The plaintiffs do not put all their eggs in a basket with no bottom; they also challenge the soundness of Judge Der-Yeghiayan's ruling that the "unqualified use" regulation infringes freedom of speech and is also unconstitutionally vague and overbroad. He indeed was wrong. If he were right, trademark law would be unconstitutional. In effect the regulation makes "Indian" the trademark denoting products made by Indians, just as "Roquefort" denotes a cheese manufactured from sheep's milk cured in limestone caves in the Roquefort region of France. A non-Indian maker of jewelry designed to look like jewelry made by Indians is free to advertise the similarity but if he uses the word "Indian" he must qualify the usage so that consumers aren't confused and think they're buying not only the kind of jewelry that Indians make, but jewelry that Indians in fact made. There is no constitutional infirmity.
Native American Arts v. Waldron Corp., No. 043182 (7th Cir. Mar. 2, 2005), slip op. at 3 (citations omitted).
I'll go into more detail spread out over the next couple of entries. Notice, though, that Judge Posner is pretty dismissive of two of the major "objections" raised by proponents of unrestricted fan fiction (and, for that matter, of unrestricted reuse of certain aspects of copyrighted material). First, he disposes of the First Amendment issue with a sentence. Second, he draws an explicit analogy between a non-trademark issue of proper identification of materials and trademark law. The Indian Arts Act does not include the word "trademark" anywhere in it. As Judge Posner implicitly finds, that doesn't matter to the analysis; what matters is function, not form.