(CNN) -- The Supreme Court on Wednesday delved into the complexities of federal trademark law in a case concerning a poop-themed dog toy that resembles a Jack Daniel's bottle, at times erupting into laughter as the justices explored how much protection should be given to parodists that rip off trademarks they don't own.
At the center of the case is a "Bad Spaniels Silly Squeaker" toy created by VIP Products that is strikingly similar to Jack Daniel's bottles. The distiller sued the company over the toy -- which is replete with scatological humor -- claiming it violated federal trademark law, which usually centers around how likely a consumer is to confuse an alleged infringement with something produced by the true owner of the mark.
But at oral arguments, at least one justice admitted she didn't understand the joke being sold by VIP Products.
"What is there to it? What is the parody here?" Justice Elena Kagan asked an attorney for the toy company, leading the courtroom to burst into laughter. "Because maybe I just have no sense of humor. But what's the parody?"
Kagan went on to list a number of different marks the company pokes fun at, drawing laughter from Justice Clarence Thomas: "Doggie Walker, Dos Perros, Smella Arpaw, Canine Cola, Mountain Drool. Are all of these companies taking themselves too seriously?"
And a misunderstanding by Lisa Blatt, an attorney representing Jack Daniel's, over a hypothetical posed by Justice Samuel Alito led to another round of giggles.
Alito was trying to ask how likely it was that a reasonable person would believe Jack Daniel's approved the toy at hand or a similar theoretical toy that joked it contained "dog urine."
"So a reasonable person would not believe Jack Daniel's had approved this?" he asked Blatt.
"I think if you're selling urine you're probably going to win on a motion to (dismiss), but you're probably also violating some state law," she replied.
"Oh no, you're not selling urine. It's exactly this toy, which purportedly contains some sort of dog excrement or urine," Alito said, humoring the courtroom as he attempted to clarify his hypothetical.
"Well, just showing how confused I was suggests that I would be your perfect consumer," Blatt said.
Jokes -- intentional or not -- aside, some of the justices were skeptical of the distillery, whose attorneys want the court to toss out a heightened standard of review an appeals court used when it ruled in favor of the toy maker.
"I have some hesitation doing away with the Rogers Test," Justice Sonia Sotomayor said in part, referring to a court-created test used to determine whether a potential trademark infringement in non-commercial instances enjoys constitutional protection.
Alito seemed to agree.
"Well, I'm concerned about the First Amendment implications of your position and you began by saying, by stressing that Rogers is atextual, it was made up."
"You know, there is a text that says that Congress shall make no law infringing the freedom of speech. That's a text that takes precedence over the Lanham Act and you said there are no constitutional issues," he added, referring to the trademark law at the center of the dispute.
Joining the dog pile, Justice Ketanji Brown Jackson said she was "concerned about impairing artists" if the court sided with Jack Daniel's and issued a decision that effectively prevents the unauthorized use of marks in artistic works.
Concerns over damage to reputation
The case pits the rights of a famous trademark holder against the First Amendment rights of a company that wants to use those marks to sell a humorous product.
VIP's "Bad Spaniels Silly Squeaker" toy has the same general shape of a Jack Daniel's bottle. The plastic bottle, like its glass counterpart, has a similar font style and uses a black label.
VIP borrows Jack Daniel's "Old No. 7 Brand Tennessee Sour Mash Whiskey" to sell "The Old No. 2 On Your Tennessee Carpet," a reference to dog excrement. And it changes the liquor bottle's "40% ALC. BY VOL. (80 PROOF)" with "43% POO BY VOL." and "100% SMELLY."
A tag affixed to the toy notes that it's "not affiliated with Jack Daniel Distillery."
That, however, was not enough to keep Jack Daniel's from suing the company to take the toy off the market. The distiller argues VIP violates federal trademark law and that the toy, especially the references to dog excrement, damage its reputation because it could confuse consumers into thinking the product belongs to the "oldest registered distillery in the United States."
"To be sure, everyone likes a good joke," lawyers for Jack Daniel's wrote incourt papers. "But VIP's profit-motivated 'joke' confuses consumers by taking advantage of Jack Daniel's hard-earned goodwill."
Depending on how they rule, the justices could strip away some trademark protections by giving entities cover to legally use registered marks not belonging to them so long as they do so in a way that expresses humor.
A district court ruled in favor of Jack Daniel's, finding that the toy infringed on the distiller's trademark. But an appeals court later sided with VIP Products, invoking the so-called Rogers Test.
The court said VIP's use of Jack Daniel's trademark was non-commercial and that because it was done humorously for an "expressive work," it's protected by the First Amendment.
The case "deals with a very common thing of pitting somebody who has trademark rights ... against another who is saying, 'I'm entitled to (use those marks) under the First Amendment because it is parody. And I need to take enough of the mark in order to make it funny. People have to get the joke,'" said Mark Sommers, a trademark attorney based in Washington, DC.
Sommers added that the justices' decision in the matter has the potential to be a landmark ruling if they "help define that line that exists between the First Amendment right of expression -- be that parody, be that art, whatever you want to express -- versus the important trademark issues that are here where brand owners who have invested a tremendous amount of goodwill don't want their trademarks used in a manner which could result in potential confusion among the consuming public."
Attorneys for Jack Daniel's told the justices in court papers that the appeals court ruling "gives copycats free license to prey on unsuspecting consumers and mark holders," and warned that if it wasn't reversed, companies could use trademarks they don't own to flood the markets with allegedly unserious products.
"No one disputes that VIP is trying to be funny. But alcohol and toys don't mix well, and the same is true for beverages and excrement," they wrote. "The next case could involve more troubling combinations -- food and poison, cartoon characters and pornography, children's toys and illegal drugs, and so on."
VIP argues consumers can easily distinguish between the two products, with lawyers for the Arizona-based company writing in court papers that it "has never sold whiskey or other comestibles, nor has it used 'Jack Daniel's' in any way (humorously or not). It merely mimicked enough of the iconic bottle that people would get the joke."
"This is a case about speech, and a popular brand's attempts to control that speech by weaponizing the Lanham Act," they wrote, referring to the federal trademark law at the center of the dispute.
"It is ironic that America's leading distiller of whiskey both lacks a sense of humor and does not recognize when it -- and everyone else -- has had enough," the toy company told the court.
The Biden administration had urged the justices to take the case, with the Justice Department siding with Jack Daniel's in the dispute.
"The First Amendment does not confer any right to use another person's trademark, or a confusingly similar mark, as a source identifier for goods sold in commerce," the department wrote in court papers. "Indeed, the absence of any such right is a basic animating premise of trademark-infringement law. If such a right existed, states and the federal government might lack authority to prohibit trademark infringement."
Several major companies also filed briefs to the court in support of Jack Daniel's, including Nike and Levi Strauss & Co.
"Though defendants will often have an incentive to label it as such, not every humorous use of another's trademark is a parody," Nike wrote in its brief. "Courts therefore should take a disciplined approach to this important classification in cases where 'parody' is claimed."
The Supreme Court is expected to rule later this term in another high-profile intellectual property law case, with the justices having heard arguments last year ina copyright infringement case concerning the late Andy Warhol and the late musician Prince. During those arguments, the justices attempted to determine when a new work based on a prior piece is substantially transformative, and when it simply amounts to a copycat version of an existing work subject to copyright rules.
This story has been updated with additional developments.
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