Details of the case
In 2019, Pennsylvania State University (PSU) filed a lawsuit against Vintage Brand, a company that produces sports-themed apparel, for trademark infringement. PSU claimed that Vintage Brand's use of the term "Happy Valley" on its merchandise was infringing on PSU's trademark for the same term.
"Happy Valley" is a nickname that has been used to refer to the area surrounding PSU's main campus in State College, Pennsylvania, for decades. PSU has held a trademark on the term since 2012, which covers the use of "Happy Valley" on clothing and other merchandise. PSU alleged that Vintage Brand's use of "Happy Valley" on its merchandise was likely to cause confusion among consumers, who might think that the products were officially licensed by the university. The lawsuit also claimed that Vintage Brand had ignored cease-and-desist letters from PSU and continued to sell infringing products.
In response, Vintage Brand argued that "Happy Valley" was a common nickname for the area, and that PSU did not have exclusive rights to the term. The company also claimed that its products were clearly labeled as not being official PSU merchandise, and that consumers were not likely to be confused.
According to Vintage Brand’s complaint, PSU trademarks are "used as mere decoration, printed in large font and in a prominent location, and do not serve to identify Penn State as the source or origin of the goods"; that "on information and belief, consumers perceive . . . [the marks] to be merely a decorative feature of the goods and not an indication of the source of the goods"; and finally that their "overall commercial impression . . . is purely ornamental or merely a decorative feature[,] . . . [and they] do not identify and distinguish Penn State's goods from those of others and, therefore, do not function as a trademark . . . .". On July 14, 2022, Middle District of Pennsylvania upheld the counterclaims filed by Vintage Brand that sought to remove PSU’s exclusive control over the use of specific logos that identify the university and its sports teams.
Trademark rights and fair use
The primary purpose of trademark law is to protect consumers from confusion or deception in the marketplace. Trademarks serve as a way for consumers to identify the source of goods or services and to distinguish them from those of others. Trademark owners are granted certain exclusive rights to use their marks in connection with the goods or services covered by their registration, but these rights are not unlimited.
Trademark law does provide college and professional sports teams with exclusive control over merchandise featuring their brand name and logos, to the extent that they have registered those trademarks with the United States Patent and Trademark Office (USPTO) and have obtained a federal trademark registration. Once a trademark is registered with the USPTO, the trademark owner has the exclusive right to use the mark in connection with the goods or services covered by the registration, and to prevent others from using confusingly similar marks in connection with the same or related goods or services. This gives sports teams and other trademark owners significant control over the use of their trademarks on merchandise and other products.
However, it's worth noting that there are certain limitations on what trademark owners can control. For example, fair use allows others to use a trademark for certain purposes, such as for commentary, criticism, news reporting, or parody. In addition, trademarks that are purely descriptive or generic may not be eligible for protection. In the case of sports teams, there are also certain limitations on their ability to control the use of their trademarks on merchandise. For example, if a company is selling merchandise that uses a team's trademark in a way that does not suggest an endorsement or sponsorship by the team, and there is no likelihood of confusion, the team may not have a strong legal claim to prevent that use.
If a trademark holder wants to prevent other companies from using their trademarks, they must produce evidence that the use of said marks results in consumer confusion as to the source of the goods. This evidence can be achieved by producing consumer surveys or similar forms of research that would indicate that an average consumer is likely to assume the link between the two companies because of the continuous use of the mark.