Overview
The Supreme Court heard two trademark cases back to back on Tuesday and Wednesday this past week. The first case, Abitron v. Hetronic, focused on the extraterritorial scope of proceedings under the Lanham Act, while the second case, Jack Daniel’s v. VIP Products, tackled the issue of parody, and how and when lower courts should consider the First Amendment rights of accused infringers. Both cases have incredibly important implications for trademark law moving forward.
Jack Daniel’s / Bad Spaniels
District and appellate courts have struggled for years with how to properly balance Lanham Act liability with First Amendment protections. The Jack Daniel’s appeal brought this issue to the forefront via a dog toy made by Respondent VIP Products. Clad in a square bottle and highly evocative of Petitioner Jack Daniel’s trade dress, VIP created a dog chew toy with the name "Bad Spaniels" and a reference to "Old No. 2," given that it purported to (but thankfully did not) contain dog waste.
Jack Daniel's prevailed at the district court level relying on, among other evidence, a consumer confusion study, but the Ninth Circuit reversed based on a broad interpretation of the Second Circuit’s Rogers test, allowing VIP to avoid liability on First Amendment grounds.
Jack Daniel's argued that the Rogers test is unnecessary given that the ultimate issue—whether consumers were likely to be confused—could be addressed under the long standing "multi-factor" tests adopted in various Circuits. And, according to Jack Daniel's, if consumers were in fact confused, the First Amendment should not save the day.
As expected, VIP leaned heavily into Rogers and argued that the multi-factor tests were not well-suited to address parody cases, or other cases involving First Amendment considerations. VIP argued that Rogers should effectively be used as a gatekeeper in such cases, and reach the "multi-factor" test only when Rogers is not satisfied.
Given the nature of the accused product, the argument was both interesting and amusing—and replete with a lot of "what if" hypotheticals. The Justices were interested in whether a "reasonable person" standard should be employed. Specifically, the Court inquired as to whether a reasonable person would find that the parody/expression was meant to be a joke or poke fun at the trademark holder. Additional questioning focused on whether any amount of "artistic expression" would suffice or whether some threshold level should be imposed. And finally, questioning concluded with a discussion as to whether the Bad Spaniels product was "non-commercial," even though it is sold in commerce for a profit.
While reading the tea leaves following an argument is often an exercise in futility, Justice Kagan seemed to be the most vocal in her leanings and seemed to challenge several of VIP's positions. She claimed to not understand the "joke," although she poked fun at her own sense of humor along the way. But Justice Kagan also pushed back on VIP’s non-commercial use position.
Additional clarity from the Court will be welcome in this area as brand owners on the wrong side of a joke and entrepreneurs looking to make such jokes continue to struggle with where the line is drawn.
The case is Jack Daniel’s Properties, Inc. v. VIP Products LLC, No. 22-148.
Abitron v. Hetronic and Foreign Conduct
Tuesday’s trademark case involved the important question of extraterritorial reach under the Lanham Act. The Abitron Petitioners are challenging a $113 million Oklahoma jury award (and 10thCircuit affirmance), where it was alleged that 97% of sales were foreign—products made by a foreign company in a foreign country and sold to foreign customers.
Petitioners suggest that the reach of the Lanham Act should be limited to domestic use of the trademarks and that the Tenth Circuit ruling extended the reach of the Lanham Act too far into foreign jurisdictions. Foreign trademark law and regimes, it was argued, were well positioned to address trademark disputes in those foreign countries. Respondent Hetronic leaned heavily on the Court's 1952 decision in Steel v. Bulova Watch, which held that the foreign conduct of a U.S. citizen that has a substantial impact on the scope of U.S. commerce sits squarely "within the jurisdictional scope of the Lanham Act."
The Solicitor General’s office, as an amicus curiae, argued that the Lanham Act extended beyond domestic use of a trademark, but not as far as the Tenth Circuit was willing to go, at least without a determination that there would be consumer confusion in the United States.
Like Wednesday, the Justices were very active with a litany of "what if" scenarios. For example, significant time was spent on a counterfeit Coach handbag scenario and if and when it would be appropriate to extend Lanham Act liability to manufacturers who sold overseas. The Solicitor General argued in favor of a "reason to know" standard, in that if the manufacturer had reason to know the products would end up in the U.S. market, the Lanham Act could extend out over that activity. That argument received some pushback from the Court, given the view that foreseeability should not play a role in whether or not U.S. consumer confusion was proximately caused by the activities of a foreign entity.
The resolution of this case is likely to have a significant impact on companies that face infringement and counterfeiting problems from foreign countries, particularly those with far less favorable or advanced intellectual property protection regimes.
The case is Abitron Austria GmbH, et al. v. Hetronic International, Inc., No. 21-1043.
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Decisions in both cases are expected by late June before the Court's term ends. We will of course, provide information on these decisions when they are issued by the Court. In the meantime, relevant briefs can be accessed below. And if you have questions or are interested in discussing these or other IP-related issues, please let us know.
Links to Jack Daniel’s v. VIP Products briefs:
- Petitioner Jack Daniel’s opening brief filed January 11, 2023
- Respondent VIP Products’ responsive brief filed February 16, 2023
- Petitioner Jack Daniel’s reply brief filed March 10, 2023
Links to Abitron v. Hetronic briefs:
- Abitron Petitioners’ opening brief filed December 19, 2022
- Respondent Hetronic’s responsive brief filed January 27, 2023
- Abitron Petitioners’ reply brief filed February 27, 2023
