Supreme Court: Parody does Not Automatically Negate Federal Trademark Infringement or Dilution Claims

Introduction

Use of parody in evoking another's mark does not automatically justify dismissal of Lanham Act claims alleging trademark infringement or trademark dilution, a unanimous Supreme Court of the United States held in Jack Daniel's Properties, LLC v. VIP Products LLC (U.S. June 8, 2023).

In a trademark context, courts have defined "parody" as "a simple form of entertainment conveyed by juxtaposing the irreverent representation of the trademark with the idealized image created by the mark's owner." Louis Vuitton Malletier v. Haute Diggity Dog, LLC (4th Cir. 2007). "To be considered successful, the alleged parody must both call to mind and differentiate itself from the original, and it must 'communicate some articulable element of satire, ridicule, joking or amusement.'" Smith v. Wal-Mart Stores, Inc. (N.D. Ga. 2008) (quoting Louis Vuitton, supra).

Main Takeaway

If the parodist makes "trademark use" of another's mark, i.e., the parodist uses another's mark to distinguish the parodist's own goods or services, then the parodist is not entitled to summarily terminate Lanham Act trademark litigation on First Amendment or "fair use" / "noncommercial use" grounds. Instead, absent either case settlement or a failure of the trademark owner to properly plead its case, a parodist making trademark use of another's mark must try to prevail against: (i) a federal trademark infringement claim by raising arguments within the framework of a conventional likelihood-of-confusion analysis, which can already take a parodic use into consideration; and (ii) any federal dilution claim without the "fair use" or "noncommercial use" defenses recited in the Lanham Act.

Factual Background

VIP Products LLC ("VIP") marketed a squeaky toy for dogs that it called BAD SPANIEL (middle image). The toy emulated the bottle and label for Jack Daniel's "Old No. 7" whiskey (left image) in several respects. For example, the toy: (1) approximated the size and shape of the Jack Daniel's bottle; (2) bore a black label with white lettering, including arching the letters spelling BAD SPANIEL in the same manner as the letters spelling JACK DANIEL'S (also in white lettering against a black label), using a similar font for those letters; and (3) displayed an oval with the expression "The Old No. 2" bearing a similar appearance to the oval on Jack Daniel's label, which recited "Old No. 7."

VIP packaged the BAD SPANIEL toy using a cardboard hangtag. The back of the hangtag (right image) bore two logos positioned above wording: a SILLY SQUEAKERS logo on the left, and a BAD SPANIELS logo on the right. VIP did not attempt to register the BAD SPANIELS logo; however, it did obtain registrations for its SILLY SQUEAKERS mark and for names of other squeaky toys in its SILLY SQUEAKERS product line, such as "Smella Arpaw" (sounding like Stella Artois) and "Doggie Walker" (sounding like Johnny Walker).

Procedural Background

Jack Daniel's, not at all amused by the BAD SPANIEL toy, sent VIP a cease-and-desist letter. VIP responded by filing a declaratory judgment action in the U.S. District Court for the District of Arizona. VIP's complaint alleged that VIP neither infringed nor diluted Jack Daniel's marks, and that VIP was "the owner of all rights in its 'Bad Spaniels' trademark and trade dress for its durable rubber squeaky novelty dog toy." Jack Daniel's asserted Lanham Act counterclaims for both trademark infringement and trademark dilution.

VIP sought summary judgment on both of Jack Daniel's counterclaims, arguing that the First Amendment barred the infringement counterclaim pursuant to Rogers v. Grimaldi (2d Cir. 1989), and that VIP made "fair use" of Jack Daniel's marks, barring its dilution claim pursuant to a section in the Lanham Act, namely, 15 U.S.C. § 1125(C)(3)(A)(ii). The Rogers case established a type of First Amendment "filter" for trademark cases, mandating that they be dismissed unless the challenged use: (1) "has no artistic relevance to the underlying work"; or (2) "explicitly misleads as to the source or the content of the work."

The district court denied VIP's summary judgment motion because it found that VIP made "trademark use" of the Jack Daniel's marks, i.e., VIP used those marks to distinguish VIP's own goods. The district court held that the Rogers filter did not apply to such "trademark use," and that therefore Jack Daniel's trademark infringement counterclaim was not subject to a Rogers dismissal on First Amendment grounds. VIP's trademark use likewise prevented dismissal of Jack Daniel's dilution claim, because under the Lanham Act, a "fair use" defense only applies if the challenged use does not employ another's mark(s) to distinguish one's own goods.

On appeal, the Ninth Circuit reversed, finding that the BAD SPANIEL toy was an "expressive work" that "communicate[d] a humorous message," and that therefore Jack Daniel's infringement counterclaim was subject to the Rogers filter. Although the Ninth Circuit remanded the trademark infringement claim to the district court for a determination of whether Jack Daniel's could satisfy either part of the Rogers filter, the Ninth Circuit granted judgment to VIP on Jack Daniel's dilution claim, not on "fair use" grounds, but because VIP supposedly made "noncommercial use" of Jack Daniel's marks, thereby negating the dilution claim under 15 U.S.C. § 1125(c)(3)(C).

On remand, the district court held that Jack Daniel's could not meet either prong of Rogers, and that Rogers therefore mandated dismissal of Jack Daniel's infringement claim. Jack Daniel's appealed, but the Ninth Circuit summarily affirmed. The Supreme Court then granted review of both the infringement counterclaim dismissal and the dilution counterclaim dismissal.

The Supreme Court's Reasoning in Jack Daniel's

Reversing the Ninth Circuit, the Supreme Court essentially held that the district court got it right the first time, and that both of Jack Daniel's counterclaims against VIP could therefore proceed.

VIP made "trademark use" of Jack Daniel's marks. Central to the Supreme Court's holding on both issues was its observation that VIP did, in fact, make "trademark use" of Jack Daniel's marks. It pointed to not only VIP's own allegations in its complaint quoted above (claiming trademark rights to the BAD SPANIEL toy), but also to the use of the BAD SPANIELS logo on the hangtag in a manner similar to the use of VIP's registered SILLY SQUEAKERS logo on the same hangtag surface. The Court also pointed to VIP's registration of marks for other products in VIP's SILLY SQUEAKERS product line.

Rogers Does Not Apply if the Accused Party Makes ANY Trademark Use of Another's Mark. On the trademark infringement claim, Justice Elena Kagan, writing for the unanimous Court, explained that the Court was not rendering any opinion about the viability of the Rogers filter generally, only that Rogers does not apply when the accused party makes any trademark use of the adversary's mark(s). Even if an accused use involves a successful parody in addition to trademark use, Rogers still does not apply: "When, instead, the use is 'at least in part' for 'source identification' - when the defendant may be 'trading on the good will of the trademark owner to market its own goods' - Rogers has no proper role."

Conventional Likelihood-of-Confusion Analysis Already Accounts for Expressive (Parodic) Use. Justice Kagan stressed that the inapplicability of Rogers to the case did not mean that a court could completely disregard the parodic nature of VIP's accused use when assessing liability for trademark infringement. Rather, an expressive (parodic) use can be considered in a multifactor likelihood-of-confusion test conventionally employed by courts to assess liability for trademark infringement: "There is no threshold test working to kick out all cases involving 'expressive works.' But a trademark's expressive message - particularly a parodic one, as VIP asserts - may properly figure in assessing the likelihood of confusion." Although Justice Kagan did not articulate how the expressive nature of an accused use factors into the likelihood-of-confusion analysis, lower courts offer guidance, as aptly demonstrated by the Smith v. Wal-Mart Stores case cited above. There, the district court conducted a conventional multifactor likelihood-of-confusion analysis, taking into account the defendant's parodic use of the plaintiff's mark. For example, regarding one of the factors - strength of the plaintiff's mark - the court explained that although in conventional cases a high degree of trademark strength favors the trademark owner, in parody cases "the strength of the mark may actually cut against a likelihood of confusion because consumers are more likely to recognize that a very famous mark 'is being used as part of a jest.'"

If the Accused Party Makes Any Trademark Use of Another's Mark, the "Fair Use" and "Noncommercial Use" Defenses to Dilution Do Not Apply. Part III of the Jack Daniel's decision, discussing Jack Daniel's dilution counterclaim, spans only two pages. Justice Kagan characterized that issue as "more easily dispatched" than the above-discussed issues concerning Jack Daniel's infringement counterclaim. In explaining why the "noncommercial use" defense to dilution did not apply in cases of accused trademark use, Justice Kagan echoed the district court's reasoning as to the separate "fair use" defense, pointing to express statutory language limiting applicability of the "fair use" defense to non-trademark uses. She then explained that exempting all parodies from dilution liability under the "noncommercial speech" defense would necessarily nullify the "non-trademark use" condition placed on the "fair use" defense. The rationale employed here is questionable because it places limits on a subsection of a statute that do not appear in the statutory text. Specifically, 15 U.S.C. § 1125(c)(3)(C) simply exempts from dilution liability, without conditions: "Any noncommercial use of a mark." (emphasis added). Perhaps Justice Kagan could have reached the same result - reversing the dismissal of the dilution counterclaim - by construing "noncommercial" more narrowly, without importing the "non-trademark use" requirement recited in a separate subsection, namely, 15 U.S.C. § 1125(C)(3)(A). Justice Kagan's statutory interpretation renders subsection (3)(C) superfluous over subsection (3)(A), in the face of a fundamental maxim of statutory interpretation that "'[a] statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant . . . .'" Hibbs v. Winn (U.S.  2004) (citation omitted). Be that as it may, a defendant to a dilution claim can no longer rely upon the "noncommercial use" defense of subsection (3)(C) if the defendant has made trademark use of the trademark owner's mark(s). And the "fair use" defense was never available in such instances by its own terms, as recited in subsection (3)(A).

Result from Jack Daniel's: More Leverage for Trademark Owners

While Jack Daniel's does not mean that all parodists will ultimately lose against trademark infringement and dilution claims (indeed, as an example, the parodist in Smith v. Wal-Mart prevailed), it does mean that when a parodist has made trademark use of the plaintiff's mark(s), then regardless of whether the accused use was also expressive (parodic) in nature, the parodist can no longer summarily terminate trademark infringement litigation. In such instances, barring settlement, or unless the trademark owner fails to properly plead its case (see Footnote 2 of Jack Daniel's), parodists will have to consider increased financial risks of having to litigate a case at least all the way through trial and any post-trial motions, as well as sustaining an adverse judgment. This gives the senders of cease-and-desist letters commensurately more leverage when threatening to sue in such instances. 

Just as elimination of the Rogers "escape hatch" for instances of trademark use increases leverage for trademark infringement plaintiffs, the elimination of the "noncommercial use" defense in such instances cuts off a dilution claim "escape hatch," thereby similarly increasing leverage for owners of famous marks threatening to bring dilution actions.

Remember, however, that Rogers is not dead for all purposes. One who seeks to parody another's mark should now avoid claiming trademark rights in the product that the parodist wants to sell, to the extent such claimed rights would be directed to expressive elements involving that mark. A mark not directed to such elements could identify the parodist's overall product line, like VIP's product line mark SILLY SQUEAKERS, which itself did not raise any liability issues. If the parodist can meaningfully distinguish its use of another's mark from VIP's trademark uses discussed in Jack Daniel's, then the Rogers filter could still apply to summarily dismiss a federal trademark infringement claim in the event of any litigation. Similarly, the Lanham Act "fair use" and "noncommercial speech" defenses could then still be invoked to summarily dismiss a federal dilution claim. An experienced trademark attorney can help a would-be parodist to determine whether a given use of another's mark would amount to "trademark use."