola signed a five-year contract worth a reported $250 million to become the official soft-drink of the NFL.  In 1995, Visa USA would sign the then second-largest partnership agreement with the NFL, a five-year deal worth $50 million, to become the NFL’s exclusive payment card sponsor.

In the background of these deals, though, was Jones.  Not a team owner when NFL owners voted to create the NFL Trust, Jones realized that he and the Cowboys were in a situation unique from most other NFL teams:  The Cowboys didn’t need a stable of teams to secure lucrative endorsement deals.

With the business savvy cured from his education, which includes a Master’s degree in business, and successfully running his own Jones Oil and Land Lease, Jones set out to capitalize upon the brand recognized as “America’s Team.”  The owner of not only the Dallas Cowboys, but also their stadium, Texas Stadium Corporation, Jones entered into multi-million dollar sponsorship agreements with American Express, Pepsi and Nike through Texas Stadium Corporation.

While arguably not directly contravening the terms of the NFL Trust, since only teams and not stadiums were part of the trust, Jones nonetheless secured the ire of the NFL.  At an owners meeting in Atlanta in 1995, Jones was served with a $300 million lawsuit filed by NFL Properties.  The lawsuit raised claims including violations of the Lanham Act, breach of contract, breach of the implied covenant of good faith, unjust enrichment and tortious interference with contractual rights.

In response to the lawsuit, Jones and the Cowboys filed a motion to dismiss.  This motion was granted in part.  Then, Jones took a big risk:  He filed a $750 million antitrust lawsuit against the league.  It was this legal maneuver that put the Cowboys on the ground to becoming the most valuable NFL franchise.  In 2013, Forbes valued the team at a league-wide high of $2,300 million.

With portions of its lawsuit dismissed, Jones’ antitrust lawsuit motivated the NFL to do one thing:  Settle.  The settlement agreement Jones reached with the NFL allowed Texas Stadium Corporation to maintain its contracts with American Express, Pepsi and Nike.  It also provided every other NFL team the opportunity to sign their own stadium sponsorship agreements.  Arguably, though, Jones was the big winner of the settlement agreement, as he also retained the right for the Cowboys to enter into their own licensing agreements.  It is this right that allows the Cowboys to create merchandise apart from the NFL’s licensing agreements.

Today, the Dallas Cowboys are using the footing they gained through the contentious litigation to further build the value of their brand.  With the NFL identifying 44-percent of its fans as being female, in recent years, the league has taken a proactive approach to providing women with apparel choices that better suit their fashion sense.  Leading the league in this effort, are the Dallas Cowboys.

In recent years, the Cowboys have utilized their licensing capabilities to enter into team-exclusive partnership agreements with women’s apparel designers, including PINK by Victoria’s Secret and Peace Love World.  The partnership with PINK was born six years ago. According to Cowboys executive vice president and chief brand officer, Charlotte Jones Anderson, “Sales of PINK merchandise in our pro shops was so successful, that PINK wanted to create a stand-alone store in our stadium.  We are the only team to have our own stand-alone store and the first team to enter into a licensing agreement with PINK to produce Cowboys-only apparel.”

Seeing how female fans flocked to the team’s PINK merchandise, Jones Anderson set out to find other licensees to partner with to create Cowboys women’s apparel lines.  ”Seeing how successful our PINK line was really inspired us to go out again and find another partner to do something similar,” Jones Anderson said.  Earlier this year, the Cowboys partnered with Peace Love World to create a line of women’s apparel featuring tops, tanks, hoodies and pants with phrases including, “I Love Sundays” and “I am Dallas.”

For Peace Love World founder Alina Villasante, the growing trend of teams and leagues investing in women’s apparel opportunities has been good for business.  Launched in 2007, Peace Love World was born as a brand focused upon “spreading peace and love all over the world,” according to Villasante.  In wasn’t until 2013 when that the spreading of that message reached the sports space.

During the Miami Heat’s 2013 NBA Finals run, Villasante, a Miami resident, was contacted by Heat executives to begin producing women’s apparel for fans.  Through promotion solely on social media streams, Villasante’s creations, featuring phrases like, “I am Champion” and “I am Miami,” sold out in seven minutes.  ”The clothes got to the AmericanAirlines Arena and within seven minutes, they were sold out.  The team called me and told me to take the pictures of the items off of Instagram, because they had already sold out.  It was a great introduction for what I was going to be facing in the future in partnering with sports teams,” Villasante recalled.

The taste of success in the sports marketplace that Peace Love World experienced during the NBA Finals allowed Villasante to recognize that sports could provide a unique opportunity for her company to grow.  ”Women have been hungry to show up to games looking like we are ready to go out with our friends and to be very fashionable.  I wanted to provide women with clothing that gives them the feelings of femininity and loyalty, while also looking like a sports fan,” Villasante said.

Seeing the success that Villasante and Peace Love World achieved in their partnership with the Miami Heat, the Cowboys contacted her to build a line for the team.  Throughout the season, Peace Love World merchandise has been promoted not only in the Cowboys’ team store and online storefront, but in pop-up shops and at an NFL style lounge event.  For someone whose business plan did not initially include entering the sports marketplace, Villasante calls her sports partnerships with the Heat and Cowboys “the best thing that’s happened to me in the four-and-a-half years since I’ve launched Peace Love World.”

Jones Anderson credits the Cowboys’ capabilities to license their own merchandise for providing the team with an opportunity to take risks in the women’s apparel arena.  ”We are the only team that can produce, license and sell our own merchandise as a complete business,” Jones Anderson noted.  This ability has allowed the Cowboys to test the marketplace in ways that other teams are unable to.  ”For the longest time, people in retail believed that jerseys, hats and plain t-shirts were driving sales in the industry.  Taking a step into a market that is more luxury-oriented, like women’s apparel, was thought to have more risk behind it.  People didn’t have the cojones to jump in and try something if it wasn’t going to work,” Jones Anderson said.

With their own merchandising entity, Dallas Cowboys Merchandising, Ltd., the Cowboys had the flexibility to take risks when entering the women’s apparel marketplace.  ”For us, since we are able to do it just for us, we can run a test to see if there’s real traction in the brand.  It’s been incredible.  Our fans have been very receptive and they love that we are thinking of them differently,” Jones Anderson said.

Like business, success in fashion involves taking risks.  With the NFL finding that its women’s apparel sales have tripled in recent years, taking risks to meet the wants of fashion-forward female sports fans is likely to pay off for teams like the Cowboys and women’s sports apparel creators like Peace Love World.

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Inside The Legal Fight To Change The Washington Redskins’ Name

A battle of public opinion is being waged with respect to whether the Washington Redskins should change their name.  Members of the Oneida Indian Nation are airing ads in strategic NFL markets asking that the Redskins abandon their team name, which the group and other Native American groups alleges amounts to a racist slur.  In a halftime monologue during the October 13 Sunday Night Football broadcast, Bob Costas referred to the team’s name as “an insult, a slur.”  Perhaps the biggest name to raise a stake in the battle, is President Barack Obama, who recently opined, “If I were the owner of the team and I knew that the name of my team, even if they’ve had a storied history, that was offending a sizable group of people, I’d think about changing it.”

The problem, though, for Obama and those on his side of the debate, is that the owner of the Redskins, Daniel Snyder, is emphatic that he is not changing the name of his team.  Snyder arguably summed up his point best when he told USA Today earlier this year, “We will never change the name of the team.”  Snyder’s rationale for this lies in a myriad of factors.  Snyder and those who oppose the name change base their opposition largely on the history of the team’s name.  They point to this history as a sign of honor–and not disparagement–of Native Americans and the courageous nature that demarcates their history as a people.  From their perspective, it is notable that in 1933, when the Boston Braves were renamed the Redskins, the team’s head coach was a Native American.

While the trial of the court of public opinion will likely continue to play out over television as the NFL season continues, a quieter case is taking place within the legal system.  It is the outcome of this case which may play the biggest role in whether Snyder changes his team’s name.

Snyder purchased the Washington Redskins in 1999.  For a man who said he would never change the team’s name, an event that took place that same year could have caused enough of an economic burden to twist his hand into doing so.  In 1999, the Trademark Trial and Appeal Board cancelled six trademark registrations held by the Redskins.  This decision meant that the rights and benefits associated with owning these trademark were no longer afforded to the team.  From a monetary perspective, this legal decision could have cost the Redskins potentially hundreds of millions of dollars.  Losing a trademark in place for over thirty years signals the loss of the goodwill developed since the trademarks’ creation in 1967, the subsequent loss of licensing deals created around those trademarks and finally, a loss of stature in the marketplace.  At the end of the day, those factors ultimately equate to the Redskins not only losing trademark protection, but losing money.  Big money.

What caused the Redskins’ trademarks to be canceled in 1999?  The cause was a case filed by a group of Native Americans, Harjo v. Pro Football, Inc.  That case argued that the trademarks held by the Redskins were disparaging, and as such, violated Section 2 of the Lanham Act (the body of law governing trademark protection in the United States).  The plaintiffs’ arguments in theHarjo case were largely similar to the arguments being raised today in the court of public opinion:  the use of the word “Redskin” in a team name amounts to using a racial slur as a team name.

Realizing the ramifications of losing trademark protection, the Redskins appealed the Trademark Trial and Appeal Board’s decision in the Harjo case.  Through a series of appeals, a federal district court overturned the Trademark Trial and Appeal Board’s decision.  The federal district court’s basis for doing this, was based in part upon a finding that the doctrine of laches barred the plaintiffs from bringing their claim.  Further appeals were made.  Ultimately, the Supreme Court denied to hear the case.  As such, at the end of the Harjocase, the Redskins maintained their trademark protection.  The Native Americans offended by the team’s use of a word that is one of the most disparaging used against their culture faced a new uphill legal battle to change that name.

Currently, a claim similar to that raised in the Harjo case is pending before the Trademark Trial and Appeal Board.  This case, Blackhorse v. Pro-Football, Inc., has been pending since before the conclusion of the Harjo case.  Like theHarjo case, it argues that six of the Redskins’ trademarks should be cancelled, because they are disparaging.  This case was built utilizing strategy gleaned from the outcome of the Harjo case.  Yet, that strategy does not mean that theBlackhorse legal team faces a clear and easy path to successfully arguing for the cancellation of the Redskins’ trademarks.

The uphill battle faced by Native Americans wishing for the Redskins to change their team name was paved by the federal district court who overturned the Trademark Trial and Appeal Board’s decision in Harjo.  First, the Harjodistrict court’s reliance upon the doctrine of laches arguably presents difficulties for the group.  Laches is an equitable legal defense, under which claims can be barred if a person waits too long to bring them.  In the Harjolitigation, the district court found that the plaintiffs’ claims were barred using laches, because the Redskins were awarded their first trademark in 1967.  TheHarjo plaintiffs, however, didn’t bring their case until 1992–some 25 years after the Redskins’ first trademark was approved.

The time clock for the doctrine of laches begins ticking when a plaintiff reaches the age of majority.  In the Harjo case, the youngest plaintiff was only one-year-old in 1967, when the Redskins obtained their first trademark.  However, on remand, the district court found that even this plaintiff’s case violated the doctrine of laches, since he waited eight years after reaching the age of majority to bring his case.

Seeing how the Harjo court ruled when it came to laches, the biggest difference between the the Harjo case and the Blackhorse case, is the age of the plaintiffs.  The plaintiffs in the Blackhorse case were between the ages of 18-and-24 when the case was filed.  It is expected that their attorneys will argue that the case this time around is not barred by laches, since the plaintiffs brought their case within six years of reaching the age of majority.

The question, though, is whether this legal maneuver is enough to make a court find in favor of the Blackhorse plaintiffs and cancel the Redskins’ trademarks?  Looking at the Harjo case, it does not appear so.  Rather, it is only the beginning of the battle.

The biggest legal hurdle that the Blackhorse plaintiffs face, is not their age.  Rather, it is showing that the Redskins’ trademarks are disparaging.  This hurdle will not be overcome by anything leaders of the Oneida Indian Nation, famous broadcasters or even the President of the United States says in 2013.  That is because the plaintiffs must prove that the trademarks were disparaging when they were granted; not whether they are considered disparaging today.

When it comes to showing that a trademark is disparaging,the plaintiffs must meet a two-part test:  (1) the likely meaning of the mark and (2) if that meaning refers to an identifiable group, that the meaning is disparaging to a substantial composite of that group.  Meeting the first part of this test is relatively simple from an evidence producing standpoint, as the the Trademark Trial and Appeal Board can only decipher the “likely meaning” of a trademark from dictionaries, encyclopedias and other reference materials.  Thus, the Blackhorse plaintiffs will point to materials of this type from when each of the trademarks was granted to argue prong one of the two-part test.

Proving the second part of the two-part test, however, may prove to be more difficult for the Blackhorse plaintiffs.  The reason this is difficult, is that the plaintiffs must show that a substantial composite of Native Americans–not in 2013, but from 1967-1990 when the trademarks were granted–found the trademarks disparaging.  The question becomes, then, how do the plaintiffs go back in time and show that a sizable enough number (although not a majority) of the Native American population felt this way?

It is unclear whether the Blackhorse plaintiffs have the substantial evidence necessary to meet the burden of proving that the Redskins’ trademarks are disparaging.  This should come as no surprise, as the district court in the Harjocase found that those plaintiffs did not have enough substantial evidence to show that then that the Redskins’ trademarks were disparaging.  Unless the attorneys for the Blackhorse plaintiffs have unearthed new evidence demonstrating that the Redskins’ trademarks were considered disparaging when they were granted, it is unlikely that the plaintiffs will succeed in this regard.

The discussion above details the tough legal fight the Blackhorse plaintiffs face in removing a word they believe to be a slur from the name of an NFL team.  Given that, one may wonder why the Blackhorse plaintiffs nonetheless choose to go forward with their cause of action.  Perhaps it is because, even if they do not win in a court of law, they will slowly but surely win their case in the court of public opinion.

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Nike’s Tim Tebow Jets Apparel Lawsuit Against Reebok

On March 27, 2012, Nike filed a lawsuit against Reebok in the United States District Court for the Southern District of New York.

The Basis of the Lawsuit

Nike’s lawsuit against Reebok stems from what Nike alleges is Reebok’s “unauthorized and improper use of Tim Tebow’s name on New York Jets-related apparel. . .”  After Tebow was traded by the Denver Broncos to the New York Jets on March 21, 2012, Reebok introduced into the market Jets apparel with Tebow’s name and the number 15.

Nike asserted that Reebok was not authorized to introduce this merchandise into the market, as it was not licensed to do so.  According to Nike’s complaint, introduction of a product bearing an NFL player’s name on a team-identified product requires that one receive the “. . . right to use the trademarks of the NFL and/or its member clubs. . .” and also obtain the right to use a player’s name and number through either the player or from the NFLPA.  The crux of this case, lies in Nike’s allegation that Tebow did not grant Reebok the right to use his name and number on merchandise, nor did Reebok  have a valid group license with the NFLPA to use Tebow’s name on March 21, 2012.  Rather, Nike alleges that it not only has been granted the right to use Tebow’s name on apparel from Tebow himself, but also that as of March 1, 2012, Nike was granted a group license by the NFLPA.

Filing of the lawsuit was arguably prompted by what Nike saw as a limited opportunity to fully capitalize upon Tebow’s trade to the Jets.  Reference to this is made in several places within the lawsuit.  For instance, the lawsuit alleges, “Mr. Tebow’s high-profile trade to the New York Jets has garnered around-the-clock national news media coverage, and generated an immediate and short-lived intense consumer demand for Tim Tebow-identified New York Jets-branded apparel.  Additionally, the lawsuit references Nike’s scheduled April 3 unveiling of its new NFL uniforms and the company’s new spot as the NFL’s exclusive provider of on-field apparel.  Nike alleged that although the release of the new Nike NFL uniforms would be expected to increase sales of Nike apparel with Tebow’s name on it, Reebok’s distribution of Tebow Jets apparel will limit Nike from optimizing its sales in this regard.

Ultimately, the lawsuit alleges four causes of action:  Violation of the Lanham Act under 15 U.S.C. section 1125 (a) (alleging that the Reebok Tebow Jets apparel is likely to cause confusion, mistake or to deceive as to Tebow’s approval of such goods); misappropriation of Tebow’s rights or publicity (which Nike asserts it has standing to raise as an exclusive license holder of Tebow’s name for apparel); tortious interference with current and prospective business relationships (alleging that Nike’s sales of Tebow Jets apparel was disrupted and diminished by Reebok’s actions) and unjust enrichment.

Nike seeks preliminary and permanent injunctions, compensatory damages, punitive damages and attorney’s fees.  Additionally, if Nike is successful in recovering under the Lanham Act, it is entitled to treble damages (three times the amount of damages).

Movement in the Case

On March 28, a judge in the Southern District of New York issued a temporary restraining order against Reebok.  Temporary restraining orders are granted when a plaintiff faces an immediate and irreparable harm as a result of the alleged actions of the defendant.  Thus, the judge must have determined that if sales of the Reebok Tebow Jets apparel, Nike’s interests would be immediately and irreparably damaged.  From reports, the temporary restraining order prevents Reebok from selling and producing any further Tebow Jets apparel, and Reebok must also recall that Tebow Jets apparel which it entered into commerce.

What Will Happen Next

The lawsuit will proceed through the course of civil litigation.  An answered will be filed by Reebok.  Thereafter, the parties will engage in discovery.  While there is always the chance that the parties will settle out of court, a settlement in this case is unlikely to occur unless Reebok is enjoined from distributing or selling unlicensed Tebow Jets apparel in the future.  Given the unlikelihood that Reebok would voluntarily agree to this, the case will most likely proceed through the court system.  Nike will need to obtain a permanent injunction against Reebok in order to permanently stop Reebok from selling unlicensed Tebow Jets apparel.  Furthermore, as noted above, Nike will seek to obtain monetary damages in the lawsuit.

What to Watch For

Moving forward, there are several things to pay attention to.  First, is the possible addition of plaintiffs to the lawsuit, namely Tebow and the NFLPA.  In its lawsuit, Nike alleges that Tebow’s right to publicity has been violated.  In order to avoid a standing defense raised by Reebok to this allegation (meaning, that Nike doesn’t have the right to raise this claim in Tebow’s place), Tebow should be joined as a plaintiff.  Additionally, the NFLPA may be joined as a plaintiff, as Reebok arguably violated its intellectual property rights by selling apparel with an NFL player’s name on it without a license from the NFLPA.

There are likely several defenses Reebok will raise.  As noted above, expect a standing defense to be raised by Reebok to the right of publicity claim.  Another issue which Reebok will likely raise, is that it is licensed to manufacture NFL apparel through March 31, 2012.  The NFL has licensed Reebok up until that date to manufacture and sale NFL apparel.  Reebok will likely argue that this license granted it the right to manufacture and sale the Tebow Jets apparel.  However, as noted above, Nike will likely counter this defense by asserting that Reebok not only need a license from the NFL, but also a license from Tebow or the NFLPA.  Nike will assert that Reebok lacked this secondary license required to produce the merchandise.

In its lawsuit, Nike notes that Tebow “. . . has attracted unprecedented public interest and attention from the media. . .”  This lawsuit is sure to only add to that public interest and media attention.

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The Case of Clipper Darrell

There’s an old adage, that all it takes to succeed in the world, is for one other person to believe in you.

Then, there’s the idea, that all it takes to succeed in the world, is for one person to tell you that you’ll never become anything.

The latter is what prompted Darrell Bailey, the man better known as “Clipper Darrell,” to pursue superfandom.  According to his own account on his website, http://www.clipperdarrell.com, Bailey was once fired from his job and told by his boss on his way out the door, “that he would never be anything in life without him.” 

What Bailey did thereafter was not conventional.  Rather than starting a business to rival his former employer’s, Bailey set to work on becoming something, namely, the biggest fan that the Los Angeles Clippers had ever seen.  He donned a custom-made blue and red suit to over 400 games.  He painted his house Clippers colors.  He spent $12,000.00 to paint his BMW sedan red, white and blue with Clippers logos. 

There is nothing inherently illegal in being a superfan.  Someone with the level of fanatic devotion of Bailey is something most other teams would love to have the support of.  In fact, according to his website, Mark Cuban offered to make Bailey a Dallas Mavericks employee if he would relocate to Dallas and support the team.

So, where does one begin to cross the link from superfandom into illegal activity?  It starts with trademark law.

Trademark protection initially existed at the state level.  It was created to prevent Merchant A from using the mark of Merchant B to deceive buyers into purchasing Merchant A’s goods.  In 1881, after nearly 100 years of federal attempts to protect company’s goodwill, Congress successfully enacted trademark legislation.  Today, federal trademark protection exists under the Lanham Act, a piece of legislation enacted in 1946.  In relevant part, the Lanham Act allows users of marks in commerce to register the marks as trademarks, and subsequently, protect the trademarks against infringement. 

Protecting the integrity of the trademark from infringement by non-trademark holders is important.  When a trademark holder allows non-trademark holders to use the trademark, it is said that the trademark is “diluted.”  When a trademark becomes diluted, the trademark holder runs the risk of losing trademark protection.  Given the goodwill and monetary rights associated with trademark protection, the risk of a trademark becoming diluted sends most trademark holders into swift action.

As noted above, there is not a legal cause of action against being a superfan.  However, when a superfan profits off of his superfandom by using trademarks associated with a team, the alarm goes off for the team’s trademark holders.

The Lanham Act provides that trademark holders can pursue civil lawsuits against those who, without consent of the trademark holder, “use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.”  Amongst other things, this section of the Lanham Act protects against “false endorsements.”  Essentially, a false endorsement is one in which a non-trademark holder uses the trademark in a way to give the appearance that the holder of the trademark is endorsing the non-trademark holders activity.

It is likely, that the recent fallout between the Clippers and Clipper Darrell is strictly the result of the Clippers’ desire to prevent the dilution of the team’s trademarks.  LAC Basketball Club, Inc. (the Clippers) is the registered holder of the “Los Angeles Clippers” trademark.  If the Clippers allowed Clipper Darrell to pass himself off as an authorized user of the trademark in areas of commerce (i.e., paid appearances where Bailey appears as Clipper Darrell), then the trademark would arguably be diluted.  Thus, while many have called into question the “cold nature” of the Clippers’ recent actions against Clipper Darrell, it is clear that there is one simple basis for them:  trademark protection.

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