A Win for Big Brand Owners as U.S. Supreme Court Restricts Parody Protections in Trademark Cases
On June 8, 2023, the U.S. Supreme Court issued a ruling in Jack Daniel's Properties, Inc. v. VIP Products, LLC[1] concerning the First Amendment freedom-of-speech defense for a parody in a trademark infringement case. In a unanimous decision, authored by Associate Justice Kagan, the Court ruled in favor of Jack Daniel's and held that the First Amendment of the U.S. Constitution does not protect the maker of the "Bad Spaniels" dog chew toy that parodies the Jack Daniel's whiskey bottle from an infringement claim.
VIP Products LLC (VIP) made a dog toy with a similar font style and a black label like the Jack Daniel's whiskey bottle. However, instead of “Jack Daniel’s,” the toy was labelled “Bad Spaniels,” and instead of “Old No. 7” and “Tennessee Sour Mash Whiskey” it read “The Old No. 2 on your Tennessee Carpet.” Jack Daniel’s demanded that VIP stop selling the toy.
Subsequently, VIP sued for a declaration that its toy was a parody of the Jack Daniel's bottle; thus, the toy did not infringe or dilute the Jack Daniel’s trademark. The trial court disagreed and sided with Jack Daniel’s counterclaims finding both infringement and dilution of the mark. The trial court reasoned that even if the toy was an “expressive work,” it was still a commercial product. As such, the toy did not receive the benefit of an exception to trademark infringement that a parody is entitled to under the Lanham Act.
However, the U.S. Court of Appeals for the Ninth Circuit reversed by applying an exception to the Lanham Act known as the “Rogers test.” Generally, the Rogers test states that the First Amendment requires a showing that the alleged parody of a mark either: (1) has no artistic relevance to the underlying creative work or, (2) if it does have artistic relevance, it is explicitly misleading to consumers. The Ninth Circuit held that the toy is a humorous parody entitled to First Amendment freedom-of-speech protection. The Ninth Circuit further held that VIP’s use fell within the scope of a section of the Lanham Act that excludes “noncommercial use of a mark” from liability for likely dilution, thereby barring Jack Daniel’s cause of action. Jack Daniel’s appealed, and the Supreme Court agreed to hear the case.
There were two questions before the U.S. Supreme Court. The first question was whether humorous use of another’s trademark as one’s own on a commercial product is subject to the Lanham Act’s likelihood-of-confusion analysis, or does such use instead receive heightened First Amendment freedom-of-speech protection from infringement claims?
The Court reversed the Ninth Circuit and narrowly held that the nature of VIP’s use disqualifies that particular use from the First Amendment protections granted under the Rogers test. The Court explained that VIP used Jack Daniel’s mark to designate the source of its own goods, and this "falls within the heartland of trademark law" that the Lanham Act addresses. Since VIP’s use of its Bad Spaniel’s mark does not receive First Amendment protection, the likelihood of confusion test for infringement is to be used instead.
While acknowledging that the Rogers test may have merit in other contexts, the Court cautioned that it does not shield a defendant from ordinary trademark scrutiny where the mark is used to identify or brand goods or services. The Court clarified the role of the First Amendment in infringement inquiries by explaining that “[w]hen a mark is used as a mark (except, potentially, in rare situations), the likelihood-of-confusion inquiry does enough work to account for the interest in free expression”.
With respect to parodying imitations, the Court provided guidance on performing an inquiry in similar cases. The Court explained that a parody must conjure up enough of the original to make the object of its critical wit recognizable; but, a successful parody must contrast with the plaintiff’s own marks sufficiently “that its message of ridicule or pointed humor comes clear.” The Court also clarified that using a mark to parody another mark is relevant to a confusion analysis, “because consumers are not so likely to think that the maker of a mocked product is itself doing the mocking.” This signifies that a parody will succeed only if it does not result in likelihood of confusion.
The second question before the Court was whether humorous use of another’s trademark as one’s own on a commercial product is “noncommercial,” thus barring, as a matter of law, a claim of dilution by tarnishment under the Trademark Dilution Revision Act.
VIP argued that its use fell within the fair use exclusion because it parodied, criticized, or commented upon the famous Jack Daniel’s mark. Similar to the ruling above, the Supreme Court disagreed and held that that the fair use exclusion does not cover use that is a designation of source for the person's own goods or services. The Court reasoned that "given the fair-use provisions carve out, parody, (and criticism and commentary, humorous or otherwise) is exempt from liability if not used to designate source."
With respect to the exclusion’s language and purpose, the Court held that the Ninth Circuit’s reasoning was problematic because it reversed a statutorily directed result by the lower court. The Court also criticized the Ninth Circuit’s expansive view of the “noncommercial use” exclusion because it effectively nullified Congress’s express judgment to limit the fair-use exclusion and “about when—and when not—parody (and criticism and commentary) is excluded from dilution liability.” In other words, the Ninth Circuit Court of Appeals was faulted for substituting its own view of the issue for Congress’s view as clearly expressed in the statute.
The Supreme Court offered further guidance that the district court “rightly concluded that because VIP used the challenged marks as source identifiers, it could not benefit from the fair-use exclusion for parody.” It should be noted that the Court did not rule on whether VIP violated Jack Daniel's trademark rights. Accordingly, the Court remanded the case for further proceedings and a determination in the first instance of whether VIP’s “Bad Spaniels” mark is likely to cause confusion with the Jack Daniel’s Trademark.
Two concurring opinions were issued. Associate Justices Sotomayor and Alito commented on the use of surveys to assess consumer confusion in cases involving parodies. They cautioned that surveys should be understood as merely one piece of the multifaceted likelihood-of-confusion analysis, and that giving too much weight to surveys may silence great parodies thereby further increasing the power of already-powerful brands. Associate Justice Gorsuch, joined by Associate Justices Thomas and Barrett, warned the lower courts that they should address the Rogers test with care as “it is not obvious that Rogers is correct in all its particulars.”
This case generated great interest because the U.S. Justice Department sided with Jack Daniel’s in the dispute, and the Biden administration urged the Court to hear and decide the case. Further, several well-known brand owners such as Nike filed amicus briefs in support of Jack Daniel’s. As such, the Court’s ruling in favor of Jack Daniels will be viewed as a win for other powerful brand owners as well.
Consequently, litigation initiated by well-known brand owners against those parodying their marks may increase if parodying users ignore the clear lessons of the Jack Daniel’s decision, or may decrease now that the result is known and those same parodying users simply cease their potentially infringing uses without waiting to be sued. Trademark practitioners will have to carefully advise clients of potential risks in seeking to trademark goods or services involving parodies of any marks of others. Also, the fundamental question will now be whether the challenged use of mark constitutes a trademark use. VIP’s argument that it was not using its parodying dog toy designs as source-identifying trademarks was easily dismissed by the Court’s noting that VIP had actually sought trademark registration for its allegedly infringing designs.
In the coming months, interested parties will keenly follow this case on remand and analyze evidence and arguments presented by both sides in district court. Finally, trademark practitioners should keep in mind that the Court did not completely reject the Rogers test, so it will likely be applied for uses that are not source-identifying.
