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VIP Products, LLC v. Jack Daniel's Properties, Inc.

United States District Court, D. Arizona

September 27, 2016

VIP Products, LLC, Plaintiff,
v.
Jack Daniel's Properties, Inc., Defendant. And Related Counterclaim.

          MEMORANDUM OF DECISION AND ORDER

          Stephen M. McNamee Senior United States District Judge

         Pending before the Court is Plaintiff VIP Products, LLC's (“VIP”) motion for summary judgment. (Doc. 110.) VIP contends that it is entitled to judgment as a matter of law on its Amended Complaint that contains three claims for declaratory relief. (Id.) VIP further contends that it is entitled to judgment as a matter of law on all of the claims that Defendant Jack Daniel's Properties Inc.'s (“JDPI”) brought as Counterclaims in its Answer. (Id.) The matter is fully briefed.

         Also pending is JDPI's motion for partial summary judgment. (Doc. 101.) At issue, JDPI moves for partial summary judgment regarding VIP's second and third claims. (Id.) The matter is fully briefed.

         Finally, there are pending motions associated with the parties' cross-motions for summary judgment, which are also fully briefed.

         The Court will deny VIP's motion for summary judgment, grant JDPI's motion for partial summary judgment, and resolve all of the pending motions associated with the parties' cross-motions for summary judgment.[1] The Court will set a status hearing for the parties in order to discuss the remaining matters that must be adjudicated at trial.

         FACTUAL BACKGROUND

         The Court will summarize the basic factual background here. In its discussion of the particular claims, the Court will discuss certain relevant and material facts that arise in conjunction with those particular legal claims at issue.

         VIP designs, manufactures, markets, and sells chew toys for dogs. VIP sells various brands of dog chew toys, including the “Tuffy's” line (durable sewn/soft toys), the “Mighty” line (durable toys made of a different material than the Tuffy's line), and the “Silly Squeakers” line (durable rubber squeaky novelty toys). (Doc. 110 at 2.) In July of 2013, VIP introduced its latest novelty dog toy, the “Bad Spaniels” durable rubber squeaky novelty dog toy. (Doc. 158.) 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.” (Id.) 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”). (Doc. 157.) These similarities include the shape of the product, the use of white lettering over a black background, and font styles. Nevertheless, on the back of the Silly Squeakers packaging for the Bad Spaniels toy, it states: “This product is not affiliated with Jack Daniel's.” (Doc. 158.)

         JDPI promptly demanded that VIP stop selling the new toy. (Doc. 47.) VIP responded by filing this suit seeking a declaratory judgment. (Doc. 49.) In Claim 1, VIP alleged that its use of the Bad Spaniels' name and trademark does not infringe or dilute any claimed trademark rights that JDPI may claim in its Jack Daniel's trademark for its Tennessee sour mash whiskey and/or any other product. (Id. at 9.) In Claim 2, VIP alleged that neither the Jack Daniel's trade dress nor the Jack Daniel's bottle design are entitled to trademark protection because they are functional; they contain merely ornamental and decorative features; they are generic; and they are non-distinctive. (Id. at 9-10.) In Claim 3, VIP alleges that Jack Daniel's bottle design is not entitled to Patent and Trademark Office (“PTO”) registration because it is functional, generic, and non-distinctive. (Id. at 10-11.) The PTO registration states that JDPI's trademark consists of a three-dimensional configuration of the square shaped bottle container for the goods having an embossed signature design comprised of the words, “Jack Daniel.” (Doc. 49 at 5.) VIP contends that JDPI's trademark registration should be cancelled. (Id. at 10-11.)

         In response, JDPI answered VIP's complaint and filed nine separate counterclaims: (1) Infringement of JDPI's federally-registered trademarks and trade dress under the Lanham Act, 15 U.S.C. § 1114, 1116-18; (2) Trade dress infringement in violation of federal law, 15 U.S.C. § 1114, 1116-18 and 1125; (3) Dilution by tarnishment of the JDPI trademarks under 15 U.S.C. § 1125(c); (4) Dilution by tarnishment of the Jack Daniel's trade dress under 15 U.S.C. § 1125(c); (5) Trademark infringement in violation of Arizona law, A.R.S. §§ 44-1451 et seq.; (6) Infringement of the JDPI trademarks and unfair competition at common law; (7) Infringement of the Jack Daniel's trade dress at common law; (8) Dilution of the JDPI trademarks under A.R.S. § 44-1448.01; and (9) Dilution of the Jack Daniel's trade dress under A.R.S. § 44-1448.01. (Doc. 12.)

         JDPI alleged in its Answer that it owns a trade dress consisting of a combination of square bottle with a ribbed neck, a black cap, a black neck wrap closure with white printing bearing the OLD NO. 7 mark, and a black front label with white printing and a filigreed border bearing the JACK DANIEL'S trademark depicted in arched lettering at the top of the label, the OLD NO. 7 trademark contained within a filigreed oval design in the middle portion of the label beneath the JACK DANIEL'S trademark, and the words “Tennessee Sour Mash Whiskey” in the lower portion of the label with the word “Tennessee” depicted in script. (Doc. 12 at 5 ¶ 6; see also Doc. 101 at 9.)

         VIP has moved for summary judgment contending that JDPI's infringement and dilution claims be denied because the defenses of nominative and First Amendment fair use shield it from liability. (Doc. 110.) VIP further argues that even if those defenses do not apply, VIP is still entitled to summary judgment on all claims because JDPI cannot prove its dilution claims under the Trademark Dilution Revision Act (“TDRA”); as to JDPI's infringement claims, that Jack Daniel's Tennessee Whiskey (“JDTW”) trademarks and bottle dress are functional and non-distinctive. (Id. at 3, 15-28.)

         JDPI moves for partial summary judgment on VIP's Amended Complaint. (Doc. 101.) As to Claim 1, JDPI leaves for trial the issue of whether VIP's alleged parody infringes or dilutes the Jack Daniel's trademarks and trade dress. (Id. at 7.) As to Claims 2 and 3, JDPI acknowledges that it bears the burden of proof regarding the protectability of its Jack Daniel's trade dress. (Id.) JDPI disputes that the Jack Daniel's trade dress and the trademark shown in United States Trademark Registration No. 4, 106, 178 (See Doc. 12 at 7) are functional, contain merely ornamental and decorative features that do not function as trademarks, are generic, and are non-distinctive. (Doc. 101 at 6.)

         STANDARD OF REVIEW

         Summary Judgment

         “A party may move for summary judgment, identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought.” Fed.R.Civ.P. 56(a) A court must grant summary judgment if the pleadings and supporting documents, viewed in the light most favorable to the nonmoving party, show “that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.” Id.; see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Jesinger v. Nevada Fed. Credit Union, 24 F.3d 1127, 1130 (9th Cir. 1994). Substantive law determines which facts are material. See Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986); see also Jesinger, 24 F.3d at 1130. “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248. The dispute must also be genuine, that is, the evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Id.; see Jesinger, 24 F.3d at 1130.

         A principal purpose of summary judgment is “to isolate and dispose of factually unsupported claims.” Celotex, 477 U.S. at 323-24. Summary judgment is appropriate against a party who “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Id. at 322; see also Citadel Holding Corp. v. Roven, 26 F.3d 960, 964 (9th Cir. 1994). The moving party need not disprove matters on which the opponent has the burden of proof at trial. See Celotex, 477 U.S. at 323. The party opposing summary judgment may not rest upon the mere allegations or denials of the party's pleadings, but must set forth “specific facts showing that there is a genuine issue for trial.” See Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586-87 (1986) (quoting Fed.R.Civ.P. 56(e) (1963) (amended 2010)); Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir. 1995). The non-movant's bare assertions, standing alone, are insufficient to create a material issue of fact and defeat a motion for summary judgment. Anderson, 477 U.S. at 247-48.

         General Trademark Principles

         “A trademark is a limited property right in a particular word, phrase or symbol.” New Kids on the Block v. News Am. Publ'n, Inc., 971 F.2d 302, 306 (9th Cir. 1992). “Throughout the development of trademark law, the purpose of trademarks remained constant and limited: Identification of the manufacturer or sponsor of a good or the provider of a service.[] And the wrong protected against was traditionally equally limited: Preventing producers from free-riding on their rivals' marks.” Id. at 305. “[T]he holder of a trademark will be denied protection if it is (or becomes) generic, i.e., if it does not relate exclusively to the trademark owner's product.” Id. at 306.

         To state an infringement claim, whether it be a trademark claim or a trade dress claim, a plaintiff must meet three basic elements: (1) distinctiveness, (2) nonfunctionality, and (3) likelihood of confusion. Kendall-Jackson Winery, Ltd. v. E. & J. Gallo Winery, 150 F.3d 1042, 1047 (9th Cir. 1998).

         General Trade Dress Principles

         “Trade dress refers generally to the total image, design, and overall appearance of a product.” Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 765 n.1 (1992). It may include the packaging, the “dress” of a product or the design of a bottle. See Fiji Water Co. v. Fiji Mineral Water U.S., 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, 210 (2000); Kendall-Jackson, 150 F.3d at 1047. “[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, 150 F.3d at 1050.

         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, 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 dress “‘has come through use to be uniquely associated with a specific source.'” Two Pesos, 505 U.S. at 766 n.4 (quoting Restatement (Third) of Unfair Competition § 13 (1995)).

         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. See Disc Golf Ass'n v. Champion Discs, Inc., 158 F.3d 1002, 1006 (9th Cir. 1998). The Ninth Circuit utilizes four factors to consider whether a product feature is functional: (1) whether the design yields a utilitarian advantage; (2) whether alternative designs are available; (3) whether advertising touts the utilitarian advantages of the design; and (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture. See Disc Golf, 158 F.3d at 1006. No one factor is dispositive; all are to be weighed collectively. See International Jensen, Inc. v. Metrosound U.S., Inc., 4 F.3d 819, 823 (9th Cir. 1993).

         Alternatively, under the aesthetic functionality test, trade dress may be 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. Marketing 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, 741 F.Supp.2d at 1173 (further quotation and citation omitted).

         DISCUSSION

         The Court will first discuss VIP's motion for summary judgment. (Doc. 110.)

         I. VIP's Defenses

         VIP first contends that all of JDPI's counterclaims for infringement and dilution must be denied because VIP's defenses of nominative fair use and First Amendment fair use shield it from liability. (Doc. 110 at 3.)

         Nominative Fair Use

         Trademark law recognizes a defense where a registered trademark is used only “to describe the goods or services of a party, or their geographic origin. See New Kids, 971 F.2d at 306. “The ‘fair use' defense, in essence, forbids a trademark registrant to appropriate a descriptive term for his exclusive use and so prevent others from accurately describing a characteristic of their goods.” Id. (further citation omitted).

         To establish nominative fair use, first, “the product or service in question must be one not readily identifiable without use of the trademark; second, only so much of the mark or marks may be used as is reasonably necessary to identify the product or service;[] and third, the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder.” Id. at 308.

         VIP argues that its product constitutes nominative fair use of the JDTW Marks and Bottle Dress because: (1) the JDTW Marks and Bottle Dress are not readily identifiable without using several of their elements. Given the medium of the parody, a three-dimensional dog toy, VIP argues that it had to utilize several key components of the JDTW Marks and Bottle Dress; (2) VIP used only so much of the JDTW Marks and Bottle Dress that were reasonably necessary to identify the bottle. VIP otherwise states that it did not specifically use any of JDPI's registered marks; and (3) VIP did nothing to suggest that JDPI had sponsored or endorsed the VIP Product. (See Doc. 110 at 4.)

         JDPI contends that the nominative fair use defense does not apply because this defense only applies where a defendant uses the plaintiff's identical mark or trade dress. (Doc. 142 at 10-11.) Here, VIP did not identically use JDPI's trademarks or trade dress. (Id.) According to JDPI, the nominative fair use doctrine applies only “where a defendant has used the plaintiff's mark to describe the plaintiff's product, even if the defendant's ultimate goal is to describe his own product, ” citing Cairns v. Franklin Mint Co., 292 F.3d 1139, 1151 (9th Cir. 2002) (finding that it was necessary for the defendant to use the name and likeness of Princess Diana to refer to its “Diana-related” merchandise). (Doc. 142 at 10-11.)

         The Court does not find that VIP is entitled to be shielded from liability based on its nominative fair use defense. VIP's Bad Spaniels toy closely imitates the Jack Daniel's Trade Dress and marks, but it did not use any of JDPI's registered marks, including the Jack Daniel's name; the number 7; the embossed Jack Daniel's' signature on the bottle; the same filigree design on the label; the three-sided body label, or the identical combination of elements constituting the trade dress. Under the New Kids test, when a defendant uses a trademark nominally, the trademark will be identical to the plaintiff's mark, at least in terms of the words in question. 971 F.2d at 308. As further stated in Playboy Enter., Inc. v. Welles, 279 F.3d 796, 801 (9th Cir. 2001), it is the defendant's very use of the plaintiff's identical trademark that makes the nominative fair use analysis necessary rather than application of AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979) which utilizes eight factors to focus on the similarity of the trademarks used by the plaintiff and the defendant in order to determine liability for likelihood of confusion in the marketplace. Because it is undisputed that VIP did not use JDPI's identical marks or trade dress in its Bad Spaniels toy, the nominative fair use doctrine does not apply as matter of law.

         First Amendment Fair Use

         Next, VIP argues that JDPI's infringement and dilution claims must fail because VIP's Bad Spaniels' parody use of the JDTW Marks and Bottle Dress is protected speech under the First Amendment. (Doc. 110 at 6.) VIP states that its dog toy parody qualifies as an expressive work under the First Amendment. (Id.) VIP argues that in order to qualify as “expressive use, ” first a defendant must have used the mark “beyond its source-identifying function” (Id. at 6 (citing Mattel Inc. v. MCA Records, Inc., 296 F.3d 894, 900 (9th Cir. 2002)), and second, its parody form of expression must not be part of a commercial transaction. (Id. at 6-7, (citing Nissan Motor Co. v. Nissan Comput. Corp., 378 F.3d 1002, 1017 (9th Cir. 2004)).)

         JDPI contends that VIP's dog toy is not entitled to protection under the First Amendment. (Doc. 142 at 13.) In MCA Records, 296 F.3d at 902, JDPI states that the Ninth Circuit adopted the Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), standard for determining the balancing of interests between trademark law and the First Amendment. According to JDPI, the Rogers standard applies to artistic or expressive works and requires courts to construe trademark law only where the public interest in avoiding consumer confusion outweighs the public interest in free expression. Rogers, 875 F.2d at 999. Because the VIP dog toy is not an artistic or expressive work, JDPI contends that the Rogers balancing test is not applicable. (Doc. 142 at 14-15.) Rather, JDPI contends that the VIP dog toy falls into those cases construing parody products-cases which have uniformly applied the standard trademark likelihood of confusion analysis. (Id.)

         The Court finds that VIP's dog toy is not entitled to protection under the First Amendment because it is not an expressive work. See Brown v. Elec. Arts, Inc., 724 F.3d 1235 (9th Cir. 2013) (stating that the Rogers test is reserved for expressive works). In Rogers, the court dealt with the intersection of trademark law and the title of a motion picture. 875 F.2d at 997. The Rogers court went on to find that movies, plays, books, and songs are works of “artistic expression” and thus subject to the balancing between trademark law and the protections of the First Amendment. Id.; see also E.S.S. Entm't 2000 Inc. v. Rock Star Videos, Inc., 547 F.3d 1095, 1099 (9th Cir. 2008) (stating that the Rogers balancing test only applies to artistic works). Although Rogers dealt with a motion picture; the Ninth Circuit has also applied the Rogers balancing test to a song (MCA Records), photographs (Mattel Inc. v. Walking Mountain Prods., 353 F.3d 792 (9th Cir. 2003), and video games (E.S.S. and Brown).

         In this case, the Court finds that the standard trademark likelihood of confusion analysis, not Rogers, is appropriate. See Sleekcraft Boats, 599 F.2d at 348-49 (establishing the eight factors applicable to likelihood of confusion analysis). Under likelihood of confusion principles, confusion exists where there is a likelihood that an appreciable number of ordinary prudent purchasers will be misled or confused as to the source of goods, or where consumers are likely to believe that the trademark's owner sponsored, endorsed, or otherwise approved of the defendant's use of the trademark. Id. Based on the facts here, the First Amendment affords no protection to VIP because it is trademark law that regulates misleading commercial speech where another's trademark is used for source identification in a way likely to cause consumer confusion. See Tommy Hilfiger Licensing, Inc. v. Nature Labs, LLC, 221 F.Supp.2d 410, 415 (S.D.N.Y. 2002) (refusing First Amendment protection to “Timmy Holedigger” an alleged parody “dog perfume” in favor of the owner of the Tommy Hilfiger trademarks for clothing). Here, as was similarly the case in Tommy Hilfiger, VIP is using an adaptation of the Jack Daniel's trademark and trade dress for the dual purpose of making an alleged expressive comment as well as the commercial selling of a non-competing product. See Tommy Hilfiger, 221 F.Supp.2d at 415. The Court agrees with the analysis in Tommy Hilfiger that because the adaptation of the Jack Daniel's trademark and trade dress mark are being used, at least in part, to promote a somewhat non-expressive, commercial product, the First Amendment does not extend to such use. See id. at 415-16.

         In conclusion, the Bad Spaniels dog toy is not an expressive work for purposes of the application of the Rogers test because VIP makes trademark use of its adaptations of JDPI's trademarks and the Jack Daniel's trade dress to sell a commercial product, its novelty dog toy. The novelty dog toy is not an expressive work like those to which the Rogers test has been applied in the Ninth Circuit. In this case, where the adaptation of the Jack Daniel's trademark and trade dress were engaged for the dual purpose of making an alleged expressive comment as well as the commercial selling of a non-competing product, the First Amendment does not establish protection.

         II. VIP's Motion for Summary Judgment Re: JDPI's Counterclaims for Trade Dress Infringement

         In JDPI's Answer to VIP's Complaint for Declaratory Judgment, JDPI asserted nine counterclaims against VIP. (Doc. 12.) In five of those claims, JDPI asserted either trademark or trade dress infringement. (Id.) In the other four claims, JDPI asserted trademark and trade dress dilution. (Id.) In VIP's motion for summary judgment, it alleged entitlement to summary judgment on each of JDPI's counterclaims. (Doc. 110.) As a threshold matter, VIP contended that it is entitled to summary judgment on all of JDPI's counterclaims because the nominative fair use defense and the First Amendment fair use defense shield it from liability. (Id. at 3.)

         The Court has found that neither nominative fair use nor First Amendment fair use provides a defense for VIP. Consequently, the Court turns to the merits of VIP's arguments that it is entitled to summary judgment.

         Infringement Claims

         To state an infringement claim, whether it be a trademark claim or a trade dress claim, a plaintiff must meet three basic elements: (1) distinctiveness, (2) nonfunctionality, and (3) likelihood of confusion. See Kendall-Jackson, 150 F.3d at 1047. VIP alleges that the bottle dress of the Jack Daniel's Tennessee whiskey bottle and the “Jack Daniel” embossed signature bottle design lacks distinctiveness and is functional. (Doc. 110 at 15-28.)

         Lack of Distinctiveness Generic

         VIP first argues that JDPI has not proven that the JDTW bottle dress is a source identifier for Jack Daniel's whiskey. Rather, VIP argues that the JDTW bottle dress is only a generic identifier of Kentucky Bourbon/Tennessee Whiskey, not Jack Daniel's whiskey in particular. (Doc. 110 at 18.) In order for JDPI to prove that its JDTW bottle dress is not generic, VIP argues that JDPI must show more than a subordinate meaning that applies to its trade dress. (Id.) It must show that the primary significance of the term in the minds of the consuming public is not the product but the producer. (Id.)

         JDPI contends that VIP's expert, Martin Wolinsky, has already conceded that the JDTW bottle dress is not generic, but a source identifier for Jack Daniel's whiskey. (See Doc. 104-5 at 23, Deposition of Martin Wolinsky (“Q: Do you consider the Jack Daniel's packaging to be generic? . . . A: I do not consider the Jack Daniel's package to be generic.”)

         The Court finds that the JDTW bottle dress is a source identifier for Jack Daniel's whiskey. The JDTW bottle dress is a combination bottle and label elements. It includes the Jack Daniel's and Old No. 7 word trademarks. (See Doc. 12 at 5, ¶6.) Under Kendall-Jackson, the inquiry is not whether individual features of the trade dress are nondistinctive, but whether the whole collection of features taken together are nondistinctive. See 150 F.3d at 1050. No reasonable trier of fact could find that the JDTW Bottle Dress, as a “whole collection of features taken together, ” id., including the Jack Daniel's and Old No. 7 trademarks, merely serves as an ...


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