The Razorback Foundation has free use of University of Arkansas, Fayetteville trademarks that others must pay to display, an arrangement set by “oral” agreements and university policy that outside attorneys find lacking.
The foundation bears the “Razorback” name, and UA’s “Running Razorback” emblem is the centerpiece of its official logo. A side silhouette of a forward-charging hog appears on the foundation’s website, fundraising documents and communication with donors.
UA and foundation officials have cited the nonprofit’s independence — it is governed by its own board of directors — and have said it receives no public money, so they can withhold from public release documents about foundation business that overlaps with the state’s largest university.
The University of Arkansas board of trustees is the registered owner of the Running Razorback and other UA marks, according to the U.S. Patent and Trademark Office. An open-records request for licensing agreements between the UA and other parties turned up a list of 11 outside groups, including NFL Films, Nissan and Walmart but not the Razorback Foundation.
Scott Varady, the foundation’s executive director, said UA board policy 100.7 authorizes the nonprofit to use the trademarks. The policy applies to “university affiliates,” such as alumni organizations, student organizations, faculty, students and “associated foundations.”
The term “associated foundation” — which is not defined in the policy — was “intended to cover entities separate from the institution that are established to support the institution financially or in other ways,” UA System spokesman Nate Hinkel said. The language about foundations was added to board policy in March 2017.
UA campuses and their units — such as the Criminal Justice Institute, for example — determine which foundations qualify as “associated foundations,” Hinkel said. There are more than a dozen “associated foundations.”
Because the Razorback Foundation existed before the university founded its trademark licensing program in 1988, its name was “grandfathered” into the licensing program, Hinkel said. Businesses with the sports team name in their titles — Razorback Discount Supply in Wickes, for example — were also grandfathered in, emails show.
But the foundation also has permission to use the Running Razorback logo. The logo was last updated in 2012. That permission to use the logo comes from the board policy and an “oral trademark license,” Hinkel said. Varady said permission came from the UA’s licensing office and athletic department’s executive committee.
Scott Andresen, a Chicago-based sports law attorney who works on trademark issues, said the board policy lacks the clarity and rigor of typical licensing agreements, potentially jeopardizing UA’s ownership of the marks. He also said his reading of the policy may give the foundation authority to use the university’s name but does not expressly say it can use its logos.
“This is a valuable mark,” Andresen said. “Is it not worth a couple of hours just to do a paper trail?”
To refer to the nonprofit, which regularly describes itself as an independent entity, as an “associated foundation” is contradictory, Andresen said.
“It sounds like they’re talking out of both sides of their mouth,” Andresen said. “They want the benefits without the obligation.”
The Arkansas Democrat-Gazette began scrutinizing the foundation’s relationship with the university amid questions about the costs of recent athletic department turnover, much of which was covered with donor money. The foundation also has a key role in the ongoing expansion and renovation of Razorback Stadium, a $160 million project to be financed mostly with public bonds.
The university’s athletics department, boosted by foundation support, is self-sufficient and transferred $3.2 million to the school’s general fund in fiscal 2017.
Varady has said the state’s open-records law does not apply to the foundation because it “receives no public funds from any public entity.” The foundation’s contract with a national search firm hired last year to help find a head football coach to replace Bret Bielema is among the documents Varady has declined to disclose.
The Arkansas Freedom of Information Act applies to records kept as part of official duties of an agency “that is wholly or partially supported by public funds or expending public funds.”
The newspaper’s ongoing examination of the foundation’s relationship with the UA has found:
The UA waived $12.7 million in Razorback Foundation cash commitments to capital projects. (arkansasonline.com/foundation1)
High-ranking staff members for both entities last year discussed a ticket-pricing change that would have shifted roughly $4 million per year from the university to the nonprofit. (arkansasonline.com/foundation2)
The UA committed to help the foundation raise more money from students by better promoting its “Collegiate Membership” program. (arkansasonline.com/foundation3)
The newspaper is reviewing 17,800 pages of emails exchanged between foundation staff members and about 30 university and UA System employees last year. Those emails were obtained through the state’s open-records law.
Companies, individuals and groups — including colleges and universities — can register names, phrases, logos and other designs as trademarks with the U.S. Patent and Trademark Office. The process allows trademark owners to control the use of marks that are unique to them.
Higher-education institutions grew active in trademarking their names, logos and other designs in the late 1980s, said Jacob Rooksby, an intellectual property attorney in Pennsylvania and author of The Branding of the American Mind.
In the 1990s, colleges and universities began expanding their trademarks to, as an example, slogans and institutional programs, and began the “first wave” of going after local businesses that used their names, he said.
An associate dean at Duquesne University’s School of Law, Rooksby surmised that the UA board policy attempts to handle trademarks in a way that is going to be more efficient for all of the university system’s “affiliated foundations.”
“Is that a solution that is viable? Yeah, I think it is,” he said. “Is it the best way to do it? Is it the cleanest way to do it in that they’re making clear they can revoke the license? No, it’s not. The reality is they often view these organizations as one in the same with the university.”
Because of that, he said, they are often not motivated to follow all the formalities to the letter. The thought may be that if push came to shove, “these groups are going to do what we want anyway,” he said.
“That may be practically true,” Rooksby said. “But it doesn’t necessarily mean that for all purposes it will continue to be true.”
He specifically highlighted two cases that ended with the foundations splitting from the schools they were initially created to support, including changing their missions. He litigated one involving a national fraternity organization and its booster group.
“In most instances, the feeling is, ‘We’re going to get along indefinitely,’” he said. “No problem at all. But good lawyering would not accept that as an answer.”
Groups seeking to use trademarks must secure licenses from the registered owners, whose interests typically include maintaining strict rules on how the marks are used and securing a cut of the sales.
Those agreements often, but not always, require the license seeker to pay for the use, frequently in the form of royalties based on a percentage of sales.
It makes sense from a business standpoint for the UA to give free use to a foundation that exists solely to support the athletics department, said Andresen, the Chicago-based sports law attorney.
But that doesn’t resolve questions about whether the licensing agreement is legally sufficient or whether the foundation’s free use of the trademarks as an “associated foundation” contradicts its stance that it is legally separate, he said.
Registered owners who do not maintain proper control of how their trademarks are used can lose their rights to the marks, Andresen said. That includes not policing who is using the property, as well as inadequate agreements that don’t detail rigorous oversight over allowed use, sometimes referred to as a “naked license,” he said.
Among the policy’s omissions are clear definitions for terms such as “informal groups” and “associated foundations,” details about allowed use of the marks and a statement saying the UA retains the right to revoke the license, Andresen said.
“If they’re saying this [board policy] is all they’ve got and this is sufficient, I’d say you’re bordering on a naked license,” he said.
LOGO’S VALUE UNCLEAR
How much in monetary value the trademark represents to UA and the foundation is unclear. The UA System declined to disclose what it charges others who use the logo for commercial purposes, citing an exemption to the open-records law that allows agencies to withhold information that would put them at a competitive disadvantage.
“As I understand it, the agreements are individually negotiated in order to get the best value for the university relative to each request and [the licensed group’s] unique plans,” Hinkel said. “By disclosing amounts, that process could be compromised.”
UA’s standard royalty rate for trademark usage is 12 percent, according to IMG College Licensing’s website. IMG contracts with the university to license its trademarks to third parties. It’s unknown whether or how that standard rate would change when applied to a fundraising group.
Most, but not all, of the Razorback Foundation’s revenue is spent in direct benefit of the athletics department.
The foundation pays a minimum $12 million per year as part of an agreement that allows it to assign seats in sporting venues, which it does in accordance with how much money the people donate. It also pays portions of coaches’ and administrators’ salaries, contributes to capital projects and covers some department travel costs.
Some of its income is spent elsewhere, such as $2.4 million for management and general expenses and $3.1 million in reported fundraising costs in fiscal 2017. It raised $37.5 million in contributions that year and spent $30.3 million on program services, or athletic department and capital expenses, according to its audited financial statements.
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