American Needle Victorious at Supreme Court But Loses Trademark Infringement Jury Verdict in Dallas

Classic Ink, Inc., owner of Classic Sports Logos brand apparel line and rapidly growing trademark licensing firm, secured a major legal victory in the U.S. District Court for the Northern District of Texas against American Needle, Inc., and its Red Jacket apparel business on Aug. 6, 2010. After a five-day trial, the seven-member jury returned a unanimous verdict finding American Needle and its Red Jacket apparel business infringed Classic Ink’s trademark rights under the U.S. Trademark laws, including “Tampa Bay Rowdies”® and “Chicago Sting”® marks. The Dallas jury also confirmed the validity of Classic Ink’s trademarks to its “retro” sport team marks and logos. An injunction prevents American Needle from any further infringing sales, and American Needle has indicated that they would comply with any Court-ordered injunction by stopping future sales of the accused products.

Classic Ink, Inc. is the owner of U.S. Trademark Registration No. 2,755,164 and U.S. Trademark Registration No. 3,264,260 to “Tampa Bay Rowdies”® and “Chicago Sting”®. In early July, 2009, American Needle was found to be marketing and selling infringing apparel items having those same infringing marks under its Red Jacket clothing brand. Classic Ink requested that American Needle stop its use of the Classic Ink trademark rights, but American Needle did not respond to those requests. Classic Ink, Inc. then filed a trademark infringement lawsuit in August 2009.

Readers may recall that just a few months ago it was American Needle that celebrated an important win, with a win over the National Football League at the United States Supreme Court. See American Needle v. National Football League.  In that case the National Football League, which consists of 32 separately owned professional football teams who each own its own name, colors, logo, trademarks, and related intellectual property, formed National Football League Properties (NFLP) to develop, license, and market that property. At first, the NFLP granted nonexclusive licenses to American Needle to manufacture and sell team labeled apparel, but then in December 2000, granted an exclusive license to respondent Reebok International Ltd. to produce and sell trademarked headwear for all 32 teams. When petitioner’s license was not renewed, it filed this action alleging that the Reebok agreement violated §1 of the Sherman Antitrust Act. The District Court and the Court of Appeals sided with the NFL because they argued they were incapable of conspiring as required by §1 of the Sherman Act because they were a single entity. The Supreme Court ruled that the concerted action was not categorically beyond the reach of §1 of the Sherman Act.

According to a press release issued regarding the case, during the progression of the case and at the jury trial, American Needle took the consistent position that U.S. trademark laws did not apply to its business and its infringing conduct.

“Essentially, American Needle took the position that it was ‘above the law,’” said Classic Ink litigation counsel D. Scott Hemingway of Hemingway & Hansen, LLP in Dallas, Texas. On May 24, 2010, American Needle obtained a favorable ruling against the National Football League (NFL) at the U.S. Supreme Court. American Needle successfully argued to the Supreme Court that the NFL was “not above the law.” “American Needle has obviously taken some strategies right out of the NFL’s playbook in how they dealt with Classic Ink’s infringement claims,” Hemingway said, “but no one is above the law, including American Needle — they should know that from their dealings with the NFL.”

“This is a tremendous validation of our Classic Ink trademark portfolio, and it means a great deal to Classic Ink and its licensing partner, BioWorld Merchandising, Inc.,” said Jeff Henderson, the Vice President of Classic Ink, Inc.

The Classic Sports Logos licensed products are manufactured and sold under license by BioWorld Merchandising, Inc. The licensed products include shirts and hats bearing Classic Ink’s registered “retro” sports marks. BioWorld Merchandising, Inc. of Carrollton, Texas supplies licensed and private label products to retailers, such a Wal-Mart, JCPenney, Target and Kohl’s department stores, and BioWorld’s licensed products include such names as DC Comics, Sesame Street, and Corona beer.

Classic Ink, Inc. is also attempting to stop other infringing uses of their trademark rights, such as the trademark infringement by the newly formed “Tampa Bay Rowdies” soccer team. The “Rowdies” team was formed in Tampa Bay by the Citrus Sports Group and Citrus Ventures. All those parties are named in a parallel trademark infringement case filed by Classic Ink, Inc. in the U.S. District Court for the Northern District of Texas. According to the Complaint, without proper authorization, the Tampa Bay Rowdies soccer team adopted the team name “Tampa Bay Rowdies,” and began selling apparel items bearing Classic Ink’s registered trademark in direct violation of its registered rights.

“Like American Needle, the “Rowdies” soccer team is also ignoring Classic Ink’s requests to stop all their continued infringement. I guess they just don’t think we are serious about getting them to stop their violations of the law,” said Hemingway. “We are going to shut down these infringers one by one until the market starts to respect our intellectual property rights.”

As with any form of intellectual property right, it is valuable only if it is enforced.  Trademarks, however, are particularly fragile because they represent the goodwill created by the trademark owner.  As such, any infringement of a trademark should be taken seriously and efforts made to have unauthorized infringing uses stopped.