The following article is a guest contribution by Benjamin Haynes, Esq. Haynes is a former Division 1 Basketball Player at Oral Roberts University and currently practices law in the State of Florida.
Background: Daniel Moore has been a famous sport artist for over 25 years. Most people are familiar with the work he has done for the University of Alabama. He has been producing historical football paintings of the Alabama football team since 1979. Moore had been painting for the school for 12 years before the University, in 1991, requested a licensing agreement to be signed between Moore and the University. There were a total of a dozen licensing agreements entered into between the parties from the years of 1991 to 1999. These licensing agreements granted Moore permission to portray the University’s uniforms, including the jersey and helmet designs and the crimson and white colors.
The first conflict between the parties arose in 2002, when the University informed Moore that he needed the University’s permission to depict the University’s uniforms because they are trademarked. Moore believed that he did not need permission to paint the historical events. Even though this disagreement arose, Alabama continued to sell Moore’s unlicensed work in campus stores, as well as display Moore’s work across campus.
However, in March of 2005, the University sued Moore in the Northern District of Alabama for breach of contract, trademark infringement, and unfair competition. Specifically, the University alleged that 1) Moore had breached several terms of his prior licensing agreements, and 2) Moore’s paintings, prints, calendars, mugs and other objects violated the Lanham Act by infringing the University’s trademark right in its football uniforms.
Procedural History: In 2009, the district court granted summary judgment in favor of Moore with regard to paintings and prints. However, the district court granted summary judgment to the University with respect to calendars, mugs, and other “mundane products.” Both parties appealed the decision, and on June 11, 2012, the appellate court ruled on the appeal.
The appellate court divided its opinion into the two categories, 1) the arguments of the respective parties with regard to a category of objects composed of paintings, prints, and calendars, and 2) arguments of the parties with respect to the objects composed of mugs and other “mundane products.” An in depth analysis of the courts reasoning is as follows:
I. Paintings, Prints, and Calendars.
1. Licensing Agreements: Ambiguity and Course of Conduct
First, the University believed that the prior licensing agreements from 1995- 2000 prohibited the use of unlicensed portrayals by Moore. The University’s main argument with regards to the licenses was that Moore was required to get permission in order to use the “licensed indicia” listed in the license. This section of the license was very broad and included a wide range of criteria. For example, the licensed indicia included the names, symbols, designs, and colors of the University. Further, the indicia included an Appendix B section which listed items and phrases such as “Roll Tide”, “Alabama”, etc. This section included the colors “Crimson PMS 201” and “Gray PMS 429” as well.
However, the court found that the design and colors of the uniforms were not specifically mentioned anywhere in the licensing agreement, or the appendix. Further, the court found that this language in the licensing agreement was very ambiguous on this issue.
While there was undoubtedly an ambiguity in the licensing contract, that alone was not enough for the court to rule against the University on this issue. Most courts will look at the course of conduct in order to determine the true intent of the parties with regard to ambiguity in a contract. This court used the following standard, “Where the contract is ambiguous to such a degree as to question the parties intent…. courts should examine the course of conduct and actions of the various parties….the construction placed upon a contract by the parties thereto, as shown by their acts and conduct, is entitled to much weight and may be conclusive upon them.” Am. Honda Motor Co. v. Williams & Assocs., Inc., 431 S.E.2d 437, 443 (Ga. Ct. App. 1993).
Thus, looking at the evidence established, the court found numerous instances where the University did not require Moore to seek permission to portray the University’s uniforms. For example, Moore sold over $12,000 worth of unlicensed calendars in Alabama’s campus store. Also, in 2001, the University asked Moore to complete a sketch on live television during a nationally televised football game. This sketch was unlicensed. Throughout all of these incidents, Alabama never sought to recover royalties on these unlicensed items, until they filed the law suit.
Therefore the court found, and rightfully so, that the parties’ course of conduct did not intend that Moore needed permission every time he sought to use the University’s uniforms in the content of his paintings, prints, and calendars.
2. Trademark Claims: Infringement, Likelihood of Confusion, First Amendment
The University’s next argument was that Moore infringed on Alabama’s trademark because the unlicensed use of the football uniforms created a “likelihood of confusion” for the buyers. Specifically, the University argued that the buyers would be confused that the University endorsed the product. The term likelihood of confusion is a term that the court uses in determining whether a trademark has been infringed upon. Alabama issued a survey which they stated established sufficient evidence to establish a likelihood of confusion.
The court found that Alabama’s trademark was a weaker mark and had only threatened to establish some likelihood of confusion. Alabama distributed a survey in order to prove that there was confusion between Moore’s unlicensed product, and the endorsed products of the University. The court stated that “the survey lacks strength because of its manner of taking, the form of the questions, the nature of the surveyed customers, and the number of responders. It involved only a single print, and the questions are loaded with suggestions that there is a “sponsor” other than the artist.” Id. Therefore, the survey was not sufficient to establish this burden of showing a likelihood of confusion.
While the court found that the likelihood of confusion argument had little merit, the court found that the First Amendment interests involved, specifically artistic expression, heavily outweighed any customer confusion.
When the court is determining whether one’s first amendment rights should or shouldn’t prevail over customer confusion, the court has implemented a balancing test. This balancing test was established in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). The test states, “in general the (Lanham) act should be construed to apply to artistic works only where the public interest in avoiding consumer confusion outweighs the public interest in free expression.” Id. Further, the court found that a trademark will not violate the Lanham Act “unless the use of the mark has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless it explicitly misleads as to the source or content of the work.” Id.
The court found that Moore’s use of the uniforms in his content was artistically relevant to the expressive underlying works, and also that there was no misleading as to the source of the content of the work.
Holding: Therefore, because there was no violation of the licensing agreement, nor was there trademark infringement found by the court, the appellate court affirmed the district court’s decision with respect to the paintings and printers, and reversed with respect to the calendars.
II. Mugs and Other “Mundane Products”
1. Licensing Agreements and Trademark Infringement: Lack of Evidence, Waiver, Acquiescence.
Once again, the University claimed licensing agreements controlled with regards to the mugs and other “mundane products”. However, the court established that the licensing agreements were ambiguous with respect to this issue as well. Therefore, the court looked at the course of conduct between the parties once again.
The court came to the conclusion that there was not enough evidence to resolve this matter. For instance, the court found that Moore had only produced three sets of mugs in his thirty year tenure. One of those Moore asked permission to create, but on the other two he did not.
Holding: Since there was not enough evidence on this issue the appellate court reversed the grant of summary judgment to the University on the licensing issue.
Moore’s last argument was the defense of acquiescence. The best way to describe what acquiescence means is to compare it to the doctrine of laches. Laches is a defense which highlights passive consent by a party, where acquiescence highlights active consent. Therefore, the court looked in this issue to see if there was active behavior by the University during the time Moore was portraying these uniforms.
Holding: However, like the licensing issue, the court couldn’t find enough evidence on the record to make a determination as to the acquiescence defense. Therefore, the court remanded this issue for the district court.
The court found through ambiguous contract language, course of conduct between the parties, and the importance of first amendment rights, that Moore was entitled to his royalties for the paintings, prints, and calendars and did not infringe upon Alabama’s trademark. The remaining issues as to the mugs and other “mundane products” are still lacking sufficient evidence to decide on a motion for summary judgment.
This should be a lesson to Universities who draft contracts in the future. The lesson being that you can never be too specific in your contractual language. Alabama should have taken the time to think of every scenario that could have arisen and drafted against such possibility. Courts will almost always find against the drafter of a contract on an issue of ambiguity, as they did in the case of Daniel Moore.