Trademark issues frequently arise in the context of professional sports. Such issues may surface, for example, when teams relocate to different cities and new teams (and their potential fans) want to use the "old" team name. This occurred in a dispute between the Canadian Football League (CFL) and the National Football League (NFL).

 

Background
In 1984, the NFL permitted the "Baltimore Colts" to move to Indianapolis, where the team was renamed the "Indianapolis Colts." Nine years later, the CFL granted a franchise to a Baltimore team (at the time, four CFL teams were American). The CFL named this new team the "Baltimore Colts." After the NFL threatened legal action, the CFL changed the team's name to the "Baltimore CFL Colts," and subsequently launched media advertisements, licensed merchandise, and took steps in preparation for the beginning of the football season.

 

Thereafter, the Indianapolis Colts and the NFL sued the new CFL team in federal court for trademark infringement based on misappropriation and consumer confusion. Although rejecting the misappropriation claim, the district court did issue an order preventing the new team from using the name "Colts," "Baltimore Colts" or "Baltimore CFL Colts" in connection with the playing of professional football, football game broadcasts, or the sale of merchandise, based on the claim of consumer confusion.

 

In issuing the order, the court reasoned that purchasers of "Baltimore CFL Colts" merchandise would likely think that the new team was an NFL team somehow related to the Indianapolis Colts. The new CFL team and its owner appealed the court's decision.

 

Trademark Law: The Defense of Abandonment
In its appeal, the new CFL team argued that the Indianapolis Colts had "abandoned" the "Baltimore Colts" trademark. Generally, if a party can show that a trademark has been abandoned, that party is free to use the mark without liability to the trademark holder. In order to successfully use the affirmative defense of abandonment, the party accused of infringement must prove both of the following — that the party claiming trademark infringement:

Name Change Does Not Break Team's Continuity
Although neither court denied the fact that the NFL team had "abandoned" its "Baltimore Colts" mark, the U.S. Court of Appeals for the Seventh Circuit held that the abandonment did not break the continuity of the team. Rather, the Colts—despite its relocation to a new city— remained the same team, with the mere addition of a geographical component in its name. In other words, although the Colts team had effectively abandoned its old mark, it continued to use a mark confusingly similar to the abandoned mark.

 

Primarily for this reason, the court held that the Colts' abandonment of the old mark did not entitle the CFL to use the Colts' name and possibly confuse fans regarding the identity, sponsorship or league affiliation of the new team.

 

Name Confusion Creates Loss in Revenues
In finding that "Baltimore CFL Colts" was confusingly similar to "Indianapolis Colts," the court offered the following examples to illustrate the NFL's and Indianapolis Colts' potential loss of revenue due to consumer confusion:

Order Stands Preventing CFL Use of "Baltimore CFL Colts"

Upon considering the arguments in the case, the Seventh Circuit noted that the aim of determining the permissible use of a mark is to strike a balance among new sellers wishing to use the mark to sell their product, existing sellers already using the mark, and the consuming public. On one hand, new sellers and consumers have an interest in an "arresting, attractive, and informative name," which will help a new product to compete in an existing market. On the other hand, existing sellers and consumers have an interest in being able to have the consuming public know "exactly what they are buying," perhaps saving on additional marketing and consumer investigation costs.

After reviewing survey evidence offered by both parties, the court ultimately concluded that the use of the name "Baltimore CFL Colts" for its team and merchandise would likely confuse a substantial number of consumers. As such, the Seventh Circuit affirmed the district's court order that prevented the CFL from using the name.