The U.S. Supreme Court ruled VIP Products' squeaky, chewable dog toy designed to look like a bottle of Jack Daniel's whiskey both infringed and diluted the Jack Daniel's trademarks.
The fact the dog toy wasn't an exact replica of the Tennessee whiskey's label and bottle didn't make the infringements okay, Justice Elena Kagan wrote in the opinion. She noted that "on the toy, for example, the words 'Jack Daniel's' became 'Bad Spaniels.' And the descriptive phrase 'Old No. 7 Tennessee Sour Mash Whiskey' turns into 'Old No. 2 On Your Tennesse Carpet' . . . did not impress petitioner Jack Daniel's Properties," which owns the trademarks and believed Bad Spaniels had infringed the marks, "the argument ran, by leading consumers to think that Jack Daniel had created or was otherwise responsible for, the dog toy. And Bad Spaniels had diluted the marks, the argument went on, by associating the famed whiskey with, well, dog excrement."
Kagan noted that a trademark may "catch a consumer's eye, appeal to his fancies, and convey every manner of message. But whatever else it may do, a trademark is not a trademark unless it identifies a product's source (this is a Nike) and distinguishes that source from others (not any other sneaker brand). In other words, a mark tells the public who is responsible for a product."
That source-identification enables "customers to select the goods and services they wish to purchase as well as those they want to avoid," she wrote, adding, "the mark quickly and easily assures a potential customer that this item--the item with this mark– is made by the same producer as other similarly marked items that he or she liked (or disliked) in the past.
The other purpose of a trademark is to protect famous marks, thouse widely recognized by the public as designating the source of the mark owner's goods. Dilution of a famous mark can occur when there is an a similarity between two marks, one of them famous.
But there are exceptions to the dilution rule, Kagan recognized, including any "noncommercial use of a mark," or "fair use of a mark in connection with parodying, criticizing, or commenting upon the famous mark owner or its goods." The exclusion doesn't apply if the defendant uses the similar mark as its mark.
This case got to the Supreme Court from the 9th Circuit Court of Appeals, which, among other things, thoughtVIP Products' dog toy didn't infringe because it was an "expressive work: 'Although just a dog toy, and surely not the equivalent of the Mona Lisa,' it 'communicates a humorous message."
The 9th Circuit also held that the dog toy was a "noncommercial use," which would be an exception to the general rule. The “use of a mark may be ‘noncom-mercial,’” the 9th Circuit reasoned, “even if used to sell a product.” And here it was so, the 9th Circuit found, because it “parodies” and “comments humorously” on Jack Daniel’s.
The Supreme Court dismissed the 9th Circuit's arguments on the source designation issue: "Consumers are not so likely to think the maker of a mocked product is itself doing the mocking."
The primary mission of trademark law, Kagan explained, is to protect marks when used as source identifiers, and the cardinal sin under the law is to make some consumers think that one producer's products are another's.
VIP had rejected Jack Daniel's claim that Bad Spaniels diluted the Jack Daniel's trademark because it was "humorous" or a "parody." Kagan's opinion concludes that parody, criticism and commentary, humorous or otherwise "is exempt from liability only if not used to designate source."