Following yet another strongly-worded and unfavorable ruling for Louis Vuitton in its copyright infringement, and trademark infringement and dilution case against “parody” bag-maker My Other Bag, this time from the Second Circuit Court of Appeals, the Paris-based design house has entered a rather strongly-worded filing of its own. The brand is seeking a hearing en banc – or a hearing before the full court of all the appeals judges.
You may recall that in December 2016, the Second Circuit Court of Appeals affirmed the Southern District of New York ("SDNY")’s January 2016 ruling that the inexpensive “My Other Bag” canvas totes, which bear cartoon imagery of Louis Vuitton trademarks, are, in fact, protected by the parody defense. As such, the court held that My Other Bag is not on the hook for copyright infringement or trademark infringement or dilution, as asserted by Louis Vuitton. The appeals court - like the SDNY - was also quick to call out Louis Vuitton - the world's most valuable design brand - for its failure to take a joke, which was been an ongoing theme in this case, which was originally filed in June 2014.
According to Louis Vuitton's request for a hearing en banc - filed in mid-January - not only did the SDNY rule erroneously in the case, the Court of Appeals did, as well - on several counts. Per Louis Vuitton, the Second Circuit panel ruled in conflict with existing case law (the law as established by the outcome of former cases) in the Second Circuit and against the case law set forth by the Supreme Court.
In particular, Louis Vuitton has three significant qualms with the Second Circuit panel’s ruling: (1) The decision conflicts with Supreme Court and Second Circuit precedent on what constitutes parody; (2) The decision conflicts with the Supreme Court’s decision in Hana Financial on how to determine commercial impression; and (3) A policy argument – the decision will seriously undermine Congress’s purposes under the Trademark Dilution Revision Act (“TDRA”).
(Note: Trademark dilution - a cause of action separate from trademark infringement - recognizes the potential injury to a trademark holder in cases where there is not a likelihood of confusion. Unlike a trademark infringement claim, which requires the plaintiff to show a likelihood of confusion, for dilution, a plaintiff need only show that the defendant’s mark is likely to cause dilution of plaintiff’s mark).
(1) The Second Circuit's decision conflicts with Supreme Court and Second Circuit precedent on what constitutes parody.
According to Louis Vuitton’s filing, both the TDRA and numerous existing decisions of the Second Circuit establish that “a parody must be directed at the senior user or the senior user’s trademark itself, and cannot be merely vague social criticism or comment, particularly if used to promote and sell defendant’s own products. Supreme Court precedent in the copyright context confirms this view. (Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 580 (1994)."
The design house asserts, “As this Court recognized in [Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 588 F.3d 97 (2d Cir. 2009)], the parody exclusion under the TDRA does not apply unless the defendant’s use of the plaintiff’s famous trademark is for the purpose of ‘identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner.' [...] A parody must be directed at the trademark owner or its trademark.”
In summary: Louis Vuitton claims that the parody must be specific to its brand - and not speak to luxury brands or luxury consumption, for instance, in general - in order to constitute a parody, and thereby, shield the defendant from liability.
Louis Vuitton further claims that these decisions, among others, establish that “a mere humorous use” or “gentle satire” of another’s trademark for commercial purposes does not meet the legal requirements of a parody, “particularly when the claim of parody comes only after-the-fact and is contrary to record evidence.”
With the aforementioned case law in mind, Louis Vuitton asserts that My Other Bag’s use of its trademarks does not constitute parody. It further asserts that in finding that My Other Bag's bags are, in fact, parodies of its trademarks, “the decision of the district court, as affirmed by the [Second Circuit] panel, essentially rewrites and expands the definition of parody in a manner not consistent with existing precedent.”
(2) The Second Circuit's decision conflicts with the Supreme Court’s decision in Hana Financial on how to determine commercial impression.
Louis Vuitton's second point is a procedural one. In terms of determining "commercial impression" (in layman's terms: the meaning or idea a trademark conveys to consumers), LV asserts that as established by the Supreme Court in Hana Financial, Inc. v. Hana Bank, 135 S. Ct. 907 (2015), and the Second Circuit in Louis Vuitton Malletier, S.A. v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532 (2d Cir. 2005), "under trademark law, the question of commercial impression (which is part of the parody inquiry) is a fact question for the jury, not an issue to be determined by the court unless there is no conflicting evidence."
Louis Vuitton claims the courts got this wrong - procedurally, as “the district court and the [Second Circuit] panel determined by themselves that the commercial impression of My Other Bag’s use of the [Louis Vuitton] trademarks was to create a joke." Yet, according to Louis Vuitton, “There is no evidence My Other Bag was poking fun at, or even commenting on, ‘society’s larger obsession with status symbols’ … Rather, it wanted that status for its own bags, by associating with Louis Vuitton.”
Louis Vuitton asserts that My Other Bag “did not intend to parody the plaintiff or its mark and did not promote its products as a parody. There was no parodic intention here, nor any evidence consumers perceived a parody, but only an impermissible use by My Other Bag of the plaintiff’s marks to promote and sell its own products.”
Therefore, the design house claims that “in making this determination, [the courts] completely disregarded the evidence to the contrary that My Other Bag’s actual intent was to sell its own bags as stylish and fashionable and a complement to, or even substitute for, the designer handbags its customers love … The district court and the panel likewise substituted their own views for how consumers would perceive My Other Bag’s use of the LV Marks, deciding the issue of commercial impression as a matter of law on that basis.”
As such, both the district court and the panel erred, according to Louis Vuitton, as they "arrogated the decision regarding parody to themselves, notwithstanding ample record evidence from which a jury could conclude differently.”
(3) The Second Circuit panel’s decision will seriously undermine Congress’s purposes under the TDRA.
Finally, Louis Vuitton takes a very strong stance about the effects that such a decision will have on the purpose of the TDRA (which was designed to protect famous marks from uses that blur their distinctiveness or tarnish their reputation). According to Louis Vuitton:
The effect of the panel’s decision is to eviscerate TDRA and its associated trademark and copyright statutes. Now, a person using another’s famous trademark can escape liability by arguing, after-the-fact, that the effect is humorous or really a joke, or some kind of social satire. If, despite the evidence, a court itself finds the matter humorous, the junior user’s use of the trademarks for its own commercial gain will go unchecked, creating a likelihood of blurring the distinctiveness of the famous trademark it is using. Because TDRA relates exclusively to famous marks, there is always a risk that the junior user can, with a lesser product, find some reason to claim a “gentle satire” or a joke, thereby free riding on the investment the trademark owner has made in its marks.
Hearing En Banc
As for whether the court will grant a hearing en banc, it is unlikely. While some courts, like the U.S. Supreme Court and the supreme courts in most U.S. states, always hear decisions en banc, other courts, like the U.S. Courts of Appeals and many state courts of appeals, usually have cases assigned to a “panel” of three or more judges, and only hear matters en banc when specifically requested and granted.
An en banc request asks the court to hear the case again, this time with all of the court’s judges listening to the case. According to the Federal Rules of Civil Procedure, “a majority of the circuit judges who are in regular active service may order that an appeal or other proceeding be heard or reheard by the court of appeals in banc. Such a hearing or rehearing is not favored and ordinarily will not be ordered except (1) when consideration by the full court is necessary to secure or maintain uniformity of its decisions, or (2) when the proceeding involves a question of exceptional importance.”
In short: Not all requests for a rehearing en banc are granted. Often, an appeals court will not take the time to rehear a case en banc unless the case includes a question of major importance (like how to interpret a new law), or the panel’s opinion appears to contradict state or federal law or precedent, the latter of which is at issue here according to Louis Vuitton.
UPDATED (2/14/2017): The Second Circuit will not rehear Louis Vuitton's suit against My Other Bag, the appeals court said Monday. "In a one-page order, the court said it declined to give the suit a panel or en banc rehearing but did not give a reason, letting stand its December ruling that ended claims against California retailer My Other Bag," according to Law360.