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Communications Law

Explosion of Lanham Act Cases

Thomas S. Leatherbury

Media defense lawyers are accustomed to encountering new liability theories designed to circumvent the constitutional strictures of defamation, including false light privacy, business disparagement, and negligent and intentional infliction of emotional distress. Claims based on news-gathering conduct, including trespass, intrusion, breach of contract, tortious interference with contract, conversion, breach of the Fourth Amendment’s prohibition against unreasonable searches and seizures, and RICO have a higher profile than ever before. However, the focus has shifted back to content, as a growing number of plaintiffs seek to extend the reach of the Lanham Act, demanding both damages for and injunctions against the use of registered and even unregistered trademarks in news stories and in varied artistic and creative contexts. The federal reporters are fast becoming littered with Lanham Act cases, many of which are hopelessly confusing.

The Lanham Act originally was enacted in 1946 to protect merchants against the most common forms of piracy and unfair competition, palming or passing off, and false advertising. Today, celebrity and corporate plaintiffs use two sections of the Lanham Act, 15 U.S.C. §§ 1114 and 1125, to attempt to plead around the First Amendment. Section 1114 proscribes infringement of registered trademarks, while 15 U.S.C. § 1125(a), commonly known as section 43(a) of the Lanham Act, guards against unfair competition, prohibiting a wide variety of trademark uses that are likely to cause consumer confusion. The likelihood of consumer confusion is a common element of both infringement and unfair competition claims.

Section 43(a)(1)(A) generally is described as the statute prohibiting false designations of origin and false endorsements, while section 43(a)(1)(B), which was enacted in 1988, proscribes false advertising. Although section 43(a) "created a new federal cause of action for unfair competition," it remained for many years a remedy against only a true competitor’s dirty tricks. Judge Clark wrote in 1956 that "the bar has not yet realized the potential impact of this statutory provision." However, the plaintiffs’ bar caught on in the late 1980s and made up for lost time.

Since then, more courts have waded through a morass of Lanham Act litigation, attempting to balance the interests of rights owners, journalists, and artists—sometimes with wildly disparate results. A comparison of the Eighth Circuit’s opinion in Anheuser-Busch, Inc. v. Balducci Publications with the Second Circuit’s opinion in Hormel Foods Corp. v. Jim Henson Productions, Inc. reveals the troubling lack of consistency in the courts’ treatment of humorous and creative uses of trademarks.

In Balducci, Anheuser-Busch, the maker of Michelob beer, sued the publishers of Snicker magazine for an ad parody that appeared on the magazine’s back cover. The parody, a commentary on the effects of environmental pollution and a recent oil spill in a river from which the brewer obtained some of its water supply, contained replicas of several Michelob trademarks. The parody further contained the words, One Taste and You’ll Drink It Oily. In smaller print, the ad read, "At the rate it’s being dumped into our oceans, lakes and rivers, you’ll drink it oily sooner or later anyway." And in even smaller print, along the side, were the words, "Snicker magazine Editorial by Rick Balducci. Art by Eugene Ruble. Thank goodness someone still cares about quality (of life)." After a bench trial, the district court dismissed Anheuser-Busch’s complaint, holding that there was no likelihood of confusion and that "special sensitivity" to the First Amendment in this "editorial context" required dismissal.

The Eighth Circuit, in an opinion devoid of humor and common sense, conducted a de novo review and reversed and rendered judgment for Anheuser-Busch. The Eighth Circuit criticized the district court for "conflat[ing] the two" issues of whether the fictional ad was likely to confuse the public and whether it was protected by the First Amendment as a parody. Under the Eighth Circuit’s test for likelihood of confusion, the court examined (1) the strength of the trademark, (2) the similarity between the plaintiff’s and defendants’ products, (3) the alleged infringer’s intent to confuse the public, (4) evidence of any actual confusion, and (5) the degree of care reasonably expected of the plaintiff’s potential customers. The court found the combination of Anheuser-Busch’s strong marks, the defendants’ virtual copying of the marks, the defendants’ "indifference" to the possibility of confusion, and slim survey evidence of confusion overrode the defendants’ First Amendment rights. The lack of
competition between Anheuser-Busch and the defendants and the defendants’ clear intent to parody did not matter.

The Second Circuit’s recent decision in Hormel involves another particularly outrageous attempt to use the Lanham Act to suppress protected creative speech, with a result much friendlier to the First Amendment. Jim Henson Productions, the creators of The Muppets, developed a new character, Spa’am, the high priest of a wild boar tribe, for its movie, Muppet Treasure Island. Joining the ranks of Muppet celebrities such as Meryl Sheep and Placido Flamingo, "[t]he similarity between the name ‘Spa’am’ and Hormel’s [meat product] mark [Spam was] not accidental." As the Second Circuit recognized, the defendant’s comic intent was obvious: Henson hoped "to poke a little fun at Hormel’s famous luncheon meat by associating its processed, gelatinous block with a humorously wild beast."

After a three-day bench trial complete with expert testimony about children’s literature, Judge Kimba Wood denied Hormel’s request for a permanent injunction against Henson’s use of the character Spa’am in the movie as well as in movie-related merchandising deals.

Without mention of the First Amendment, the court dutifully tackled the Lanham Act issues, analyzing whether Henson’s use of "Spa’am" would likely cause consumer confusion by ticking off the eight factors articulated in the leading Second Circuit case, Polaroid Corp. v. Polarad Electronics Corp.: (1) strength of the mark, (2) degree of similarity between the marks, (3) proximity of the products, (4) bridging the gap, (5) actual confusion, (6) bad faith, (7) quality of the products, and (8) consumer sophistication. Turning the strength of Hormel’s mark and the defendants’ clear intent to parody against the plaintiff, the court found no likelihood of consumer confusion. The court emphasized and relied on Henson’s creative use of Hormel’s trademark throughout its opinion.

The potent observation that preschoolers are more sophisticated consumers than Joe Six Pack does not help reconcile the divergent opinions in Balducci and Hormel. While the result and the protection for creative parodies crafted by the court in Hormel are welcome, it is amazing that the court felt constrained to engage in such complicated and studied analysis. Think of the litigation costs in these cases and the consequent chill cast on activities fully protected by the First Amendment. Perhaps overly faithful to the jurisprudential principle that postpones consideration of constitutional questions, the courts slog through the convoluted rhetoric and multipart tests of the statute to reach their sometimes subjective decisions based on the value of defendants’ speech. Yet in the context of news and entertainment, the courts should be bolder and draw much brighter lines to maximize the zone of First Amendment protection enjoyed by journalists and artists. When faced with silly Lanham Act claims in the news and entertainment fields, the courts should "Just Do It" and assess sanctions against Gumby-like plaintiffs who deliberately refrain from asserting libel claims in their otherwise elastic pleadings because they really want to muzzle the defendant and they know they cannot prove either factual falsity, or actual malice, or actual damages. In the next such situation, the court itself should co-opt some creative phrases and boot the plaintiff, holding, "That’s a joke, son. I say, I say, that’s a joke," or "Where’s the beef?" or "Stop the insanity," or perhaps most appropriately, "Get a life."

Thomas S. Leatherbury is a partner in the Dallas office of Vinson & Elkins, L.L.P.

This article is an abridged and edited version of one that originally appeared in Communications Lawyer, Spring 1996 (14:1).

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