The Supreme Court recently issued opinions in two important intellectual property cases clarifying the scope of protection for rightsholders facing fair use and parody defenses. First, in Jack Daniel's Properties, Inc. v. VIP Products LLC, the Court unanimously held that First Amendment protections will not protect alleged infringers who use a mark as a source identifier for their goods, regardless of whether the mark also conveys an expressive message. This decision follows close on the heels of the Court's recent decision in the Andy Warhol Foundation v. Goldsmith copyright case, which shed light on whether and to what extent a work is transformative. We previously covered an overview of the Jack Daniel's case and oral arguments and discussed both cases during our Copyright Roundup presentation earlier this year.
Together, these decisions strengthen the protections that intellectual property creators and rightsholders have against others who seek to capitalize on those creations without proper authorization.
Jack Daniel's v. VIP
As we noted in earlier alerts, Jack Daniel's v. VIP involved a squeaky dog toy called "Bad Spaniels" that was designed to look like a bottle of Jack Daniel's whiskey. The Court spent the majority of its opinion tackling the issue of whether the Second Circuit's Rogers test (or any other First Amendment test) is an appropriate threshold inquiry for trademark infringement claims under the Lanham Act for "expressive works." Under Rogers, a trademark infringement claim may be dismissed prior to analyzing the merits of the claim if the work is "expressive," and either "has no artistic relevance to the underlying work" or "explicitly misleads as to the source or content of the work."
The Court disagreed with the Ninth Circuit's expansion of the Rogers test to apply to any expressive works. Under that scenario, the Court reasoned that few cases would even reach the substantive "likelihood of confusion" test under the Lanham Act because all marks at some level include expressive content. The Court also noted that the Rogers test has always been a "cabined doctrine." The Second Circuit—and even the judge who authored Rogers—has not afforded First Amendment protections for marks that are used as source identifiers for goods.
In formulating its holding, the Court drew distinctions between expressive works protected under Rogers and marks used as source identifiers in prior cases. For example, the Court noted that in Mattel v. MCA Records (2002), the use of the Barbie mark in the "Barbie Girl" song merely expressed a parody of a Barbie but did not serve as a source identifier. Cases such as Harley-Davidson v. Grottanelli (1999) and Tommy Hilfiger v. Natura Labs (SDNY 2002), however, were not granted Rogers protection. In these cases, a mechanic used a parodied bar-and-shield logo and a dog perfume-maker used a "Tommy Holedigger" mark as a source identifier, respectively, for goods and services, despite both marks also having an expressive and "somewhat humorous" message.
The Court reasoned that VIP, too, used Bad Spaniels as a source identifier given its conduct of registering marks for its other similar parody products, VIP's admission in the complaint that Bad Spaniels is a source identifier, and inclusion of the Bad Spaniels mark on the back label of the product packaging.
Despite not having Rogers protection, the Court determined that source identifiers such as Bad Spaniels that also serve as expressive content to poke fun at brands such as Jack Daniel's may be considered by a factfinder when determining whether a consumer is likely to be confused. The Court thus noted that "consumers are not so likely to think that the maker of a mocked product is itself doing the mocking." But, in the end, because VIP used its mark as a source identifier, likelihood of confusion must be evaluated. The Court also quickly decided that the "non-commercial use" exception does not apply to trademark dilution claims.
Justice Kagan made clear that the opinion does not address the merits of the Rogers test or the full scope of the "non-commercial use" exception, but only whether they apply to marks with source-designation functions. In a concurring opinion, Justices Sotomayor and Alito cautioned that the results of consumer surveys should not be given undue weight or drive the likelihood of confusion analysis. Justices Gorsuch, Thomas, and Barrett in their own concurring opinion noted that it is unclear from what authority the Rogers test derives, which is a question for a later day.
Andy Warhol Foundation v. Goldsmith
In Andy Warhol Foundation v. Goldsmith, the Andy Warhol Foundation licensed to magazines artwork by Andy Warhol that had incorporated a photograph of the musician Prince. This photo had been taken and copyrighted by photographer Lynn Goldsmith. The Court determined that the Foundation's practice of licensing the artwork did not constitute a fair use of the photograph under copyright law. At issue was the first fair use factor, which considers "the purpose and character of the use including whether such use is of a commercial nature . . . ." 17 U.S.C § 107(1). (The other factors were conceded to disfavor fair use.)
The Foundation argued that although Warhol had incorporated a photograph by Lynn Goldsmith into his work, Warhol made alterations to the photograph, which resulted in a new meaning or message that qualified as fair use. The Court noted that the first fair use factor (and the related consideration of "transformativeness") are matters of degree—the question is "whether and to what extent the use at issue has a purpose or character different from the original. The larger the difference, the more likely the first factor weighs in favor of fair use. The smaller the difference, the less likely." Here, any new message conveyed by the Warhol print was outweighed by the fact that the Foundation's license of the print and Goldsmith's original "share substantially the same purpose"—"portraits of Prince for use in magazines to illustrate stories about Prince." That did not constitute fair use.
The majority opinion made clear that its holding was limited to the Foundation's practice of licensing the Warhol print to a magazine, and not to the "creation, display, or sale of" Warhol's original prints. And Justice Gorsuch, joined by Justice Jackson, wrote a concurring opinion to emphasize that point, noting that the question before the Court was to evaluate "the purpose and character of the challenged use"—which included licensing the Warhol print for use in magazine articles about Prince, in competition with Ms. Goldsmith. (It also left open the ultimate question of infringement.)
Justice Kagan, joined by Chief Justice Roberts, wrote a sharp dissent, suggesting that the majority conflated the first fair use factor with the fourth [the effect of the use upon the potential market for . . . the copyrighted work," 17 U.S.C. § 107(4)], and ignored the significant alterations made by Warhol. This, according to the dissent, "will stifle creativity" among other impacts.
These barbs in the dissent drew sharp rebukes in the majority opinion, which noted, among other things, that there are numerous "escape valves" in copyright law to protect creativity, including idea-expression dichotomy, the standard for actionable infringement, and a proper application of fair use. The majority concluded that here, the Foundation had not justified its commercial use of the photograph of Prince (as embodied in Warhol's work), specifically in licensing it to magazines for use alongside articles about Prince. This failed to satisfy the first fair use factor.
These two decisions held in favor of intellectual property creators and rightsholders. But they rested in part on key facts—VIP's use of Bad Spaniels on its packaging or the Andy Warhol Foundation's licensing practices—that challengers might rely on to distinguish their holdings. It will be interesting to see how district courts and litigants apply these decisions.
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