Louis Vuitton, The Super Bowl and “The Hangover”—In That Order

Louis Vuitton, The Super Bowl and “The Hangover”—In That Order

by Jerry Glover
April 16, 2012

 

Louis Vuitton and its trademarked design on luxury goods (known as the “toile monogram”) is famous throughout the world. No one can deny that—not even two companies that Vuitton recently sued for infringing on that mark: Warner Brothers and Hyundai.

The lawsuit against Warner Bros. has received the most publicity. In that litigation, a Vuitton knock-off handbag was featured briefly in an airport scene in the film HANGOVER II in which one of the film’s character played by Zach Galifinakis tells an airport employee who pushes Galifinakis’ luggage to “be careful, that is … that is a Lewis Vuitton.” Vuitton has sued alleging trademark infringement and trademark dilution, among other things. Vuitton alleges the Vuitton bag used in the scene was a counterfeit.

But another decision was recently handed down by a federal district court in New York in which Vuitton prevailed over Hyundai over the use of the Vuitton design mark in a commercial. Louis Vuitton Malletier, S.A. v. Hyundai Motor America, 2012 WL 1022247 (S.D.N.Y. March 22, 2012). In this case Vuitton alleged Hyundai had both infringed and “diluted” the value of its design mark by using it (or a minor variation of the mark) in a Super Bowl commercial entitled “Luxury” for the defendant car company. You can view that commercial on YouTube at the following URL: http://www.youtube.com/watch?v=O7I4v7NYHrY. As you can see, something very much akin to the well-known Louis Vuitton design mark is seen for about one second on a basketball being handed off to one of the players in the brief basketball sequence.

Hyundai claimed that the use of the Vuitton mark was a part of the commercial’s “humorous social commentary on the need to redefine luxury during a recession… .” Slip op. at 3. The commercial poked fun at these symbols of ‘old’ luxury to distinguish them from [Hyundai] in an effort to challenge consumers to rethink what it means for a product to be luxurious.” Id. Hyundai added that the commercial “pok[ed] fun at the silliness of luxury-as-exclusivity by juxtaposing symbols of luxury with everyday life… .” Id.   Hyundai also argued that it was trying to distinguish the Vuitton symbol “from the common-sense Sonata.” Id.

The court noted that Hyundai has sought permission from several other luxury brand owners to use the marks in the commercial. Six brands declined consent; others never responded. Apparently, no one asked Vuitton’s permission. The commercial ran not only during the Super Bowl but also during the NBA All-Star Game weekend even after Vuitton had sent Hyundai a cease and desist letter objecting to Hyundai’s use of the Vuitton mark. Vuitton eventually sued alleging trademark infringement and trademark dilution.

Our review of this case will be limited to the findings the court made regarding trademark dilution. Trademark dilution is not the same thing as trademark infringement. In an infringement action the plaintiff trademark owner must show that the consuming public is likely to be confused as to the source of a product as a result of the defendant’s use of a mark that is the same or substantially similar to the plaintiff’s mark on goods or services that are similar to those of the plaintiff. In a trademark dilution action, no likelihood of confusion need be proved.

The dilution claim in this case is governed by the federal Trademark Act (commonly known as the Lanham Act), specifically 15 U.S.C. Sec. 1125(c)(1), the Trademark Dilution Revision Act of 2006. That statute states as follows:

Subject to the principals of equity, the owner of a famous mark that is distinctive, inherently or through acquired distinctiveness, shall be entitled to an injunction against another person who, at any time after the owner’s mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition or of actual economic injury.

There are also provisions for monetary damages where willful dilution is found Note that the mark owner does not have to prove actual dilution, only “likely” dilution.

This case involved dilution by “blurring” which is an “association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark.” Id. at 10 quoting Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 588 F.3d 97, 105 (2d Cir. 2009) (hereinafterStarbucks). Again referencing the Starbucks decision, this court noted that examples of blurring would include Dupont shoes, Buick aspirin tables, Schlitz varnish, Kodak piano and Bulova gowns.

The federal dilution law sets out six factors to determine whether dilution by blurring has occurred (15 U.S.C. Sec.1125(c)(2)(B):

(1) The degree of similarity between defendant’s mark and the famous mark;

Here the mark used in the defendant’s commercial was almost identical to the actual Vuitton mark. That the mark was seen on screen for only one second (therefore not allowing close scrutiny) made the similarity even more apparent to the viewer in the court’s opinion.

(2) The distinctiveness of the famous mark

 The court noted that the greater a mark’s distinctiveness the higher its degree3 of protection from dilution. The defendant had little choice but to concede the Vuitton mark as distinctive going so far as t5o admitting that the mark is “viewed by some as the most valuable luxury brand in the world.” Slip op. at 15.

(3) Whether the famous mark’s owner is engaging in substantially exclusive use of the mark;

Vuitton noted that in 2009 it had initiated almost 10,000 anti-counterfeiting raids and over 25,000 anti-counterfeiting procedures. Id. If it missed a couple of infringements here and there, it was clear that Vuitton was enforcing its right to exclusive use of its mark.

(4) The degree of recognition of the famous mark;

Hyundai did not dispute that the Vuitton mark was widely recognized.

(5) Whether the defendant intended to create an association with the famous mark;

The court noted that this component of blurring did not require bad faith on the part of the defendant. Id. at 16. Several people who were deposed by Vuitton and who worked on the commercial admitted that they intended to create an association with Vuitton.

(6) Actual association between the defendant’s mark and the famous mark.

The district court noted that to prove this last blurring element, Vuitton had to establish that defendant’s mark “conjure[s] an association with the [Vuitton mark] thereby lessening the distinctiveness of the [Vuitton mark]. Id at 18 quoting Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 218 (2d Cir. 1999).    Various consumer surveys commissioned by Vuitton showed that a significant percentage of consumers who were asked if they recognized any brands in the commercial surveyed stated that the Vuitton mark was used. Slip op. at 19. An even larger percentage of surveyed consumers stated that the basketball in the commercial reminded them of Vuitton. Id. Sixty-two percent of those surveyed thought the commercial was approved by Vuitton.

The court even referenced Twitter noting the public response to the Vuitton role in the commercial. Id. at 20-21.

Weighing all the evidence relating to each factor, the court found that Vuitton had satisfied each of the 6 blurring factors adding that Hyundai was “definitely laddering and borrowing equity from Louis Vuitton.” Id at 25.

The district court also ruled that Vuitton had established willfulness on the part of Hyundai. The court again referenced deposition testimony from those associated with the commercial that they intended to associate Hyundai with the luxury brand in order to promote the Hyundai automobile. Since Hyundai had tried to get the consent of other mark owners to use the marks in the commercial, the court concluded that Hyundai believed it needed that consent but proceeded to use the Vuitton mark without consent. Even after Vuitton sent Hyundai a cease and desist letter, Hyundai ran the commercial during the NBA All-Star Weekend telecast. Id. at 27. The slight alteration to the Vuitton mark that Hyundai made also demonstrated to the court that Hyundai was aware it could not use the Vuitton mark. Id.

Hyundai separately argued that its use of the Vuitton mark was a fair use under the federal dilution law. 15 U.S.C. Sec. 1125(c)(3) states in part:

The following shall not be actionable as dilution by blurring … under this subsection:

(A) Any fair use, including a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source for the person’s won goods or services including use in connection with—

(i) advertising or promotion that permits consumers to compare goods or services; or

(ii) identifying and parodying, criticizing or commenting upon the famous mark owner or the goods or services of the famous mark owner.

(C) Any noncommercial use of a mark.

Hyundai argued its use of the Vuitton mark was a parody, criticism or comment upon the mark. Id. at 31. The court noted that the statute quoted above contemplates the availability of the fair use defense even in a commercial context since a noncommercial use of the mark is “not actionable.” 15 U.S.C. Sec. 1125(c)(3)(C).

The court noted that Hyundai had specifically disclaimed any intent to parody, criticize or comment upon the Vuitton mark in deposition testimony and other submitted evidence. The court concluded, therefore, that Hyundai’s use the mark not qualify as a fair use. Even if some parody, comment or criticism could be found in the commercial, the court added that the fair use defense was seldom applied to “subtle satire.” Id. at 38 citing Starbucks at 113. Here, the court implied that any satire in this commercial was practically non-existent.

So what does this mean for the dilution claim Vuitton is making in the Hangover case noted at the beginning of this article? In our view, Vuitton will have a difficult time avoiding a First Amendment/free speech argument since the movie is not a commercial for the studio’s products/services and the mark is used in an expressive sense, not to promote the film. The studio may also argue that the use of the mark in the particular scene described above is a parody or comment on the way people view so-called luxury brands. The significance to Vuitton’s argument that the bag used in the scene may have been a counterfeit is unclear and will hopefully be clarified during the progress of the litigation.

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