I think the owner of the copyright/trademark has to report the shop to Etsy. When you click on the "report this item" link, the only place to report a copyright issue is the link that says "this is my intellectual property." Ebay is the same way. The copyright owner has to be the one to report the listing. (I was given that info directly from ebay awhile ago)
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Beth Clough from thegracioushome says
The same is also true for college and professional sports teams, using their logos, mascots or licensed fabrics to sell - it's a violation of copyright. ...whether it's on etsy, other online shops or in local markets. It's not allowed, and certainly not worth the risk.
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This also applies to advertising with trademarked logos and words. I work in the advertising dept. of a newspaper publisher. We are not allowed to EVER use logos or the words Super Bowl, World Series or March Madness in any advertising. We can't use team logos. For instance, I'm in Mass. and we can't use Patriots or Red Sox logos in anyone's ad. If a local bar wants to advertise their Super Bowl party, the ad can't say Super Bowl. That's why you hear and see advertisements for "The Big Game." Super Bowl is trademarked and we can get sued for using it.