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Parody Products: When Should Brand Owners "Smile or Laugh" and When Should They Sue?

Jeffrey Kobulnick and Michael Bernet

Summary

  • The Second Circuit affirmed the district court’s finding that My Other Bag’s depiction of Louis Vuitton’s design on a tote bag was done in parody and thus constituted fair use.
  • To qualify as fair use, a mark must simultaneously suggest it is the original and that it is not, clarifying the lack of connection to the trademark owner.
  • The existence of a parody influences trademark dilution, trademark infringement, and copyright infringement factors and typically leans the analysis in favor of the defendant.
Parody Products: When Should Brand Owners "Smile or Laugh" and When Should They Sue?
Dulin via Getty Images

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After nearly a decade, it seems that Louis Vuitton still has not learned the meaning of the word “parody.” The Southern District of New York granted summary judgment in favor of My Other Bag, Inc. (MOB) earlier this year, dismissing the luxury handbag designer’s trademark dilution, trademark infringement, and copyright infringement claims, finding that MOB’s depiction of Louis Vuitton’s marks and design on a tote bag was done in parody and thus constituted “fair use.” On December 22, 2016, the Second Circuit Court of Appeals affirmed the district court’s ruling.

Even before the appellate court’s written opinion, the case came back into the spotlight when Louis Vuitton’s counsel was reportedly laughed at by Second Circuit Judge Gerard E. Lynch during an extended oral argument into the meaning of the word “parody.” Louis Vuitton asked a three-judge panel to grant it a new trial on the theory that MOB did not intend to parody Louis Vuitton’s marks, and thus the fair use defense could not apply. During oral arguments, however, the panel seemed to disagree. “This is a joke. I understand you don’t get the joke. But it’s a joke,” said Judge Lynch.

The trial court’s opinion in Louis Vuitton v. My Other Bag discusses in great length when the parody defense does and does not apply. This article examines that opinion, and offers insight into the parody defense in order to assist legal practitioners and business owners in evaluating potential claims. As succinctly stated by the court, “In some cases . . . it is better to ‘accept the implied compliment in [a] parody’ and to smile or laugh than it is to sue.”

The “Fair Use” Defense

Courts apply different tests to decide what constitutes fair use under copyright and trademark law. Fair use under copyright law involves the weighing of four statutorily delineated factors:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

Under trademark law, two doctrines of fair use have been recognized. The first is “classic” fair use, an affirmative defense set forth in the Lanham Act, where a trademark is not used as a mark but rather is used to describe the defendant’s product or service. The second is “nominative” fair use, a doctrine that has been adopted by several courts, where a trademark is used to reference the plaintiff. Nominative fair use comprises three areas: (1) comparative advertisements, (2) news reports and commentary, and (3) noncommercial free speech (otherwise known as the First Amendment defense), which further includes the parody defense, which was at issue in My Other Bag.

Significantly, as in My Other Bag, a commercial transaction involving the use of another’s trademark will be considered noncommercial for fair use purposes if the use of the mark has a purpose beyond the commercial transaction, such as social commentary or criticism. Additionally, to constitute nominative fair use in such quasi-commercial cases, (1) the use of the plaintiff’s mark must be necessary to describe both the plaintiff’s and the defendant’s products, (2) the defendant may only use as much of the plaintiff’s mark as is necessary to describe the plaintiff’s product, and (3) the defendant’s conduct must not imply that its product is sponsored by or affiliated with the plaintiff.

My Other Bag's Zoey Tonal Brown Tote

What Constitutes a Parody?

As the My Other Bag district court explained, with ironically heavy reliance on another highly publicized Louis Vuitton trademark loss from the Fourth Circuit, a parody is “a simple form of entertainment conveyed by juxtaposing the irreverent representation of the trademark with the idealized image created by the mark’s owner.” In order for the use of another’s mark to constitute fair use, it “must convey two simultaneous—and contradictory—messages: that it is the original, but also that it is not the original.” This generally may be accomplished by relying on some difference between the way in which the two marks are being used and communicating an “articulable element of satire, ridicule, joking, or amusement” that distinguishes them. “In other words, a parody clearly indicates to the ordinary observer ‘that the defendant is not connected in any way with the owner of the target trademark’” while simultaneously “poking fun at [the] trademark or the policies of its owner.”

A Parody Should Convey a Message about the Target Trademark or Its Owner

As demonstrated by the My Other Bag court, by distinguishing three well-known cases where the parody defense did not apply (including, interestingly, another Louis Vuitton case in the same court nearly three years prior), while not required, a parody should convey a message about the target trademark or its owner. For instance, in Louis Vuitton v. Hyundai, the defendant aired a commercial after the 2010 Super Bowl that included “a four-second scene of an inner-city basketball game played on a lavish marble court with a gold hoop,” and featured “a basketball bearing marks similar, but not identical, to the Louis Vuitton [Toile Monogram].” Based on testimony from Hyundai representatives that indicated “the ad was only intended to make a ‘broader social comment’ about ‘what it means for a product to be luxurious,’” and not some “critici[sm] or comment upon Louis Vuitton,” the court found that the parody defense could not apply.

Hyundai 2010 Super Bowl Commercial

Likewise, in Dallas Cowboys v. Pussycat Cinema, the parody defense was unavailable to the purveyor of the purportedly “gross and revolting” sex film Debbie Does Dallas because it did not have to use the Dallas Cowboys Cheerleaders’ trademark in order to “comment on sexuality in athletics,” but could have instead used any generic cheerleader uniform to make its professed point. Additionally, in Tommy Hilfiger v. Nature Labs, where the defendant created a line of perfume products for pets “called [Timmy] Holedigger, which resembled a Tommy Hilfiger fragrance in name, scent, and packaging,” the parody defense was unavailable because testimony of the defendant’s general partner established that its product made no comment about Tommy Hilfiger but rather was intended as “a fun play on words” or “spoof . . . [t]o create enjoyment.”

Debbie Does Dallas (1978)

Nature Lab's Timmy Holedigger Pet Perfume

How Is “My Other Bag . . .” a Parody?

In the My Other Bag district court’s view, MOB’s use of Louis Vuitton’s marks constituted parody for three reasons. First, it found MOB’s bags a “play on the well-known ‘my other car . . .’ joke,” and thus a joke about the social expectations of those who carry luxury or nonluxury handbags. Second, MOB’s “stylized, almost cartoonish renderings of Louis Vuitton’s bags” helped build “significant distance between MOB’s inexpensive workhorse totes and the expensive handbags they are meant to evoke.” And finally, “the image of exclusivity and refinery that Louis Vuitton has so carefully cultivated” was, at least in part, as MOB argued, “the brunt of the joke”: “Whereas a Louis Vuitton handbag is something wealthy women may handle with reverent care and display to communicate a certain status, MOB’s canvas totes are utilitarian bags ‘intended to be stuffed with produce at the supermarket, sweaty clothes at the gym, or towels at the beach.’”

It may seem interesting, given the court’s discussion of Hyundai and Dallas Cowboys, that the court would consider the “my other car . . .” joke as a basis for parody because, as Louis Vuitton argued, “MOB could use any well-known luxury handbag brand to make its points” about the social expectations of luxury handbag purchasers. In this instance, however, the court felt that the “my other car . . .” joke would not make any sense without the use of a widely recognized mark, such as Louis Vuitton’s Toile Monogram, because it “would confusingly communicate only that ‘my other bag . . . is some other bag.’” In other words, because MOB could not communicate an amusing message about the social expectations of luxury handbag purchasers without using an actual luxury handbag maker’s trademark or trade dress, the parody defense could apply.

Trademark Dilution by Blurring

Despite its conclusion that MOB’s use of Louis Vuitton’s trademarks constituted fair use under the Lanham Act, thereby disposing of all of Louis Vuitton’s trademark claims, the district court went on to discuss Louis Vuitton’s trademark dilution claims. The court concluded that even in the absence of fair use, Louis Vuitton’s trademark dilution claims (under federal and New York law) still failed because MOB’s tote bags posed “no danger of impairing the distinctiveness of Louis Vuitton’s marks.” In the court’s view, MOB’s comical tote bags would instead, if anything, “reinforce and enhance the distinctiveness and notoriety of the famous [Louis Vuitton] brand.” While that point seems debatable, the court was clearly correct in its decision, as it noted that in order to succeed on a claim of dilution by blurring, a senior user (Louis Vuitton) must show that the junior user’s (MOB’s) use of a mark is likely to blur the ability of consumers to “clearly and unmistakably distinguish” one user as the source of the goods.

As the court stated, “it is not enough to show . . . that members of the public are likely to ‘associate’ the [junior user’s] mark with the [senior user’s] mark.” Rather, it must be shown that the junior user is using the senior user’s mark as a “designation of source for its own goods.” Because MOB seemingly did not use Louis Vuitton’s trademarks in order to indicate that it (MOB) was the source of its own tote bags, but rather to poke fun at Louis Vuitton, MOB could not be liable for dilution by blurring as a matter of law.

Interestingly, the court reached this conclusion by relying heavily on another well-known Louis Vuitton loss from the Fourth Circuit, Louis Vuitton v. Haute Diggity Dog. In that case, the parody defense applied and Louis Vuitton’s trademark dilution by blurring claim failed, despite the fact that the defendant—a manufacturer of plush dog chew toys resembling Louis Vuitton handbags prominently labeled “Chewy Vuiton”—used a variation of Louis Vuitton’s Toile Monogram to indicate that it (Haute Diggity Dog) was the source of its own goods.

Haute Diggity Dog's Chewy Vuiton Purse (White)

It may appear, at least with respect to the trademark dilution claims, that the My Other Bag and Haute Diggity Dog opinions are inconsistent, because the defendant in Haute Diggity Dog used Louis Vuitton’s Toile Monogram as an indicator of source for its own goods, while the defendant in My Other Bag did not, and neither was found liable for dilution. This distinction is reconciled by the fact that MOB was statutorily exempt from liability for dilution because it did not use Louis Vuitton’s marks as an indicator of source, whereas Haute Diggity Dog could have been liable, but ultimately was not because the court found that the application of the statutorily delineated dilution factors weighed in its favor. As noted in My Other Bag, where a junior user parodies a senior user’s mark as an indicator of source for its own goods, in cases such as Haute Diggity Dog, the existence of a parody typically influences the dilution analysis in favor of the defendant. The more famous the mark being parodied, the higher the senior user’s burden becomes to establish blurring.

Trademark Infringement

Similar to trademark dilution claims, the existence of a parody influences the analysis of the relevant trademark infringement factors and typically leans the analysis in favor of the defendant. This is especially true with more “successful” parodies that inherently communicate they are not associated with a senior user and thus reduce likelihood of consumer confusion—the keystone of trademark infringement claims. Such was the case with My Other Bag, where the court concluded, after weighing the Polaroid factors, that there was “no credible risk that a reasonably prudent consumer would think Louis Vuitton ‘sponsored or otherwise approved’ of MOB’s totes.”

Reasoning through the first two Polaroid factors—the strength and similarity of the marks—the court determined that although Louis Vuitton’s and MOB’s marks were obviously similar, the context of MOB’s bags as a whole and their cartoonish renderings more than adequately separated them from Louis Vuitton in the minds of consumers. Further, the next two Polaroid factors—the proximity of the goods and likelihood of expansion—also weighed against a likelihood of confusion due to the incredible distance in price, marketplaces, and intended uses for the bags. With respect to the fifth factor—evidence of actual confusion—the court was not persuaded by the “handful of instances” of alleged consumer confusion submitted by Louis Vuitton, finding them not credible and taken out of context.

The sixth Polaroid factor—the defendant’s “bad faith” in selecting the mark—also did not weigh in Louis Vuitton’s favor, because in the context of parody, the fact that a defendant intentionally selected the plaintiff’s mark “does not show that defendant acted with the intent relevant in trademark cases—that is, an intent to capitalize on consumer deception or hitch a free ride on plaintiff’s good will.” In parody, the defendant’s intent is simply to amuse, and Louis Vuitton failed to demonstrate that MOB intended otherwise. The court also found that the quality of Louis Vuitton’s and MOB’s bags were so apparently different that the seventh Polaroid factor weighed in neither direction. And finally, the court concluded that the eighth Polaroid factor—consumer sophistication and degree of consumer care—weighed decidedly against Louis Vuitton as even a “minimally prudent customer would not be confused” as a result of the “gimmick” and giant price gap. After all, the court echoed, “[t]he purchasing public must be credited with at least a modicum of intelligence.”

Copyright Infringement

Despite qualifying as “fair use” under trademark law, the designs printed on MOB’s tote bags also had to be evaluated under the Copyright Act’s separate fair use test using the four factors set forth above. Unlike trademark law, copyright law does not presume commercial use. Under copyright law, “not all parody is protected; instead, parody, ‘like any other use, has to work its way through the relevant factors.’” In parody cases, where a copyright infringement claim is used to pursue “what is at its core a trademark [or] trade dress infringement claim, application of the fair-use factors . . . is awkward” but feasible. In such cases, similar to trademark dilution and infringement claims, the existence of the parody will typically lean the analysis in favor of the defendant, even if it is being used for commercial gain.

In concluding that the first fair use factor—the purpose and character of the use—did not weigh in Louis Vuitton’s favor, the court tersely stated that “although commercial use ‘tends to weigh against a finding of fair use,’ it is not presumptively unfair. Parody, even when done for commercial gain, can be fair use.” In the court’s view, the second factor—the nature of the copyrighted work—also weighed against Louis Vuitton “since parodies almost invariably [must] copy publicly known, expressive works” in order to be understood. Similarly, the court concluded that the third factor—the amount and substantiality of the copyrighted work used—weighed in MOB’s favor because “MOB’s totes must successfully conjure Louis Vuitton’s handbags in order to make sense.” And finally, the court concluded that the fourth and perhaps most important factor—the potential effect on the market—also weighed in favor of fair use as it correctly found that tote bags do not serve as a market replacement for luxury handbags, even though they occupy the same market “in an abstract sense.”

Conclusion

It can be difficult for any brand owner to see someone else using its intellectual property for his or her commercial gain. Nevertheless, as the My Other Bag opinions demonstrate, true parody is still a defense to trademark and copyright claims. Intellectual property rights are not without limits, particularly when conflicting with fair use principles consistent with the First Amendment. As Louis Vuitton has learned several times, only the judge needs to understand the joke, even if the intellectual property rights owner does not. The lesson here is that before brand owners initiate costly litigation against what could very well be protected as a parody, they should consider other creative means to resolve their concerns, or simply accept the implied compliment and laugh it off. This is particularly true for owners of famous marks, as they are more likely to be parodied and less likely to result in confusion. On the other hand, if the joke is truly subtle and there is a real risk of consumer confusion, legal action may be warranted.

©2017. Published in Landslide, Vol. 9, No. 6, July/August 2017, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

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