By Sofia M. Kurtz and Robert E. Freeman (Co-Head, TMT Group Member, Sports Group), of Proskauer
The Penn State University’s (“Penn State”) recent lawsuit against Paul Parshall (“Parshall” or “Defendant”) demonstrates a few ways that people or businesses could be using federally registered trademarks in an infringing and confusing manner, specifically ones related to popular college sports teams.
Chances are you have owned a sports jersey or some other merchandise from your favorite sports team, or maybe even surfed online for themed products bearing your college name or team nickname. Some consumers may not be too concerned over whether such products are officially licensed, but it’s a fair bet the team or trademark owner with a successful licensing or merchandising program will take the field to protect its IP. If you’re a victim of this violation, join the Nittany Lion Club and learn how you can get down into the nitty gritty to protect your trademarks.
Based on a review of the relevant pleadings, Parshall, under his business entity, Sports Beer Brewing Company, apparently held himself out as “an intellectual property holding company consisting of a portfolio of sports trademarks.” As such, Parshall’s website offered for sale different products (e.g., craft beer, cigars, t-shirts) using variations of professional and college sports teams names, or otherwise presented trademark licensing opportunities to athletic venues, bars, brewing companies, and grocery stores. In this case, Parshall’s website offered Penn State-related products such as “Penn State Nittany Brewing Co” and “Penn State Nittany Beer.” In doing so, Parshall’s website attested that he had obtained state trademark registrations for various sports teams “complying with the Secretary of State regulations.”
According to Penn State, however, there was one major flaw with respect to offering such branded products, namely, that Penn State owns a family of federally registered, famous NITTANY LION and PENN STATE marks and Parshall had unlawfully obtained state trademark registrations for marks that are confusingly similar to the Penn State marks. Furthermore, Penn State alleged that Parshall had never taken steps to obtain permission to use such marks in any way. As per the complaint, it seems that Parshall’s strategy, in this instance, was to obtain Penn State-related trademark registrations in Pennsylvania and Illinois to project the veneer that he obtained valid trademark rights to offer his products for sale, because, as Penn State alleged, there was no process by which Penn State would have been notified of such state registrations and such infringement might never be noticed.
When Penn State eventually discovered Parshall’s unauthorized use of their federally registered trademarks, it sent cease and desist letters. In response, Parshall attempted to sell the state trademark rights and an internet domain he had registered called <pennstatenittanybeer.com> back to Penn State. Parshall even applied to register the trademarks on the Federal Register (note: Penn State stated in its papers that the USPTO rejected Parshall’s application to register PENN STATE NITTANY BEER). Penn State filed its original complaint on July 26, 2019 (and an amended complaint on September 24, 2019) against Parshall, asserting 17 causes of action including trademark infringement under the Lanham Act, federal unfair competition and false designation of origin, and cybersquatting. In response, Parshall filed a motion to dismiss and a motion to change the venue from Pennsylvania to Florida.
In May 2020, a Pennsylvania district court denied Parshall’s motions to dismiss on several grounds, rejecting Parshall’s primary argument that the complaint should be dismissed because Parshall owns state trademark registrations and Penn State had never used nor filed for the mark PENN STATE NITTANY BEER or related names. (The Pennsylvania State University v. Parshall, No. 19-01299 (M.D. Pa. May 7, 2020)). In general, the court found that Penn State’s complaint contained plausible allegations and valid claims for relief and that Penn State sufficiently alleged ownership of a family of famous marks. The court also denied Parshall’s motion to change the venue, keeping the home field advantage for Penn State.
Later in 2020, Parshall registered several Penn State-themed domain names. In response, Penn State brought UDRP actions, and was able to obtain orders (see here and here) mandating the transfer of such confusingly similar domains to Penn State. Eventually, the district court considered both parties’ motions for summary judgment. Then, on December 14, 2021, the case was referred to a magistrate judge to rule on the pending motions. In a February 17, 2022 Report and Recommendation, the magistrate ultimately ruled in favor of Penn State, finding that “Parshall has created an Internet-based counterfeiting scheme in which he is profiting from the deliberate misappropriation of Penn State’s trademark rights.”
The magistrate outlined several factors that led to the decision to grant Penn State’s motion for summary judgment. The magistrate divided Penn State’s claims into two main categories: Trademark claims related to infringement and unfair competition (Part A) and Trademark Counterfeit claims, including cybersquatting (Part B).
In the discussion for Part A, the magistrate easily concluded that Parshall willfully infringed Penn State’s federally protected registered trademarks in violation of the Lanham Act and also was liable for trademark dilution in that Parshall selected the infringing marks with the intention of making consumers believe he and his business were affiliated with Penn State.
In Part B, the magistrate also ruled that Parshall’s state trademark registrations should be canceled because the infringing marks were confusingly similar or improperly registered. The court also recommended that Penn State be granted summary judgment on its federal claim under the Anti-Cybersquatting Consumer Protection Act, given that the “undisputed material facts” demonstrate Parshall’s bad faith intent to profit from Penn State’s goodwill in registered domain names confusingly similar to the Penn State marks.
On March 31, 2022, a Pennsylvania district court adopted the magistrate judge’s ruling recommending that Penn State’s motion for summary judgment be granted. Among other things, the court permanently enjoined Parshall from using, selling, or creating any Penn State-related trademarks, ordered the cancellation of certain Penn State-themed state trademark registrations and the transfer to Penn State of any and all domain names that include any portion of Penn State’s marks (as well as Parshall’s main Sports Beer Brewing domain so Penn State could cease operation of that website).
Pursuant to the court’s order, Penn State filed a motion for attorney’s fees on April 28, 2022. Subsequently, the parties filed a joint motion to stay the proceedings, and according to a June 2022 status report, the parties are nearing a settlement of the remaining issues in the case.
