Taking a Bite Out of the Brand?

By Brian Siff and Victoria Danta

Is imitation the sincerest form of flattery? Not according to brand owner Jack Daniel’s Properties, Inc., (“JDPI”), which owns the JACK DANIEL’S source identifiers for alcoholic beverages and other goods – most notably, whiskey.

For the better part of a decade, JDPI has been embroiled in a dispute with toy maker VIP Products LLC, (“VIP”), which makes humorous chew toys that allegedly parody well-known products. The toy shown below is at the center of this dispute, and features elements of authentic Jack Daniel’s® whiskey bottles and labeling, and dog-related puns, such as “BAD SPANIEL,” “OLD No. 2,” and “TENNESSEE CARPET”:

 

VIP Chew Toy

JDPI Bottle and Labeling

In 2014, JDPI accused VIP of trademark infringement and demanded that VIP cease all sales of the BAD SPANIELS chew toy. VIP then sued for a declaratory judgment, including a declaration of non-infringement. JDPI counterclaimed for infringement and related causes of action, including dilution of a famous trademark. The U.S. District Court for the District of Arizona applied a traditional “likelihood of confusion” analysis to JDPI’s claims, finding that confusion was likely on the basis of evidence that included actual confusion and a consumer survey. Notably, JDPI’s brand licensing program included pet products.

The District Court allegedly erred by not appropriately considering the First Amendment’s free speech protections and specifically, it did not properly consider the idea that the chew toy was a humorous parody, and that it was an expressive work entitled to protection.

In early-2020, the U.S. Court of Appeals for the Ninth Circuit ruled that the toy was, indeed, an expressive work protected by the First Amendment. Thus, VIP’s use of JDPI’s source identifiers was not actionable infringement, dilution or tarnishment. The Ninth Circuit held that the traditional likelihood of confusion test failed to account for the public interest when free speech rights are involved. The Ninth Circuit emphasized the toy’s humorous messages. Ultimately, the Ninth Circuit sent the dispute back to the District Court for further proceedings on JDPI’s infringement claims. Critics point out that the Ninth Circuit was the first anywhere to apply such strong free-speech protections, and that the holding conflicts with decisions from other Courts of Appeals (including the Second Circuit). Furthermore, some argue, the Ninth Circuit’s decision could encourage trademark infringement, by appearing to offer infringers protection if they can allege some minimal “humorous” aspect to their product.

When the dispute then returned to the District Court, the Court ruled for VIP, finding that the chew toy did not infringe upon JDPI’s rights, and that it was creative expression was protected by the First Amendment. However, the District Court encouraged the parties to appeal to the SCOTUS, as it believed the Ninth Circuit’s decision would create significant uncertainty.

Initially, SCOTUS rejected JDPI’s Petition for Certiorari, but JDPI was persistent; with the further urging of the District Court, JDPI repetitioned SCOTUS, and SCOTUS agreed to hear the appeal in late-November 2022.

The issues SCOTUS will resolve are as follows:

1) “Whether humorous use of another’s trademark as one’s own on a commercial product is subject to the Lanham Act’s traditional likelihood-of-confusion analysis, or instead receives heightened First Amendment protection from trademark-infringement claims.”; and

(2) “Whether humorous use of another’s mark as one’s own on a commercial product is ‘noncommercial’ under 15 U.S.C. §1125(c)(3)(C), thus barring as a matter of law a claim of dilution by tarnishment under the Trademark Dilution Revision Act.”

Various third parties have filed amicus briefs on the issue, including the American Intellectual Property Law Association, (AIPLA); Campbell Soup Company; Levi Strauss & Co. and Patagonia Inc.; and the International Trademark Association, (INTA).

Congress Overhauls FDA Cosmetics Authority in Year-End Appropriations Bill

On December 23, 2022, Congress significantly expanded the FDA’s regulatory authority over cosmetics as part of its year-end Consolidated Appropriations Act of 2023, the first major statutory change to the Food, Drug and Cosmetics Act regarding the regulation of cosmetics since 1938. Passed with bipartisan support and garnering industry approval, the Modernization of Cosmetics Regulation Act contains a number of key provisions, requirements and dates for compliance.

To read the full text of this Duane Morris Alert, please visit the firm website.

Legal Risks Of Anti-Aging Claims Highlighted by L’Oreal Case

It is a truth universally acknowledged that a woman over 30 must be in want of an eye cream. Or a serum. Or anything, really, so long as it recreates the appearance of youth, vitality or an actual night’s sleep.

The global market for anti-aging cosmetics is expected to reach $93.1 billion by 2027. But as illustrated by a recent decision from the U.S. District Court for the Southern District of New York, Lopez v. L’Oréal USA Inc., promises that a product can turn back time by “restoring skin” or “promot[ing] cell regeneration” can prove costly for brands looking to capitalize on this growing market.

Brands should be mindful of litigation and regulatory risk when making certain anti-aging claims.

To read the full text of this article by Duane Morris associate Kelly Bonner, which was originally published in Law360, please visit the firm website.

Sports Teams Should Take Care When Choosing Sponsorship Partners After FTX’s Collapse

The dramatic collapse last week of the cryptocurrency exchange FTX will also affect those teams, arenas and other sports companies that have naming rights and sponsorship agreements with FTX.

When a sponsorship partner undergoes a dramatic collapse like that suffered by FTX last week, sports teams that have partnered with the company for naming rights and other sponsorship agreements suffer losses on multiple fronts. First, of course, is the loss of the contractually guaranteed income that the team has taken for granted when budgeting for years to come. But beyond that is the reputational harm. Sports is about winning and losing, and no team wants to be associated with a loser.

To read the full text of this post by Duane Morris partner Alexander Chester, please visit the Duane Morris Sports Law Blog.

Efforts To Dismiss BIPA Claims Involving Virtual Try-On Technology Rejected by Illinois Federal Court

In a significant decision for retailers, Judge Manish Shah of the U.S. District Court for the Northern District of Illinois recently denied in part Defendant Estée Lauder’s motion to dismiss proposed class action claims that its consumer “try-on” technology violated the Illinois Biometric Information Privacy Act (“BIPA”).  The Court rejected Defendant’s personal jurisdiction argument, as well as claims that its website terms and conditions required Plaintiff to arbitrate her dispute, and that Plaintiff lacked standing to sue on behalf individuals that used websites Plaintiff herself did not visit. In a decision entitled Kukovec v. The Estée Lauder Companies, Inc., Case No. 22-CV-1988 (N.D. Ill.), the Court determined, however, that Plaintiff did not sufficiently plead that the cosmetics giant intentionally or recklessly violated consumers’ biometric privacy rights, and thereby dismissed those claims.  The ruling in Kukovec illustrates the ongoing legal risks for retailers in using “try-on” tech to enhance customer service.

To read the full text of this post by Gerald L. Maatman, Jr., Gregory Tsonis and Kelly Bonner, please visit the Duane Morris Class Action Defense Blog.

FTC Publishes Proposed Changes to Guides Concerning the Use of Endorsements and Testimonials in Advertising

The Federal Trade Commission (FTC) has announced proposed changes to its Endorsement Guides, 16 CFR Part 255, which assist entities in conforming endorsements and testimonials in advertising to the requirements of Section 5 of the FTC Act. FTC continues to review the guides, first published in 1980, as part of its ongoing regulatory review process.

To read the full text of this Duane Morris Alert, please visit the firm website.

INFORM Consumer Act Designed to Curb Counterfeits

In March 2021, the Senate reintroduced a revised version of a bill calling for online retailers to publish specific, verified information concerning high-volume third-party sellers of consumer products for their customers. The Integrity, Notification and Fairness in Online Retail Marketplaces (INFORM) for Consumers Act is directed toward putting an end to the online sale of stolen, counterfeit and unsafe consumer products.

In particular, online marketplaces that include high-volume third-party sellers would be required to authenticate vendors’ identities through essential identification and contact information in the hopes of preventing not only anonymous online sales of counterfeit goods, but also preventing organized retail crime rings from stealing from stores and reselling items online.

To read the full text of this Duane Morris Alert, please visit the firm website.

Blockchain and NFTs Are Smart, but Can They Revolutionise the Fashion Industry?

Following the worldwide disruption in retail due to COVID-19, sales of luxury goods are expected to grow as much as 25% in 2022. Much of this growth has been driven by e-commerce, with online sales totalling 23% of all luxury sales in 2020. Meanwhile, consumer sustainability demands have driven growth in luxury resale or rental markets, now worth an estimated $36 billion, while brands have expanded their reach into the brave new digital territory of the metaverse – the overlapping digital spaces in which we increasingly work, play, and consume.

Yet luxury’s digital embrace has been hampered by a concomitant rise in counterfeit goods in the physical and digital worlds.  Is blockchain the solution?

To read the full text of this article co-authored by Duane Morris attorneys Cindy Yang and Kelly Bonner, please visit the Multilaw website.

News For Retailers: New California Law Requires Gender-Neutral Displays for Children’s Items

By Anjuli M. Cargain

California Governor Gavin Newsom signed Assembly Bill (“AB”) 1084, requiring retail department stores in California to maintain a gender-neutral section to display toys and certain childcare items beginning January 1, 2024. The new law applies to retail department stores with 500 or more employees within California that are physically located in California; it expressly excludes out-of-state stores.   Continue reading “News For Retailers: New California Law Requires Gender-Neutral Displays for Children’s Items”

Common U.S. Visa Categories for the Fashion and Design Industries

The fashion and design industries employ individuals in various fields of specialization, both in “back office” design and production and “front office” presentation and merchandising, marketing/advertising and sales. To read the full text of this overview of common nonimmigrant and immigrant visa categories allowing employers in these industries to hire and retain foreign talent, written by Duane Morris attorney Susanne Heubel, please visit the Duane Morris Immigration Law Blog.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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