Do university names and team names, fall under public domain so that I
could manufacture and market novelty items such as license plate
holders, decals, flags, etc. without permission or needing to pay
royalties?

Hi terry1469,

The short answer: you need to get written permission from the
university before using their name on products.

Trademark law: an overview:
"Trademarks are generally distinctive symbols, pictures, or words that
sellers affix to distinguish and identify the origin of their
products. Trademark status may also be granted to distinctive and
unique packaging, color combinations, building designs, product
styles, and overall presentations. It is also possible to receive
trademark status for identification that is not on its face distinct
or unique but which has developed a secondary meaning over time that
identifies it with the product or seller. The owner of a trademark has
exclusive right to use it on the product it was intended to identify
and often on related products. Service-marks receive the same legal
protection as trademarks but are meant to distinguish services rather
than products."
http://www.law.cornell.edu/topics/trademark.html

Examples:

Arizon State University:
"Arizona State University?s registered trademarks, service marks,
wordmarks, and logos, including ?Arizona State University,?  ?ASU,?
seal, and athletic mascot Sparky, may not be used or reproduced
without permission.  Any individual, organization, or company wishing
to use Arizona State University?s logos and trademarks must obtain the
right to do so in writing from the university."
http://www.asu.edu/copyright/

University of Oklahoma:
"The University of Oklahoma has an established independent licensing
program to control the use of the name, abbreviations, symbols,
emblems, logos, mascots, slogans, and other terminology associated
with the University."
http://www.ou.edu/disclaimer/copyright.html

Iowa State University:
"The names, words, symbols, and graphics representing Iowa State
University are trademarks and copyrights of the university, protected
by trademark and copyright laws of the U.S. and other countries."
http://www.iastate.edu/guide/policies/notice.html

Baylor University:
"Baylor University has an established independent licensing program to
control the use of the name, abbreviations, symbols, emblems, logos,
mascots, slogans, and other terminology associated with the
University. (the "Marks") Any use of a Baylor Mark without Baylor
university's express written consent is prohibited."
http://www.baylor.edu/about/index.php?id=7216

Cranfield University:
"Use of the Cranfield University name, logo or crest is strictly
prohibited without the University's written consent."
http://www.cranfield.ac.uk/copyright.htm

University of Saskatchewan (Canada):
Commercial Use of University Trademarks:
"A royalty fee will be charged for the commercial use of University marks."
http://www.usask.ca/policies/4_04_01.htm

I hope this helps. If you have any questions, please post a
clarification request before closing/rating my answer and I'll be
happy to respond.

Thank you,
hummer

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