Chew on This: What the Bad Spaniels Trademark Decision Means for Free Expression and the Metaverse

In Jack Daniel’s Properties, Inc. v. VIP Products LLC, a unanimous Supreme Court sided with Jack Daniel’s and sent dog toy maker VIP Products scurrying away with its tail between its legs. The decision held that VIP’s commercial use of a dog toy, designed to look like a bottle of Jack Daniel’s whiskey, complete with droll variations on Jack Daniel’s trademarks, is not entitled to First Amendment protections for artistic expression under the “Rogers test.” Rogers v. Grimaldi, 875 F. 2d 994, 999 (2d Cir. 1989). Instead, it is subject to the Lanham Act’s likelihood-of-confusion test to determine if consumers would be likely to confuse VIP’s dog toy with Jack Daniel’s, no matter how parodic. While the justices felt that artistic expression versus trademark use was cut and dried in this instance, that is not always the case in litigation focused on NFTs and the Metaverse.

With the above holdings in place, the Jack Daniel’s Court saw no need to get into the Rogers weeds, reasoning that Rogers does not apply when “an alleged infringer uses a trademark in the way the Lanham Act most cares about: as a designation of source for the infringer’s own goods.” The majority opinion in Jack Daniels explained the Rogers test as a “cabined doctrine,” only appearing in limited circumstances: when a defendant uses a trademark in a “non-source-identifying way.”  The test itself originated in the Second Circuit and was designed to protect First Amendment interests in a trademark context when dealing with “expressive works” (e.g., plays, books, movies, music, TV shows, art, etc.). However, even an otherwise artistic work is not entitled to First Amendment protection under this test if the trademark owner can show that either (1) the use of its trademark in an expressive work was not “artistically relevant” to the underlying work or (2) the trademark is used to “explicitly mislead” the public as to the source or content of the underlying work.” Justice Neil Gorsuch suggested in his concurrence that lower courts should apply Rogers with caution because much of the test remains unaddressed and may face scrutiny sooner rather than later.

Rogers Enters the Metaverse

Just prior to Jack Daniel’s, Rogers received a nod in a lawsuit involving Hermès, Hermès International v. Rothschild, which focused on an artist’s renderings of fur-covered Birkin handbags in NFT form—so-called “MetaBirkins.” Like VIP’s dog toys, the digital handbags were designed to look like an instantly-recognizable product—a Birkin bag—protected by trademark and trade dresses. In ruling on cross motions for summary judgment, the district court applied the Rogers test because it found that the “MetaBirkins images themselves, with their depiction of Birkin bags covered with fur, suggest that they were originated as a form of artistic expression.” While the district court found that both uses of the mark—“for an expressive purpose” and to “identify the source”—were present, it felt that there was enough expression to apply the Rogers test rather than the standard likelihood of confusion. The court proffered, however, had the MetaBirkins been designed as digital handbags that could be worn by someone’s digital avatar, rather than the standalone NFT, the test used to determine infringement might have been different. Yet, even under the Rogers test, the MetaBirkin creator ultimately lost at trial because a jury found that there was an intention to mislead the public as to the source of the NFT.

By the time the court granted Hermès’s request for a permanent injunction, it had the benefit of Jack Daniel’s. The court opined that Jack Daniel’s cast doubt on whether the Rogers test even properly applied, but because the jury still found infringement, applying the Rogers test did not alter the outcome in a way contrary to Jack Daniel’s. Consequently, in a post-Jack Daniel’s world, and even through a Rogers lens, Rothschild’s artistic use of a trademark was found to be source-identifying.

Dog Toy or Metaverse, a Mark is a Mark

Jack Daniel’s may be, unintentionally, more far-reaching and innovative than anticipated, providing a standard not only for the tangible world, but the Metaverse as well. The dog toy decision may not be sexy, but it is practical: allegedly infringing source-identifying trademarks will be treated as such and will get the vanilla likelihood-of-confusion test. In the wake of Jack Daniel’s, then, creativity or parody or spoofs in the Metaverse cannot transform the use when used as a source identifier; on this, Jack Daniel’s draws a hard line. Potential purveyors of digitalized branded goods (or knockoffs) in the Metaverse should also heed Justice Gorsuch’s warning that the Rogers test may receive a serious future parsing. Notwithstanding in which universe a trademark exists, Jack Daniel’s concludes that a mark is a mark is a mark.

Image Source: Deposit Photos
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Author: oatstocker