United States District Court, D. Arizona
DAVID G. CAMPBELL, District Judge.
Plaintiff VIP Products, LLC has moved to amend its pleadings. Doc. 31. Defendant Jack Daniel's Properties, Inc. opposes the motion, arguing that the proposed amendments are futile, VIP delayed unduly in seeking leave to amend, and granting leave to amend would prejudice Jack Daniel's. Doc. 36. The Court will grant the motion to amend.
VIP Products, LLC designs and manufactures toys for dogs. Many of these dog toys are humorous in nature, including squeaky toys in the form of beer bottles and green aliens. In July of 2013, VIP introduced its latest invention, the "Bad Spaniels" "durable rubber squeaky novelty dog toy." Doc. 1, ¶ 9. The Bad Spaniels toy is in the shape of a liquor bottle and features a wide-eyed spaniel over the words "Bad Spaniels, the Old No. 2, on your Tennessee Carpet." The design for the Bad Spaniels toy has many similarities to the bottle design for Jack Daniel's Tennessee Sour Mash Whiskey ("Old No. 7 Brand"). These similarities include the shape of the product, the use of white lettering over a black background, and font styles. Id., ¶ 12. Nevertheless, the packaging for the Bad Spaniels toy states: "This product is not affiliated with Jack Daniel's." Id.
Jack Daniel's Properties, Inc. ("Jack Daniel's") was not amused, and promptly demanded that VIP stop selling the new toy. On September 16, 2014, VIP responded by filing this suit and seeking a declaratory judgment that its use of the Bad Spaniels name and mark "does not infringe or dilute any claimed trademark rights that Defendant may claim in any Jack Daniel's' trademark for its Tennessee sour mash whiskey and/or any other product." Doc. 1, ¶ 16. Jack Daniel's counterclaimed that the Bad Spaniels toy infringes and dilutes Jack Daniel's trademark and trade dress. Doc. 12. In its answer to Jack Daniel's counterclaims, VIP argued that the Bad Spaniels toy was a protected parody of the Jack Daniel's mark. Doc. 20, ¶ 67.
On March 23, 2015, and before the amendment deadline set in the Court's Case Management Order (Doc. 25), VIP requested leave to amend its complaint. The amended complaint would add a second and third claim for relief. The second claim requests a declaratory judgment that Jack Daniel's trade dress and bottle design are not entitled to trademark protection because they are functional and non-distinctive. Doc. 31-1, ¶¶ 50-56. The third claim asks the Court to cancel Jack Daniel's trademark registration "for the three-dimensional configuration of a square shape bottle container... for distilled spirits" that represents Jack Daniel's bottle design. Id., ¶ 57-62 (citing 15 U.S.C. § 1119). VIP has also sought leave to amend its answer to Jack Daniel's counterclaims. Among other defenses, the amended answer states that Jack Daniel's counterclaims are barred because Jack Daniel's trademark and trade dress are "not entitled to protection." Doc. 31-2, ¶ 66.
II. Legal Standard.
Rule 15 makes clear that the Court "should freely give leave [to amend] when justice so requires." Fed.R.Civ.P. 15(a)(2). The policy in favor of leave to amend must not only be heeded, see Foman v. Davis, 371 U.S. 178, 182 (1962), it must be applied with "extreme liberality, " see Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001). "A trial court may deny such a motion if permitting an amendment would prejudice the opposing party, produce an undue delay in the litigation, or result in futility for lack of merit." Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990) (citing Foman, 371 U.S. at 182). Generally, the consideration of a motion to amend "should be performed with all inferences in favor of granting the motion." Griggs v. Pace Am. Group, Inc., 170 F.3d 877, 880 (9th Cir. 1999).
In the amended complaint, VIP alleges that the design or "trade dress" of a Jack Daniel's bottle of whiskey is functional and not distinctive. For that reason, VIP claims, the Jack Daniel's bottle design is not entitled to trademark protection and the Court should cancel its trademark registration. Doc. 31-1, ¶¶ 50-62. Jack Daniel's argues that these claims are futile because: (1) VIP's amended complaint focuses only on a few elements of the bottle design, as opposed to the overall look, and (2) VIP has failed to allege sufficient facts to support its claim that the bottle design is functional. Doc. 36 at 12-14. After reviewing the relevant law, the Court finds that VIP's amended claims are not futile.
"Trade dress refers generally to the total image, design, and overall appearance of a product, " Switchmusic.com, Inc. v. U.S. Music Corp., 416 F.Supp.2d 812, 819 (C.D. Cal. 2006), and may include the packaging of a product or the design of a bottle, see Fiji Water Co., LLC v. Fiji Mineral Water USA, LLC, 741 F.Supp.2d 1165, 1172-74 (C.D. Cal. 2010). A product's trade dress or packaging is protectable under trademark law so long as the trade dress is nonfunctional and distinctive. See Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 209-10 (2000); Kendall-Jackson Winery, Ltd. v. E. & J. Gallo Winery, 150 F.3d 1042, 1047 (9th Cir. 1998). "[T]he proper inquiry is not whether individual features of a product are functional or nondistinctive but whether the whole collection of features taken together are functional or nondistinctive." Kendall-Jackson Winery, Ltd., 150 F.3d at 1050.
The trade dress of a product is functional if the trade dress is essential to the use or purpose of the product or affects the cost or quality of the product. Disc Golf Ass'n, Inc. v. Champion Discs, Inc., 158 F.3d 1002, 1006 (9th Cir. 1998) (listing factors for analysis). Alternatively, under the aesthetic functionality test, trade dress is functional if "protection of the [trade dress] as a trademark would impose a significant non-reputation-related competitive disadvantage." Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc., 457 F.3d 1062, 1072 (9th Cir. 2006) (citing TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 32-33 (2001)). This means that trade dress is aesthetically functional when it "serve[s] an aesthetic purpose wholly independent of any source-identifying function, ' or in other words, where the consumer is driven to purchase the product based on how it looks." Fiji Water Co., LLC, 741 F.Supp.2d at 1173 (quoting Au-Tomotive Gold, Inc., 457 F.3d at 1072-74).
The trade dress of a product is "distinctive and capable of being protected if it either (1) is inherently distinctive or (2) has acquired distinctiveness through secondary meaning." Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 769 (1992). Broadly speaking, trade dress is inherently distinctive if it is so "unique, unusual, or unexpected in this market that one can assume without proof that it will automatically be perceived by consumers as an indicator of origin[.]" Fiji Water Co., LLC, 741 F.Supp.2d at 1176 (citing Seabrook Foods, Inc. v. Bar-Well Foods Ltd., 568 F.2d 1342, 1344 (C.C.P.A. 1977)). Trade dress may also acquire distinctiveness through secondary meaning, that is, when the trade ...