In a recent unanimous decision, the United States Supreme Court held that the test set forth in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989) (the “Rogers test”) does not apply in two situations. The Supreme Court held the Rogers test does not apply where the accused infringer uses a mark to designate the source of its goods. The Supreme Court also held that when a parody of another’s mark is used as an indication of source, it is not automatically shielded from a dilution claim as a noncommercial use. Jack Daniel’s Properties, Inc. v. VIP Products LLC, No 22-148, __ US ___ (June 8, 2023). Thus, the Court vacated the decision of the U.S. Court of Appeals for the Ninth Circuit and remanded the case for further proceedings.
Jack Daniel’s Properties owns trademark rights on many of the words and images appearing on its Jack Daniel’s whiskey bottle, as well as on the bottle itself. These words, images, and the bottle shape serve as indicators of the source of the goods (the whiskey) and signal to consumers who is responsible for the whiskey. To facilitate this function, trademark law protects brand owners’ right to benefit from the goodwill associated with their marks and protects consumers’ right to be able to make informed purchasing decisions. The Lanham Act does this, in part, by giving brand owners a cause of action against those who create a likelihood of confusion by using marks that are confusingly similar to those of the brand owner. Federal trademark law also allows owners of famous marks to sue for dilution even where there is no likelihood of confusion. A famous mark in the dilution context is one that is a household name widely recognized among consumers. There are two types of dilution. In this case, the relevant type is dilution by tarnishment, in which an association is created between a famous mark and the accused mark that could harm the reputation of the famous mark. There are limits to the right to sue for dilution. The Lanham Act does not allow owners of famous marks to recover for dilution when the accused activity is a noncommercial use of a mark or when the activity in question is a fair use of a mark that parodies, criticizes, or comments on the famous mark owner or its goods without using the mark as a designation of source for the defendant’s own goods.
Jack Daniel’s Properties sent VIP Products a cease and desist letter, accusing it of trademark infringement and dilution because VIP Products made a dog toy that mimicked the Jack Daniel’s bottle, but replaced certain key features (such as replacing JACK DANIEL’S with BAD SPANIELS and replacing OLD NO. 7 BRAND TENNESSEE SOUR MASH WHISKEY with THE OLD NO. 2 ON YOUR TENNESSEE CARPET). This was the latest in a line of VIP’s SILLY SQUEAKERS dog toys that parodied well-known brands of alcohol. In addition to appearing on the toy to mimic the appearance of the Jack Daniels bottle, the words BAD SPANIELS appeared on the back of the hang tag (opposite VIP’s SILLY SQUEAKERS brand) associated with the dog toy to indicate the source of this product.
VIP filed a declaratory judgment action, asking the court to declare that its product did not infringe or dilute Jack Daniel’s Properties’ marks. Jack Daniel’s Properties counterclaimed for infringement and dilution. VIP moved for summary judgment on the grounds that the Jack Daniel’s infringement claim failed the threshold Rogers test. This test was derived from a case decided by the U.S. Court of Appeals for the Second Circuit over 30 years ago and is intended to protect First Amendment rights associated with expressive works. It requires dismissal of an infringement claim unless the plaintiff can show that the challenged use has no artistic relevance to the underlying work or that it explicitly misleads as to the source or content of the work. Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). VIP also argued that Jack Daniel’s Properties’ dilution claim should fail because VIP’s product was a parody of Jack Daniel’s and therefore made fair use of the famous mark. The district court denied summary judgment on both grounds because VIP made unauthorized use of another’s mark for source identification purposes. In other words, VIP used BAD SPANIELS as a mark for its own goods. Thus, the district court concluded, neither the Rogers test nor the statutory exception to dilution claims apply. At trial, Jack Daniel’s Properties prevailed on its claims.
VIP appealed. The U.S. Court of Appeals for the Ninth Circuit considered VIP’s toy to be an expressive work and therefore found that the First Amendment compelled stringent application of the threshold Rogers test. The Ninth Circuit found that because the toy communicated a message about the Jack Daniel’s product through parody, it was a noncommercial work. The case was remanded back to the district court, which found that Jack Daniel’s Properties failed to show either prong of the Rogers test. On appeal, the U.S. Court of Appeals affirmed the district court’s decision. The Supreme Court granted certiorari to decide whether a brand owner should have to satisfy a First Amendment threshold test before the court proceeds to consider the likelihood of confusion factors and whether the dilution claim in this case was blocked by the statutory parody or fair use exception.
Without deciding that there is never a context in which the Rogers test could apply, the Supreme Court held that the Rogers test does not apply when an accused infringer uses a mark as an indication of source for the accused infringer’s own goods. In reaching this conclusion, the Supreme Court observed that, in practice, courts that find in favor of accused infringers under the Rogers test in the context of expressive works when the mark in question is not used to indicate source, also regularly focus exclusively on likelihood of confusion factors (without first addressing the Rogers test) when the accused infringer used the mark as an indication of source for its own goods. Because VIP used the marks that it derived from Jack Daniel’s Properties’ marks as indicators of source, the infringement claim should depend only on the likelihood of confusion analysis. These are the situations where confusion is more likely because the accused use serves the same purpose as the use by the brand owner and strikes at the heart of trademark law. Applying the Rogers test in these contexts would run the risk of swallowing the general rule prohibiting likelihood of confusion because brands themselves often have expressive elements.
The fact that VIP used the marks attempting parody can still be taken into account when considering the likelihood of confusion factors.1 A successful parody must both call to mind the original and create contrasts with it in order to highlight the pointed humor. The Supreme Court observed that when a parody is successful in this way, confusion may not be likely. Whether that happened in this case is for the courts below to decide on remand, consistent with the Supreme Court’s opinion under the likelihood of confusion factors.
Turning to the dilution claim, the Supreme Court disagreed with the view of the Ninth Circuit Court of Appeals, which considered the use of a mark noncommercial if it consisted of a parody. The Supreme Court noted that not every parody or humorous critique is necessarily noncommercial. This is in part simply a matter of statutory construction as the Lanham Act itself excludes uses as a designation of source from fair use protection. Thus, when the accused infringer uses a mark as its own indication of source, the mere fact that such use may also count as a parody will not excuse the accused dilution.
The Supreme Court emphasized the narrowness of its holding. It decided only that the Rogers test does not apply in cases where the accused use of a mark serves as an indication of source for goods or services.2 Similarly, it held only that the noncommercial exclusion does not protect parody or humorous commentary that simultaneously serves a source-identifying function. Thus, the Supreme Court vacated the judgment of the U.S. Court of Appeals for the Ninth Circuit and remanded the case for further proceedings consistent with this decision.
1In this case, Jack Daniel’s Properties used survey evidence to show confusion by consumers notwithstanding the parody. Justice Sotomayor’s concurrence (joined by Justice Alito) cautioned that survey evidence should be treated carefully by courts in the context of infringement cases that implicate First Amendment issues. In particular, she cautioned that courts should not accept results uncritically or give the survey evidence undue weight.
2It is worth noting that Justice Gorsuch’s concurrence (joined by Justices Thomas and Barrett) suggests that some justices of the Supreme Court may welcome additional or broader challenges to the Rogers v. Grimaldi test. The concurrence questions both the legal foundation for the test and the correctness of the case from which it was derived. It all but invites future challenges by noting that these issues remain for resolution another day and inviting courts to be alert to this.