Pa. State Univ. v. Vintage Brand, LLC

• Docket Number: 4:21-CV-01091
• Decision Date: 14 July 2022
• Citation: 614 F.Supp.3d 101
• Parties: The PENNSYLVANIA STATE UNIVERSITY, Plaintiff, v. VINTAGE BRAND, LLC, Defendant.
• Court: U.S. District Court — Middle District of Pennsylvania

614 F.Supp.3d 101

The PENNSYLVANIA STATE UNIVERSITY, Plaintiff,

v.VINTAGE BRAND, LLC, Defendant.

No. 4:21-CV-01091

United States District Court, M.D. Pennsylvania.

Signed July 14, 2022

Allison L. Ebeck, McGuireWoods LLP, Pittsburgh, PA, Claire H. Eller, Pro Hac Vice, Lucy J. Wheatley, Pro Hac Vice, Matthew G. Rosendahl, Pro Hac Vice, McGuireWoods LLP, Richmond, VA, for Plaintiff.

Jodi S. Wilenzik, Post & Schell, P.C., Philadelphia, PA, John T. Fetters, Pro Hac Vice, Leslie C. Vander Griend, Pro Hac Vice, Stokes Lawrence, P.S., Seattle, WA, Marc H. Perry, Post Schell, Philadelphia, PA, for Defendant.

MEMORANDUM OPINION

Matthew W. Brann, Chief United States District Judge In June 2021, The Pennsylvania State University sued Vintage Brand, LLC, an online retailer of goods bearing screen-printed, and often retro, logos and images. Penn State contends that this practice violates federal and state trademark and unfair competition laws. Vintage Brand, however, denies these charges and asserts four counterclaims attacking the validity of Penn State's marks—emphasizing that while it sold goods with Penn State's marks, these images and logos are in the public domain and not subject to further protection under trademark law. Penn State now seeks to dismiss Vintage Brand's fourth counterclaim, where the Company contends that three of the University's marks should be canceled because they are ornamental and fail to function as trademarks.

While this case touches on broad and substantial questions about collegiate merchandising rights under trademark and unfair competition law, the fate of Penn State's motion turns on a far narrower question: Under the Lanham Act, does a symbol identify the source of the goods if it merely creates an association between it and the trademark holder?

Because the Court finds that it does not, Penn State's motion to dismiss is denied.

I. FACTS ALLEGED IN THE COMPLAINT

For today's motion, the Court need not delve deeper than the allegations about the three marks.¹ First among them is the University's 1984 registration of the text "Penn State."² The University holds this registration across a host of goods, including everything from apparel, banners, and flasks to USB flash drives, manual toothbrushes, and salt and pepper shakers.³ Second is the image of the so-called "Pozniak Lion,"⁴ which Vintage Brand contends was used as a school logo until it was phased out in 1987.⁵ Penn State registered this mark in 2017 for use on metal novelty license plates and apparel.⁶ And third is the image of the Penn State seal.⁷ Similarly registered in 2017, this mark—which displays the Pennsylvania Coat of Arms ringed by the University's name and date of founding—covers various apparel and drink-related goods, such as decanters, coasters, and ceramic mugs.⁸

For each, Vintage Brand alleges the same deficiencies. The Company pleads that they 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 "[o]n 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 ...."⁹

II. LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), the Court may dismiss a complaint, in whole or in part, if the plaintiff has failed to "state a claim upon which relief can be granted." Following the landmark decisions Bell Atlantic Corp. v. Twombly¹⁰ and Ashcroft v. Iqbal ,¹¹ "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ "¹² In its assessment, the Court must "accept as true all factual allegations in the complaint and draw all inferences from the facts alleged in the light most favorable to [the plaintiff]."¹³ Still, "the tenet that a court must accept as true all of the allegations contained in the complaint is inapplicable to legal conclusions."¹⁴ "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."¹⁵

III. ANALYSIS

Under the Lanham Act, a trademark can be obtained for "any word, name, symbol, or device, or any combination thereof ... used by a person ... to identify and distinguish his or her goods ...."¹⁶ When a trademark fails to fulfill this purpose, it is subject to cancellation.¹⁷ Because Penn State has registered these three marks with the United States Patent and Trademark Office Vintage Brand must show that they are invalid.¹⁸

Vintage Brand attempts to do so here through an ornamentality challenge. A registration fails on this ground when its overall commercial impression is "solely as attractive ornamentation" and not "also as a symbol that identifies and distinguishes a single source."¹⁹ In assessing aesthetic ornamentation, the first half of this conjunctive requirement, courts have considered the symbol's "size, location[,] and dominance," and whether it is accompanied by a ™ or ®.²⁰ Sitting at the non-ornamental end of this continuum are the small symbols affixed to the tag of a shirt or stamped on the bottom of a mug. While on the ornamental side stand the large, dominant, and centrally located symbols, such as shirts with text emblazoned across the chest or a coaster with a mascot featured across the top. By both allegation and appearance, Penn State's marks fall into the latter.²¹

But this finding does not settle the matter. The ornamentality requirement is conjunctive; that "a design is pleasing to the eye and serves a decorative purpose does not mean that the design cannot also serve a trademark purpose."²² The Court must also consider whether the marks "identify and distinguish" the goods. This requirement, which invokes the Lanham Act's definition of a trademark, broadens the analysis to the fundamental trademark question: does the mark serve a source identifying function?²³ And here, the parties’ understanding of the law diverges.

Vintage Brand contends 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.²⁴ So in its view, the marks do not "identify and distinguish" Penn State as the source of the goods. Penn State, on the other hand, contends that "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."²⁵ These arguments are nothing new. They have been raised across a host of decisions that assess whether a symbol is eligible for trademark protection to begin with (the so-called "eligibility" cases) or whether another entity's use of a trademark symbol constitutes infringement (the so-called "infringement" cases).²⁶ And while these cases’ terminologies and postures vary, they center on a common question: should trademark holders—particularly those in the business of education, research, and New Year's Six appearances—have an exclusive right to control merchandise bearing their marks when consumers are purchasing the products not for their guaranteed quality, but to signal their support for or affiliation with the trademark holder?

Perhaps it should come as no surprise that our modern trademark regime has struggled with this question. Trademark law has traditionally served to promote competitive markets.²⁷ Indeed, protecting marks "enable[s] sellers to develop reputations for quality," while also "assur[ing] customers that products sold under the seller's brand will live up to that reputation."²⁸ Up until the mid-20th century, the law focused narrowly on preventing sellers from using similar marks to "pass off" their goods as those made by another.²⁹ Over time, however, the law has come to include more instances when a consumer may be confused about a good's source.³⁰ Owing to expansion, trademark protection is no longer limited to mere word marks; logos, packaging, and even the shape of products may now be protected.³¹ Nor is it limited to directly competing products; under current law, trademark holders can protect against the use of similar marks outside of their core business provided consumers would presume some form of affiliation or sponsorship.³²

Entities’ efforts to control the use of their marks on merchandise beginning in the 1970s represented yet another attempt to expand the protections provided to sellers under the law. For universities, this trademark use diverged from traditional areas of trademark protection, such as Penn State preventing an unaffiliated educational institution from using its name. In this hypothetical, a consumer might reasonably believe that they are enrolling in a Penn State affiliate. But university-trademarked apparel and merchandise present a different case; the mark itself is the product.

From the outset views diverged on whether, given this overriding non-trademark function, the marks still identified the entity as the source or sponsor of the goods. Some, notably the United States Court of Appeals for the Fifth Circuit in Boston Professional Hockey Ass'n v. Dallas Cap & Emblem Manufacturing ( Boston Hockey )³³ and the Trademark Trial and Appeals Board in In re Olin Corp. ,³⁴ found that the marks inherently do.³⁵ The Fifth Circuit drew this conclusion from the fact that consumers only purchase the merchandise because of the mental association it creates between the trademark and trademark holder.³⁶ The question as they saw it was answered by sole reference to whichever party's toil generated the sale,...