Intellectual Property Attorney

March Madness Brings Increased Licensing Revenues

Every year in March, more than sixty U.S. college basketball teams are selected to play in the NCAA Tournament, the championship of college basketball. For approximately three weeks, teams battle each other in a winners advance/losers eliminated format. One of the most compelling aspects of the tournament is that small colleges with unsung basketball programs compete against large universities with well-established basketball programs, often resulting in upsets and the emergence of “Cinderella” teams that advance far beyond expectations. The spectacle has become known as “March Madness,” due in large part to unpredictable results and last-second upsets.

Especially for smaller colleges and universities, the NCAA Tournament is about more than simply basketball. It is also about increased revenues from licensed merchandise. As reported by Forbes, sales of collegiate retail items were $4.62 billion in 2012, second only to Major League Baseball in total licensing revenue. The publicity that the tournament brings results in increased sales of licensed merchandise such as clothing and souvenirs. For example, in 2006, George Mason University’s licensing revenue increased by 143% when it surprisingly reached the semifinals of the tournament.

This year, Florida Gulf Coast University (“FGCU”) of Fort Myers, Florida became the first team in NCAA history to advance to the “Sweet Sixteen” (i.e., final sixteen teams) after being seeded fifteenth out of sixteen teams in its region. Until now, the school was relatively unknown in basketball circles. Classes only began in 1997, and the school did not have a men’s basketball program until 2002. The attention and media coverage that the school received as a result of its tournament appearance resulted in merchandise sales that far exceeded previous levels – $200,000 worth of licensed merchandise this March compared with $20,000 in March 2012.

The increased exposure that FGCU has received has also resulted in potential trademark disputes over the term “DUNK CITY”. The term refers to the basketball team’s high-paced offense that yielded 144 dunks this year. Within days after FGCU advanced to the Sweet Sixteen, trademark applications began to be filed for the term. A review of the U.S. Patent and Trademark Office’s database reveals five pending trademark applications that incorporate the term “DUNK CITY” for such items as apparel, restaurant and bar services and sports camp services, none of which appear to be related to FGCU. All of these trademark applications were filed since the last week of March by Florida-based Applicants on an intent-to-use basis (i.e., the Applicants have not yet begun to use the trademark in commerce). Thus, there will likely be disputes going forward regarding which party or parties have the legitimate right to use the trademark. Incredulously, some have even suggested that the trademark rights should belong to the University of Southern California, who hired FGCU’s basketball coach after the team was eliminated from the NCAA Tournament.

Because trademark rights are derived from use in commerce, FGCU, which has previously sold merchandise bearing the “DUNK CITY” trademark, will have priority over the other Applicants at least with regard to the goods and/or services that it has sold bearing the mark. It is possible that one or more intent-to-use Applicants may claim legitimate rights to, for example, “restaurant and bar services” and/or “sports camp services,” on the grounds that FGCU has not used the “DUNK CITY” trademark in connection with these services. It appears, however, that FGCU originated and popularized the “DUNK CITY” trademark. Thus, the intent-to-use Applicants may be considered mere interlopers attempting to take advantage of the sudden popularity of FGCU and its basketball program. Should these disputes proceed to Court, FGCU would have an advantage in a trademark infringement litigation to enforce its rights, because Florida courts place special emphasis on whether the alleged infringer has adopted the disputed trademark in bad faith. Here, a compelling argument could be made that the intent-to-use Applicants have adopted their trademarks with bad faith intent to profit from the goodwill created by FGCU. For all of these reasons, we expect that FGCU will ultimately prevail in these disputes.


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