In a win for brand owners across the country, the U.S. Supreme Court ruled last week that potential infringers as a threshold matter are not automatically shielded from liability by simply claiming their infringement includes a comical message – particularly when the so-called joke is used as a component of their own brand and source-identifier.

The High Court made the pronouncement June 8, 2023, in a dispute between Jack Daniel's and the seller of a poop-themed dog chew toy that resembles the brand's iconic whiskey bottle.

While this decision is at odds with, and reverses, the Ninth Circuit’s decision, it is consistent with the prior jurisprudence that addressed, under similar circumstances, the proper balance and application of the Trademark Act’s infringement analysis and the First Amendment’s protection of expressive works. Consistent with such jurisprudence, the Supreme Court held that the First Amendment does not demand a threshold inquiry for trademark uses of an expression, including like the one provided for in the Rogers test that protects the fair use of expressive works.

The Supreme Court ruled narrowly, and expressly stated that it was not ruling on the continued viability of the threshold test set forth in Rogers beyond the facts of the Jack Daniel’s case. In other words, the holding is limited to where the parody is used in a trademark-like manner, as opposed to, for example, as a title of a book or as a lyric of a song.

The Jack Daniel’s Facts

The Iconic American whiskey brand Jack Daniel’s owns numerous trademarks for its Old No. 7 Tennessee Sour Mash Whiskey, including a trademark for OLD NO. 7, the arched Jack Daniel’s logo, the stylized label with filigree — the twirling white lines — and even the distinctive square bottle itself. Together these registered trademarks make the well-known and easily recognizable Old No. 7 whiskey.

VIP Products is a dog toy company that produces and sells a line of rubber toys called “Silly Squeakers” designed to look like and parody big name beverage brands. The Silly Squeakers line includes Dos Perros (parody of Dos Equis beer), Smella Arpaw (parody of Stella Artois beer), Doggie Walker (parody of Johnnie Walker), and more. In 2014, the company created the Bad Spaniels whiskey bottle toy to evoke the distinctive Jack Daniel’s bottle in the name of humor.

Notable features of the Bad Spaniels toy include: the toy bottle’s black label with stylized white text and twirling white lines; the words “Bad Spaniels” in the same spot “Jack Daniel’s” is located with a similar font and arch; the toy bottle is about the same size and square shape as the Jack Daniel’s bottle; the replacement of “Old No. 7 Tennessee Sour Mash Whiskey” with “The Old No. 2 On Your Tennessee Carpet” in a similar graphic form; and the replacement of the small print alcohol content information with “43% poo by vol.” and “100% smell.”

Soon after Bad Spaniels hit the market, Jack Daniel’s sent VIP Products a cease-and-desist letter demanding the toy company stop selling all Bad Spaniels products. VIP Products responded by bringing this suit and seeking declaratory judgment that Bad Spaniels neither infringed nor diluted Jack Daniel’s trademarks.

At trial, VIP Products moved for summary judgment and argued that there could be no infringement of Jack Daniel’s trademarks under the First Amendment “threshold test,” known as the Rogers test, because its use of Bad Spaniels was applicable as an expressive work mocking Jack Daniel’s product. VIP Products argued that Jack Daniel’s dilution claim also failed because of VIP Products’ parody defense under the Lanham Act’s fair use exclusion for parodies of famous marks. The district court rejected both of VIP Products arguments for the same reason: VIP Products appropriated Jack Daniel’s trademarks as its own source-identifying trademark for its toy products.

On appeal, the Court of Appeals for the Ninth Circuit reversed the district court’s finding of infringement due to a likelihood of confusion because the Bad Spaniels marks, as expressive works, subjected the infringement claim to the threshold Rogers test and the claim failed on that basis. The Ninth Circuit did not get to the likelihood of confusion analysis. The appellate court also found for VIP Products for the dilution claim without analyzing the relevant statutory provision that excluded parody and other fair use. Instead, it held that the exclusion for “noncommercial use” shielded VIP Products from liability due to its parodying nature.

The Trademark Act and The Rogers Test

The Supreme Court dedicated an entire section of its decision to break down what a trademark is and does, as contemplated by the Lanham Act, the core federal trademark statute. The Court plucked the definition of a trademark from the plain language of Section 1127 and explained that the definition “described every trademark’s ‘primary’ function: ‘to identify the origin or ownership of the article to which it is affixed.’” By deliberately returning to the root of trademark law, the High Court set the foundation for its reversal of the Ninth Circuit’s decision to dismiss the infringement claims due to an inapplicable First Amendment threshold issue.

Without deciding whether the Rogers test has merit or continued viability in other situations, the High Court held that the Rogers test does not apply where the infringing trademark is used as a trademark, or designation of source, for the infringer’s own goods, rather than merely as an expressive work.

The Rogers threshold test had been designed to protect expressive works “with at least some artistic relevance” that was not “explicitly misleading as to source or content.” Rogers v. Grismaldi, 875 F.2d 994, 998 (CA2 1989).The opinion notes that for decades lower courts adopting Rogers have confined its cases to such circumstances where expressive works at issue only pose a slight risk of confusion about either the source or the content of the work — like in the case of a book title or song lyric. All other unfitting cases (including those that used the expressive work as part of the brand itself) must be, and have been, analyzed under the likelihood of confusion analysis.

Notable case precedent discussed includes MCA Record Inc.’s use of the “Barbie” iconic doll in the song “Barbie Girl” and Warner Brothers Entertainment, Inc.’s use of “Louis Vuitton” (pronounced as “Lewis”) in the film The Hangover: Part II. These other cases did not involve trademark uses. Where the expression is, at least in part, used for source identification, Rogers has generally been held not to apply.

High Court Held Infringement Not Precluded Because of Comedic Message

The Supreme Court found that the Ninth Circuit’s analysis fell short because it did not contemplate whether VIP Product’s use of Jack Daniel’s trademarks was used in a source-identifying way. In particular, the Ninth Circuit had determined that the Bad Spaniels toy bottle is an expressive work because it contained a comedic message. Once this was decided, the Ninth Circuit halted its analysis before likelihood of confusion could be determined.

Reviewing this issue, the High Court held there is sufficient evidence that VIP Product’s use of the similar trademarks had been done in a source-identifying way. While there were no federal registrations for the Bad Spaniels marks (which VIP Products did have for some of the other products that it offered under other comedic brands), VIP Products stated in its complaint that it owns the marks as its own trademarks and trade dress. This supported the conclusion that its uses of the parody brands were as trademarks and that they were applied in a trademark-like manner. The back of the toy bottle’s packaging also had the Bad Spaniels logo positioned parallel to the federally registered Silly Squeakers logo. This further indicated that Bad Spaniels served as a trademark with source-identification functions.

Because VIP Products’ marks were used as trademarks for the dog toys and not merely as an expression of parody towards the Jack Daniel’s bottle, the Supreme Court found that the Ninth Circuit incorrectly applied the Rogers test. As the Court stated, “there is no threshold test working to kick out all cases involving ‘expressive works.’” In other words, comical expressiveness cannot preclude infringement liability when such expression also functions to identify the source of the product. Any other result would “upset the Lanham Act’s careful balancing of ‘the needs of merchants for identification as the provider of goods with the needs of society for free communication and discussion.’”

Because the Rogers test did not apply, the Supreme Court remanded the case to determine whether there is a likelihood of confusion between Jack Daniel’s marks and Bad Spaniels marks. Even though parody does not preclude liability in the case, the Jack Daniel’s opinion assured that a trademark’s expressive message, particularly a parodic one, remains relevant to the likelihood of confusion analysis.

High Court Held That Use as a Trademark Is Expressly Prohibited From Trademark Act’s Parody Exception to Dilution

For the second claim, the Supreme Court looked to the Lanham Act for answers on how to resolve the issue of dilution. The High Court pointed to dilution’s fair use exclusions outlined in the statute’s text, which specifically covers “parodying, criticizing, or commenting upon” a famous mark owner. In that same statutory provision, Section 1125(c)(3)(A), it specifically states that this exclusion does not apply when the use is “as a designation of source for the person’s own goods or services.”

Having already determined that VIP Products used Bad Spaniels to identify it in a trademark-like way, the three-paragraph dilution analysis was quite simple. The Lanham Act’s explicit language allows for parodying fair use of a person’s mark “other than as a designation of source for the person’s own goods or services.” Because the dog toy marks were used as a designation of source, VIP Products could not benefit from the fair-use exclusion for parody.

Concurring Opinions

Justice Gorsuch, with whom Justices Thomas and Barrett joined, issued a short concurrence noting to lower courts that outside of these circumstances there is much about Rogers that was left unaddressed, including its origins under either the First Amendment or the Lanham Act and whether it should have continued viability. Justice Sotomayor, with whom Justice Alito joined, also issued a concurrence to emphasize that in the context of parodies and potentially other uses implicating the First Amendment, courts should be wary of how much weight they give to survey results because there is additional risk involved where a survey answer reflects a mistaken belief among respondents that all parodies require permission from the owner of the parodied mark.

Key Takeaways

The Supreme Court’s decision clarified that a trademark used as a trademark, such as the one in Jack Daniel’s, must be examined using the likelihood-of-confusion inquiry as required by the Trademark Act. The fundamental fact is, therefore, “whether the use of a mark is serving a source-designating function.” As the decision stated, “the Lanham Act makes that fact crucial, in its effort to ensure that consumers can tell where goods come from.”

Notably, despite providing that clarity, buried within the decision in parentheses, the Supreme Court includes the language “except, potentially, in rare situations,” signaling that there could be a future exception to the rule that it just espoused.

Following the Jack Daniel’s decision, companies looking to take advantage of the Rogers threshold inquiry test in a trademark dispute will want to be careful to avoid using the parody, mockery or criticism of another’s trademark as part of its own brands or other source identifiers.

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