As athletes make the transition from professional sports into the business sector, some find it helpful to rely on name recognition established in years past. It is the hope of those who represent these athletes-turned businessmen and women that the sports-related reputation carries sufficient weight in the corporate world to garner a significant amount of contract negotiating power. But even if our clients’ reputations are strong now, who’s to say they will continue to be popular enough, good enough or even pure enough to maintain the interest of the consumers who are purchasing goods and services tied to the athletes’ names? This is where the concept of “brand protection” typically enters the discussion. Take a survey of a PR firm, an intellectual property attorney, sports agents and talent managers and you are bound to hear various definitions for the term “brand protection,” and even more explanations on the best methods of achieving it.
In recent years it seems that business professionals have increasingly encouraged clients to achieve a certain level of brand protection by obtaining a formal trademark for their names, logos and even catchphrases. If, by doing so, the hope is to stave off would-be infringers and/or increase the chances of legally stripping infringers of profits generated from the unauthorized use of a protected mark, obtaining a trademark may or may not be the best vehicle to achieve these goals.
A person can trademark a word, phrase, symbol or design that identifies and distinguishes the source of a good from goods associated with someone else. Although trademark holders have the exclusive right to use their registered marks, this federally recognized right may not provide the extensive level of legal protection we typically associate with “trademarks.”
Intuitively, we believe people who sell goods—license plate holders, key chains, t-shirts, cups, etc.— bearing a swoosh symbol, distinctive bunny ears, or a black prancing stallion on a yellow shield, should be sued and forced to turn over their profits if it is the case that the sellers are not actually licensed by these multinational trademark holders. It also seems reasonable to think that the unauthorized sale of cloth patches bearing the initials of a national sports league, or figurines/dolls wearing a jersey bearing a popular player’s number should also be deemed unlawful behavior. (Note that this article will not discuss alternative legal bases a person may rely on to challenge this seemingly illegal behavior, independent of trademark laws.) Surprisingly (and for mark holders, unfortunately), in many parts of the United States, our intuition with regard to the protection afforded by trademark laws is wrong.
In a federal case filed in Arizona, a district judge concluded that the unauthorized sale of license plate holders and key chains branded with a popular symbol for a German auto manufacturer did not constitute infringement. The trial judge explained that consumers are less concerned about who actually manufactures these license plate holders and key chains and more concerned with the functional use of the products that happen to include an aesthetically pleasing insignia. The function of the license plate holders and key chains outweighs the use of the German brand name. As a result, there is no trademark protection because trademark laws do not provide exclusive protections for functional goods. This decision was ultimately overturned on appeal; however, weighing “function” against “aesthetic” charm continues to be a major consideration when a trademark holder sues an infringer.
Reaching a different conclusion but relying on the same type of reasoning, a trial judge in Texas explained that since the function of an embroidered patch that is typically sewn on to one’s own clothes is simply to display an association with a team or fan support as opposed to functioning in another manner (like a t-shirt, for example), the National Hockey League could stop a manufacturer from making and selling these patches that was occurring without NHL permission.
These examples show us that the rationale used by courts to enforce the scope of trademarks is neither settled nor necessarily intuitive to the general public because they are considering notions of “aesthetic functionality.” As a result, trademark holders should understand why they seek trademark protection, understand the function and aesthetic characteristics associated with the brand name, good and/or service, and cautiously set out to enforce rights as it may turn out to be an expensive and fruitless endeavor even when you know you’re right.
Trademark Law Generally
Trademark law is a species of “unfair competition” laws to the extent that trademark laws permit the holder of a mark to sue someone who is using a mark without permission. Trademark holders typically file lawsuits in an effort to limit consumer confusion.
Theoretically, a trademark should garner confidence in consumers who tend to seek out certain products knowing they are officially endorsed by a specific mark holder. In this regard, trademark law can be relied on to protect reputation. When Mars Blackmon, a fictional character created by director Spike Lee, wondered aloud, “Is it the shoes? It’s got to be the shoes…,” sales of Nike’s Air Jordan line probably increased exponentially because basketball fans believed, too, that maybe they could be better if they had the shoes. As a result, consumers specifically sought out Jordan's particular brand of shoes, confident in the manufacturer’s product.
In addition, trademarks prevent the misappropriation of goodwill by stopping others from stealing or capitalizing on the good reputation of the mark holder by passing off unauthorized goods or services as being endorsed by the athlete. By using a particular symbol on this line of shoes, the manufacturer and the athlete who lends his or her likeness confirm for consumers this product is of a particular quality that is unique from other brands. Trademarks encourage meaningful consumer participation in the market by asking the consumer to choose whether to buy a product associated with his or her favorite athlete or another, perhaps less popular brand.
Lastly, trademarks encourage manufacturers to produce well-made products so that consumers are enticed to purchase more goods and services offered by the mark holder. So, with these goals, why and how are trademarks still limited in their legal effect and enforceability?
Limitation of protection based on aesthetic functionality
In California, Arizona, Washington, New York, Connecticut and others, the scope of trademark protection is limited by a concept called “aesthetic functionality.” In the legal context, aesthetic functionality describes an attempt to classify some visually attractive (or aesthetically pleasing) design as “functional” and therefore free for all to copy and imitate.
In considering the scope of protection trademarks afford, consider the following: Believing you are showing support for your favorite team, you go to your local sporting goods store to pick up a few things for the family. While there, you pick up a few hats, a couple shirts and some blankets to sit on. On each is plastered the name and logo for your team in various fonts and colors. Before heading to the cash register, do you demand from the sales associate a certificate of authenticity that each item bearing your team’s logo was manufactured by an authorized licensee? Probably not. After all, they are all being sold in a store and not on the street corner, right?
Although you hope that your choice has led to the purchase of products from someone who has permission to use the team’s name and logo, it just might be that you bought an infringer’s products—an infringer who lawfully sells product without permission from the registered mark holder.
In February 2011, the U.S. Court of Appeals for the Ninth Circuit confirmed that the example above is the law of the land for this particular segment of the country
. In that case, the Court declined to recognize the existence of trademark infringement where a company sold Betty Boop dolls, t-shirts and handbags without the permission of the [alleged] trademark holder. The Court explained that because the products were “functional” and because there was no evidence that consumers were actually confused about the identity of the manufacturer, the commercial use of the Betty Boop character on these products could not be protected in the context of trademark law. This decision makes clear that courts recognize a strong public policy of promoting free competition. Courts are reluctant to award exclusive rights in a “useful” or functional product.
What steps can trademark owners take to protect their marks from unauthorized use?
Predictable legal results are more likely to follow where a trademark is obtained by an athlete who wants to make sure cybersquatters (for example) cannot capitalize from website domain names that lure unsuspecting people to a site by using the athlete’s name or catchphrase for an unauthorized commercial gain. But, where the use of the trademark is grounded in a more complex set of facts, expectations as to enforceability should be shifted.
Before running to trademark your name, logo or popular catchphrase, it is imperative that you know why you are doing it. In addition, try to get a clear understanding of the legal protections potentially afforded to you through ownership of the trademark. This means you need to find out why your business team (PR, lawyer, management, etc.) believes a trademark is necessary. Perhaps most important, use the trademark as a tool to develop your marketing or business plan, and consider the functional component attributable to your good(s) or service(s) that could potentially be used against you in an action for trademark infringement.
Depending on your goals, a trademark should also be used to limit the scope of the number and type of consumer goods and services to which your mark is affiliated. This will help to create evidence of actual consumer confusion, should you find your trademark infringed.
 Note that the Ninth Circuit consists of California, Oregon, Washington, Arizona, Nevada, Idaho, Montana, Alaska and Hawaii.
This article is published as an information service and does not constitute the rendering of tax, financial, legal advice or other professional service. Kanika Corley is an attorney with Sedgwick LLP, where she specializes in all matters related to media, entertainment and sports law, including intellectual property and nonprofit compliance.