White v. Board of Regents, S-99-102.

• Decision Date: 21 July 2000
• Docket Number: No. S-99-102.,S-99-102.
• Citation: 260 Neb. 26,614 N.W.2d 330
• Parties: Brent WHITE, appellant and cross-appellee, v. BOARD OF REGENTS OF the UNIVERSITY OF NEBRASKA AT LINCOLN, appellee and cross-appellant.
• Court: Nebraska Supreme Court

614 N.W.2d 330

260 Neb. 26

Brent WHITE, appellant and cross-appellee, v. BOARD OF REGENTS OF the UNIVERSITY OF NEBRASKA AT LINCOLN, appellee and cross-appellant.

No. S-99-102.

Supreme Court of Nebraska.

July 21, 2000.

Jefferson Downing, of Keating, O'Gara, Davis & Nedved, P.C., and, on brief, Brett McArthur, Lincoln, for appellant.

John C. Wiltse for appellee.

WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

STEPHAN, J.

Brent White appeals from a judgment of the district court for Lancaster County, Nebraska, dismissing his claim for damages and injunctive relief against the Board of Regents of the University of Nebraska at Lincoln (University) based upon the alleged wrongful use of a registered trade name. The district court found that White was not entitled to relief because he failed to establish that he actually used the trade name "Husker Authentics" prior to registering it with the Nebraska Secretary of State. The University cross-appeals, contending the district court erred in dismissing its counterclaims for breach of contract and common-law trade name infringement. We affirm, although for reasons different from those articulated by the district court.

I. FACTS

In late 1995, the University of Nebraska-Lincoln Athletic Department (Department) internally proposed the establishment of an "authentic shop" which would sell to the public apparel and equipment used by its teams and staff. The Department thereafter began making plans related to the development of the new store. As part of this process, the Department began test marketing the sale of "authentic goods" with the intent of developing purchasing statistics for the new store. The test marketing was conducted over a 7-month period beginning in the spring of 1996. According to Christopher Bahl, the director of licensing and sales for the Department, "authentic goods" referred to the exact product used, developed, or produced by the Department, such as a football autographed by the players or exact replicas of coaches' shirts and players' jerseys.

The test marketing was conducted through two principal means. Soft goods, such as T-shirts, sweatshirts, and other apparel, were marketed pursuant to an agreement with Eastbay, a mail-order catalog business located in Wausau, Wisconsin. An Eastbay catalog was developed through the joint efforts of Eastbay and the Department. This catalog, which displayed various styles of Nebraska Cornhusker wearing apparel, manufactured by "adidas," was mailed by the Department directly to season ticket holders, boosters who had donated money to the Department, and approximately 50,000 alumni of the University of Nebraska-Lincoln. The catalog was also distributed on game day at Memorial Stadium in Lincoln for one football game during the fall 1996 season. The catalog displayed, in the upper right-hand center, a large "N" over which the word "Husker" was written in script, with the word "Authentics" written underneath in italicized and capitalized block letters. This logo was developed generally by the Department. The catalog also displayed a picture of the then University of Nebraska-Lincoln football coach Tom Osborne, who was quoted as stating, "Husker Authentics is your official provider of Nebraska/adidas sideline shoes and apparel." Beneath the quote in small print was the language, "Husker Authentics is brought to you by the University of Nebraska— Athletic Department, adidas & Eastbay." The address and telephone number listed on the catalog were that of Eastbay. Pursuant to the agreement with Eastbay, the Department received 4 percent of gross sales generated by the catalog.

During the same 7-month time period, the Department test marketed "hard goods" pursuant to an agreement with Awards Unlimited, Inc., a Lincoln business. Hard goods are items such as footballs, photographs, posters, and videos. These products were marketed in essentially the same manner as the soft goods in that a catalog or order form containing a list of available items and their description was directly mailed by the Department to season ticket holders, boosters, and 50,000 alumni of the University of Nebraska-Lincoln. The catalog or order form for the hard goods did not contain a "Husker Authentics" logo similar to that displayed on the Eastbay catalog, but did contain a regular "N" with "Huskers" written over it in script in the lower left-hand corner. The top of the catalog or order form was entitled "Authentic Nebraska Athletic Department Products," and the address listed on the form was "Husker Authentics, 1935 `O' Street, Lincoln, NE 68510." Pursuant to the agreement between the parties, Awards Unlimited operated as a fulfillment house for processing orders and storing inventory, and the Department received revenues from merchandise sold. In addition to this catalog or order form, Bahl testified that the Department also ran advertisements in the magazine, Huskers Illustrated, and a Lincoln newspaper for the "hard goods." On cross-examination, Bahl admitted that the Department's test marketing was not directed at the general public.

On July 11, 1996, the "Board of Regents of the University of Nebraska d/b/a UNL Department of Athletics" filed an application with the Nebraska Secretary of State to register the trade name "Husker Authentics." The application stated that the first use of the name in Nebraska was in June 1996 and that the nature of the business was "Sales of University of Nebraska-Lincoln licensed goods." Because the University did not file the requisite proof of publication of the name with the Secretary of State and the county clerk as required by Neb.Rev.Stat. § 87-219 (Reissue 1999), the Secretary of State subsequently canceled the registration. The Department was not aware of the cancellation until June 30, 1997, and, after registering the trade name, continued making plans to open its new retail store.

From 1989 to 1998, White owned and operated two Lincoln businesses named "Nebraska Spirit" and "Team Spirit Industries." Both businesses were engaged in screen printing, embroidering, and selling clothing and novelty items related to a theme of the University of Nebraska-Lincoln athletics. White was aware of the Department's plan to open a retail outlet store to sell authentic goods in February 1997. He opposed the opening of the store, fearing competition with his businesses. Upon inquiry, White was informed by the Secretary of State on June 26, 1997, that the Department's registration of the trade name "Husker Authentics" was canceled due to improper publication. That same day, White filed an application for registration of the trade name "Husker Authentics." The application indicated that the trade name was first used in Nebraska on the date of the application and that the general nature of the business was a retail sportswear store. White completed all of the requirements for registration and was granted registration of the trade name "Husker Authentics." At trial, White testified that he wanted to use the trade name for a new business, as a name for a department in his store, or to identify his products. He specifically acknowledged that the registration was motivated in part by his desire to prevent the Department from opening its retail store. White further testified that he did not actually use the trade name "Husker Authentics" for his business because he expected the Department to litigate the issue and he did not want to "invest a dime" of his money until the situation was settled in the courts.

The Board of Regents is the governing body for the University and, as such, is the owner of a number of trademarks, service marks, and trade names associated with the University. The University is a "Member University" represented by The Collegiate Licensing Company (CLC), its exclusive licensing agent. CLC is authorized to grant licenses to third parties, which licenses allow specified use of the indicia that are associated with the University. A license is required for persons who produce or manufacture any of the indicia which the University owns, although a license is not required to simply sell such products in a retail business. White obtained such a license to produce and manufacture the University's indicia for the period January 27, 1995, to January 31, 1998. Approximately 3 weeks after registering the trade name "Husker Authentics," White received a letter dated July 16, 1997, from CLC's counsel informing him that his registration was in violation of the license agreement and that failure to transfer his registration to the University within 15 days would subject his license agreement to "immediate termination." A second letter, dated August 7, 1997, informed White that if a written response, including verification that he had taken steps to transfer the registration, was not received by August 14, the license agreement "will be terminated immediately." White responded to the July 16 letter on August 8, before receiving the August 7 letter, and informed CLC that he was "canceling [his] license agreement." White testified that after sending his August 8 letter, he never received confirmation that his license was canceled, but he did not after that date manufacture or produce products subject to the license agreement.

After learning of White's registration of the trade name "Husker Authentics" from a published notice, the Department inquired of the Secretary of State and learned that its prior application for registration had been canceled because the process had not been completed, as noted above. On June 30, 1997, the "Board of Regents of the University of Nebraska d/b/a UNL Department of Athletics" attempted to register the trade name "Huskers Authentic," but the Secretary of State refused to register the name due to the similarity with the name previously registered by White.

On July 28, 1997, the University filed a trademark application with the Secretary of State. The...