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High Court Dog Toy Case Ushers in ‘Exciting’ Trademark Law Year

Dec. 30, 2022, 10:10 AMUpdated: Jan. 4, 2023, 10:00 PM

The US Supreme Court made it easy to see what trademark practitioners will be watching most closely in 2023: poop-joke dog toys shaped like whiskey bottles.

The high court also agreed to take up a question about the territorial reach of the Lanham Act after an appeals court awarded profits from foreign sales of Hetronic-branded radios. But the case with the tightest grip on attorneys’ attention is Jack Daniel’s Properties LLC‘s bid to undo a finding that the First Amendment protects “Bad Spaniels” dog toys mimicking the look and feel—or trade dress—of its liquor bottles.

This will be “an exciting year,” trademark attorney Mark Sommers of Finnegan Henderson Farabow Garrett & Dunner LLP said, as both high court cases could have big impacts on practitioners and litigants.

Regarding the Jack Daniel’s appeal, Sommers said the court’s resolution of another intellectual property-meets-First Amendment case would be telling, even though it’s a copyright case. Photographer Lynn Goldsmith is defending her win over Vanity Fair, which used an Andy Warhol print of Prince based on her photo. During oral arguments in October, the justices’ struggled to suss out a definition of art, offering a window into how the court might more broadly weigh IP rights against free speech, Sommers said.

“If you think that they struggled with transformative art, how do you think the Supremes are going to struggle with defining ‘what is humor’?” Sommers said. “We’re all sitting on the edges of our seats, wanting the Supreme Court to give us guidance. Because the existing framework is such that it gives the litigant very little assurance and confidence in the arguments that can be made.”

Illustration by Jonathan Hurtarte/Bloomberg Law

At the heart of the decision is the Rogers test, which allows trademark use in expressive works if it’s artistically relevant and not explicitly misleading, with no consumer confusion analysis needed. Some argue such issues should be rolled into a broader confusion analysis, while others say the low-bar threshold should at least be reserved for use with traditional expressive works—however defined—and not products like dog toys.

Sommers discounted the idea of a narrow, low-impact ruling, saying “they simply can’t punt this.”

IP attorney Marsha G. Gentner of Dykema Gossett PLLC echoed Sommers that practitioners, more than anything, want clarity.

“Even if it’s bad news for them, they’d rather have clarity and assurance than having to decide: ‘Do I plop this money down? Do i fight this battle?’” Gentner said.

The Boundaries of Boundaries

The court’s decision to hear the Bad Spaniels case came less than three weeks after it agreed to hear Abitron Austria GmbH et al. v. Hetronic Int’l Inc. There, Abitron appealed a $90 million award of profits derived almost entirely from sales that never touched the US, arguing the territorial nature of US trademark law barred such an outcome.

The ruling raised questions about the foreign reach of US trademark law, and many attorneys expect the high court to undo the decision.

A flood of friend-of-the-court briefs backing Abitron, including one from the US government and an uncommon slew from Europe, highlights the import of the outcome, said trademark attorney Theodore H. Davis of Kilpatrick Townsend & Stockton LLP.

“I’ve been very much surprised at the number of briefs and where they’re coming from,” Davis said. “You do have a fairly aggressive application of US law here by the Tenth Circuit, and the Europeans are reacting to that fairly negatively.”

The US government echoed foreign concerns by arguing the appeals court overreached by awarding foreign revenue that “would have flowed into the U.S. economy.” It said such logic would foist US law on other countries. Sommers noted that the Federal Circuit Bar Association also weighed in, and—without taking sides—implored the court to consider potential impacts of its ruling on patent law.

Some attorneys, including Gentner, said the circumstances of the case don’t often arise, limiting its direct impact. IP attorney Raffi Zerounian of Hanson Bridgett LLP added that traditionally a nexus between activity and the US must be established. The case may primarily represent the correction of an outlier decision, he said.

But Sommers called the case “fascinating,” and noted the increasingly global economy and the five or six different tests courts use to weigh extraterritorial application of the Lanham Act.

The Quiver’s ‘New Arrow’

Several attorneys also said they’re interested to see how proceedings for challenging fraudulent trademarks continue to evolve in 2023. The new proceedings—created by the Trademark Moderization Act of 2020, and implemented in late 2021—are designed to be a faster and cheaper path for canceling marks never used or not used when claimed.

Davis said there’s now a “collection of data-points” for how to get a mark invalidated, but not so much on the best way to defend against allegations of non-use.

Gentner also was interested in the evolution of the new proceedings, though she said she’s “hard-pressed to figure out why you would do that instead of petitioning to cancel.” The changes put the process into the hands of US Patent and Trademark Office examiners—after examiners approved the allegedly fraudulent mark in the first place, she said.

“If it’s really important to you I wouldn’t trust that. I’d want to present the evidence myself,” Gentner said.

But Zerounian said the “new arrow in the quiver” is cost-effective and results in a closer look from examiners.

“The registrant has to come up with information. And if they don’t there’s a consequence,” Zerounian said. “It’s a relatively short window, and the registrant has to come up with a lot of historical information.”

Attorneys are also watching other trademark office evolutions.

Joel Samuels of Harness IP wondered if the shorter deadlines for responding to office actions—three months rather than six—would speed up the process of registering marks. He wasn’t sure how much would change, as the time for the PTO to respond to an application remains around 8.5 months and registration takes around 14 months, he said.

He also said he thinks the requirement of foreign applicants to use US counsel hasn’t had as much impact as the office wanted, as applicants can usually find an attorney to file. He said a recent trend of examiners becoming picky about particular goods listed in an application may be in part to serve as a filter of phony applications, forcing a response that a fraudulent applicant usually wouldn’t bother to file.

(Updates with additional detail about trademark registration delay times. The story was originally published Dec. 30.)

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com