Dog Toy Trademark Case Remanded Again

The Supreme Court of the United States overruled the Ninth Circuit Court of Appeals and sent the case back to the district court. In a sense, this is a victory for all trademark owners, because the Supreme Court narrows when constitutional “free speech” trumps trademark law. The federal appellate court in California erred by applying a threshold test, referred to as the Rogers test, to the the dog toy product, when the speech in question was the use of a spoof trademark as an identifier of source of the product.

Even if the spoof trademark expresses some humor or parody, it is not protected speech when it serves as a trademark, i.e. as an identifier of the source of a product. When a trademark is used as a designation of source for goods the Rogers test does not apply, according to the Supreme Court’s recent decision in Jack Daniel’s Properties, Inc. v. VIP Products LLC, Supreme Court, No. 22–148 (2023).

“[T]he trademark law generally prevails over the First Amendment” when “another’s trademark (or a confusingly similar mark) is used without permission” as a means of “source identification.” Citing Yankee Publishing Inc. v. News Am. Publishing Inc., 809 F. Supp. 267, 276 (SDNY 1992) (Leval, J.) (emphasis deleted). So for those uses, the First Amendment does not demand a threshold inquiry like the Rogers test. When 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.

Although the dog toy company’s efforts at humor or parody do not justify use of the Rogers test, its particular use might make a difference in application of the standard trademark likelihood of confusion analysis. A “…trademark’s expressive message—particularly a parodic one, as
VIP asserts—may properly figure in assessing the likelihood of confusion.” Id. Citing Louis Vuitton Malletier S. A. v. Haute Diggity Dog, LLC, 507 F. 3d 252, 265 (CA4 2007) (Parody “influences the way in which the [likelihood-of-confusion] factors are applied”); Brief for United States as Amicus Curiae 17–22 (same). A parody must “conjure up” “enough of [an] original to make the object of its critical wit recognizable.” Campbell v. Acuff-Rose Music, Inc., 510 U. S. 569, 588 (1994) (internal quotation marks omitted). Yet to succeed, the parody must also create contrasts, so that its message of ridicule or pointed humor comes clear. And once that is done (if that is done), a parody is not often likely to create confusion.

The Supreme Court had an easy time dispatching the Ninth Circuit’s faulty logic on Jack Daniel’s claim of dilution by tarnishment for linking its whiskey to dog poop. The Ninth Circuit improperly dismissed that claim based on one of the Lanham Act’s exclusions from dilution liability as a noncommercial use of a mark, because its parody conveys a humorous message. “However wide the scope of the ‘noncommercial use’ exclusion, it cannot include, as the Ninth Circuit thought, every
parody or humorous commentary” according to the Supreme Court’s reasoning. The Ninth Circuit’s approach ignores the Lanham Act’s specific fair-use carve-out for parody and criticism and commentary, humorous or otherwise. This type of use is exempt from liability if, and only if, it not used to designate source. Since the dog toy company uses the parody as a trademark, to identify the source of goods, it cannot avail itself of the noncommercial use exclusion. The Ninth Circuit’s view of the noncommercial use exclusion would have “effectively nullifies Congress’s express limit on the fair-use exclusion for parody, etc.” according to the Supreme Court decision.

The Supreme Court concludes by pointing out that its decision is limited to parody in trademarks: “It is no coincidence that both our holdings turn on whether the use of a mark is serving a source-designation function. The Lanham Act makes that fact crucial, in its effort to ensure that consumers can tell where goods come from.” The Supreme Court thoroughly rebuffed the Ninth Circuit’s faulty reasoning, but unfortunately, perhaps for both parties, it remanded the case to the district court for further proceedings, now for the third time. The Ninth Circuit had already returned the decision to the district court based on its faulty reading of the Lanham Act.

This decision is a victory for trademark owners, because the Supreme Court decision removes any defense based on “fair use” when used as a trademark to identify the source of goods. The fair use exclusion of the Lanham Act specifically covers “parodying, criticizing, or commenting upon” a famous mark owner. §1125(c)(3)(A)(ii). However, the Lanham Act limits its fair-use exclusion. It must not serve as a designation of source. §1125(c)(3)(A).

“Given the fair-use provision’s carve-out, parody (and criticism and commentary, humorous or otherwise) is exempt from liability only if not used to designate source,” according to the Supreme Court’s decision. Here, the dog toy company’s IP counsel made a critical error. In its complaint for declaratory judgment of non-infringement, the dog toy company alleged that it “‘own[s]’ and “use[s]” the “‘Bad Spaniels’ trademark and trade dress for its durable rubber squeaky novelty dog toy.” A federal district court declaratory judgment action seeks to preemptively hall the owner of a trademark into federal court, because their is a case or controversy in which the declaratory relief requested is appropriate. Admitting ownership of a trademark and trade dress in its “Bad Spaniels” doggy toy might have been deemed necessary by litigation counsel as justification for why the declaratory judgment relief it sought was appropriate. Given the Supreme Court’s logic, this admission of use as a source identifier within its complaint may prove fatal in remand at the district court.

Ultimately, the Supreme Court’s decision might make it more difficult for sellers of spoof products to hall trademark owners into federal district courts under the Declaratory Judgment Act, providing trademark owners choice of forum and timing when faced with trademark infringement and trademark and trade dress dilution challenges raised by purveyors of spoof products.