Penn State is seeking compensation from University Orthopedics Ltd. for alleged damages and losses incurred due to the company's use of the word "university" in its name.

Penn State claims that because of the company's name, University Orthopedics, 101 Regent Court, misleads the public into believing the company is part of the various health services the school offers, according to court documents. The school is requesting that the company not use "university in any manner in connection with the rendering of orthopedic and related medical services."

But University Orthopedics, a group of eight physicians specializing in both orthopedics and sports medicine, says the use of the word in its name is no different from that of several other local businesses.

Roger Williams, assistant vice president and executive director of University relations, confirmed that a suit has been filed against the State College-based medical company but refused to comment further.

"Our policy is not to comment on pending litigation," Williams said.

Penn State is asking for compensatory and punitive damages, costs of suit and attorney's fees.

The complaint, filed on Dec. 9, alleges that in August 1991 the founders of University Orthopedics began marketing services under that name because they recognized "the benefit of associating themselves with the prestige and reputation of Penn State University."

Penn State also claims that using "university" in the name violates the University's rights and the federal Trademark Act of 1946.

But according to a countersuit filed Dec. 29, University Orthopedics' attorney Charles Rubendall said the word "university" is a generic term and is also used in businesses such as University Book Centre and University Terrace Apartments.

Penn State, however, contends those companies do not offer goods or services that consumers would believe are sponsored by Penn State.

Andrew Cline, Penn State's attorney, could not comment on the case, and Rubendall did not return phone messages.

By February 1993, both sides entered a contract that stated University Orthopedics would include a disclaimer in all advertisements stating that it is not affiliated with Penn State.

But Penn State alleges that several advertisements without disclaimers have appeared in phone books, brochures and newspapers, prompting the University to include breach-of-contract charges in the lawsuit. The medical company denies that any agreement to limit consumer confusion was reached, according to court documents.

Rubendall's response in the court papers also states that University Orthopedics used the disclaimer in most advertisements and those that appeared without disclaimers were due to advertisement agency error.