There's a more substantial story here:
http://www.courant.com/news/education/hc-morgan-huskys-1023-20121022,0,2086719.story
I only read of a cease and desist and a willingness on both parties part to work to resolve the issue. I don't see the term lawsuit. One of the challenges with trademarks, logos and the sort is that you need to prove that you defend them. If you do not, over time, competitors and other parties can use your lack of vigorous defense and the fact that you let others "use" your marks as a way to be able to use them as well. I am not an attorney, so I can't speak to it in the legalese, but I do know that my marketing clients need to be proactive and address every apparent infringement on their property. I can be fairly confident that UConn did not want to take this action, but they would be foolish not to.
UConn appears to be very willing to be reasonable and helpful. This can be a good lesson in the way the real world or marketing plays for students at both schools.
My biggest criticism would be to WFSB for its shoddy reporting. They quote a high school student and a Clinton resident in the roles of persecuted little guy without giving more detail on the potential consequences for UConn not defending its property. It makes it look like UConn is running roughshod over a little high school without detailing the issues. Also, the video version has an almost identical quote coming from a town official that is attributed to someone else in the print version, so I don't know if that was a mixup. However, the video is fun to watch to see the painfully long pauses between the satellite feed and the field reporter getting the okay to start.