If there's one thing we can count on the Supreme Court to do, it's to make headlines. The Court's current term has made waves in almost every legal sphere, including trademark law with the recent clarifications to the Rogers test. The Rogers test, arising from the case of Rogers v. Grimaldi, determined that the title of a noncommercial artistic work is entitled to First Amendment protections and is not subject to the Lanham Act as long as the title of the work has some artistic relevance to the underlying work and is not explicitly misleading as to the source or content of the work.
The Rogers test was created by the Second Circuit in 1989, and has since drawn the ire of legal scholars and courts alike. The scope of this test was placed in limbo late last year, when the Supreme Court agreed to hear the case of Jack Daniel's Properties v. VIP Products. The case, which has colloquially been called the Bad Spaniels case – after VIP Product's Bad Spaniels dog toy which claimed to be a parody of the Jack Daniel's whiskey bottle – was decided on June 8th with the Supreme Court holding that the Rogers test does not apply where a party uses its allegedly parodic trademark as a trademark and not merely as expressive content.
This holding was monumental within the trademark community, and the case itself was compelling, but its prominence has buried another case that is sure to be equally as entertaining and will hinge on similar legal issues. It's time we turn our attention from dog toys and reasonably priced whiskey to friendly-faced hugging toy bears.
On Tuesday, June 20, The Supreme Court reversed and remanded the case of Diece-Lisa Industries Inc. v. Disney Store USA LLC back to the 9th Circuit to apply the newly clarified Rogers test. The case revolves around Diece-Lisa's LOTS OF HUGS trademark (Reg. Nos. 3361849 & 2120326), which is used in connection with "wearable hugging bear[s]," and a Disney character from the movie Toy Story 3.
According to the complaint, Diece-Lisa successfully sold their bears from 1997-2007 and also licensed their LOTS OF HUGS trademark to third parties. The toy market's fuzzy feelings towards Diece-Lisa came to an abrupt end in 2010, however, with Disney's release of Toy Story 3. The film raked in over $1 billion worldwide and featured an unassumingly devious antagonist – a plush bear named Lots-o'-Huggin Bear (aka Lotso).
Diece-Lisa claimed that the film's popularity decimated the market for their own hugging bear and brought claims for trademark infringement and unfair competition. One of the main arguments made throughout the case was that Disney's character had caused reverse confusion, as consumers began confusing Diece-Lisa's LOTS OF HUGS bear with Disney's fluffy villain.
The case began back in 2012 and has since been slowly working its way through the courts. In 2021 a California district court granted summary judgment to Disney, holding that, under the Rogers test, Disney's use of the LOTS OF HUGS trademark was an expressive work that did not intentionally mislead consumers and thus was protected under the First Amendment. In 2022, the 9th Circuit affirmed this decision, which led to Diece-Lisa's appeal to the Supreme Court.
Diece-Lisa's hopes of winning the case were all but stuffed until the Bad Spaniels ruling earlier this month, which led to the case's revival by the Supreme Court. The Supreme Court has now sent the case back to the Ninth Circuit for further consideration in light of its decision in the Bad Spaniels case.
With its new lease on life, we will certainly be keeping tabs on this interesting case.
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