VIP Products partially loses on aesthetic functionality and partially wins on dilution in an appeal filed against Jack Daniels
Date Published: Jun 24, 2021
The plaintiff/appellant VIP Product LLC (“VIP”), which sells the Bad Spaniels Silly Squeaker dog toy filed an appeal against a verdict of United States District Court of Arizona (“District Court”) for removal of permanent injunction at the United States Court of Appeal for the Ninth Circuit (“Appellate Court”) (VIP Prods.LLC v. Jack Daniel's Props., Inc. 953 F.3d 1170 (9th Cir. 2020) against defendant Jack Daniel’s Properties Inc (“JDPI”). JDPI, a Delaware corporation, is a wholly owned subsidiary of Brown-Forman Corporation and handles all the intellectual property protection work for Jack Daniel's and the spirit brands of Brown-Forman Corporation, had asked the appellant to stop selling the dog toy. The appellant’s work resembled a bottle of Jack Daniel’s Old No 7 Black Label Tennessee but involved light-hearted alterations to it. For instance, the name Jack Dannel was replaced with the term Bad Sapinels, the term Old No. 7 was replaced with the term Old No. 2, and the descriptions of contents of alcohol were modified etc. Subsequently, the VIP brought a civil action in the district court to declare that the toy did not infringe JDPI’s trademark rights and the trade dress and bottle design of JDPI were not eligible for protection of trademark. However, the district court denied this contention and accepted JDPI’s counterclaim that such acts amount to trademark infringement and dilution and VIP was not entitled to the nominative defense and First Amendment fair use. Ultimately, the court issued summary judgment in favor of JDPI and permanent injunction enjoining VIP from manufacturing and selling the Bad Spaniels toy. Aggrieved by this, an appeal was filed. The appellate court partly affirmed, partly reversed and the partly remanded the suit for further proceeding.
The appellate court while vacating the judgment of the district court referred to the Rogers Test and held that VIP was entitled to First Amendment fair use. It was observed that district court erred in the judgment because Jack Daniel’s was first required to satisfy at least one of the Rogers Tests which “requires a plaintiff to show that the defendant’s use of a mark is either (1) not artistically relevant to the underlying work or (2) explicitly misleads consumers as to the source or content of the work.” This test originated in Locus Classicus Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). Lanham Act dealing with expressive works applies only when at least one of the conditions is satisfied. For deciding whether the work is expressive or not, it needs to be analyzed whether the work is “communicating ideas or expressing points of view.” This was not rendered non-expressive simply because of its commercial nature. It was also supported by the case of S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252 (4th Cir. 2007), the Fourth Circuit’s decision in which the dog toys which loosely resembled and were shaped roughly like Louis Vuitton handbag, and their name Chewy Vuitton sounded like and rhymed with Louis Vuitton were held to be successful parodies and thus not liable for infringement of trademark. Therefore, it was held that district court erred in its judgment, since Bad Spaniels was an expressive work and JDPI needed to satisfy at least one of the two conditions of the Rogers Test.
For the issue of aesthetic functionality and distinctiveness the appellate court upheld the district court judgment favoring Jack Daniel’s because both Jack Daniel’s trade dress and bottle design were distinctive and aesthetically nonfunctional hence eligible for trademark protection. Thus, it was held that normative fair use defense and request of cancellation of trademark could not be accepted. The court while relying upon WalMart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 210 (2000) and Talking Rain Beverage Co., Inc. v. S. Beach Beverage Co., 349 F.3d 601, 603 (9th Cir. 2003) held that for trademark protection the trade dress or design must be nonfunctional and distinctive. It was observed that the test is to not to analyze individual features, but the whole collection of features should be taken together to see whether something is functional/distinctive or not. VIP was unsuccessful in rebutting the presumption of non functionality and distinctiveness which was registered vide Trademark Registration No. 4,106,178. The court pointed out that plaintiff in an infringement action with a registered mark is given the prima facie or presumptive advantage on the issue of validity, which shifts the burden of production to the defendant to prove otherwise. However, evidence given by defendent failed to substantiate that the elements of the bottle design registration when taken together are functional or nondistinctive.
The appellate panel reversed the judgment of district court on trademark dilution by tarnishment. The appellate panel also held that use of noncommercial marks is not dilution by tarnishment. Despite the fact that JDPI’s trade dress and bottle design were used to sell Bad Spaniels, but since that product was also used for conveying a humorous message, it was found to have a defense of first amendment. Therefore, VIP was granted a judgment in its favor on the issue of dilution claim in state and federal law. The panel also vacated the permanent injunction order granted in favor of JDPI by the district court.
The panel affirmed the district court’s summary judgment in favor of JDPI on the issues of aesthetic functionality and distinctiveness and on the validity of JDPI’s registered mark but reversed the judgment on the issue of dilution and vacated the judgment after trial on the issue of infringement, and remanded the suit for further proceedings. The permanent injunction was also vacated.
VIP Prods. LLC v. Jack Daniel's Props., Inc. 953 F.3d 1170 (9th Cir. 2020)