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Source: http://www.tmcnet.com/usubmit/2007/11/17/3102959.htm June 27, 2008. Article has not been altered except to reformat it for easier reading and to remove advertising.

[November 17, 2007] Universities strive to protect brand (Daily Oklahoman, The (KRT) Via Thomson Dialog NewsEdge) Nov. 17--A few years ago, Kimberly Smith was selling her college-theme holiday ornaments at the Oklahoma City An Affair of the Heart craft show. She was surprised by what she saw. "People came up to me -- they saw that I was licensed -- and were asking, 'Have they been through yet?'" said Smith, who owns her own company Picture This! in Oklahoma City. She had no idea what they were talking about -- until she noticed several vendors in nearby booths reaching for their college merchandise. "What they were doing was waiting until (the licensing representatives) went through and pulling out stuff that they didn't have licensed," she said. "I was like, 'Oh my gosh. That defeats the purpose of us who went through and got a license,' and they were purposely being deceitful." What Smith witnessed was something university licensing representatives and the Collegiate Licensing Company -- the nation's oldest and largest collegiate licensing agency -- deal with on a daily basis. Universities are constantly struggling to find ways to protect their licensed trademarks or what they refer to as their intellectual property, especially as technology makes it easier for anyone to become a budding entrepreneur. But where do they draw the line on what artists and crafters can and can't do? Even the experts say there is some gray area. This year's Affair of the Heart show is one example. That weekend of Oct. 26-28, more than 15 vendors filed complaints of theft against Suzanne Staley, OU's director of brand development, and Judy Barnard, OSU's director of brand development, after the two women allegedly went through the event and seized merchandise that contained any reference to their respective universities, accompanied by an off-duty officer from another jurisdiction. Vendors were selling everything from kitchen towels and diaper bags to clothing and other accessories and lost between $150 and $7,000 in merchandise. Some used materials that were already licensed, like fabric or paper. Some used similar OU and OSU color combinations along with the word "Oklahoma" or "Cowboys," but not necessarily an emblem. Most claimed they did not know they were doing anything wrong. Both OU and OSU maintain that the products infringed on university trademarks, but have decided to return the vendors' items if they agree to sign a release statement. Was it infringement? Judgment plays a fairly large role when it comes to trademark infringement of collegiate products, said Heath Price, CLC director of university services. "One of the most common misconceptions from general people in the marketplace or fans or consumers is if it is not a logo, it's not protected," Price said. "We hear that quite often. 'Well, I'm not using just the logo for the Michigan Wolverines; I'm using just the word Michigan Wolverines. You can't stop that.' "And the reality is that on a case-by-case basis, as those are evaluated, if somebody took a rock, and they painted Michigan Wolverines in blue and gold on that rock and went out to try and sell it as a for-sale product, that's protected." Anil Gollahalli, OU assistant general counsel -- which works closely with OU's trademark office -- said even though the university has close to 30 registered trademarks, there are other legal standards that apply. "(OU) does have trademarks on crimson and cream, but the legal standard is one of likelihood of confusion," he said. "So just by changing the shade of the color, if your ultimate intent is to affiliate yourself with the university or somehow evoke images of the university; if it is likely to cause confusion; if it's close; there still is a legal problem." In 2006, a U.S. District Court in Louisiana ruled in favor of OU, along with Louisiana State University, Ohio State University, University of South California and CLC, in a lawsuit against a sports apparel company that sold unlicensed merchandise using the schools' symbols and color combinations. The ruling made it clear that the use of certain university color schemes, even if it did not identify them by name, was still unlawful. When it comes to using materials that already have been licensed to create new products, "that's a little bit of a gray area," Gollaholli said. "As a result of the Affair of the Heart event, we have gone back and examined these to make sure that the right labeling is in place," he said. "The original licensing fabric is generally for personal use. If you want to make a throw pillow or some curtains for your house, you can go buy that fabric, which is licensed, which has paid a royalty. ... The fabric should be labeled to that effect." In light of the Affair of the Heart incident, OU also created a crafters licensing program similar to OSU's, which allows low volume or smaller profit retailers to pay an annual $100 application fee without royalties, Gollahalli said. Price, who previously was the licensing director for Louisiana State University, said CLC typically does not confiscate a product that has been made out of licensed materials, but that could change because of its recent popularity. Crafters who use licensed materials, however, are not the norm, he added. "Most of the time, what we're finding are people who are much more intentional," he said. "They know what they're doing. They're out there for a reason. They're out there to make a few dollars." CLC, which represents more than 160 universities, conducts about 100 enforcement actions a year, often with licensing directors from around the country at high-profile sports events. Seizing property Under Title 21 of Oklahoma Statutes, or the Violation of Trademark Anti-Counterfeiting Act, a person who knowingly and with intent to sell or distribute an item that bears a counterfeit mark can, upon conviction, be guilty of a misdemeanor punishable by a fine of up to $1,000 or imprisonment for up to a year. Under that same statute, an officer is authorized to seize those items that are in violation of the Trademark Anti-Counterfeiting Act. Price said when CLC seizes products, the company always does two things: It has an officer present who is involved in that particular jurisdiction, then interprets the state statutes on how the situation should and could be handled. "You take product when (people) are selling it, when they are truly out there trying to be a business selling a product and when it is infringing merchandise," he said. Merchandise typically is then held for at least six months at the university's campus or at the CLC offices in Atlanta in case an issue arises. If it's tasteful, it is often donated to a charity, and if it's demeaning or derogatory, it's almost always destroyed, Price said. Where do the royalties go? When it comes to generating royalties, OU ranks No. 8 and OSU ranks No. 24 for the top selling universities, according to CLC's fiscal year-end rankings, ending June 30. For the past few years, OU has generated on average about $2.5 million in royalties, Gollahalli said. Last year OSU generated close to $1.15 million, according to the OSU trademark office. But what happens to that money? In most cases, it goes back to the campus. "They're not going into a coach's pocket," Price said. "That's not the intent of licensing royalties. These schools are trying to use these in beneficial ways. Therefore, when you talk to these crafters and you discuss it with them, they typically are more excited to know that in some way, they're giving back to the campus." Each university also sets its own royalty rate. OU's royalty rate on commercial products is 9 percent, which is comparable to fellow institutions, Gollahalli said. Royalty-free licenses include university licenses, often used by student organizations, and promotional licenses, which are related to university programs. At OU, those royalties primarily support operations of the trademark office, and the university's athletic programs, where the trademark office is housed, Gollhalli said. OSU also splits its royalties -- 65 percent goes to the athletic department and 35 percent goes into the general scholarship fun, according to OSU's trademark office. Kimberly Smith of Picture This!, who is in the process of getting licenses from eight more universities, said that royalty doesn't bother her. "Everything they require of you is to protect you as a business person, like making sure you have enough insurance and your product is a quality product," she said. As her business has grown, Smith said she understands why the licensing programs have had to crack down on people who try to profit off the universities -- because it's so easy to get people to buy college products. "People love their colleges," she said. "People laugh that I make Bob Stoops ornaments, like 'Who would buy that?' But that's my No. 1 seller right now. Who would have thought, but people are so passionate about their schools." Licensing your product As a general rule, if you are trying to make a product that is somehow associated with the university or evokes images of the university, it is best to contact the trademark office, said Gollahalli. The three primary types of licenses available through the Collegiate Licensing Company are: -- Standard license: a $500 application fee and royalties -- Local license: a $100 application fee and royalties -- Restricted license: an annual $100 application fee with no royalties Some universities, including OU and OSU, also manage crafter programs on campus, which include a one-time fee and do not seek royalties. Consumers should look for the "Officially Licensed Collegiate Products" hologram label to recognize licensed products. For more information about which license is needed, visit www.clc.com. To see more of The Oklahoman, or to subscribe to the newspaper, go to <http://www.newsok.com>. Copyright (c) 2007, The Oklahoman Distributed by McClatchy-Tribune Information Services.