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Source:
http://www.ehow.com/how_10012950_use-licensed-fabric.html
October 7, 2011.

Home > Legal > Communications & Media Law > Do Not Call List > How to Use a Licensed Fabric
How To Use A Licensed Fabric

If General Mills were to license fabric printed with their logo, they could not control sale of replica racing suits. Trademarked characters, logos, slogans and graphics show up on products including fabrics used to make clothing and other articles. The fabric manufacturer will have paid the trademark owner for use of the image, and the selvage (the finished edge of the fabric) may be printed with a statement of who owns the trademark and that it appears under license. No one will attempt to interfere if you make an item out of licensed fabric for personal use. If you try to sell the item, the trademark owner might want a piece of the profits, but a simple disclaimer in advertising may ward off trouble.

Instructions
1 Keep a clear and careful record of your purchase of the fabric, such as a receipt, purchase order or paid invoice. If these documents do not identify the design elements that are licensed, such as by listing "5 yds Disney flannel," take a time-stamped photo of the fabric and keep it with the purchase record. Also keep a piece of the fabric and the selvage that identifies the trademark holder. What's most important is what you won't have in your record: an "assignment" of the license from the fabric manufacturer to you. U.S. trademarks law, 15 U.S.C. § 1060, paragraph a(4), makes it clear that such an assignment would have to be filed in the Trademarks Office by the manufacturer. It is not your responsibility.
2 Title your product to make it clear you do not represent the product as endorsed in any way by the owner of the trademark. An e-tailer that has defended itself in suits over selling crafts made of licensed fabrics suggests using language such as "made from" rather than starting off with the trademarked character or other identifier. You can find the actual trademark and the associated descriptors of the goods that have been registered in the Patent and Trademark Office's Trademark Electronic Search System (TESS) listed in Resources.
3 Display an explicit disclaimer of association with or endorsement by the trademark owner prominently in at least one place in your auction listing or other advertising. Experienced e-tailers suggest you include the phrase "I am not affiliated with or sponsored by" the trademark owner. Print out time-stamped copies of all such listings and file them with your other records regarding the fabric.
4 Stay calm if you receive something like a "cease and desist" notice from corporate attorneys. Send them copies of your records and demonstrate that you understand the law. Call their attention to past cases, in which federal courts required only a disclaimer on the part of the defendants. Having your records in order is the best way to make even big corporations back down.
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