The Supreme Court issued a unanimous decision on June 8 in Jack Daniel's Properties v. VIP Products LLC, __ US __ (2023), a victory for Jack Daniel's in a battle over whether a dog toy infringed and diluted Jack Daniel's trademarks and trade dress. The decision has (for now) preserved courts' longstanding framework for balancing freedom of expression with the protection of trademark rights, but has sharpened the boundary between the First Amendment and Lanham Act when trademark rights and creative expression collide.

One of the most famous whiskey distillers in the world, Jack Daniel's is renowned in particular for its hallmark Old No. 7 Tennessee Whiskey. The Old No. 7 whiskey is known for its iconic branding (including the shape of the bottle and stylized black and white label, and "trademarks "Old No. 7" and the arched Jack Daniel's logo). Commensurate with the fame of the Jack Daniel's brand, Jack Daniel's offers a wide range of merchandise to fans, including pet toys.

VIP is a pet toy company who offers chewable iterations of popular beverages under its "Silly Squeakers" product line. Replete with pet-friendly puns, VIP's toys include rubberized riffs on "Johnny Walker" whiskey ("Doggie Walker"), Heineken beer ("HeinieSniff'n"), Mountain Dew soda ("Mountain Drool") and other household brands. In 2014, VIP released a "Bad Spaniels" toy shaped like Jack Daniel's iconic whisky bottle, replacing "Old No. 7 Tennessee Sour Mash Whiskey" and "40% ALC. BY VOL." with playful descriptions appealing to furry companions, including "The Old No. 2 on your Tennessee Carpet" and "43% POO BY VOL." and "100% SMELLY." A disclaimer ("This product is not affiliated with Jack Daniel's Distillery") and VIP's Silly Squeakers and Bad Spaniels logos appeared on the back of the toy.

Jack Daniel's objected to the toy, alleging trademark and trade dress infringement and dilution, and a far from playful tug-of-war ensued. The US District Court for the District of Arizona found infringement and dilution on both Jack Daniel's trademarks and trade dress. On appeal, the Ninth Circuit reversed-in-part. While accepting the district court's determination that consumers were likely to be misled under the traditional likelihood of confusion test, the Ninth Circuit found no infringement or dilution, determining that the parody on Jack Daniel's branding invoked VIP's First Amendment freedoms of expression under the decades-old balancing test between First Amendment rights and Lanham Act protection set out in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989). Courts in all circuits have relied on Rogers to demarcate trademark infringement from artistic expression, including most recently in Hermès Int'l v. Rothschild, No. 1:22-cv-00384-JSR (S.D.N.Y Jan. 14, 2022) (holding that "furry" NFT iterations of Birkin handbags infringed Hermes' trademark and did not constitute protected speech under Rogers). Jack Daniel's petitioned for certiorari, and the US Supreme Court heard oral argument on March 22, 2023.

In an opinion delivered by Justice Kagan, the Supreme Court vacated the Ninth Circuit's holding, rejecting its reliance on Rogers in this context. Declining to overturn Rogers or cast doubt upon its merits, the justices chose "a narrower path." Although Rogers may still be appropriate with respect to VIP's general parody on Jack Daniel's branding (e.g., "The Old No. 2 on your Tennessee Carpet"), the Supreme Court clarified that Rogers "has always been a cabined doctrine" that is not appropriate in situations "when an alleged infringer uses a trademark…as a designation of source for the infringer's own goods." Because VIP used a riff on Jack Daniel's trademarks as a designation of source for VIP's own goods, supported by VIP's earlier allegation that VIP "own[s]" and "use[s]" the "'Bad Spaniels' trademark and trade dress for its…novelty dog toy" and VIP's use of the Bad Spaniels logo in proximity to VIP's Silly Squeakers product mark on the packaging, the justices held that Rogers does not apply because "the infringement claim here rises or falls on likelihood of confusion," not freedom of expression. Although agreeing that Rogers was not appropriate in this context, Justices Gorsuch, Thomas and Barrett cast doubt on whether Rogers should remain the gold standard for parody in other circumstances, saving that issue for another day.

After agreeing that Rogers did not apply here, the justices dug into the lower courts' trademark infringement and dilution analysis, tearing through multiple flaws.

The Ninth Circuit found that no dilution by tarnishment existed because VIP's use was noncommercial based on VIP's parody on the Jack Daniel's brand, but the Supreme Court pointed out that this assessment directly conflicts with the language of the Lanham Act on permissible fair use. The Lanham Act's fair use exception (which includes parody) expressly does not apply when the use is a "designation of source for the person's own goods or services," as is the case here. §1125(c)(3)(A). Because the "Bad Spaniels" mark served to identify the source of the toy, parody does not apply.

On the issue of trademark infringement, the Court found that the lower courts erred by failing to appropriately consider whether VIP's parody could have created sufficient contrasts with Jack Daniel's trademarks and trade dress to reduce any likelihood of confusion. To be clear, parody "matters in assessing confusion because consumers are not so likely to think that the maker of a mocked product itself is doing the mocking." Accordingly, the justices noted that VIP's numerous riffs on Jack Daniel's trademarks and trade dress "may make a difference in the standard trademark analysis," because while "[s]elf-deprecation is one thing; self-mockery is far less ordinary." In a concurring opinion, Justice Sotomayor echoed this point, underscoring the importance of considering parody during a likelihood of confusion analysis, and that traditional likelihood of confusion evidence (namely surveys) must not be allowed to drive the infringement analysis when parody is at play, which "would risk silencing a great many parodies."

The Supreme Court vacated the Ninth Circuit's judgment and remanded for further consideration of whether consumers are likely to mistakenly believe that the "Bad Spaniels" toy is a Jack Daniel's product under the likelihood of confusion analysis, and whether dilution by tarnishment existed, consistent with the Lanham Act.