IP Law Daily, TRADEMARK NEWS: Supreme Court asked to formulate limits on trademark protection, (Oct 18, 2022)

By Cheryl Beise, J.D.

Trademark cases seek clarity on the Lanham Act’s ability to reach foreign sales, noncommercial use, and First Amendment expressive works.

Four trademark cases are currently pending on the High Court’s docket. The common theme of the petitions is that they are asking the Court to weigh in on the limits trademark infringement under the Lanham Act. One petition asks the Court to clarify the Lanham Act’s ability to reach infringing foreign sales. Two petitions seek the Court’s guidance on limits to First Amendment protection of expressive works. The last case presents a question about use in commerce.

Abitron Austria GmbH v. Hetronic International, Inc. In a case involving the extraterritorial reach of the Lanham Act, German and Austrian distributors of remote controls used in industrial equipment have asked the High Court to decide whether the Act applies to purely foreign sales. After an 11-day trial, a jury returned a verdict in favor of Hetronic International, Inc., the U.S. manufacturer of the remote controls, awarding over $90 million for trademark infringement, 97% of which was related to foreign sales. In April 2020, the district court entered a permanent injunction against the foreign distributors. In August 2022, the Tenth Circuit affirmed the damages award, finding that the infringement had an effect on U.S commerce and that the award was warranted under a diversion of foreign sales theory. The court, however, narrowed the scope of the permanent injunction only to those countries where the manufacturer currently markets or sells its products because a party is not entitled to an injunction in markets it has not actually penetrated.

The question presented by Abitron’s petition is: “Whether the court of appeals erred in applying the Lanham Act extraterritorially to petitioners’ foreign sales, including purely foreign sales that never reached the United States or confused U.S. consumers.”

The U.S. government filed an amicus curiae brief on September 23, urging the Court to take up the case to clarify that U.S. trademark law cannot be used as a springboard for regulating foreign conduct that is unlikely to affect the perceptions of U.S. consumers. According to the Solicitor General, the question presented by the petition “is an important and recurring one, and the various tests adopted by the courts of appeals have failed to focus on whether a foreign use is likely to cause U.S. consumer confusion.” Moreover, there is a conflict in the circuit courts regarding the viability of the diversion of sales theory.

The case is Dkt. No. 21-1043.

Lodestar Anstalt v. Bacardi & Co. Ltd. Lodestar Anstalt, a Liechtenstein-based seller of distilled spirits under the mark UNTAMED has asked the Supreme Court to clarify whether proof of commercial use is necessary before a trademark owner can pursue an infringement claim. Lodstar sued distilled spirits maker Bacardi for trademark infringement for use of the tag-line BACARDI UNTAMABLE in advertising based on a theory of reverse confusion. In a case of first impression, the Ninth Circuit ruled that the Madrid Protocol gives priority of right in a trademark even without prior use in commerce. The court emphasized, however, that proof of commercial use is still necessary before an infringement claim can be pursued.

The question posed by Lodestar’s petition is “Whether a plaintiff in a trademark enforcement action must prove that each use of its mark meets Section 45 of the Lanham Act’s ‘use in commerce’ definition before that use can be considered in the likelihood of confusion analysis.” The petition was filed on September 29; Bacardi’s answer is due on December 5.

The case is Dkt. No. 22-316.

Jack Daniel’s Properties, Inc. v. VIP Products LLC. Famous spirits distiller Jack Daniel’s has filed a second petition for certiorari asking the Court to weigh in on the limits of protection from trademark infringement liability afforded to parodic expressive works. In January 2021, the Court denied a petition (No. 20-365) by Jack Daniel’s seeking review of a Ninth Circuit decision holding that the federal district court in Phoenix erred in finding that VIP Products’ "Bad Spaniels" squeaky chew toy for dogs in the shape of a whiskey bottle infringed and diluted Jack Daniel’s Properties’ registered trade dress and bottle design. The Ninth Circuit held that the toy qualified as a parodic expressive work protected by the First Amendment and remanded the case for evaluation of the infringement claims under the Rogers v. Grimaldi test to determine whether VIP’s use of Jack Daniels’ marks is either not artistically relevant or explicitly misleading as to source. On remand, the district court granted summary judgment in favor of VIP Products, and the Ninth Circuit summarily affirmed. The American Intellectual Property Law Association (AIPLA) and the International Trademark Association (INTA) have each filed amicus briefs (here and here) urging the High Court to accept the case and render a decision in favor of Jack Daniel’s.

The questions presented by Jack Daniel’s new petition for certiorari are: (1) Whether humorous use of another’s trademark as one’s own on a commercial product is subject to the Lanham Act’s traditional likelihood-of-confusion analysis, or instead receives heightened First Amendment protection from trademark-infringement claims. (2) Whether humorous use of another’s mark as one’s own on a commercial product is “noncommercial” under 15 U.S.C. § 1125(c)(3)(C), thus barring as a matter of law a claim of dilution by tarnishment under the Trademark Dilution Revision Act.

The case is Dkt. No. 21-1043.

Diece-Lisa Industries Inc. v. Disney Store USA, LLC. Diece-Lisa Industries Inc., a seller of stuffed toy bears under the registered mark LOTS OF HUGS, has filed a petition asking the Supreme Court to revise the Ninth Circuit’s application of the Rogers v. Grimaldi test for finding First Amendment protection of expressive works. At issue is a Ninth Circuit decision affirming the district court’s finding as a matter of law that a teddy bear character named “Lots-O’Huggin’ Bear” appearing in Disney’s Toy Story 3 movie was a noninfrigning, expressive use protected by the First Amendment.

The questions posed by Diece-Lisa petition are: (1) Does the First Amendment provide an infringer blanket immunity for trademark infringement across all categories of goods so long as they can claim their first use was in an “expressive work”? and (2) Assuming the First Amendment provides some level of immunity against forward trademark infringement, should courts apply the test specifically crafted for forward confusion cases in cases of reverse trademark infringement? Disney’s response to the petition is due November 14.

The case is Dkt. No. 22-347.

Attorneys: Lisa S. Blatt (Williams & Connolly LLP) for Jack Daniel’s Properties, Inc. Bennett Evan Cooper (Dickinson Wright PLLC) for VIP Products LLC. James A. Barta (MoloLamken LLP) for Abitron Austria GmbH. Matthew S. Hellman (Jenner & Block LLP) for Hetronic International, Inc. Elizabeth B. Prelogar, U.S. Department of Justice, for Untied States. Kendra N. Beckwith (Lewis Roca Rothgerber Christie LLP) for Lodestar Anstalt. Michael C. Lynch (Kelley Drye & Warren LLP) for Bacardi & Company Limited, et al. William A. Delgado (DTO Law) for Diece-Lisa Industries, Inc.

Companies: Jack Daniel’s Properties, Inc.; VIP Products LLC; Abitron Austria GmbH; Hetronic International, Inc.; Lodestar Anstalt; Bacardi & Company Limited; Diece-Lisa Industries, Inc.

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