2023 IP Outlook: Trademark and Copyright Supreme Court Update

VIP Products v. Jack Daniel’s

The Supreme Court’s ruling in this case could put an end to inconsistent treatment of the First Amendment parody defense in trademark law. In the most recent development, the Supreme Court will review the following questions:

• How far does First Amendment protection extend regarding humorous, commercial use of a third-party trademark?
• Can the humorous use of a third-party trademark on a product offered for sale be considered noncommercial use (and therefore evade a dilution claim)?

This is the second time Jack Daniel’s filed a petition for certiorari in connection with this case. The first petition on the same issue was denied by the Supreme Court without comment.

Looking ahead:

• The Supreme Court’s decision in VIP Products v. Jack Daniel’s should clarify the strength—or limitations—of a First Amendment parody defense.
• The decision may open (or close) the door to further litigation for trademark infringement and dilution regarding parody products—particularly if the Court leaves unanswered questions about what qualifies as an expressive work (or not).
• The decision should provide helpful guidance both for parties creating products that parody third-party trademarks and for trademark owners.

Notable cases with similar parody defense issues include Louis Vuitton v. My Other Bag (purses featuring images of Louis Vuitton bags and other designer handbags), Louis Vuitton v. Haute Diggity Dog (Chewy Vuitton dog toys) and Smith v. Wal-Mart Stores, Inc. (WAL*OCAUST products).

Abitron Austria GmbH v. Hetronic International, Inc.

In this case, the Supreme Court’s ruling could resolve a circuit split regarding the correct test for whether the Lanham Act should be applied extraterritorially. In the underlying case on appeal, the US Court of Appeals for the Tenth Circuit largely followed the US Court of Appeals for the First Circuit’s McBee test. Under the test, if the defendant is not a US citizen and its conduct has a substantial effect on US commerce, the court should consider whether the extraterritorial application of the Lanham Act would create a conflict with foreign law. For the first time since the 1950s, the Supreme Court will consider whether the Lanham Act can apply extraterritorially, even to foreign sales that never reached the United States or confused US consumers.

Looking ahead:

• This case is particularly timely given that counterfeit goods continue to be a significant issue for brand owners and the public generally across a broad scope of industries. Even if not intended for the US market, counterfeit goods can make their way into US commerce and to US consumers. The decision may impact a company’s ability to obtain damages for international trademark infringement.
• The Supreme Court’s decision may also provide trademark owners with another tool for tackling the increase of foreign counterfeit goods.

Andy Warhol Foundation for the Visual Arts v. Goldsmith

Touching the states of two of the world’s best-known artists, this case addresses whether Warhol’s Prince Series (a set of 15 prints created from Lynn Goldsmith’s photograph of Prince) qualifies as a transformative work of the original such that the prints are protected via fair use. The case focuses on the distinction between derivative works and transformative works and the scope of the fair use doctrine. If Warhol’s famous Prince Series is a transformative work, then it may be protected under the fair use doctrine. If it is a derivative work, then it may constitute copyright infringement, since the right to make a derivative work is one of the exclusive rights granted to copyright owners.

This distinction is the subject of a split between the US Court of Appeals for the Ninth Circuit and the US Court of Appeals for the Second Circuit. Many influential organizations filed amicus briefs in this case, including the Guggenheim, several Harvard Law School groups, various photographer associations and guilds, and the Recording Industry Association of America.

Looking ahead:

• The implications of this decision could be far-reaching, as any further guidance about where a derivative work ends and a transformative work begins arguably impacts the scope of protection offered under copyright law.
• For example, this case may help clarify whether NFTs (and other types of digital art) are independent works protected via the fair use doctrine or if they require a license from the original copyright holder.