Warner Bros. Dropkicks Louis Vuitton’s Lawsuit Over The Hangover: Part II

by Greenberg Glusker Fields Claman & Machtinger LLP
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Warner Bros. Dropkicks Louis Vuitton’s Lawsuit Over The Hangover: Part II

Louis Vuitton has been busy practicing all kinds of legal kung fu in court lately.

First, it unleashed a Chuck Norris-like flurry of legal roundhouse kicks to the dome upon hundreds of counterfeiters in the form of hundreds of injunctions and even a $3 million dollar judgment.

Then, in March, a federal district court in New York found Hyundai liable to Louis Vuitton for trademark dilution, based on a thirty-second television commercial called “Luxury.” The Luxury commercial showed “policemen eating caviar in a patrol car; large yachts parked beside modest homes; blue-collar workers eating lobster during their lunch break; a four-second scene of an inner-city basketball game played on a lavish marble court with a gold hoop; and a ten-second scene of [a Hyundai] Sonata driving down a street lined with chandeliers and red-carpet crosswalks.” The Luxury ad sought to “redefine the concept of luxury by communicating to consumers that the Sonata offered ‘luxury for all.’” But within the “four-second scene” of an inner-city basketball game, it showed — for one second — a basketball with Louis Vuitton’s famous “toile monogram” (pictured left). Based on that one second of footage, Louis Vuitton established liability for trademark dilution.

Finally, after beating up on Hyundai, Louis Vuitton attempted to leverage its victory in its ongoing dispute with Warner Bros., over the use of knock-off Louis Vuitton luggage that appeared in a twenty-five second clip in The Hangover: Part II.

But Warner Bros., like Bruce Lee, does not succumb to roundhouse kicks to the dome so easily.

Trademark Dilution

Before comparing the legal fighting styles of Louis Vuitton, Hyundai, and Warner Bros., let’s first examine one of the interesting contested areas of law — trademark dilution.

Trademark dilution is a concept, within the universe of trademark law, which gives the owner of a famous trademark standing to forbid others from using that mark in a way that would lessen its uniqueness or value.  A plaintiff in a dilution case can prevail by proving one of two things — blurring or tarnishment.  Blurring occurs where a mark impairs a famous trademark’s distinctiveness.  Tarnishment, on the other hand, occurs where a mark harms the reputation of a famous trademark.  (Because, according to our legislators[’ lobbyists], trademarks have reputations too.)

Many scholars agree that trademark dilution law’s benefit to society is highly questionable.  Unlike traditional trademark infringement law, dilution law does not actually protect consumers, because the plaintiff does not need to prove a likelihood of confusion or actual economic injury (by comparison, in traditional trademark infringement cases, “likelihood of confusion” is the sine qua non).  In addition, trademark dilution law arguably prevents socially beneficial uses of trademarks by companies that aren’t in competition with each other.  But, notwithstanding the seeming academic consensus against trademark dilution law, it has become Louis Vuitton chosen form of legal combat (narrowly edging out the deadly “Crouching Tiger, Hidden Lawyer” form).

Louis Vuitton v. Hyundai

In its dilution case against Hyundai — click here to see the infringing commercial — Louis Vuitton convinced the court that it had met all six of the “non-exclusive factors that go toward dilution by blurring”:  (i) the degree of similarity between the defendant’s mark and the famous mark; (ii) the distinctiveness of the famous mark; (iii) whether the famous mark’s owner is “engaging in substantially exclusive use of the mark”; (iv) the degree of recognition of the famous mark; (v) whether the defendant intended to create an association with the famous mark; and (vi) actual association between the defendant’s mark and the famous mark.

Unfortunately, the court lost sight of the forest for the trees.  The court’s opinion completely fails to explain how Hyundai’s Louis Vuitton basketball “impaired the distinctiveness” of Louis Vuitton’s mark — which is the whole point of the six factor analysis.

I, for one, just don’t see it.  Sure, the Hyundai commercial’s wink-and-nod to the Louis Vuitton logo was recognizable (and intentionally so).  But arguably, that recognizable use only reaffirms and enhances the distinctiveness and value of Louis Vuitton’s mark.

In any event, Louis Vuitton’s summary judgment win over Hyundai was limited to trademark dilution liability only, which means Louis Vuitton still has to fight over its trademark infringement claim.  Even with respect to trademark dilution, Louis Vuitton still has to prove damages for that claim (assuming the case goes to trial).  But that victory was enough for the house that Louis built to direct its next round of legal kung fu squarely at Warner Bros.

Louis Vuitton v. Warner Bros.

Switching gears back to traditional trademark infringement, Louis Vuitton’s lawsuit against Warner Bros., like the lawsuit against Hyundai, also centered on a thirty-second clip, but this time, from the film, The Hangover:  Part II.  And again, the allegedly infringing content appeared for just a few seconds.

In the film’s “Airport Scene,” one of the film’s dumber characters (it’s really just a matter of degree in these films), named Alan, carries what appears to be a Louis Vuitton “Keepall” bag, while his porter pushes some other Louis Vuitton luggage behind him.  When Alan’s friend Stu moves the bag in a subsequent scene, Alan reacts by saying:  “Careful that is…that is a Lewis [sic] Vuitton.”  And we all laugh at Alan.

Turns out, the bag Alan carried in the film was a counterfeit.  And Louis Vuitton HATES counterfeits.  Louis Vuitton’s legal claim:  consumers would be confused into thinking that the knockoff Alan carries — that appears for three seconds in the film — was a genuine Louis Vuitton product.

Just like in its case against Hyundai, Louis Vuitton presented evidence to the court of “representative Internet references and blog excerpts” — giving the courts a well-earned break from considering Twitter evidence, apparently — demonstrating that consumers mistakenly believed that the knockoff bag was a genuine Louis Vuitton bag.  Unlike the Hyundai case, however, Louis Vuitton’s primary claim against Warner Bros. was not about whether people mistakenly associated the product (in this case the film) with Louis Vuitton, but whether Warner Bros. impermissibly used the counterfeit bag.

Warner Bros. reminded the court that, because of the First Amendment, the Lanham Act is inapplicable to “artistic works,” so long as the defendant’s use of the trademark in question is “artistically relevant” to the work and not “explicitly misleading” as to the source or content of the work.  Louis Vuitton argued that the parties needed to engage in discovery before the court could make those determinations, but the court disagreed.  The court ruled that Louis Vuitton’s trademark dilution claims were also barred by the First Amendment defense and dismissed the case.  In addition to vindicating Warner Bros., the court’s decision could very well embolden every production company that has long been browbeaten by its arch-conservative lawyers into getting a license for every trademark that appears recognizably in one of its pictures or television shows (whether the law seemed to actually require it or not).

So why couldn’t Hyundai win based on the same First Amendment argument?

The First Amendment protects noncommercial speech more than it protects commercial speech.  Hyundai’s one second of footage appeared in a commercial advertisement, which doesn’t become any less commercial just because it seeks to “redefine the concept of luxury.”  Warner Bros.’ three seconds of footage, on the other hand appeared in a motion picture, which (at least for purposes of First Amendment law) is considered “noncommercial,” even if it’s a sequel which essentially recycles the entire plot of the original movie, simply replacing a baby with a monkey and Las Vegas with Bangkok.

Does it make sense that art in a film should be more protected than art in a commercial?  Can’t we get just as much artistic/comedic value out of commercials?  If you ask me, whoever successfully transformed a past-middle-age Jewish guy from the Bronx into the most interesting man in the world is an artist of the highest order!

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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