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Im certainly no lawyer, but if the contracts been in place in the past and the Rowdies sold shirts still, havent they (the bookstore) given up their rights by ratification? They havent defended their contract for years...
You mean like how your trade mark can be forfeited if you don't actively protect it? Maybe...
Here's what you need to do: get a copy of the contract and read it. I have no idea what this contract says, but, like some have suggested, maybe it only applies to shirts with trademarked images. Perhaps if you refrain from writing "Aggies" or using recognizable university graphics, you could get away with it. I imagine your shirts are already printed up though, so this might not help you much. But a shirt with the words "Reed Rowdies," a generic design of a basketball, or a clever saying might not be under the umbrella of the contract.
So... see if you can read a copy of the contract. Ask whoever it was who told you that you couldn't sell shirts. I should think if they're forcing you out of business, you should at least get the chance to see if their claims are legitimate.
Also, I thought I remembered reading somewhere that the university doesn't actually own Reed Arena. Or was that misinformation?