Elsewhere, I discussed the economic decision universities must make when deciding whether to enjoin or allow local businesses to use their trademarked nickname in business names. In and near college towns, it is common to see a school's nickname emblazoned on a variety of business names in all types of industries. Universities must police their trademarks, and if they lose control over the mark, it loses distinctiveness and then would lose its status as a valid trademark. But if a university presses a local business too hard, it risks upsetting a person or business who likely donates money to the school and attends sporting events.
In some cases, the economic decision is an easy one, because the use of the school's nickname is not in good faith. In this example, the University of Kansas is trying to get a local website to stop selling infringing merchandise that dilutes the school's "KU" mark. It is a clear cut case of dilution, and possibly infringement, but the University is taking a fairly diplomatic approach, at least initially.