As seen originally on ATL Redline.
The last time I watched professional wrestling, the WWE was the WWF and all the cool kids were crossing their arms over their crotches and yelling, “Suck it!”
Today, such affinity for D-Generation X would likely lead to some sexual assault charges, but at the time every young male was obsessed with Triple-H, Stone Cold Steve Austin and the Rock. The WWE has maintained its relevance since my adolescence as the organization has gone public on the New York Stock Exchange with annual revenues north of $500 million.
Last year, live event merchandise sales accounted for $19.4 million, or roughly 4 percent, of the WWE’s total revenues. Accordingly, it is no wonder that the WWE recently fought all the way to the Fifth Circuit to shield those millions of dollars from unauthorized merchandise sellers.
In WWE, Inc. vs. Unidentified Parties, the WWE sought to seize merchandise from unidentified “fly-by-night” sellers who allegedly would hawk unlicensed products outside of venues hosting WWE events. Despite WWE’s stacked legal team, they lost at the District Court level, because the Court would not order seizure and issue an injunction under the federal Trademark Counterfeiting Act against unnamed merchandise sellers.
However, the WWE appealed and prevailed in the Fifth Circuit last month with a finishing move that other sports leagues and teams will likely imitate.
The key in the WWE’s victory was that the Court took notice that the company did not license any third parties to sell merchandise at live events. Rather, it sells direct to consumers. Therefore, it is quite easy for the WWE to identify knockoff gear and shut counterfeiters down immediately.
As the Court acknowledged, “WWE faces a real threat from such counterfeiters who, upon detection and notice of suit, disappear without a trace and hide or destroy evidence, only to reappear later at the next WWE event down the road. This is the very nature of the ‘flyby-night’ bootlegging industry.”
The Fifth Circuit judges concluded that WWE should have the right to seize counterfeit merchandise since any non-WWE seller is obviously unlicensed and unauthorized. Although, it is somewhat problematic to actually carry out seizures. Imagine a WWE goon drop-kicking a t-shirt vendor in the parking lot.
Ignoring the practical details of the decision, WWE’s victory extends beyond the squared circled, though.
Any other league, band, or performer that wants to combat counterfeit merchandise can now point to this decision when it wants to seize counterfeit goods as long as they do not license any other entities to sell merchandise at live events. This decision, in effect, incentivizes leagues and entertainers to maintain exclusivity on event merchandise sales while making it riskier for counterfeiters to set up shop in close proximity to major events.
Legally, the Fifth Circuit got this one right. Practically, however, what is good for Vince McMahon’s bottom line is not so great for fans’ wallets.