Legal Issues and K-12 and Intellectual property and Education & Workforce Development and Sports Business

Firm helps area high schools sell themselves

August 25, 2008

Continental Enterprises, an intellectual property consulting firm, launched a service this summer to help area high schools register their logos, names and mascots as trademarks and establish licensing programs, assuring that schools will get a cut of all merchandise sales bearing their mark.

This month, North Central High School, one of the state's largest, signed with Continental, and six to eight more schools are expected to follow suit within 60 days.

"A school's intellectual property is just as much an asset as a computer or a building," said Karl Manders, 56, who founded Continental in 1988. "We think this is a way to give high schools a structure to capitalize on their intellectual property and create another revenue stream in an economically difficult time."

Manders' 24-employee firm does licensing work internationally for companies ranging from automotive manufacturers to beer and energy-drink makers. Manders thinks he can use lessons he's learned in the licensing and intellectual property arena to help schools.

"In our experience, there is no program like this in the country," he said. "Indiana is going to be at the forefront."

Richard Sheehan, a University of Notre Dame economist and former South Bend Community School Corp. board member, said he has never heard of such a broad-based program for high schools. But the alliance between Continental and North Central doesn't surprise him.

"Fifteen or so years ago, this movement swept through colleges and universities across the country," said Sheehan, who authored, "Keeping Score: The Economics of Big-Time Sports." "With a more intense local, regional and even national focus on high school athletics and its athletes these days, this makes some sense."

Stars equal cash

Star athletes are bringing their high schools considerable attention, and that spotlight has the potential to be monetized, Sheehan said.

North Central graduate Eric Gordon, who this summer was drafted by the National Basketball Association's Los Angeles Clippers, has brought his alma matter such attention.

"The situation with Eric Gordon has brought this into focus for us," said North Central Athletic Director Chuck Jones. "We do think that brings an opportunity to sell replica jerseys and other apparel."

In most cases, a high school would have to work out a deal with a former player to use his or her name or likeness to sell merchandise, trademark attorneys said. North Central officials said they have had conversations with Gordon.

Colleges and universities nationwide have rung up seven-figure annual sums in licensed goods sales. For schools with established sports programs like the universities of Nebraska and Southern California, licensed goods sales bring in $3 million to $5 million annually, according to the Atlanta-based Collegiate Licensing Co. Even small colleges like Butler University can bring in $250,000 annually.

While no one expects high schools to bring in that kind of cash, Sheehan said it's not unreasonable for a large school like North Central to bring in $20,000 to $30,000 a year.

North Central Principal C.E. Quandt thinks those figures might be a bit optimistic. But he said whatever comes in is sorely needed.

"This money would be very important to the school's athletic department," Quandt said. "It would go toward things like uniforms, equipment, transportation and upkeep of facilities."

With school budgets tightening, Manders thinks more schools will sign deals with his firm. Continental officials think they could have more than a dozen deals done with Indiana schools by year's end. Then they plan to take the initiative national.

"Schools are tired of seeing thousands of items being sold in neighborhood grocery stores, drugstores and other outlets, and none of the money coming back to the school," Manders said. "The ones really getting hurt by these unlicensed, unauthorized sales are the students."

Tracking knock-offs

Continental makes its money by helping schools recoup a percentage of unauthorized sales. If a company is selling an unlicensed North Central product, and Continental negotiates a settlement, Continental will get a cut, Quandt said. Continental also could get a cut of overall sales in some cases.

"There really is no risk to the schools," said Continental Vice President Jeremiah Pastrick. "There's no upfront payment."

An organized licensing program sometimes piques the interest of vendors wanting to sell themed items, Manders said.

"Licensing helps get legitimate merchandise into the hands of more people," he said.

As the public's appetite for high school items increases, enforcement becomes an increasing concern, said Cliff Browning, a trademark attorney and partner with Indianapolis law firm Krieg DeVault.

"Obtaining a trademark is one thing, but pursuing trademark infringement is another thing entirely," Browning said. "Chasing down vendors and suppliers of unlicensed goods can really be challenging."

Before launching the firm, Manders worked as Marion County's deputy coroner, where he often handled investigative work.

His sister, Kristine Myers, who works as a trademark and licensing specialist for Continental, has 35 years' experience as a teacher and administrator for Indianapolis Public Schools, Washington Township Schools and Park Tudor High School.

Enforcement is Continental's strong suit, Manders said.

Initially, Manders' firm handled routine private investigative work, including cases involving Worker's Compensation and insurance fraud, divorce and child custody, and personal injury. The company was originally called Manders Detective Agency, but fearing the company's name would blow his and his agents' cover, he changed it to something more generic.

"I thought Continental Enterprises sounded more like a food service company or something like that," Manders said. "I wanted a name that blended into the background."

A Warner Bros. representative in New York found Manders' firm through his Yellow Pages listing, and asked him to help Warner investigate a T-shirt maker that had set up shop on Massachusetts Avenue. The shop, which is no longer in business, was printing unauthorized Batman T-shirts, capitalizing on the Warner Bros. movie released in the late 1980s, Manders said.

After word spread of Manders' success on that case, he was able to sign intellectual-property-rights investigation deals with the likes of Guess Jeans and the PellePelle clothing line, among others. Now the firm does almost entirely intellectual property and trademark cases, Manders said.

Though Continental is used to cracking down on offenders, Manders doesn't intend to use a heavy hand with the school programs.

"Since this is a new arena for high schools, we want to teach people how to be involved in the right way," Manders said. "We're going to use an educational and community-minded approach with manufacturers and vendors. We think once people learn how this will help their community's schools, they'll want to be involved."

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