Can you make craft items with licensed fabric and sell it?

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All of the below information has been taken from the http://www.tabberone.com website:

Licensed Fabric When someone releases fabric into the stream of commerce they effectively have relinquished control over the uses of that fabric. While the pattern on the fabric may be copyrighted, the actual fabric itself is not. The pattern may include images of registered trademarks, such as the logo of the New York Yankees or a John Deere logo, etc. Copyright law applies to the use of licensed fabric in the application of the first sale doctrine. Bear in mind, the term "licensed fabric" legally only refers to the fact the manufacturer of the fabric has a license to use the images on the fabric. It does not mean the fabric is "licensed" to the purchaser. "Licensed" products require an agreement between the owner of the product and the potential purchaser. Fabric is not "licensed"; fabric is sold. In Precious Moments vs La Infantil, 1997, the federal court invoked the first sale doctrine in denying Precious Moments attempts to block the use of its licensed fabrics. Since then, M&M/Mars, Disney Enterprises, Major League Baseball, United media (Peanuts fabric), Sanrio (Hello Kitty fabrics), among others, have been sued when these companies tried to block the eBay sales of items hand-crafted from their licensed fabrics. Every one of them settled rather than risk losing the issue in court. Judge Waterman of the Second Circuit Court of Appeals, said that under the Lanham Act "one can capitalize on a market or fad created by another provided that it is not accomplished by confusing the public into mistakenly purchasing the product in the belief that the product is the product of the competitor." American Footwear Corp. v. General Footwear Co. Ltd., 609 F.2d 655, 662 (2d Cir. 1979), cert. denied, 445 U.S. 951, 100 S. Ct. 1601, 63 L. Ed. 2d 787 (1980) (finding that the manufacturer of a "Bionic Boot" did not infringe the trademark of the producers of the "Bionic Woman" television program). The question is: can someone buy licensed fabric to make and sell items? Yes. Will the owners of the trademarked and copyrighted images interfere with the sales of these items? They might. But, you ask, how can they interfere with the sales of items if the law says you can do this? They interfere because they can. They interfere because they know the great majority of sellers will not fight back by taking them to court. These companies employ lawyers that we refer to as bottom feeders. Some companies, like Hit Entertainment, have continued their interference in the secondary market by terminating eBay auctions. They try demand that once the fabric is made into an item the item has become an unlicensed product and therefore infringing. They also try to insist that there is a likelihood of confusion by potential purchasers. Baloney. When making and selling items from licensed fabrics, we suggest you use the Tabberone Disclaimer (http://www.tabberone.com/Trademarks/TrademarkLaw/Disclaimers/TabberoneDisclaimer.shtml) as well as careful wording of the title.
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