Jack Daniel’s Takes a Bite in Trademark Dispute – Secures a Favorable Ruling by SCOTUS

By: Eric Ball , Christopher Berberian , Samuel Sahagian

On June 8, 2023, the United States Supreme Court published its long-awaited decision in Jack Daniel’s Properties Inc. v. VIP Products LLC—a trademark dispute between whiskey maker Jack Daniel’s and VIP Products, the manufacturer of a poop-themed dog chew toy that mimics the iconic Jack Daniel’s whiskey bottle. In a unanimous decision authored by Justice Kagan, the Supreme Court ruled in favor of Jack Daniel’s, holding that neither the Rogers test nor the noncommercial use exception apply when an alleged infringer or diluter uses a mark as a designation of source for its goods. Instead, the Court stated, the Ninth Circuit should have applied the traditional “likelihood of confusion” test for the trademark infringement claim and the “harm to reputation” test for the trademark dilution claim—limiting the scope of the parody defense in certain trademark cases.

Background

The dispute arose when VIP Products’ squeaky dog toy chewed its way into the market. The toy was designed to look like a bottle of Jack Daniel’s whiskey but with a few playful differences. For example, the toy’s label says “Bad Spaniels” instead of “Jack Daniel’s;” “The Old No. 2 on Your Tennessee Carpet” instead of “Old No. 7” and “Tennessee Sour Mash Whiskey;” and “40% poo by vol.” instead of “40% alc. by vol.”

After Jack Daniel’s demanded that VIP Products stop selling the Bad Spaniels toy, VIP sought a declaratory judgment that the toy neither infringed nor diluted the Jack Daniel’s trademarks. Jack Daniel’s counterclaimed for infringement and dilution.

Why Rogers Does Not Apply

At the Supreme Court, VIP Products argued that the Rogers test—a threshold test developed by the Second Circuit to protect “expressive works”—required dismissal of the trademark infringement claim. See Rogers v. Grimaldi, 875 F. 2d 994 (2d Cir. 1989). Under Rogers, a trademark infringement claim involving an expressive work must be dismissed unless the complainant can show either 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.” Id. at 999.

Relying on Rogers and its progeny, the Court held that the Rogers test does not apply where, as here, the alleged infringer concedes that it used the challenged mark (i.e., “Bad Spaniels”) to identify or distinguish the source of its goods. “That conclusion,” the Court said, “fits trademark law” because “the Lanham Act views marks as source identifiers—as things that function to . . . distinguish [goods] from ones manufactured or sold by others[,]” and it would be “cardinal sin . . . to undermine that function.” If the Court were to hold otherwise, “the Rogers exception would become the general rule, in conflict with courts’ longstanding view of trademark law.” Accordingly, the Court remanded the case to the lower courts to determine in the first instance whether the Bad Spaniels marks are likely to cause confusion.

Why the Noncommercial Use Exception Does Not Apply

VIP Products also argued that the dilution claim should be dismissed because the Bad Spaniels toy is a parody and therefore fits within the noncommercial use exception—one of several statutory exceptions to a trademark dilution claim. 15 U.S.C.A. § 1125(c)(3)(C). But the Court disagreed that every parody or humorous commentary necessarily falls within the noncommercial use exception. That expansive view would effectively nullify Congress’s express limit on the fair-use exception, which does not apply when the use is “as a designation of source for the person’s owns goods or services.” See § 1125(c)(3)(A). Thus, the Court held that the noncommercial use exception similarly does not apply where the challenged marks are used as source identifiers and remanded on that basis as well.

Key Takeaways

Be careful with labels and marketing. Companies that engage in parodies should refrain from using a protected trademark to identify their own goods or services.

Parody power. Although the parody defense was unavailing in this context, this decision does not limit an alleged infringer or diluter from making the argument that parody makes consumer confusion and harm to reputation less likely.

Fair is fair. This decision also doesn’t limit fair use arguments where the parody itself is not used as a source identifier.

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