Surveying Warhol and Jack Daniel's Six Months Out: How The Supreme Court's Marquee IP Decisions Of 2023 Have Impacted The Lower Court Landscape

New York State Bar Association
Entertainment, Arts and Sports Law Journal

Spring 2024

By Neville L. Johnson, Douglas L. Johnson, and Daniel B. Lifschitz

2023 was a banner year for fair use decisions at the Supreme Court, with the justices electing to rein in both the concept of transformativeness under copyright law in Warhol v. Goldsmith[1] and the First Amendment-accommodating Rogers test in Jack Daniel's v. VIP Products.[2] While much ink was spilled in the days immediately following these decisions regarding their predicted impact, we now have our first crop of follow-on opinions to check those predictions, and while the plaintiffs' bar has indeed been the primary beneficiary of this new authority, the breadth of that benefit remains notably in flux.

Warhol v. Goldsmith

In Warhol, the Supreme Court revisited its seminal Campbell v. Acuff-Rose decision for the first time in three decades to finally iterate on what transformative fair use means in the art world.[3] After a vexing series of decisions out of the Second Circuit had threatened to consign the remaining factors in the fair use statute to irrelevance,[4] Warhol cautioned that absent a compelling standalone justification for appropriating another's copyrighted work (such as criticism, commentary or parody), commercial use in a market the copyright holder may otherwise compete in is presumptively not transformative.[5]

One of Warhol's primary imperatives was to get judges out of the business of art criticism by holding that an appropriating artist's stated or perceived intent does not dictate whether a work is transformative; instead, “[w]hether the purpose and character of a use weighs in favor of fair use is, instead an objective inquiry into what use was made, i.e., what the user does with the original work.”[6] In Warhol, for example, while the “Orange Prince” silkscreen undoubtedly added new expression to Lynn Goldsmith's photograph of Prince, the infringing use was “to illustrate a magazine about Prince with a portrait of Prince” – a task for which Goldsmith's original photograph was also objectively well-suited.[7]

The context-sensitive nature of Warhol's tweak to the fair use analysis was most immediately felt in the world of tattoos, where two district courts came to two different conclusions on whether Warhol exculpated the unlicensed appropriation of art on skin. In Cramer v. Netflix, the plaintiff sued over their tattoo of “Tiger King” star Joe Exotic being featured in a montage of footage highlighting the cultural impact of the series as it kicked off its second season.[8] Netflix was not in the business of selling or advertising tattoos, and its brief use of the image to illustrate a cultural phenomenon did not crowd out any commercial opportunities for the original tattoo artist, so its fair use defense prevailed.[9]

Less fortunate was artist Kat Von D, who was dinged in Sedlik v. Drachenberg for promoting herself on social media with images of a tattoo she had inked that replicated a photograph of musician Miles Davis.[10] The district court had initially found fair use based upon the tattoo's more “melancholy” aesthetic compared to the photograph,[11] echoing the same analytical framework that the district court in Warhol had deployed before being corrected from above.[12] Upon reconsideration, the Sedlik court found Warhol to be a material change in controlling law, such that the record was now bereft of any colorable argument for why merely recasting the photograph as a tattoo was transformative.[13]

Warhol has already perceptively increased district courts' sensitivity to commercially competitive use as a potential disqualifier for transformativeness, particularly when the secondary use fails to appreciably comment upon the primary use. In Vogts v. Penske Media, for example, the plaintiff's photography intended for real estate advertising was repurposed for profile pieces on the owners of said real estate.[14] The change in purpose did not alter the fact that the photographs were eminently licensable for such use, and the profiles of the owners failed to comment on the photographs themselves (much as the silkscreen in Warhol failed to comment on the underlying portrait).[15]

Notably, however, at least one court has seen fit to relegate Warhol's primary significance to the world of art. In Thomson Reuters v. Ross Intelligence, an artificial intelligence company was accused of scraping Westlaw's legal research database in service of creating a competing platform.[16] Although undoubtedly a commercial use, the district court “decline[d] to overread” Warhol on the import of that consideration, particularly given that “just two terms ago, in a technological context much more like this one, the Court[‘s fair use blessing of computer code reuse in Google v. Oracle] placed much more weight on transformation than commercialism.”[17] This was a poetic turnabout, given that the Second Circuit had similarly distinguished the non-technological context of Warhol to decline applying Google.[18]

Jack Daniel's v. VIP Products

 In Jack Daniel's, the Supreme Court was presented with its first opportunity to squarely confront the prevailing influence of Rogers v. Grimaldi, a Second Circuit decision that immunized expressive works from trademark claims if their use of a mark was artistically relevant and not explicitly misleading.[19] After the Ninth Circuit used the test to bless a line of “Bad Spaniels” dog chew toys that resembled Jack Daniel's whiskey bottles with humorous text,[20] the Supreme Court reversed, holding that Rogers does not apply when the complained-of use is part of the defendant's own trademark.[21]

The Jack Daniel's decision quickly triggered numerous lower court reviews and a not-insignificant amount of confusion. In MGA v. Harris, the music group OMG Girlz was able to score a retrial of its trademark claim against the maker of “LOL Surprise OMG” dolls by convincing the district court that it erred in giving the jury a Rogers instruction based on the dolls' trade dress, citing Jack Daniel's as intervening precedent.[22] Comparatively, in Hermès v. Rothschild, the district court upheld a jury's rejection of a Rogers defense as applied to a collection of NFTs based on images of faux-fur covered Birkin bags, holding that the artist selling them was, in the court's words, a swindler.[23] The artist sought a judgment notwithstanding the verdict after trial, but the district court found that not only had the jury gotten it exactly right, they had predicted Jack Daniel's before it even came down.[24]

The biggest problem, as one district court judge bemoaned in Homevesters of America v. Warner Bros. Discovery, was that Jack Daniel's did not involve a dispute over whether the plaintiff's mark was being used in a source-identifying way, and when that issue was in dispute, “neither party could articulate a test or method for determining, at the motion to dismiss stage or otherwise, whether an allegedly infringing mark is being used in a source-identifying way[,]” nor “whether the determination of such is a question of law, question of fact, or a mixed question of law and fact.”[25] Thus, despite appearing at first blush to be a modest curtailment of Rogers' ambit, it became clear that the lower courts sorely needed to hammer out a reliable framework for isolating source-identifying use.[26]

This process has gotten off to a rocky start in Vans v. MSCHF, in which the Second Circuit conflated the standard for disqualifying a parody defense (“trading on the goodwill of the trademark owner to market [one's] own goods”) with the actual Rogers-preclusive holding of Jack Daniel's (“us[ing] another's trademark as a trademark”).[27] After doing so, the Second Circuit breezily concluded that a modified “wavy” version of the Vans shoe logo was being used by an art house “to brand its own products” (warped and distorted shoes) solely by dint of appearing on the products.[28] Without any supporting analysis to help determine when a product feature is being held out as a trademark, Vans suggests that Rogers hopefuls must now worry that any goodwill borrowed forfeits the defense.

The Ninth Circuit has yet to offer a counterpart to Vans. After punting in Activision v. Warzone.Com (a case over dueling video game titles),[29] the Court used a dispute between a digital greeting card company and news publication to clarify that “Jack Daniel's was not limited to direct references or parodies.”[30] However, because there was no dispute the news publication was using the disputed mark (“Punchbowl”) to brand its operations, the Ninth Circuit's consideration of the mark's expressive qualities was limited to observing that such would be relevant under trademark law's traditional likelihood-of-confusion analysis, which the district court was tasked to conduct.[31]

At time of writing, the most promising vehicle for the Ninth Circuit to test the outer bounds of Jack Daniel's “mark as a mark” carveout is Diece-Lisa v. Disney, in which a stuffed animal manufacturer claimed its “Lots of Hugs” mark had been infringed by the “Lots-o-Huggin' Bear” (or “Lotso”) character in Toy Story 4.[32] The Supreme Court reversed the Ninth Circuit's application of Rogers and remanded with instructions that the matter be reconsidered in light of Jack Daniel's.[33] The Ninth Circuit, in turn, handed that task over to the district court.[34] Should the matter not settle short of further appeal, the Ninth Circuit may soon have an opportunity to clarify what the Vans decision currently leaves muddled.

The Takeaway

As is often the case with Supreme Court decisions, what the justices fail to say is often just as important, if not more so, than what they actually hold. Warhol and Google now appear to define a spectrum of analysis that weighs commercialism and transformativeness based, at least in part, on the subject matter in dispute, while Jack Daniel's now leaves the lower courts to squabble over precisely what sorts of trademark use constitute source-identifiers for purposes of nullifying Rogers. Practitioners should, therefore, brace themselves for a spike in litigation over these threshold matters before either of 2023's watershed intellectual property decisions can be reliably called upon to settle disputes.

Neville L. Johnson, Douglas L. Johnson, and Daniel B. Lifschitz are partners at Johnson & Johnson LLP, in Beverly Hills, CA, practicing entertainment, media, intellectual property, and class action litigation. The authors would like to thank Jakob Stokes for his assistance in compiling research for this article.