Licensing an issue for local businesses, Southeast Greeks
You may see the letters around campus and on T-shirts and think nothing of them, but behind the scenes of creating Greek apparel, there’s a whole world of licensing involved with intellectual property.
Per city policy, businesses in Cape Girardeau must be licensed through the city of Cape and Cape County, as well as the state of Missouri, to legally operate.
This licensing procedure is accessible on government websites.
However, licensing for businesses that participate in the sales of Greek apparel is less widely known and seems to have become somewhat of a gray area, especially when dealing with new businesses and the emergence of online vendors.
Unlicensed vendors are not paying royalties, which are payments made by the licensee to the licensor in exchange for the right to use intellectual property. Additionally, these vendors can compromise the reputation of the organization and its members.
Southeast is part of a trademark licensing program, as are many Greek organizations in order to protect their trademarks and avoid the risk of losing them or having them infringed upon.
To help manage the use of these organization’s trademarks, the organizations partner with Affinity Licensing.
Associate Vice President for Student Life Bruce Skinner said the company serves as the licensing agency for all Interfraternity Council (IFC), National Panhellenic Conference (NPC) and some National Pan-Hellenic Council (NPHC) organizations on Southeast’s campus.
However, Skinner explained the partnership is not something that happens within the university but rather functions as an outside partnership between the national organizations and Affinity.
“Their national headquarters — who owns the trademark, who owns the crest, who owns the logo, who owns the name — signed a contract with Affinity consultants and told Affinity, ‘You go out now and safeguard our trademark, you go out now and make sure that our brand standards are being met,” Skinner said.
Students participating in Greek life at Southeast in 2018 made up roughly 19% of the campus population, according to semo.edu. Of that number, many are also involved in other campus organizations and required to wear their Greek organization’s letters during certain events.
Several businesses in Cape Girardeau sell Greek merchandise. According to Brooke Stites, a representative from Affinity, only one out of the four vendors who sell Greek apparel in town are licensed.
To become licensed and maintain licensing through Affinity, there are a variety of requirements with which the businesses must comply.
Some of the major requirements include businesses submitting every design for approval that contains a fraternity or sorority trademark, so Affinity can be sure it meets their clients' brand standards and doesn’t have any inappropriate content. Vendors also have to pay royalties; every quarter, business owners have to report their sales and pay a royalty on any sales.
Another requirement is the business must maintain liability insurance, which provides the insured party with protection against claims resulting from things like injuries and damage to people or property.
Skinner said he thought within the last three years, Affinity and the national organizations were seeing infringements happen in larger cities, so they started to expect a higher level of enforcement from smaller cities, such as Cape Girardeau. He said this “caught chapters and vendors off guard.”
Some vendors in Cape stopped selling Greek apparel because they didn’t want to become licensed. Skinner used the example of Howard’s Athletic Goods, a long-time seller of Greek merchandise that stopped well ahead of its closure in summer 2019.
Imagine That Boutique, located in West Park Mall, has a licensing contract through Affinity granting the company the right to use the trademarks of Greek organizations and follow the guidelines for selling branded items.
Attempts to reach Imagine That Boutique owners by phone were not returned by the time of publication.
Stites said she was aware of three non-licensed businesses in Cape Girardeau, but declined to identify two because they are in the process of becoming licensed. She added it is most likely these businesses were not aware of the Greek organizations' trademark rights.
However, she was able to identify one of the businesses due to previous licensing issues and breaches of contract.
Stites confirmed Threadz in downtown Cape Girardeau is one of the three unlicensed vendors in town. The business has been a popular choice among Southeast students for Greek apparel over the years.
In early 2018, several Greek headquarters notified their members or chapter leaders through email to refrain from purchasing branded items from Threadz due to breaches in contract until the business obtains the proper licensing.
According to Stites, Threadz still does not have the proper licensing and despite numerous attempts and conversations, the business remains unlicensed.
Seabaugh denied claims that her business is unlicensed and said Threadz is licensed to sell Greek merchandise through a Limited Liability Company (LLC), which is a business structure combining the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. Seabaugh said much of the confusion surrounding licensing with Affinity stems from the switch to an LLC.
Despite these claims, Stites said Seabaugh has made no efforts to communicate with Affinity about licensing through her LLC or becoming licensed through Affinity again.
Seabaugh declined to disclose the name of her business’ LLC for “privacy purposes.” However, information available to the public on the Missouri Secretary of State’s website identifies Seabaugh as a registered agent for Threadz115 LLC, and the business’s address is 115 S. Main in Cape Girardeau. Threadz is located at that same address.
Greeklicensing.com is a search engine, which Affinity keeps updated in real-time, to inform members which businesses near them are licensed through their organization. A search revealed no licensing agreements exist for the majority of Greek organizations at Southeast with either Threadz or Threadz115 LLC.
When businesses remain unlicensed, the process by which Affinity goes through to rectify those situations actually affords the business some leeway.
“We have a series of communications — we start out very friendly in terms of making sure that the company knows about the organization's trademark rights, that they understand their obligation to the license and they want to use those trademarks,” Stites said. “And then, if for whatever reason, our initial communication doesn't get a response from the vendor, or they don't either become licensed or stop using the trademarks, then we certainly escalate the communication.”
If there is no progress made by the business to rectify the licensing issue, Stites said the final step is to send the business a cease and desist letter.
According to Stites, each Greek organization has policies that require chapters to patronize licensed vendors for branded items. She said their clients use a variety of methods to educate their chapters about their policies, including articles in their publications, presentations at leadership conferences, officer contracts and chapter consultant visits.
In instances of trademark infringement, Affinity must communicate the violation to its clients and then decide what they would like to do moving forward and how they want to communicate the information to their chapters.
Stites said each organization may handle the infringement differently, however, if the headquarters of an organization notifies a chapter of the violation and the chapter fails to comply, in some cases, chapters who use an unlicensed business are ineligible for national or international awards.
“[Awards] affirms that what they're doing has value for their members,” Skinner said. “And it shows to their alumni, shows to the campus community, it shows the potential new members and new members parents, what that organization is doing is following its values, living up to its risk management, meeting its academic requirements.”
Skinner said he has never seen national headquarters punish a chapter or its members for violating licensing guidelines. The Greek organizations would instead work with Affinity and threaten to take legal action against the business, if necessary.