If we could impart one piece of advice to every client who walks through our (proverbial) doors, it’s this: as business owners, you must always consider the legal considerations, as well as the business considerations of your endeavor. As lawyers, we admittedly try to simplify laws to be as black and white as possible for our clients. At the same time, as entrepreneurs, we know that there’s always a little bit of gray when business considerations come into play. And sometimes, that gray area can provide you with a legal loophole that can propel your business to the next level. 

Ironically, three high-profile women behind Superbowl rivals the San Francisco 49ers and Kansas City Chiefs spotlighted the fine line between creativity in entrepreneurship, legal boundaries, and leveraging business opportunities beautifully this NFL season: Specifically, Kristin Juszyck: the talented designer who created custom jackets for Taylor Swift and Brittany Mahomes at a recent Chiefs game. Brittany Mahomes shared a photo of herself and Taylor wearing the jackets, and the photo went viral. As did the demand for Kristin’s jackets. The demand for these jackets increased the minute Taylor Swift and Brittany Mahomes went on air. At the same time, a slew of trademark questions arose. First, even the announcers themselves were clearly confused about who made the jackets- they clearly showcase the Nike logo, leading many to believe, at first, that these were jackets made by Nike. Once it became clear that Kristin Juszyck made them, her platform was flooded with tens of thousands of requests. But did she have a right to make (or “upcycle”) these jackets in the first place? Even if she did, can she legally sell them?

And before we dive in, even if you believe you have no interest in the subject matter or individuals at play: if you have a business, creative or not, you likely do. This case study presents an example of how a business owner listened to consumer needs, got creative, leveraged a legal loophole, and created explosive growth for her company. 

Upcycled clothing

Did these creations constitute “upcycled clothing”, and even if they did, would that keep Kristin out of legal hot water?

At the heart of American trademark law is something called the Lanham Act, which  governs how trademarks are used and protected in the United States. This law is primarily in place to prevent consumer confusion and protect brand identity. However, the law does, at times (not all the time) allow for a public policy-based loophole, known as “upcycling”. The public policy argument behind this potential loophole is that it allows for sustainability and creativity (generally speaking). Here is a great example of upcycling. 

Under US trademark laws, brand identifiers (logos, slogans, brand names) cannot cause a “likelihood of confusion” for the consumer. Establishing who has the right to shut down another user of a mark (such as a logo), is a reason why it is critical to register the trademark on a federal level. Federal registration allows the owner of the registered trademark to shut down any potentially infringing behavior that could dilute a brand. According to the United States Patent and Trademark Office,  “trademark infringement is the unauthorized use of a trademark or service mark on or in connection with goods and/or services in a manner that is likely to cause confusion, deception, or mistake about the source of the goods and/or services.”

So, you can see why the upcycled clothing doctrine often treads a fine line under US trademark laws- defining that line between dilution and creativity is incredibly nuanced. In this case, the fact that even the announcers of the game, and many viewers believed these were Nike jackets caused immediate confusion, and potentially hot water for Kristin. 

HOWEVER,

We must always take into account the business considerations. In this case, the discussion and virality of the shots of Brittany and Taylor in jackets that contained a Nike logo likely provided Nike with an element of PR (a point we’ll come back to later). 

So, given the fact that whether or not a defense of “upcycling” would have to be considered on a case by case basis for Kristin, what other defense could she have? In other words, how did the risks of this potential intellectual property infringement not immediately outweigh the rewards?

The First Sale Doctrine

The “First Sale Doctrine” generally allows for the resale of items containing a trademark after the items have been released in the market by the trademark owner. Generally speaking, under this doctrine, trademark protection is exhausted after a branded good enters the stream of commerce through a first sale. Meaning, a subsequent sale could legally occur without the original trademark owner’s permission, barring two exceptions:

• The first sale doctrine does not apply when the item that is resold is “materially different” from the one initially sold by the trademark holder (the “material difference exception”), or 
• If the sale misrepresents itself as though it were any authorized sale of the actual trademark owner.

While there are many factors that play into a determination of the applicability of those exceptions, the “materially different” exception works in Kristin’s favor- these jackets obviously aren’t jerseys (and contained the Nike logo from a jersey), but did contain the Nike logo elsewhere, which likely could have worked against Kristin. After all, even the announcers mistakenly referred to them as “Nike jackets”. I say “likely”, however, because at the end of the day, the business considerations likely dictated the outcome of this case.

The law and reality don’t always align

Without taking that sentence out of context, let me be clear about one fact: there likely was some sort of deal in place between Nike and Kristin. After all, Kristin’s husband, Kyle Juszczyk of the 49’s, very proudly and loudly made it known through social media that his wife was the creator of these jackets, not Nike. Without inferring too much, I have a hard time believing that their attorneys, and even the 49’s legal counsel would have let the Juszczyks blindly run down such a dangerous path, so publicly. 

(As a quick aside, I do have deeper questions about whether or not a deal did exist, and what the terms of said deal were. Kristin was very vocal about the fact that these jackets were “gifted”; clearly an attempt to clarify that these upcycled jackets were not a part of the “stream of commerce” or “used for commercial purposes”. However, from a practitioner’s perspective: whether or not she was selling the jackets is not the end of the analysis when it comes to whether or not something is considered to be “commercial use”. Ever. It is merely a contributing factor, and a misunderstanding that I see land business owners in hot water daily. It suggests a personal, non-commercial use, which might be viewed differently in the eyes of the law, though it’s not a definitive safeguard against infringement claims). 

At the same time, it’s important to look at the broader implications of the PR behind Nike’s inaction. Nike could have very well had a clear intellectual property violation claim. However, from a business perspective, taking action against arguably three of the most popular women currently associated with the NFL likely would not have played out well in the court of public opinion. From a deeper business consideration, the virality of these jackets made it clear that demand was high. No strategic business is going to view such a scenario as purely black and white- there were clearly shades of gray, and potentially a deal to be done. 

Whether or not a deal existed between Kristin and Nike isn’t really the question to be asking: the real question is:

Can she leverage this powerful negotiating stance into an even greater opportunity for her company? If so, how?

In fact, she did 

Today, news broke that Kristin Juszczyk reached a licensing agreement with the NFL, allowing her to legally sell her jackets containing NFL logos. This is a very impressive licensing deal, as the NFL has a long and storied history of active protection of its intellectual property. 

Again balancing our legal and business interests; legally, she will be in the clear to use NFL logos on her apparel (no word on Nike yet; however, the publicity surrounding this announcement further lends to the assumption that a deal was in place). 

At the end of the day, engaging in a legal battle against the court of public could trigger a public relations backlash, potentially causing more harm to a brand than the infringement itself. The way in which a company protect its legitimate intellectual property interest must give weight to both business and legal considerations. A heavy-handed, “black and white” approach likely would not have served Nike well. 

At the same time, if you’re playing in the “gray zone” of intellectual property rights as you’re building your business, this case highlights the necessity for entrepreneurs and creative to understand the parameters of intellectual property law. You have to know the boundary lines so that you know when (or if) you’re toeing the line. With that, never underestimate the power of utilizing intellectual property to propel your business to even new echelons- by balancing the scales of legality and business opportunity, this case emphasizes the importance of considering the broader business and reputational impacts of legal decisions. 

This serves as a great reminder for our clients: this serves as a compelling reminder: navigating the legal landscape requires not only a deep understanding of the law but also a keen sense of business acumen and public perception.