Parody product fails to squeak through the cracks in dilution/infringement claim

VIP Products, LLC v. Jack Daniel’s Properties, Inc., No.
14-cv-02057 (D. Az. Sept. 27, 2016)
The court denied VIP’s motion for summary judgment on its
declaratory judgment action against JDPI, and also kicked out a number of VIP’s
defenses, leaving confusion and dilution claims for trial based on VIP’s “Bad
Spaniels” durable rubber squeaky novelty dog toy, which is in the shape of a
liquor bottle and features a wide-eyed spaniel over the words “Bad Spaniels,
the Old No. 2, on your Tennessee Carpet.” On the back of the Silly Squeakers
packaging for the Bad Spaniels toy, it states: “This product is not affiliated
with Jack Daniel’s.”

 VIP’s product, on left

VIP’s label

The court found that VIP couldn’t be engaged in nominative
fair use because this defense only applies where a defendant uses the plaintiff’s
identical mark or trade dress, which VIP didn’t.  “[I]t is the defendant’s very use of the
plaintiff’s identical trademark that makes the nominative fair use analysis
necessary rather than application of AMF Inc. v. Sleekcraft Boats, 599 F.2d 341
(9th Cir. 1979) which utilizes eight factors to focus on the similarity of the
trademarks used by the plaintiff and the defendant in order to determine
liability for likelihood of confusion in the marketplace.”  This is an extremely tone-deaf reading of New Kids, because it’s the reference to
the plaintiff, not the identicality of the marks, that drives the First
Amendment interests justifying a different liability test.  The fact that a trademark owner can claim
confusion based on a parodic reference to it makes the need for New Kids at least as great when the
reference also involves distortion.
Then, and arguably worse, the court found that VIP couldn’t
raise a First Amendment defense because its dog toy wasn’t an artistic or expressive
work.  Aaaaaaaaaaargh.  OK: (1) Both parties claim that the markings,
shape and coloration of the dog toy communicate a message, though they disagree
about what that message is.  That means
that the dog toy is expressive, even if it’s not a painting.  (2)  Expressive
is not the opposite of commercial speech, nor is it the opposite of “has
trademark significance”; the dog toy is not, in any event, commercial speech. (3)
The trademark owner’s claim seeks to suppress an allegedly infringing message,
not any nonexpressive characteristics of the dog toy: trademark regulates
communication, which doesn’t make it unconstitutional but does mean that
extending it beyond commercial speech is dicey business indeed. 
Nonetheless, the court found that regular Sleekcraft applied. “[T]he First Amendment
affords no protection to VIP because it is trademark law that regulates misleading
commercial speech where another’s trademark is used for source identification in
a way likely to cause consumer confusion.” 
Why is the design of the product commercial speech?  Because “VIP makes trademark use of its
adaptations of JDPI’s trademarks and the Jack Daniel’s trade dress to sell a
commercial product, its novelty dog toy,” and thus it has “the dual purpose of
making an alleged expressive comment as well as the commercial selling of a
non-competing product.”
A reasonable trier of fact could find likely confusion and
dilution of a famous mark. VIP also failed to exclude the report and the
testimony of JDPI’s dilution expert, Dr. Itamar Simonson, who opined on “the
implication(s) of the association between the Bad Spaniels toy and Jack
Daniel’s whiskey on JDPI’s trade dress and trademarks and the meaning of the
mark/brand to consumers.”

JDPI proposed that Simonson would discuss: 1) The basics of
consumer behavior and “how marks such as famous trade dress are represented in
memory”; 2) the basics of the “associative network memory model” which are
accepted by experts in the consumer behavior field; 3) the application of the
“associative network memory model” to the instant case; and 4) the conclusion
that VIP’s Bad Spaniels toy causes negative implication for JDPI’s trade dress
and marks and thus is likely to tarnish them. 
The court allowed his testimony as admissible based his knowledge,
training and experience rather than on his use of scientific evidence with a
testable, proven methodology.  Surveys,
focus groups, studies, or other real world tests weren’t required for him to
apply his expertise to the facts of the case.

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