Supreme Court Limits Expression-Based Defenses to Trademark Claims

On June 7, 2023, the U.S. Supreme Court issued its decision in Jack Daniel’s Properties v. VIP Products, reversing the Ninth Circuit and holding in favor of the owner of the Jack Daniel’s whiskey brand. In a unanimous decision, the Court rejected VIP’s argument that its squeaky, chewable Bad Spaniels dog toy was an expressive work warranting stricter scrutiny under the First Amendment. The Court also rejected the argument that a trademark defendant escapes a dilution claim simply because the subject of the claim is a parody.

The decision, read together with the Court’s recent copyright opinion in Andy Warhol Foundation for the Visual Arts v. Goldsmith, suggests an approach to copyright and trademark cases focused on the functional use being made, rather than on the claimed expressive meaning or message. And the decisions are alike in their relatively limited scope and the important questions left unanswered.

Background

Jack Daniel’s owns trademarks in its famous Jack Daniel’s mark and in its distinctive bottle design and label in connection with whiskey. VIP Products designed and sold dog toys designed to look like a bottle of Jack Daniel’s whiskey. The resemblance is unmistakable: VIP changed the “Jack Daniel’s” name to “Bad Spaniels” and the description “Old No. 7 Brand Tennessee Whiskey” to “The Old No. 2 On Your Tennessee Carpet.”

Jack Daniel’s demanded that VIP pull the dog toy from the market. VIP responded by suing for a declaratory judgment in federal court. Jack Daniel’s counterclaimed for trademark infringement (which turns on whether a defendant’s use causes a likelihood of confusion) and for trademark dilution (which requires a showing that the use harmed the reputation of the plaintiff’s famous mark). VIP in turn moved for summary judgment on both claims. On the infringement claim, VIP argued that because Bad Spaniels was an “expressive” work, the normal “likelihood of confusion” test was displaced by a more stringent two-prong test laid out by the Second Circuit in Rogers v. Grimaldi, 875 F. 2d 994 (1989)—a case addressing trademark-infringement liability in the context of artistic works (in Rogers, a fictional movie called “Ginger and Fred”). In this “expressive” context, VIP argued, the First Amendment requires a stronger showing than simply a likelihood of confusion: it requires a showing that the challenged use of a mark (1) has no artistic relevance to the underlying work, or (2) explicitly misleads as to the source or the content of the work. On the dilution claim, VIP argued that its Bad Spaniels product was a parody and thus a “fair use” exempt from dilution liability.

The district court rejected both defenses and ruled in favor of Jack Daniel’s. VIP appealed to the Ninth Circuit, which reversed. The Ninth Circuit held that the Rogers test applied to the infringement claim because Bad Spaniels was an “expressive” work, notwithstanding its use as a trademark. It also held that VIP should have prevailed against the dilution claim because the parodic character of Bad Spaniels made it a “noncommercial use” and therefore exempt from dilution liability. After the district court held on remand that Jack Daniel’s infringement claim could not satisfy the Rogers test, the Supreme Court granted certiorari to examine the Ninth Circuit’s holdings on both the infringement and dilution issues.

The Court’s Opinion: Focus on Use as a Trademark, Not Expressive Character

The Court unanimously rejected the Ninth Circuit’s conclusions on both issues. For both, the answer turned on whether the use of the accused mark served a source-designation function—that is, whether the mark acted as a trademark. That fact was crucial, given the Lanham Act’s focus on avoiding consumer confusion and ensuring that consumers can tell where goods come from.

For the infringement question, the Court started with the history of the Rogers test. The Second Circuit had developed the test in the context of “artistic works,” which “have an ‘expressive element’ implicating ‘First Amendment values,’” and which by their nature usually “pose only a ‘slight risk’ of confusing consumers about either ‘the source or the content of the work.’” Most lower courts have applied the test only in that context, reserving it for when a trademark is being used for an artistic purpose, not “to designate a work’s source.” Similarly, the lower courts generally have declined to employ the test or have not mentioned it at all when trademarks are used as trademarks; instead, they have applied the standard likelihood-of-confusion analysis to determine infringement.

The Court reasoned that the “cardinal sin” the Lanham Act protects against is consumer confusion over a good’s source. When someone is using another’s trademark as its own, that risk of confusion is at its highest. So Rogers, “which offers an escape from the likelihood-of-confusion inquiry and a shortcut to dismissal,” is inappropriate in this context, even if Bad Spaniels could fairly be called “expressive.” As the Court noted, virtually any mark could fit that description, and the stringent demands of the Rogers test would threaten to nullify the Lanham Act’s infringement provisions altogether.

The Court added two cautionary notes to this analysis. First, it refused to opine on the viability of the Rogers test for artistic, rather than source-designation purposes—the Court merely held that the test does not apply when someone uses a trademark to identify or brand another’s goods or services. (Justice Gorsuch, in a brief concurrence joined by Justices Thomas and Barrett, suggested some more general doubts about the validity of Rogers). Second, the Court emphasized that although the Rogers test was inapplicable here, the parodic nature of Bad Spaniels might still defeat an infringement claim on remand under the traditional likelihood-of-confusion analysis—after all, a good parody “contrasts” with the source it mocks, so consumer confusion is unlikely. (On a related note, Justice Sotomayor, in a concurrence joined by Justice Alito, signaled that courts should be skeptical when infringement plaintiffs like Jack Daniel’s use consumer surveys to prove that a parody actually caused confusion).

The Court made short work of the dilution issue. As a matter of statutory construction, the Ninth Circuit was wrong to conclude that a parody automatically qualifies for the Lanham Act’s “noncommercial use” exemption. The Court pointed to the Act’s fair use exemption from dilution liability, which only reaches a use “parodying, criticizing, or commenting upon” a famous mark when the use is not “a designation of source” for the defendant’s “own goods or services.” 15 U.S.C. § 1125(c)(3)(A). The Ninth Circuit’s expansive view of noncommercial use effectively would nullify the fair use exemption for parody.

Key Takeaways

The Jack Daniel’s decision indicates that the Court is taking a functional approach to copyright and trademark cases. A majority of the Court used a similar approach in the Warhol decision issued last month, which declined to consider the defendant’s subjective view of the purpose and character of the use, and instead considered, in the strictest sense, the use actually being made. In Jack Daniel’s, too, commercial function trumped expression: because VIP concededly borrowed from another’s trademark for its own, the fact that Bad Spaniels might have an expressive or parodic message was not enough to escape trademark liability.

And, also like Warhol, Jack Daniel’s is a decision that emphasizes its own limits and leaves important questions unanswered. Whether the Rogers test is viable in any context is left for another day, and courts remain free (at least for now) to employ Rogers when the mark at issue has a primarily artistic or expressive purpose. Also left open is whether VIP ultimately will be held liable for trademark infringement. As the Court’s opinion and Justice Sotomayor’s concurrence both underlined, a real parody probably will not cause the kind of customer confusion resulting in liability. So both trademark plaintiffs and defendants—and admirers of whiskey and dog toys alike—can take some comfort in the decision.