Bad Spaniels: Infringement? No. Dilution? Yes

On this episode of The Briefing, Scott Hervey and Tara Sattler dive into the landmark Jack Daniels v. VIP Products case that changed trademark law. They break down the Supreme Court’s ruling on trademark infringement vs. dilution and explore how a dog toy parody nearly tarnished Jack Daniels’ brand.

Watch this episode on the Weintraub YouTube channel.

 

Show Notes:

Scott: VIP products versus Jack Daniels’ properties brought a landmark Supreme Court case that forever changed the application of the Rogers Test. However, cross-motions for summary judgment at the District Court following the Supreme Court have provided some degree of closure and finality on the trademark and dilution claims raised by Jack Daniels.

I’m Scott Hervey, a partner with the law firm of Weintraub Tobin, and today I’m joined by my partner, Tara Sattler. We’re going to talk about a dog toy, a bottle of whiskey, and the Sometimes-murky waters of Trademark Law on this installment of The Briefing.

Tara, welcome back to the briefing. It’s good to have you back.

Tara: Thanks, as always, Scott.

Scott: We’ve talked about this Jack Daniels case as it has affected other cases I think, boy, almost ad nauseam. But there has finally been a resolution itself of the Jack Daniels case. Let me just give a little brief history of the background, and then you can recap the Supreme Court’s decision. This legal battle began all the way back in 2014, so over 10 years ago, when VIP Products, a company that makes dog toys, filed a declaratory relief lawsuit against Jack Daniels, seeking a declaration that their Bad Spaniels dog toy did not infringe on Jack Daniels’ trademarks. The Bad Spaniels toy was designed to mimic a bottle of Jack Daniels’ Black Label Whisky. Jack Daniels counterclaimed, alleging both trademark infringement and trademark dilution. The case has gone through multiple appeals, including a trip to the Supreme Court. Court. The Supreme Court ultimately vacated the Ninth Circuit’s decision and remanded that case back to the District Court.

From there, let’s quickly recap the Supreme Court decision. On June 8, 2023, the Supreme Court decided this case. At the district Court and on appeal to the Ninth Circuit, the issue was framed as whether the dog toy was an expressive work since trademark claims involving expressive works were analyzed under the Rogers test.

Tara: Right. But on appeal, the Supreme Court said that the issue was not whether the dog toy was an expressive work, but rather the nature of the use of the Jack Daniels mark.

Scott: Right. The Supreme Court found that the IP’s use of the marks, while humorous, was for the purpose of serving as a source identifier, a trademark use, in other words. The Supreme Court held that the Rogers test does not apply to instances where the mark is used as a source identifier, regardless of whether it’s also used to perform some expressive function.

Tara: And then from there, the case was eventually remanded to the district Court to determine Jack Daniels’ Lanham Act claims for dilution and infringement.

Scott: Before we get into the dilution part, let’s briefly touch on trademark infringement. To win on this claim, Jack Daniels needed to show that its trademarks were distinctive and nonfunctional and that there was a likelihood of consumer confusion. The court had previously ruled that Jack Daniels’ trademarks were distinctive and nonfunctional. The key issue was whether VIP’s Bad Spaniels toy would cause a likelihood of confusion about the source of the product. The Or ultimately found that while Bad Spaniels as a toy did evoke the Jack Daniels brand, it was a successful parody.

Tara: That’s right. A successful parody of a famous mark, one that conjures up the original yet creates contrasts from the original so that the message of ridicule or pointed humor becomes clear, is not often likely to create confusion.

Scott: All right. The court waved several factors and determined that due to the parotic nature of the toy, consumers were unlikely to be confused about its source. Therefore, the court found that VIP was not liable for trademark infringement.

Tara: Right. That’s score one for the dog toy. But now let’s get into the, I think, more interesting part of the case, the trademark dilution claim. This is where the court found VIP liable. Trademark dilution is different from infringement. Trademark dilution is about protecting the distinctiveness and selling power of a famous mark, even if there’s no confusion about the source of the infringing product. The Trademark Dilution Revision Act, or TD as it’s called by trademark lawyers, defines dilution as the, quote, whittling away of the value of a trademark when it’s used to identify different products. It prohibits the use of a mark that is likely to cause dilution, either by blurring or by tarnishment. In this case, Jack Daniels argued that the Bad Spaniels toy diluted their trademark by tarnishment.

Scott: To prove dilution by tarnishment, Jack Daniels had to prove three things. First, Fame, that its trademarks were famous before VIP’s use of the Bad Spaniels toy began. Second, Similarity there was a similarity between the Bad Spaniels toy and Jack Daniels trademarks. And third, reputational harm. That the Bad Spaniels toy was likely to harm the reputation of the Jack Daniels trademarks.

Tara: Let’s look at each of these in detail. I’ll start with Fame. I think that was an easy one for the court. The court found that Jack Daniels trademarks were famous, and they are famous, noting the brand’s century-long history, excessive advertising, and massive sales. Vip argued that the old number seven trademark, specifically, was not famous enough, but the court rejected this, stating that it was the overall use of Jack Daniels’ marks in a tarnishing way that mattered. The court emphasized that it was VIP’s use of Jack Daniels’ marks on the dog toy and not the bad spaniel’s name in isolation that caused the tarnishment.

Scott: Okay, so turning to the second factor, similarity. The court found that VIP intentionally designed the Bad Spaniels toy to mimic Jack Daniels’ trademarks and trade dress, including the shape of the bottle, color scheme, and font. The IP replaced Jack Daniels with Bad Spaniels Old Number Seven with Old Number Two, and also Tennessee Whisky with Tennessee Carpet, while retaining other designer elements. The court determined that this was enough to show a similarity.

Tara: As to the third element, reputational harm, the court noted that such harm, the harm to the reputation of the famous Mark, mark arising from the similarity between the famous mark and the junior mark. The court noted that this harm generally arises when the plaintiff’s trademark is linked to products of shoddy quality or where it’s portrayed in an unwholesome or unsavory context, likely to evoke unflattering thoughts about the owner’s products. Jack Daniels argued that the Bad Spaniels toy tarnished their trademark by associating the brand with dog poop. Vips’ toys included phrases like 43% poop by volume and 100% smelly and replaced Old Number 7 with old number two on your Tennessee carpet. To support their argument, I mean, that all just seems funny to me, but to support their argument, Jack Daniels brought in an expert who testified about the negative associations that the Bad Spaniel’s toy was likely to create with Jack Daniel’s whiskey, particularly because the product is intended for human consumption. The court gave prevailing weight to the expert’s testimony, concluding that the toy was likely to tarnish Jack Daniel’s reputation by creating a negative association with dog poop, essentially.

Scott: From there, VIP argued that there was no actual evidence of reputational harm and that their dog toy was not as offensive as other products that have been found to cause tarnishment. But the court disagreed. Importantly, the court emphasized that the TDRA only requires a likelihood of dilution, not actual harm. The court also dismissed VIP’s argument that the old number seven mark itself was not famous enough, stating that the tarnishment arose from the use of the overall Jack Daniels marks on a product associated with dog poop.

Tara: So VIP also raised a First Amendment challenge to the Lanamack’s prohibition on trademark dilution, arguing that it amounted to unconstitutional viewpoint discrimination.

Scott: Let’s remember that under the TDRA, the law provides an explicit exemption for certain uses of a famous trademark, including parity if the use is non-commercial or involves fair use in news reporting, commentary, or criticism. Obviously, this is commercial speech, so it’s not entitled to the statutory exemption.

Tara: Right. The court declined to consider the First Amendment challenge because VIP failed to raise it in their pleadings. This procedural point is important. The court found that because VIP did not formally include this argument in its initial court filings, it was not properly before the court at the time that the court decided the parties’ cross-motions for summary judgment.

Scott: In the end, the court ruled that while the Bad Spaniels toy was a successful parody that did not infringe on Jack Daniel’s trademarks, it did, however, dilute Jack Daniels’ trademarks through tarnishment.

Tara: Right. The court found that the use of Jack Daniels’ trademarks on a dog toy that referenced dog poop was likely to harm the reputation of Jack Daniels’ brand. Now, Now, the court’s dilution finding here, I think, is almost opposite to what the Fourth Circuit found in a 2007 case, Louis Vuitton versus Hot Diggity Dog. In that case, Louis Vuitton, the luxury fashion house, sued Hot Diggity Dog, a company that manufactured and sold a line of parody dog toys called, Ready? Chooi Vuitton. These toys, obviously, mimic Louis Vuitton famous handbags featuring similar design elements like the LV monogram pattern and style. Louis Vuitton argued trademark infringement, trademark dilution, and unfair competition, arguing that the parody toys harmed its brand and diluted the distinctiveness of its trademarks.

Scott: In that case, the District Court ruled in favor of Hot Diggity Dog, finding that the dog toys were a parody and did not dilute or infringe on Louis Vuitton’s trademarks. Louis Vuitton then appealed to the Fourth Circuit, which affirmed the District Court’s decision.

Tara: On appeal, the Fourth Circuit evaluated Louis Vuitton’s dilution claims, specifically whether the Chuy Vuitton dog toy diluted Louis Vuitton’s trademarks through tarnishment. Like Jack Daniels, Louis Vuitton argued that the dog toys could tarnish its brand by associating its luxury image with pet products. The court rejected this argument, emphasizing that the Chuy Vuitton toys were playful and non-offensive. They were not of inferior quality, nor did they create a negative association with the Louis Vuitton brand the court found. The parody was clearly a joke and unlikely to harm Louis Vuitton’s reputation, so said the fourth circuit.

Scott: Then, Scott, does this mean that there is a split in the circuit?

Tara: Probably not. The court’s finding here in the Jack Daniels case is probably a result of the unique procedural nature of that case. Remember, after remand, the parties agreed that the court didn’t need to undertake additional findings of fact in order to decide the matter and that briefings on the remaining legal issues would suffice on cross-motions for summary judgment.

Scott: Theiding of dilution by tarnishment in the Jack Daniels case rests solely on the fact that the dog toy makes jokes about dog poop.

Tara: I mean, that seems to be the case. If the dog toy didn’t include jokes about dog poop or dog pee, then the expert opinion probably would have been different, and we probably would have seen a different result. But I guess we’ll never know. The court gave great weight to the expert for Jack Daniels in their determination that there was a likelihood of tarnishment due to the references to dog poop or pee.

Scott: I think that that’s really the only distinction. But I also think that there’s sure a lot of joking that happens about dog poop and poop in general. It seems to me to be a pretty thin line between Jack Daniels and Louis Vuitton.

Tara: I agree. I mean, I don’t know what the toy company’s expert opinion What it included and whether or not that opinion found that the references to dog poop and dog pee were not likely to cause dilution. We probably won’t know unless we read the docket. But that’s the only thing I think I can hang my hat on here and explain the differences between the two cases because otherwise, we do have a split, and we seem to have a split in the circuit. But I think that the differences rest on the unique facts of these two cases.

Scott: I definitely agree with you. I guess we should all be careful before we make any more dog poop jokes. Let me go, especially if we’re parading a strong brand like Jack Daniels and creating a dog toy. Thanks for joining me today, Tara.

Tara: Thanks, Scott.

Scott: That’s all for today’s episode of The Briefing. Thanks to Tara for joining me today. Thank you, the listener or viewer, for tuning in. We hope you found this episode informative and enjoyable. If you did, please remember to subscribe, leave us a review, and share this episode with your friends and colleagues. If you have any questions about the topics we cover today, please leave us a comment.