Jack Daniel's: Supreme Court sides with Jack Daniel's in poop

The Supreme Court on Thursday sided with Jack Daniel's in a dispute over a poop-themed dog toy that parodies its iconic liquor bottle, ruling that a lower court erred when it said the toy was covered by the First Amendment's free speech protections.

The unanimous opinion written by Justice Elena Kagan allows the liquor maker to revive its trademark lawsuit against VIP Products in lower courts. In the meantime, the "Bad Spaniels Silly Squeaker" toy remains on the market.

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At the center of the case is the 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.

Though the court's decision is a win for Jack Daniel's – which argued that an appeals court made a mistake when it said the toy was "non-commercial" and therefore enjoyed constitutional protection – the justices declined to grant the distiller's request to completely throw out the test an appeals court used when it ruled in favor of the toy, a move that would have given trademark holders wide latitude to sue companies that parody their marks on consumer goods.

"Today's opinion is narrow. We do not decide whether the Rogers test is ever appropriate, or how far the ‘noncommercial use’ exclusion goes," Kagan wrote, adding: "The use of a mark does not count as noncommercial just because it parodies, or otherwise comments on, another's products."

"We hold only that it is not appropriate when the accused infringer has used a trademark to designate the source of its own goods – in other words, has used a trademark as a trademark. That kind of use falls within the heartland of trademark law, and does not receive special First Amendment protection," she said.

Thursday's decision was the second the court handed down this term in an intellectual property dispute. In May, the justices ruled against the late Andy Warhol, saying the artist infringed on a photographer's copyright when he created a series of silk screens based on a photograph of the late singer Prince.

"We are pleased with the Supreme Court's unanimous decision recognizing the rights of brand owners," said Svend Jansen, a spokesperson for Jack Daniel's, in a statement. "We will continue to support efforts to protect the goodwill and strength of this iconic trademark."

An attorney for VIP Products declined CNN's request for comment.

Legal experts said the despite the court handing a narrowly tailored win to the liquor maker, the toy could still prevail when lower courts take another look at the dispute.

"Not all hope is necessarily lost for VIP Products. Although it does not enjoy the sweeping First Amendment protection given to it by the Ninth Circuit, VIP will still have an opportunity to argue to the lower court that its use of Bad Spaniels is not likely to cause confusion in the marketplace," said J. Michael Keyes, an attorney who specializes in intellectual property law.

Though the Jack Daniel's case involved serious concerns about First Amendment protections in trademark disputes, it provided a respite from some of the politically fraught cases the court heard this term, with the justices at times erupting into laughter as they discussed the humorous topic during oral arguments in March.

"What is there to it? What is the parody here?" Kagan asked an attorney for the toy company, causing 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?"

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 in a bid to take the toy off the market. The distiller argued VIP violated 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."

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"To be sure, everyone likes a good joke," lawyers for Jack Daniel's wrote in court papers. "But VIP's profit-motivated ‘joke’ confuses consumers by taking advantage of Jack Daniel's hard-earned goodwill."

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.

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."

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."

This story has been updated with additional details.