Jack Daniel’s Dog Toy Win Sidesteps Trademark Tarnishment Debate

A rare opening to constitutionally challenge a controversial trademark tarnishment statute vanished for now when a judge ruled a dog toy-maker waived its First Amendment defense against Jack Daniel’s.

The opportunity came a decade-plus into litigation between Jack Daniel’s Properties Inc. and VIP Products LLC. After the whiskey giant’s case was revived by the US Supreme Court, Jack Daniel’s failed to demonstrate VIP’s “Bad Spaniels” toy infringed its trademarks, but still won a ruling of “trademark dilution by tarnishment.”

VIP briefing attacked the validity of the law and District Judge Stephen N. McNamee asked the US government to weigh in. But he ultimately ruled VIP waived the argument because it never tried to add the defense to its complaint.

That procedural finding may scuttle an uncommon opportunity to challenge a law trademark legal professionals have said could crumble under the scrutiny of First Amendment doctrine—and start a long wait for the next one. McNamee said, under tarnishment law, the whiskey bottle-shaped, poop pun-laden dog toy created an association between the alcoholic drink and fecal matter that would “harm the reputation” of Jack Daniel’s—and parody isn’t necessarily a defense, he said.

“When you talk to attorneys representing big brands, they’ll admit that tarnishment law might get struck down by the Supreme Court,” IP law professor Lisa Ramsey of the University of San Diego said. “If you apply First Amendment doctrine, there’s no way the tarnishment provision will survive.”

The statute—introduced in the Federal Trademark Dilution Act of 1995 and updated in 2006—only applies to trademarks famous beyond their industry. A party also found to have infringed a rival’s trademark—as is usually the case—has little incentive to press the dilution argument, further limiting potential challenges.

While McNamee’s court has some “discretionary wiggle room,” it was “technically” right about the waiver, said John M. Conley, a civil procedure and IP law professor at the University of North Carolina.

“This statute is a waste of time. If someone sees a Walt Disney porn site, they’re going to immediately say ‘This isn’t Disney.’ How is Disney damaged by that?” Conley said. “But that’s just my bias on the whole dilution concept and how the statute works. On the merits the opinion is well done.”

IP law professor Jake Linford of Florida State University said he doesn’t consider the statute facially unconstitutional. Commercial speech is less protected, and even low-percentage impacts can damage businesses, he said.

But he’s also co-authored a study finding court presumptions about the tarnishing effects of sex, drugs, and sacrilege “may be more mythic than material” and credited an argument tarnishment requires a high threshold..

“It kind of depends on whether we think trademark law is a place for imposition of aggressive First Amendment limits or not,” Linford said.

‘Fascinating Question’

The US Court of Appeals for the Ninth Circuit in 2020 found the Rogers test—a First Amendment-based test generally allowing use of trademarks in expressive works—negated McNamee’s 2018 finding that VIP’s dog toy infringed Jack Daniel’s trade dress. It also held VIP’s mimicry of the Jack Daniel’s bottle shape and label design qualified for dilution law’s non-commercial use exception.

The Supreme Court reversed both findings in June 2023. It found VIP’s use of Jack Daniel’s trademarks as trademarks precluded application of the Rogers test. It also said dilution law carves out trademark use from its parody exemption, undermining the Ninth Circuit’s conclusion that all parody qualified for dilution law’s non-commercial exemption.

McNamee’s opinion reversed his own 2018 infringement ruling, finding parody flipped consumer confusion factors to favor VIP because parodies necessarily copy strong marks. But VIP couldn’t escape the revived dilution claim, with McNamee saying a non-confusing “parodic product” can still “create negative associations and reduce the value of the famous mark.”

That ruling seems to suggest a “scale of acceptable and unacceptable parodies,” J. Michael Keyes of Dorsey Whitney LLP said. He added the Ninth Circuit could still find the result objectionable, even despite McNamee’s waiver finding.

“It’s a fascinating question, right in the heart of the First Amendment,” Keyes said. “We could end up right back at the Supreme Court.”

VIP’s attorney declined to comment. Jack Daniel’s attorney didn’t respond to a request for comment.

The Justice Department, at McNamee’s request, filed a brief arguing tarnishment is viewpoint neutral. Bans on registering disparaging and vulgar trademarks struck down in 2017 and 2019 turned on the expressive content of the mark, not the effect of a mark’s use, it said, adding the law is narrowly tailored to a valid interest in protecting famous marks.

Restraining speech requires evidence of harm, while tarnishment merely requires a showing that use is “likely” to harm a reputation, Ramsey said.

The 2017 and 2019 Supreme Court opinions might’ve justified post-remand amendment had VIP asked, Keyes said. But those opinions addressed a different section of the Lanham Act, so the court also could’ve held neither First Amendment nor tarnishment law actually changed, he said.

Hangtag Trouble

VIP faces an uphill battle to appeal the dilution finding on the merits, Conley said, because the highly-factual ruling was rooted in McNamee’s assessment of the credibility of the parties’ experts, which would be tough to find “clearly erroneous.”

But the loss isn’t necessarily a death-blow to brand parody, Linford said, noting prior rejections of tarnishment claims involving Charbucks coffee and a Chewy Vuitton dog chew toy.

Ramsey also said VIP painted itself into a corner by using elements of Jack Daniel’s trademarks on a hangtag. That let the justices avoid analyzing whether use on the product itself was ornamental and non-source-identifying, precluding dilution law’s parody exception.

“You can still make the argument that front of a T-shirt or surface on the dog toy is not trademark use,” Ramsey said. “But once you put it on the hangtag or packaging, you can get yourself into trouble.”

The case is VIP Products LLC v. Jack Daniel’s Properties Inc., D. Ariz., No. 2:14-cv-02057.