No one likes being made fun of or humiliated (okay, some people do, but that’s part of a much larger discussion), but you can’t throw your authority as a big, scary federal agency around to stop people from mocking you, even if they’re making some money doing so.

This is a lesson that has (we hope) been learned by the folks at the National Security Agency and the Dept. of Homeland Security who have reached a settlement with a T-shirt designer after they banned Zazzle.com from selling shirts and other merchandise that parodied these two fun-loving organizations.

It all began back in 2011, when the NSA and DHS sent cease-and-desist letters to Zazzle, one of the largest online marketplaces for custom-produced merch, ordering it to stop offering certain jokey products made by one seller. These products included things like the faux NSA shirt that read “Peeping While You’re Sleeping” and “The only part of government that actually listens,” or the mugs featuring the logo for the Department of Homeland Stupidity.

The NSA had claimed that the merch violated the National Security Agency Act of 1959, which sets limits the commercial use of NSA official seals, while DHS claimed the violation of three separate criminal statutes in its cease-and-desist letter.

In 2013, the creator of these products, which he has sold through his own website for years and are available on Zazzle competitor CafePress.com, filed suit [PDF] against the NSA and DHS in a federal court in Maryland.

The suit, filed by Public Citizen on behalf of the shirts’ creator, argued that the use of the NSA and DHS graphics did not create any likelihood of confusion about source or sponsorship, and no reasonable person would believe that the agencies themselves produced merchandise with those messages. The plaintiff also contended that none of the statutes cited by either agency forbids the parodic use of the logos, and that if those statutes did grant those rights, then that would be in violation of the First Amendment.

In a settlement agreement [PDF] made public today, the NSA agreed to send a follow-up letter to Zazzle’s attorney to clarify that the use of these logos were intended as parody and “should not have been viewed as conveying the impression that the designs were approved, endorsed, or authorized by NSA.”

Meanwhile, DHS will tell Zazzle that it may have made an “overbroad” interpretation of the statutes cited in its cease-and-desist letter and that these laws don’t apply to “uses of the name, initials or seal of an agency for purposes of commentary about the agency.”

“I’m glad the case helped reaffirm the right to lampoon our government,” said the shirts’ creator in a statement through Public Citizen. “I always thought parody was a healthy tradition in American society. It’s good to know that it’s still legal.”

NSA and DHS Finally Acknowledge: Parodied Merchandise Does Not Violate Federal Law [Citizen.org]

NSA and Homeland Security Settle First Amendment Lawsuit Over Parody Logos [WSJ Law Blog]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.