A Terrible Towel Trademark Tale?

As the NFL season gets underway and the Pittsburgh Steelers set off in pursuit of a seventh Super Bowl title (Pittsburghers used to say “One for the thumb” and now, fans call the city “Sixburgh”; what slogan comes next?), the local press is searching for feel-good fan stories.  One feel-good fan story offers some questions for trademark cognoscenti.

Today’s Post-Gazette features a long story on the Terrible Towel, the internationally recognized symbol of Steelers Nation and sign of allegiance of Pittsburghers everywhere.  If you watch an NFL game featuring the Steelers, whether played in Pittsburgh or elsewhere, you will see thousands of Steelers fans in the stadium twirling yellow terrycloth towels painted with a black “terrible towel” logo, usually whenever something positive happens for the team, sometimes to help rally the team.  (You might also encounter twirling Terrible Towels in family rooms, dens, bars, restaurants, sidewalks, airplanes, shopping malls, the Himalayas, war zones, and symphony halls.)  That’s the Terrible Towel.  To Pittsburghers, the Terrible Towel is not only a signal of team allegiance; it’s become a symbol of the city itself, sort of like lobster rolls in Boston, styrofoam Statue of Liberty headgear in New York, and Rice-a-Roni in San Francisco.

The point of the Post-Gazette story is to remind Pittsburghers everywhere that there is a huge “awww” story here.  The Terrible Towel is a registered trademark.  Actually, there are now lots of TT marks, all of them featuring essentially identical logos, for different products.  Among the earlier registrations is No. 2123428 for a typed drawing, in connection with “towels.”  (The law firm that prosecuted the applications was Eckert Seamans, one of Pittsburgh’s largest and best known, and for many years one of its leading IP firms.)  About ten years ago, Myron Cope, the originator of the TT, assigned the mark to the Allegheny Valley School, a local residential facility serving the disabled.  Myron’s son Danny, who is severely disabled, lives at the AVS.  Royalties from the TT marks have generated millions of dollars for the school.  Each towel costs roughly $7 at retail, and it is something of a rule that Pittsburgh citizenship requires that each household own at least one of them.  My family owns several.

All together now:  Awww.

Here’s the trademark question:  Is the Terrible Towel mark invalid?

Some additional background may help those who aren’t familiar with the full story.  The late Myron Cope, the originator of the Terrible Towel, was a talented and beloved Pittsburgh sportswriter and (later) radio and TV broadcaster.  He also possessed of one of the most distinctive (some would say, annoying) voices in the history of professional sports.  (Some would say that Myron had a face for radio and a voice for the newspaper.  Myron might have said that himself.  In Myron-speak, Double Yoi!)  He developed the Terrible Towel in the mid-1970s, during the first era of Pittsburgh Steelers football success, and despite some bumps along the way (that era’s players didn’t like it, at first), the Terrible Towel became a civic icon.  But neither the team nor the NFL owned whatever rights attached to the Terrible Towel.  It was Myron’s thing.

In fact, from the beginning, Terrible Towels authorized by Myron have always included the phrase “Myron Cope’s Original” above the phrase “The terrible towel.”

My quick-and-dirty review of the Trademark Office registration records suggests that the Terrible Towel marks were registered in the mid-1990s in the name of the Allegheny Valley School.  It appears that Myron assigned whatever common law rights had accrued by then to AVS, and AVS registered the marks.  Because the assignment occurred before applications to register the marks were filed, there doesn’t appear to be any evidence in the Trademark Office system of assignments of goodwill by Myron in connection with assignments of common law rights.

At least the earliest marks are now covered by certificates of  incontestability.

There it is.  Are the marks invalid?

Possibility one:  This is a clear case of a registered mark serving as a merchandising right, where the goodwill associated with the mark does not refer to an independent good or service (or refers only nominally to a good or service, in this case: towels), but instead either refers to the mark itself or refers to goodwill associated with an institution, often including its fans and/or alumni.  Trademark law and trademark lawyers are divided over whether these sorts of marks are valid.  It is inconceivable to me that a court would actually sustain a challenge to the Terrible Towel on this basis.  Remember:  Awww.

Possibility two:  Myron Cope’s assignment of the Terrible Towel mark to the Allegheny Valley School constituted a naked license, that is, was unaccompanied by any transfer of goodwill or any retained power to supervise production of Terrible Towels of consistent quality.  If the transaction constituted a naked license, then the mark may have been abandoned then and there.   AVS might have rights in the mark dating from its registration, but its priority wouldn’t extend back to Myron’s use in the mid-1970s.  (The registration records refer to a first use in commerce in the mid-1990s.)  Of course, AVS’s rights would be subject to the merchandising right argument above.

That leads me back to the Post-Gazette story today.  Is there a story behind the story?  The connection between the school and the towel is not well known in Pittsburgh, though it got some attention during the 2007 Super Bowl and again during the 2009 Super Bowl.  Is the AVS trying to do some PR on its own behalf, to build the case in the public mind that the Terrible Towel signifies goodwill that’s distinct from the mark and the towel itself?

Suppose (to conclude) that I were to do something that no self-respecting Pittsburgh Steelers fan ever would do (remember: awww): manufacture and offer for sale “counterfeit” Terrible Towels.  Yellow terrycloth towels with black lettering that said “The terrible towel.”  I offer those towels for sale today, in Pittsburgh’s Strip District.  That’s the market district near Downtown where Pittsburghers gather on weekends to stroll, buy food, drink coffee, and buy fan gear (Steelers, Penguins, and bargain-basement “we’re giving it away” Pirates stuff) from street vendors.  AVS, via Eckert Seamans, sues me for trademark infringement, alleging both infringement of a registered mark and infringement of common law rights.

This is perfectly hypothetical hypothetical.  But what result?