Briefing: June 9, 2023

SCOTUS Sides with Jack Daniel’s, LV NFTs, EPR Legislation & More

The Supreme Court issued its opinion in Jack Daniel’s v. VIP Products on Thurs., stating that “[w]hen an alleged infringer uses a trademark as a designation of source for the infringer’s own goods, the Rogers test does not apply.” Siding with the whiskey-maker, the unanimous court – in a decision authored by Justice Kagan – vacated the Ninth Circuit’s ruling that VIP’s “Bad Spaniels” dog toy is an expressive work entitled to First Amendment protection and thus, subject to a threshold determination under Rogers.

First things first: While there were hopes that SCOTUS might take a definitive stance on the Rogers test, it didn’t, specifically stating that it would not decide “whether Rogers has merit in other contexts.” What the court did do was rein in the Ninth Circuit’s sweeping approach to the application of Rogers, taking issue with the Ninth Circuit’s finding that “Bad Spaniels was automatically entitled to Rogers’ protection because it ‘communicate[d] a humorous message.’”

In short: The court held that Rogers’ applicability is limited to cases where the defendant does not use the TM at issue as a source identifier: “When a mark is used as a source identifier, the First Amendment does not demand a threshold inquiry.” As such, the name of the game here (and where there are still looming Qs) is the use of TMs as TMs.

As prof. Alexandra Roberts puts it, “The infringement holding [here] is narrow: a defendant cannot avail itself of the Rogers test when it uses matter as a mark, rather than ‘solely to perform some expressive function’ like [Aqua did with its song] Barbie Girl.” And if a mark does both, that does not change the result, per SCOTUS. In fact, “Few cases would even get to the likelihood-of-confusion inquiry if all expressive content triggered the Rogers filter” because … “TMs are often expressive, in any number of ways.”

Moving on … the court stated that VIP “conceded that it used the Bad Spaniels TM & trade dress as source identifiers,” and that it has “said & done more in the same direction with respect to Bad Spaniels and other similar products.” (VIP registered the names of other parody toys – but not “Bad Spaniels” – as TMs.) As such, “the only question remaining is whether the Bad Spaniels TMs [which include the Bad Spaniels name, as well as the logo & bottle trade dress] are likely to cause confusion.”

Is Rogers safe going forward? A read between the lines of SCOTUS’ view of the test – which offers an escape from the likelihood-of-confusion inquiry and a shortcut to dismissal” – suggests that it might not be long for this world. Add to that, Justice Gorsuch’s concurrence (joined by Thomas and Barrett), which is in full here …

What About Parody? “Although VIP’s effort to parody Jack Daniel’s does not justify use of the Rogers test, it may make a difference in the standard TM analysis,” the court said. “A trademark’s expressive message – particularly a parodic one, as VIP asserts – may properly figure in assessing the likelihood of confusion,” the court states, citing Chewy Vuitton (parody “influences the way in which the [likelihood-of-con-fusion] factors are applied”). And the court remanded the issue of confusion back to the lower court.

Additional points(1) Dilution: The court held that the “the use of a mark does not count as noncommercial just because it parodies, or otherwise comments on, another’s products.” So, that was a win for Jack Daniel’s; and (2) VIP’s fate: It seems from the court’s view on the role of parody in the LOC determination that VIP still has a chance. Penn law prof. Jennifer Rothman pondered, “Given the increased importance of whether a defendant’s use is use as a mark, one wonders if VIP, on remand, will have an opportunity to narrow what is considered to be its TM uses. For ex., could VIP challenge on remand whether its dog toy uses the bottle shape as a mark for its own product or instead contend that only the name (Bad Spaniels) & its logo are source-identifiers subject to the Supreme Court’s analysis and subsequent infringement and dilution analysis?”

In other SCOTUS news … this week, the court granted cert. for In re Elster, in which California-based lawyer Steve Elster is angling to register “Trump too small,” a jab coined by Sen. Rubio during the 2016 presidential race, for use on t-shirts. The USPTO rejected the application on the basis that Elster needs Trump’s written consent. The Fed. Circuit disagreed, finding that the USPTO’s denial amounts to a free-speech violation. Among other things, counsel for Elster argues that the case at hand is no different from Matal v. Tam & Iancu v. Brunetti, in which SCOTUS “concluded that the [registration] restriction significantly burdened private speech & violated the First Amendment.”

Some Legislation Updates …

– Senators Michael Bennet (D-Colo.), Todd Young (R-Ind.), and Mark Warner (D-Va.) introduced the Global Technology Leadership Act, which would establish an Office of Global Competition Analysis to assess how the U.S. fares in key emerging technologies – such as AI – relative to other countries to inform U.S. policy and strengthen American competitiveness.

– On the fashion/retail legislation front: California’s Responsible Textile Recovery Act of 2023 is worth keeping an eye on. Introduced in Feb., the bill (if passed) will require apparel & other textiles producers to implement and fund an extended producer responsibility program.

Some Litigation Updates …

– In Re Ethereummax Investor Litigation: C.D. Cal. Judge Michael Fitzgerald refused to dismiss the amended class action complaint accusing Kim Kardashian, Floyd Mayweather & NBA hall-of-famer Paul Pierce of “misleadingly promot[ing]” EMAX tokens, while “failing to adequately disclose [the] material connections” at play.

– Nike v. USAPE: Nike lodged an opposition to BAPE’s motion to dismiss, in which is argues (once again) that its complaint satisfies the pleading requirements for both registered & unregistered trade dress.

– J. Doe v. Github, et al: On the heels of the court granting the defendants’ motion to dismiss in part in this generative AI-focused copyright case in May, the plaintiffs filed an amended complaint this week. More to come on this soon.

– Andersen v. Stability AI: The plaintiffs lodged an opposition to Stability AI’s and Midjourney’s motions to dismiss, as well as an opposition to DeviantArt’s anti-SLAPP motion. (You can find those filings here.)

In the biggest web3 news of the week: Louis Vuitton launched NFTs on Friday. The “VIA” project – which consists of “connected products,” namely, a combination of a digital + physical trunks – “explor[es] a new facet of its savoir-faire with the first digital trunk from the Maison.” LV calls the project a “testament to [how] digital craftsmanship weaves the real with the dream to create the exceptional.” The TDLR from Megan Kaspar, MD at web3 investment firm FirstLight …

In some deal-making news in the fashion/retail, tech & web3 segments …

– Blk Dnm has been acquired by ChromaWay, marking the first fashion industry acquisition by the Swedish blockchain developer.

– Prada & Zegna have joined to acquire a minority stake in knitwear supplier Luigi Fedeli e Figlio. (Sound familiar? They’ve done this before.)

– Swoperz, a resale marketplace for kids apparel, has raised £250k in a pre-Seed round.

– In a nod to the enduring appeal of alternative textiles, mycelium-maker Ecovative Design has raised $30M in a Series E.

– You can find the latest in AI funding here. One standout: Impact Analytics, which provides AI-based solutions for supply chain & merchandise planning in retail, has closed a new round.

– Supply chain mapping & monitoring software startup Sourcemap has raised $20M in a Series B.