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From the Gridiron to Gold Medals: Enforcing Sports Trademarks

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From the Gridiron to Gold Medals: Enforcing Sports Trademarks Feature By James L Bikoff, David K Heasley, Michael T Delaney, Phillip V Marano and Taro Konoshima From the gridiron to gold medals: enforcing sports trademarks Sports brands must contend with myriad challenges valid US trademark, but fail to qualify as counterfeit goods because posed by their opponents, counterfeiters and the mark is not identical or indistinguishable from the authentic mark, or because the infringing mark is attached to a good outside infringers. A sound defence and tough offence are the the class of goods for which the authentic mark is registered (eg, a keys to prevailing over these inventive opponents FOLEX watch or ROLEX sports car). Defensive measures seek to prevent illicit goods from reaching consumers. To accomplish this, sports organizations must prevent their importation and seize any illicit goods that slip through Customs or are produced domestically. The fame and profitability of sporting events such as the World Cup The first arm of the defensive strategy – import prevention – rests and Olympic Games have grown at a staggering rate. Counterfeiters with the US Customs and Border Patrol (CBP). The gatekeeper to US and infringers who covet this success, money and notoriety are commerce, the CBP is responsible, among other things, for loca ting increasingly seeking to capitalize on the fame of these sporting and excluding illicit goods that are shipped into the United States. events to promote their own goods and services. To enlist the assistance of the CBP, trademark owners must satisfy In 2009 alone, US Customs seized more than $260 million in certain prerequisites. First, they must register the mark with the US counterfeit goods. Of these, approximately 60% were in classes Patent and Trademark Office. Second, owners must file the registration affecting sports organizations, including footwear, accessories, certificate with the secretary of the treasury (see 15 USC § 106). apparel, media, toys and electronic games. Once the certificate is filed, the CBP is authorized to search for The Internet has exacerbated the problem. As Eric Schmidt, and exclude illicit goods. The CBP’s authority, however, is limited by chairman and chief executive of Google, once aptly noted, “The the Tariff Act and the Lanham Act (the US trademark act), as Internet is the first thing that humanity has built that humanity amended by the Trademark Counterfeiting Act of 1984. doesn’t understand, the largest experiment in anarchy that we have Section 526(a) of the Tariff Act authorizes the CBP to seize “any ever had.” This experiment has mutated counterfeiting and merchandise of foreign manufacture if such merchandise” bears a infringement into a seemingly unstoppable, amorphous threat. US trademark filed with the secretary of the treasury (19 USC § 1526). Sports organizations must therefore employ both defensive and The Supreme Court subsequently limited the Tariff Act’s ability to offensive strategies to defend their IP rights: planning, studying and exclude grey-market goods in Kmart Corp v Cartier Inc (486 US 281 anticipating infringing activities; educating and enlisting the help of (1988)), holding that a US trademark owner cannot use the Tariff Act government allies; and unsympathetically prosecuting infringers. to exclude goods produced abroad by a US trademark owner’s Each threat, however, dictates a different strategy. subsidiary, parent or agent. The Lanham Act provides equal protection to all registered Fighting fakes marks, but provides only limited exclusionary remedies for grey- To combat counterfeiting effectively, sports organizations must slow market goods. Section 42 provides that no article of imported the influx of counterfeit goods, seize goods that are manufactured merchandise that copies or simulates a registered trademark shall domestically, and prosecute those that manufacture and traffic in be admitted into any customhouse. Section 43(b) broadly prohibits illicit goods. the importation of any good whose sale would constitute unfair Illicit goods fall into one of three classes: counterfeit, grey competition. These provisions are limited, however, by the scope of market or merely infringing. Counterfeit goods are defined as goods the registration upon which exclusion is sought. Courts have further that bear a ‘spurious’ (ie, false) mark that is identical to, or limited a registrant’s ability to exclude grey-market goods, holding substantially indistinguishable from, a registered mark (15 USC § that a registrant may exclude only grey-market goods that are 1127). Grey-market goods are goods bearing a registered mark that physically different from genuine US goods bearing the same mark are manufactured abroad with the trademark owner’s authorization, (Lever Bros Co US, 981 F 2d 1330 (DC Cir 1993)). but imported into the United States without the owner’s Thus, strategically, if an organization is a US entity, such as Major authorization (Omega SA v Costco Wholesale Corp, 541 F 3d 982, 984 League Baseball (MLB) or the National Football League (NFL), the n 1 (9th Cir 2008)). Merely infringing goods are those that infringe a Tariff Act offers the greatest protection, assuming that the registrant www.WorldTrademarkReview.com August/September 2010 World Trademark Review 87 The defensive strategy cannot stop at the border, though. The second arm is field enforcement, which involves locating and seizing infringing goods ©iStockphoto.com/Stefan Klein ©iStockphoto.com/Stefan 88 World Trademark Review August/September 2010 www.WorldTrademarkReview.com Feature: Enforcing sports trademarks is not a parent or subsidiary of the foreign manufacturer. at sports venues to surrender counterfeit goods. During Operation By contrast, if the organization is a foreign entity, it may rely on Gold Medal, the IOC and USOC served vendors of counterfeit goods the Tariff Act to exclude counterfeit goods and merely infringing with cease and desist letters explaining the IOC’s and USOC’s rights, goods (US v Able Time Inc, 545 F 3d 824, 836 (9th Cir 2008) (Section and requesting that the vendors voluntarily surrender all counterfeit 1526 of the Tariff Act lacks an identity of goods requirement). goods. This strategy was effective in many cases, streamlining However, a foreign entity has only a limited ability to exclude grey- subsequent legal proceedings while accomplishing the primary market goods under the Lanham Act. objective of field enforcement – confiscation of illicit merchandise. A more offensive strategy abandons the prevention mantra and On the ground shifts its focus to prosecuting traffickers and, if possible, Properly employed, restricting imports is a highly effective method manufacturers of counterfeit goods. of preventing dissemination of counterfeit goods. For example, in Under the Lanham Act, a party that produces or traffics in anticipation of the Atlanta Olympic Games, the International counterfeit goods is liable for infringement (15 USC § 1114) and unfair Olympic Committee (IOC) and US Olympic Committee (USOC) competition (15 USC § 1125(a)). The owner of a famous mark – a worked with the CBP to initiate Operation Gold Medal, which classification that includes many sports trademarks – may also seek resulted in 125 seizures valued at nearly $2 million. to enjoin the sale of counterfeit goods under a dilution theory (see The defensive strategy cannot stop at the border, though. The 15 USC § 1125(c)). Similar state law remedies for infringement and second arm of the defensive strategy is field enforcement, which unfair competition are also available. involves locating and seizing infringing goods. To establish an A registrant may also proceed against third parties that contribute effective operation, counsel must engage the assistance of local law to counterfeiting. Under a contributory liability theory, a registrant enforcement and investigators, educate them on the threat and may pursue any entity that induces another party to infringe a methods for identifying illicit goods and establish legal grounds to trademark or supplies a product, knowing that the buyer is using the seize the counterfeit goods discovered. product to engage in trademark infringement (Inwood Laboratories Section 34 of the Lanham Act authorizes a court to issue ex parte Inc v Ives Laboratories Inc, 456 US 844 (1982)). Through suits for direct seizure orders in a civil action alleging trademark infringement and contributory infringement, sports organizations may deter from the manufacture or sale of counterfeit goods in violation of 15 vendors, manufacturers and suppliers that knowingly contribute to USC § 1114. The order permits the seizure of counterfeit goods (ie, the manufacture, distribution or sale of counterfeit products. identical or substantially similar goods bearing a spurious mark registered on the Principal Register). This remedy is limited to goods Counterfeiting goes virtual on which the registered mark is used at the time (Senate-House Joint As in any industry, sports organizations must be vigilant for internet Explanatory Statement on Trademark Counterfeiting Legislation, domains and websites that infringe or tarnish their brands. The 130 Cong Rec H12076 (October 10 1984)). magnitude of infringement in the internet domain name system International sports organizations, such as the IOC and Fédération surrounding a particular sporting event can be staggering. At the Internationale de Football Association, have petitioned for permanent turn of the millennium, the USOC, IOC and Sal t Lake Organizing or temporary legislation
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