Ruff outcome as Bad Spaniels found to have tarnished Jack Daniel's trademarks

The sellers of "Bad Spaniels" dog toys have left court with their tails between their legs this week after the latest decision in VIP Products LLC v. Jack Daniel's Properties. In its judgment dated 21 January, the US District Court for the District of Arizona ("the Court") declined to consider VIP's constitutional challenge to the dilution by tarnishment provisions of the Lanham Act. The Court found the dog toys did not create a likelihood of confusion, but did tarnish Jack Daniel's trademarks and trade dress.

Barking up the wrong tree for a constitutional challenge

Even Kats enjoy a "Bad Spaniels" chew toy.
Original photo by Nadiye Odabaşı via Pexels.

This long-running dispute between the well-known whiskey producer and the seller of parodic chew toys has received a lot of attention [Merpel: any readers who are still unaware of the facts must've found an excellent spot to curl up for a nap for the last ten years]. Following the US Supreme Court decision in 2023 (covered by the IPKat here), the case was remanded to the Ninth Circuit, which in turn remanded the matter to the District Court.

On remand before Judge McNamee, VIP argued that the Lanham Act's prohibition on trademark dilution by tarnishment (15 U.S.C. § 1125(c)(2)(C)) amounted to unconstitutional viewpoint discrimination contrary to the First Amendment protections for freedom of speech. This was different from the issues addressed by the US Supreme Court, which found that the Bad Spaniels dog toy was not an "expressive work" to which the Rogers v Grimaldi test applied, but instead was (at least partly) used for source identification, and therefore wasn't entitled to heightened First Amendment protection. 

Jack Daniel's argued that VIP had waived the unconstitutionality claim because it was not raised in the earlier proceedings. But VIP highlighted that there had been changes to the law - namely the US Supreme Court decisions in Matal v. Tam (2017) and Iancu v. Brunetti (2019) - in the intervening years since the litigation began in 2014.

The Court agreed with Jack Daniel's that the argument had been waived for the purpose of an appeal - but this was not necessarily true for a general remand. Therefore, VIP's constitutional challenge to the tarnishment provisions was not precluded by its failure to raise the argument in earlier proceedings. 

The problem? VIP hadn't moved to amend its pleadings to assert this constitutional challenge on remand. The Court noted that parties are required to affirmatively state any affirmative defence in the pleadings, otherwise it is waived. So, VIP missed the opportunity to have the Court consider whether dilution by tarnishment falls foul of the First Amendment.

Likelihood of Confusion

In the Supreme Court decision, there was little guidance about how parody should factor into the assessment of infringement. The only guidance was that the alleged infringing product must be a successful parody in order to avoid confusion, meaning that, in addition to "conjur[ing] up" the original, it must "create contrasts, so that its message of ridicule or pointed humor becomes clear." 

Jack Daniel's vs Bad Spaniels

The Court noted various precedents that found parodies to be successful or obvious even where there was no apparent message or commentary at all about the famous mark. Consequently, ""Bad Spaniels" need not contain some message of ridicule directed at Jack Daniel’s in order to succeed as a parody product." Instead, the Court found that Bad Spaniels achieved a humorous message "by juxtaposing the irreverent representation of the trademark with the idealized image created by the mark’s owner." 

Does it matter that dogs wouldn't get the joke? The Court disagreed with Jack Daniel's attempt to distinguish this case from previous decisions about "gag gifts", noting that "it is difficult to cast a dog chew toy in the form of a popular liquor bottle as anything other than a gag gift, even if the dog does not appreciate the humorous nature of it." [Merpel: Kats, on the other hand, always get the joke].

The Court still needed to undertake a likelihood of confusion analysis. The Supreme Court had recognised that non-confusing trademark parodies may not constitute actionable trademark infringement. Applying this to the intent factor for likelihood of confusion, Judge McNamee noted that the "foremost concern of the intent factor, then, is not the intent to capitalize on another trademark’s fame, but the intent to deceive consumers in doing so." In this case, VIP's intent was to create a parody product - not to confuse the public. 

Weighing this and other factors, and starting from the premise that a successful parody is unlikely to be confusing, the Court found that Jack Daniel's failed to show that the Bad Spaniels toys created a likelihood of confusion.

Tarnishment

Despite the findings on likelihood of confusion, Judge McNamee concluded that:

a parodic product that does not create confusion as to its source may still, by way of the irreverent message qualifying it as a parody in the first instance, create negative associations and reduce the value of the famous mark to its owner. Such is the case here. 

On the factor of reputation harm, the Court affirmed that evidence of actual harm was not required: a trademark holder need only show that there is a likelihood of dilution of the famous mark. Therefore, even though the expert testimony did not demonstrate actual harm, it could be given weight in the assessment of tarnishment. Specifically, the Court considered the evidence from a consumer psychology expert that the Bad Spaniels chew toys (with all their references to dog faeces) were likely to tarnish Jack Daniel's trademarks by creating negative associations and that:

such negative associations are particularly harmful for a company such as Jack Daniel’s because the goods it offers for sale involve human consumption and human consumption and canine excrement do not mix. [...] such associations are particularly harmful to Jack Daniel’s because Jack Daniel’s brand name along with its equity is a very important asset.

Given the Supreme Court decision, VIP could not benefit from the Lanham Act's fair use exclusion for parody because of its source-identifying use of the "Bad Spaniels" mark. Therefore, Jack Daniel's was successful on this ground and was able to obtain an injunction against VIP.

Final Thoughts

The Court acknowledged the irony that "the qualities on which "Bad Spaniels" runs afoul of the Lanham Act's cause of action for dilution by tarnishment are the very qualities that help "Bad Spaniels" to prevail on a trademark infringement claim, as they are the qualities that create contrasts with Jack Daniel’s mark by way of irreverent juxtaposition."

Given this legal conundrum, it is all the more disappointing that a procedural blunder foreclosed the opportunity to consider whether the dilution by tarnishment provisions are constitutional at all. The IPKat will need to keep herself entertained with some other humourous juxtapositions until there is another chance to raise this question.