By Scott Hall, Mari Clifford, and Amber Leong

In 1988, Congress enacted the Video Protection Privacy Act (“VPPA”) in response to the confirmation hearing of Judge Robert Bork, where his video rental history was disclosed during his Supreme Court confirmation hearing. Creative plaintiffs’ lawyers in recent years have asserted new claims under this statute, arguing that the use of website tracking pixels that transmit a user’s visit to a website page containing an embedded video violates the VPPA. Some courts have allowed some of these claims to pass the pleading stage, resulting in a proliferation of pre-litigation demands and complaints against companies who embed videos on their websites and use pixel analytics.[1]

There are several defenses that have defeated these claims at the pleading stage, however.

First, courts are in agreement that the VPPA only applies to “subscribers” and not just any user who happens to watch a video on a website. What constitutes a “subscriber” can get tricky though. Some courts have held that subscribing to a mailing list or newsletter may be sufficient,[2] while other courts have reached a different conclusion and required a subscription to video services or video content.[3]

Second, what constitutes “personally identifiable information” under the VPPA is also litigated. The Third Circuit has held that under the VPPA, personally identifiable information (“PII”) is limited only to “information that would, with little or no extra effort, permit an ordinary recipient to identify a particular person’s video-watching habits.”[4] Thus, in In re Nickelodeon, the Third Circuit held that “static identifiers” such as an IP address would not allow an ordinary person to determine which videos were viewed online and thus, not actionable under the VPPA.[5] However, courts have regularly held that a Facebook ID is sufficient to constitute PII because it can be easily and directly tied to an individual through that individual’s Facebook account.

Third, the VPPA specifically pertains to pre-recorded videos, and does not apply to live-stream content.[6]

Lastly, the statutory language provides an explicit exemption from the VPPA if a company obtains affirmative, written consent from the user prior to the collection and transmission of a user’s purported video-watching history.[7] There are specific codified requirements to obtain consent under the VPPA including, among other things, providing “a form distinct and separate from any form setting forth other legal or financial obligations of the consumer.”[8] Thus, obtaining consent under the VPPA may look different than obtaining consent sufficient under wiretapping statutes as detailed in our article linked here.

If you have questions about how to navigate this legal landscape, or if your company has been served a pre-litigation demand letter, please reach out to the Coblentz Data Privacy & Cybersecurity Team to discuss the various legal defenses available to your company. There is no one-size-fits-all approach. Navigating this (constantly changing) area of law requires a determination of your business needs, business model, and a well-thought-out and bespoke approach.

 

[1] See e.g., Belozerov v. Gannett Co., Inc., —F. Supp. 3d—-, 2022 WL 17832185 (D. Mass. 2022).

[2] Harris v. Public Broadcasting Serv., —F.Supp.3d—-, 2023 WL 2583118, at *3 (N.D. Ga. 2023)

[3] See Salazar v. Paramount Global d/b/a 247Sports, 22-cv-00756, Dkt No. 33 (M.D. Tenn. July 18, 2023); see also Austin-Spearman v. AMC Network Entertainment LLC, 98 F. Supp. 3d 662 (S.D.N.Y. 2015).

[4] In re Nickelodeon Consumer Privacy Litig., 827 F.3d 262, 284 (3d Cir. 2016).

[5] See also White v. Samsung Elec. Am., Inc., Civ. No. 17-1775, 2019 WL 8886485, at *5 (D. N.J. Aug. 21, 2019) (granting Samsung’s motion to dismiss the VPPA claim because allegations of only obtaining IP addresses, MAC addresses, and zip codes do not constitute PII under VPPA).

[6]  Stark v. Patreon, 635 F. Supp. 3d 841, 852 (N.D. Cal. 2022).

[7] 18 U.S.C. § 2710.

[8] Id. § 2710(b)(2)(B).

By Scott Hall, Mari Clifford, and Amber Leong

Numerous new website technologies and tools allow companies to more effectively interact with their customers. These include chatbots, session recording software, tracking pixels (snippets of code that can be used to identify certain designated behavior on a website like seeing which products users are clicking on), and cookies (which remember products previously added to a shopping cart). All of these tools are immensely helpful in engaging with and identifying user experiences, and they help improve and promote a company’s business operations.

Plaintiffs’ attorneys have recently argued that the use of these website technologies – especially when provided or facilitated by a third-party vendor – constitutes violations of wiretapping and eavesdropping statutes. Under these statutes – both federal and state analogs – it is a violation if an individual uses a recording device to eavesdrop or intercept a confidential communication without the consent of the parties.

Historically, these statutes were used against individuals secretly listening in on private telephonic conversations. However, plaintiffs’ attorneys have revived these statutes to claim that companies are violating these laws through the use of website technologies. And some courts have allowed some of these claims to pass the motion to dismiss stage.[1]

This has created a flurry of pre-litigation demands against companies with consumer-facing websites. Many companies seek to settle these claims to avoid litigation costs, but several matters have gone to court. As more of these cases are making their way through the courts, we are able to see patterns in how courts are addressing these claims. There now appears to be a distinction emerging between claims that are allowed to proceed past the motion to dismiss stage and those that are not. Chatbots and session recording technologies used only to aid in servicing the website as a service provider have been found insufficient to state a claim under the wiretapping statutes.[2] By contrast, the use of these tools to collect user data that a third-party vendor is permitted to use for other purposes (including its own business purposes or with services to other companies) has been found to be sufficient to pass the motion to dismiss hurdle.[3]

The logic behind the reasoning is that there is no unlawful third-party “interception” by an entity that is acting as a service provider to provide a service for the company with whom the individual consumer is interacting. Put differently, a company cannot eavesdrop on itself or “intercept” its own communications.[4]

Given this guidance, companies should take the following steps if they use any chatbots, mouse click trackers, or session-recording technology to better understand their users:

• Service Provider Agreements: Companies should enter into service provider agreements with the chatbot, session recording, or mouse click providers. Contained within the agreements should be clear contractual language that companies providing such services cannot sell, share or use the personal information of users for their own purposes. This language thus captures that the service provider is there to provide a service and reaps no benefit in the form of personal information data.
• Update Privacy Policies: Companies should update their privacy policies and ensure that the policies adequately disclose the use of any chatbots, mouse clicks, or session recording. While updating the privacy policies alone will not be sufficient to be compliant with the various data privacy laws because courts have held that privacy policies at the bottom or footer of webpages may not give sufficient notice of recordings, the policies are nevertheless necessary for compliance as the bare minimum requirements.
• Disclose Immediately Prior to Recording: Companies should explicitly disclose that chat communications or other website interactions are being recorded by a vendor, and that if a user chooses to continue, they are consenting to such recording. Consent is an adequate defense to the wiretapping and eavesdropping claims. While the issues of adequate notice and consent continue to be litigated throughout the courts, generally, providing disclosure of such recordings immediately prior to the session with the opportunity to not proceed should work to provide sufficient notice and consent under the wiretapping laws.

Overall, the legal landscape of these claims is still in flux. However, a clear line that has developed is that a company’s use of “service providers” providing the recording services for companies is not in violation if that service provider cannot use the information collected for purposes other than to support the company, particularly if adequate notice has been provided to the users. This rule, however, does not include the use of analytics or pixels—which the courts have frequently found involve data exchanges with third parties for purposes beyond providing a service and which have been found sufficient to proceed past the motion to dismiss stage.[5]

If you have questions about whether your website collection procedures are compliant, or if you have received a threat or complaint about violation of the wiretapping statutes based on website technologies, please reach out to the Coblentz Data Privacy & Cybersecurity Team.

 

[1] See e.g., Hazel v. Prudential Financial, Inc., 22-cv-07465-CRB, 2023 WL 3933073 (N.D. Cal. June 9, 2023); Williams v. What If Holdings, LLC, No. C 22-03780 WHA, 2022 WL 17869275 (N.D. Cal. Dec. 22, 2022).

[2] See Licea v. Vitacost.com, Inc., —F.Supp.3d—, 2023 WL 5086893 (S.D. Cal. 2023).

[3] See e.g., Hazel, 2023 WL 3933073.

[4] See also Graham v. Noom, Inc., 533 F. Supp. 3d 823, 832-33 (N.D. Cal. 2021) (“[A]s a service provider, [third-party vendor] is an extension of [Defendant]. It provides a tool – like a tape recorder … that allows [Defendant] to record and analyze its own data in aid of [Defendant’s] business. It is not a third-party eavesdropper. As a result, [Defendant] is not liable for aiding and abetting [vendor’s] wrongdoing because there is no wrongdoing.”); Cody v. Boscov’s, Inc., ––– F.Supp.3d at ––––, 2023 WL 2338302, at *2 (C.D. Cal. 2023) (“Plaintiff must provide facts suggesting that [the vendors] are recording Defendant’s customers’ information for some use or potential future use beyond simply supplying this information back to Defendant.”).

[5] Katz-Lacabe v. Oracle Am., Inc., No. 22-CV-04792-RS, 2023 WL 2838118 (N.D. Cal. Apr. 6, 2023) (Data broker was not a party to internet users’ communications, for purposes of exemption from liability for wiretapping claims under the federal Wiretap Act and the California Invasion of Privacy Act, where broker allegedly tracked users’ browsing activities on websites other than its own to intercept their personal information and sell it to third parties.)

 

Office vacancies have caused the values of Bay Area commercial real property to significantly decline in 2022. The value of real property that is used to determine the property tax assessment for the 2023-2024 fiscal year (which runs from July 1, 2023 to June 30, 2024) is determined as of the January 1, 2023 valuation date.

Depending on the extent to which the value of your property has declined, it is likely that the assessed value of your property, as of January 1, 2023, is considerably lower than the value currently listed on the assessment roll. If a property owner requests a reduction, the Assessor has the authority to proactively change the assessed value of a property to recognize a decrease in value (a one-time Proposition 8 reduction). In addition, if a property owner disputes the assessed value, the owner can file an Appeal with the Assessment Appeals Board and receive an Administrative Hearing. The deadline for filing an Appeal in most counties is September 15, although a few are November 30.

Our tax partner, Jeff Bernstein, has extensive experience in property tax assessment matters, and has attained significant reductions in property tax valuations for many owners of commercial and multi-family residential properties. If a reduced valuation can be achieved, the property tax savings could be substantial.

Please contact Jeff directly (jbernstein@coblentzlaw.com) if you are interested in discussing your potential for a reduced property tax valuation.

A Comprehensive Look at New Developments in Labor and Employment Law

By Fred Alvarez, Hannah Jones, Stephen Lanctot, Allison Moser, Kenneth Nabity

Download a PDF version of this report here.

We are halfway through 2023 so it is a good time to look back on this year’s employment law developments so far and look forward to what lies ahead.

Our 2023 Mid-Year Labor and Employment Update provides a short overview of the legal changes that we are monitoring the closest and that we think our clients should be aware of. These changes include new laws, regulations, and decisions in the areas of workplace diversity programs, pay transparency, non-compete agreements, religious accommodations, non-disclosure and confidentiality restrictions, independent contractor relationships, whistleblowing, drug-free workplaces, and remote employee onboarding. We’ve also included our thoughts on “what now?” regarding each key legal development and potential ways to help mitigate employment law risk.

You can download the full report here. If you have any questions about any of the issues discussed in this mid-year update, please reach out to a member of the Coblentz Employment Team.

By Scott Hall and Amber Leong

Despite (or possibly in reaction to) the recent court decision halting the enforcement of the regulations for the Consumer Privacy Rights Act (“CPRA”) by nine months, California regulatory authorities have made clear that they are still full speed ahead on privacy.

Immediately after the recent court decision on June 30, 2023, the California Attorney General’s Office issued a press release that it had sent notices to certain California employers regarding their compliance efforts in connection with employee privacy rights. Subsequently, the California Privacy Protection Agency (“CPPA”) released a statement on July 31, 2023 announcing its intent to review automakers’ data privacy practices for any “connected vehicle[s]” given these vehicles’ ability collect information “via built-in apps, sensors, and cameras, which can monitor people both inside and near the vehicle.” A few days later, on August 4, 2023, California Attorney General Rob Bonta and the CPPA filed a petition seeking to overturn the June 30, 2023 trial court decision delaying enforcement of the CPRA regulations.

Thus, in what has been a very busy past few weeks, California has clearly signaled its intent and willingness to move forward with the enforcement of privacy rights of California residents under the CPRA (which remains in effect despite the halt of regulations by court order). If companies have not already done so – they should, as soon as possible, assess whether they are subject to the CPRA, and if so, work with their legal teams to ensure their data collection practices, privacy policies, service provider agreements, and mechanisms to process consumer requests are all in place. Companies should also closely review areas of privacy that have been identified as enforcement priorities by regulators, including employee privacy rights, selling and sharing of consumer data, and connected vehicle data collection. California has shown it is not afraid to dole out fines in the millions. And with a new, dedicated California Privacy Protection Agency, in addition to the AG’s office, Federal Trade Commission, and other privacy enforcers, we can be sure to see a continued focus on privacy enforcement. If you have any questions or concerns, please do not hesitate to contact the Coblentz Data Privacy & Cybersecurity team.

By Scott Hall and Bina Patel

Although you are likely breathing a sigh of relief after just finishing compliance efforts for the California Privacy Rights Act (“CPRA”), don’t relax just yet. California has another new privacy law going into effect on July 1, 2024: The California Age-Appropriate Design Code Act (“CAADCA”). The new law is aimed at enhancing privacy, data, and safety protections for children and teens who use online platforms. Businesses subject to the CPRA should review the requirements of CAADCA closely to determine how their data protection measures should be updated, as the new law expands upon existing laws geared towards minors, such as California’s Parent’s Accountability and Child Protection Act and the federal Children’s Online Privacy Protection Act (“COPPA”).

Businesses Subject to CAADCA

CAADCA defines “business” the same way as CPRA.[1]  But, CAADCA only applies to businesses that provide online services, products, or features that are “likely to be accessed by children” who are under age 18. Still, this is a very broad scope, and much broader, for example, than COPPA, which is limited to operators of websites “directed to children” under 13, or with “actual knowledge” that a website is collecting personal information of children under 13.  CAADCA therefore expands both the age range (by 5 years) and the types of businesses and websites subject to regulation, since many online services, products, or features may be “likely to be accessed by children” under 18 even if they are not specifically directed at children or with actual knowledge of access by children. Whether a website is “likely to be accessed by children” will be determined based on various factors, including whether it is directed to children, routinely accessed by a significant number of children, has advertisements marketed to children, has design elements that are known to be of interest to children (i.e., games, cartoons, music, and celebrities who appeal to children), and has a significant audience that is determined to be children.

Affirmative Requirements of Covered Businesses

CAADCA requires covered businesses to implement the following affirmative actions:

• Perform a Data Protection Impact Assessment. Covered businesses must complete a Data Protection Impact Assessment (“DPIA”) before publicly launching a new online service, product, or feature that is “likely to be accessed by children.” The DPIA must include detailed information about a business’s online service, product, or feature, including its purpose, how it uses children’s personal information, and how it could harm children through its algorithms, design features, and targeted ads. The DPIA is confidential and exempt from public disclosure. Each business must retain documentation of the DPIA for as long as it provides the online service, product, or feature to children and provide a copy to the Attorney General upon request.
• Provide privacy by default. Covered businesses must configure all default privacy settings offered by the online service, product, or feature to offer a high level of privacy, unless the business can demonstrate a compelling reason that a different setting is in the best interest of children.
• Provide a privacy policy and terms. Covered businesses must provide privacy information, terms of service, policies, and community standards concisely, prominently, and using clear language suited to the age of the children that are likely to access their online service, product, or feature.
• Allow children to exercise privacy rights. Covered businesses must provide prominent, accessible, and responsive tools to help children or their parents/guardians exercise their privacy rights and report concerns.
• Identify tracking signals. Covered businesses must provide an obvious signal to a child when the child is being monitored or tracked by the online service, product, or feature.

Restrictions on Covered Businesses

CAADCA also prohibits covered businesses from engaging in the following actions:

• Using a child’s personal information in a way that is “materially detrimental to the physical health, mental health, or well-being of a child.”
• Collecting, selling, sharing, or retaining the personal information of children for any reason other than a reason for which the personal information was collected, unless the business can demonstrate a compelling reason that aligns with the best interests of children.
• Collecting, selling, or sharing any precise geolocation information of children, unless it is strictly necessary for the business to provide the service, product, or feature and only for a limited time.
• Using dark patterns, which are online experiences designed to encourage children to provide too much personal information.
• Profiling children, though this prohibition is subject to certain exceptions.
• Using personal information to estimate the age of a child for any other purpose or retaining that personal information longer than necessary to estimate age.

Enforcement of CAADCA

There is no private right of action under CAADCA, but the law authorizes the Attorney General to seek an injunction or civil penalty against any business that violates its provisions. The Attorney General can hold violators liable for a civil penalty of up to $7,500 per affected child. The new law gives companies an opportunity to cure any alleged violation within 90 days so that they can avoid these penalties.

Next Steps for California Businesses

While CAADCA does not go into effect until July 1, 2024, it is vital that California businesses take steps to ensure their compliance with the new law in advance of the effective date. These steps may include the following:

• Assess whether your business is subject to CAADCA. Determine if your business’s online products, services, or features are “likely to be accessed by children” under age 18 as defined under the new law.
• Start to prepare a Data Protection Impact Assessment. Familiarize yourself with the requirements of the DPIA and strategize how your business would perform such an assessment. For an online product, service, or feature that was launched before July 1, 2024, a DPIA must be completed by July 1, 2024. After that, a DPIA must be completed before launching any new online service, product, or feature that is “likely to be accessed by children.”
• Provide data privacy information in appropriate language for children. Revise your privacy information, terms of service, policies, and community standards so that they are accessible to the age group of children who are likely to access your online service, product, or feature.
• Start planning changes your business will need to make to ensure compliance. Businesses should consider how they can redesign their products, including those that have launched and those in development, to mitigate the risk of harm to children. For example, businesses will need to adjust their default privacy settings to accommodate a high level of privacy by default. A service, product, or feature should also provide an obvious signal to a child when their online activity is monitored or their location is tracked.
• Ensure that your business is not engaging in any prohibited activities. As described above, CAADCA imposes certain limitations on how and for what purpose a covered business may collect, sell, share, or retain a child’s personal information.

Please contact the Coblentz Privacy Team with any questions about CAADCA or other privacy issues.

To view a PDF version of this article, please click here.

[1] The CPRA defines a “business” as any for-profit entity operating in California that collects personal information of California residents and satisfies one of three requirements: (i) the company has annual gross revenues of more than $25 million; (ii) the company buys, sells, or shares personal information of at least 100,000 California residents; or (iii) the company derives at least 50% of its annual revenues from selling or sharing California residents’ personal information.

Wine trademarks have been the subject of recent decisions from the United States Patent and Trademark Office. In analyzing whether there is a likelihood of confusion between trademarks, these decisions illustrate the growing trend toward finding wine to be related to other types of alcohol, restaurant services, and even coffee, and fruit. Sabrina Larson and Bina Patel discuss the legal landscape of the vineyard and registering wine trademarks in the North Bay Business Journal article “Vine Notes: Relating wine to beer and spirits, restaurant services, even coffee and fruit.” To read the full article, please click here.

By Scott Hall, Mari Clifford, Sabrina Larson, Amber Leong, and Bina Patel

Now that July 1, 2023 has passed, and the California Privacy Rights Act (“CPRA”) is in effect, California Attorney General Rob Bonta has indicated his intent to ensure compliance with the new statute by sending out letters to certain California companies—particularly those with numerous California employees—to ascertain compliance with the CPRA’s requirements for employees and job applicants. Enforcement of these provisions may move forward even though enforcement of certain CPRA regulations has been postponed until early next year as detailed in our previous client alert.

Please contact Scott Hall at shall@coblentzlaw.com or Coblentz Data Privacy & Cybersecurity attorneys if you receive a letter regarding your privacy compliance practices and would like assistance in responding.

By Scott Hall, Mari Clifford, Sabrina Larson, Amber Leong, and Bina Patel

You are likely aware of headlines spreading the news of a recent Superior Court of California decision that has delayed the enforcement of the California Privacy Rights Act (“CPRA”) regulations until March 29, 2024. However, while the enforcement of the regulations has been delayed until March of next year, the CPRA itself remains in effect (since January 1, 2023) and is enforceable. 

On June 30, 2023—the eve of the July 1, 2023 enforcement date of the CPRA regulations—a California state court judge granted an injunction delaying enforcement of the CPRA regulations until March 29, 2024. The court found that the regulations could not be enforced on July 1, 2023 because this did not give the adequate one-year notice from March 29, 2023, when the regulations were published. See Cal. Chamber of Comm. V. Cal. Privacy Protection Agency, 34-2023-80004106-CU-WM-GDS (Cal. Sup. Ct. June 30, 2023). Specifically, the court found that the voters who enacted the CPRA by ballot initiative intended businesses to have a 12-month grace period between the adoption of final regulations and their enforcement. Id. Accordingly, the court held that enforcement of any final regulation under the CPRA must be stayed for a period of 12 months from the date that individual regulation becomes final. For the first set of CPRA regulations that became final on March 29, 2023, that means enforcement must wait until March 29, 2024.

Takeaway: While this may seem like a nine-month reprieve, this should not be the time for companies to halt or delay CPRA compliance efforts. The CPRA itself is still in effect and enforceable even if the regulations are not. If businesses have not already done so, they should use this opportunity to finalize compliance under the CPRA and its current regulations. Additionally, this decision indicates that businesses will have a year to put into place compliance processes for any new regulations promulgated in connection with the CPRA going forward (e.g., for automated decisionmaking, data impact assessments, and other regulations still forthcoming), which is good news for businesses and compliance officers. 

The landscape of data privacy laws is constantly changing—with new states enacting new data privacy laws each week. By staying on top of CPRA compliance needs now, businesses will be in a better position to pivot quickly to adjust to new applicable state laws and new regulations yet to be issued under the CPRA.  

If you have any questions about CPRA compliance or other privacy issues, please contact Scott Hall at shall@coblentzlaw.com or Coblentz Data Privacy & Cybersecurity attorneys.

By Sabrina Larson and Christopher Wiener

On June 8, 2023, the Supreme Court issued a unanimous decision in Jack Daniel’s Properties, Inc. v. VIP Products, limiting the scope of a parody defense to a trademark infringement claim.

The Takeaways

• The test for likelihood of confusion must be applied where an infringer uses a trademark as a trademark to identify the source of its goods, even if it claims that use is a parody, rather than the First Amendment analysis applicable to the use of marks in expressive or artistic works.
• The use of a mark as a parody does not shield an infringer from a dilution claim (alleged based on famous marks) where it uses the trademark as a trademark, to identify the source of its goods.

Background

VIP makes and sells a line of dog toys called “Silly Squeakers” designed to look like and to parody popular beverage brands, including toys named Dos Perros, Smella Arpaw, and Doggie Walker, to name a few. At issue here is VIP’s “Bad Spaniels” toy, designed to evoke the distinctive Jack Daniel’s brand and bottle:

In addition to the overall trade dress of the bottle and label, the Bad Spaniels toy mimics numerous specific elements of the Jack Daniel’s bottle, many of which are registered trademarks. For example:

• “Bad Spaniels” instead of “Jack Daniel’s”
• “The Old No. 2 On Your Tennessee Carpet” instead of “Old No. 7 Tennessee Sour Mash Whiskey”
• “43% poo by vol.” and “100% smelly” instead of “40% alc. by vol. (80 proof ).”

As the Supreme Court wryly summarized, the “jokes did not impress” Jack Daniel’s. It claimed both trademark infringement and dilution.

Use of Someone Else’s Trademark in Expressive Works: The Rogers Test

VIP defended its use of the Jack Daniel’s trademarks under the First Amendment—claiming that the Bad Spaniels toy is an “expressive work.” It claimed that the Rogers test applied to its use of the trademarks and that as protected speech, the typical analysis for trademark infringement, whether the use of the trademark creates a likelihood of confusion as to the source of the goods, did not apply to the Bad Spaniels toy.

The Rogers test dates to a 1989 case from the Second Circuit, Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), and has since been applied by courts in many circuits to analyze use of trademarks in “expressive works,” where trademark rights and free speech rights under the First Amendment intersect. Rogers addressed potential infringement in the context of titles of expressive works—Ginger Rogers claimed Fellini’s film title incorporating her name was an infringement. The court disagreed, reasoning that the “expressive element of titles requires more protection than the labeling of ordinary commercial products.”

Although Rogers dealt with titles of creative works, the test has since been applied broadly to the use of trademarks within an artistic or expressive work. When it is applied, Rogers requires dismissal of infringement claims where the trademark is used in an expressive work—without turning to a likelihood of confusion analysis—unless (i) the use of the mark has no artistic relevance to the underlying work or (ii) the use of the mark explicitly misleads as to the source or content of the work. The lead-up to the Bad Spaniels decision involved extensive debate over whether the Rogers test should be stricken or modified.

Jack Daniel’s Trademark Infringement Claim

The Supreme Court did not overrule the Rogers test, but it clarified that the test does not apply when the alleged infringer uses the trademark as a trademark—i.e., as a source-identifier for its own goods. Rogers remains a “cabined doctrine” applying only when the defendant uses the mark in a non-source identifying way. Here, the Court concluded, VIP was using the Bad Spaniels trademarks as trademarks, to identify the source of the VIP dog toy products, a point that VIP had earlier conceded in the case. Accordingly, the only question that remains is whether the Bad Spaniels trademarks are likely to cause confusion with the Jack Daniel’s trademarks as to the source of each party’s products.

The Supreme Court remanded the case to determine the question of likelihood of confusion. The issue of parody was, however, not resolved. While it cannot be analyzed under the Rogers test, VIP’s claimed use of the marks as parody will be relevant to likelihood of confusion. A successful parody must conjure up the original work while also creating a contrast, to make the message of ridicule or humor clear. If parody is done successfully, it is typically not likely to create confusion.

Jack Daniel’s Dilution by Tarnishment Claim

Jack Daniel’s also claimed that the Bad Spaniels toy constituted dilution by tarnishment of its famous trademarks. Dilution applies where the asserted trademark is famous—widely recognized by the public as designating the source of goods. 15 U.S.C. § 1125(c). Dilution can occur where an infringer uses a famous trademark for unrelated goods, creating an association that harms the reputation of the famous trademark: that is, for Jack Daniel’s, the association of its whiskey with dog excrement.

A statutory exception to dilution is where the use of the trademark is “noncommercial.” VIP argued that its Bad Spaniels toy, despite being sold to consumers, was a noncommercial use because it parodied Jack Daniel’s. The Court held, however, that the use of a trademark is not necessarily noncommercial simply because it parodies another’s product. Instead, it again matters whether the trademark is being used as a trademark, to designate the source of goods.

The Takeaways Revisited

The Bad Spaniels decision narrows defenses that rely on the parodic nature of the use of the trademark. Instead, even if the intended use is a parody, the traditional trademark infringement analysis of likelihood of confusion will apply if the trademark is used to designate the source of the goods. Likewise, the noncommercial exception to a dilution claim cannot be invoked simply because the use is an intended parody. Parody is and remains, however, relevant to the likelihood of confusion analysis. Those who engage in parodies should carefully consider whether the parody is being used as a source identifier of their own goods or services—and if it is, to carefully consider whether it is likely to cause confusion. Meanwhile, the Rogers test remains intact, applying, as it traditionally has, in instances where the parody is not being used as a trademark.

To view a PDF version of this article, please click here.