During the post-game show of the 2010 Super Bowl, Hyundai ran
a 30-second commercial
that its counsel later described as “a humorous, socio-economic commentary on
luxury defined by a premium price tag, rather than by the value to the
consumer.” It consisted of brief vignettes that show “policemen eating caviar
in a patrol car; large yachts parked beside modest homes; blue-collar workers
eating lobster during their lunch break; a four-second scene of an inner-city
basketball game played on a lavish marble court with a gold hoop; and a
ten-second scene of the Sonata driving down a street lined with chandeliers and
red-carpet crosswalks.” The inner-city
basketball game scene included a one-second shot of a basketball decorated with
a pattern resembling Louis Vuitton’s toile monogram on a chestnut-brown
background. On the Luxury ad basketball,
the LV was changed to LZ, and the proportions of the other designs were
slightly altered. The ad aired five
times over a month. The court granted summary judgment in LV’s favor on
trademark dilution.
Hyundai wanted to offer “luxury for all … by poking fun at
the silliness of luxury-as-exclusivity by juxtaposing symbols of luxury with
everyday life (for example, large yachts parked beside modest homes).” LV’s mark was a symbol of “old” luxury, and
Hyundai said it was trying to distinguish those old symbols, including LV’s,
and redefine luxury during a recession to include the Hyundai Sonata.
The court emphasized the deliberateness of Hyundai’s
evocation of LV’s mark. One former
marketing executive, for example, testified that Hyundai designed “a brown
basketball as you'd expect with some gold emblems on it to represent luxury
definitely laddering and borrowing equity from Louis Vuitton. And I believe we
changed as much as we could to make it so it wasn't a complete logo. But [we]
tried to make it look like that so we would get that quick reference to luxury
and people would get the luxury reference quickly. It was the simplest thing.” Hyundai was trying to fight its own lower-quality
brand image, and the court thought it was doing so by grabbing on to LV’s
image. As Mark McKenna has noted, this
reads “use as a mark” out pretty much entirely—Hyundai didn’t adopt LV’s mark as its own, even though
it referred to it. It’s almost a European concept of free
riding, which doesn’t do much to explain why we still allow comparative
advertising in the US. The court also
didn’t like that Hyundai sought, but didn’t get, royalty-free permission to
display 13 luxury brands in the ad. Six
brands said no and the others, including LV, never responded.
As Eric Goldman explained, the court found blurring based on
the six-factor TDRA test. The mark and
the basketball design were virtually indistinguishable. The one-second duration of the basketball
clip heightened the similarity because the speed made it hard to discern any
differences, but was intended to “register luxury with the snap of the
fingers.”
LV also had high distinctiveness and exclusive use. Hyundai argued that LV permitted unlicensed,
third-party uses in a Black Eyed Peas video and in promotional material for
musicians Dwight Yoakam and Jim Jones. LV sent a C&D to the Black Eyed Peas
and was unaware of the other uses until they were raised in a deposition. At most, this was “two minor lapses in
enforcement.” (Argh! Unless these were commercial uses, they
didn’t interfere with LV’s legitimate rights, and not going after them
shouldn’t matter at all—it’s offhand comments like this one that lead TM owners
to claim they “have” to control any representation of our pervasively branded
world, and have the right to do so besides.)
Hyundai also argued that LV engaged in self-dilution by licensing
Tiffany jewelry and providing celebrities with LV products, but the court
thought that requiring royalties in the former case and deliberately using
celebrities as a marketing strategy in the latter was sufficent control.
Hyundai’s undisputed intent to create an association with LV
weighed in favor of dilution. Hyundai
argued that the association was expressive in nature and wouldn’t impair the LV
marks, but the court thought this was “ipse dixit” (even though there are a
number of cases that have recognized that unauthorized uses that refer back to
the famous mark can increase the
single-source meanings of the famous mark).
In addition, LV submitted evidence of actual association
between the marks. (Note the assumption
that the basketball is functioning as a mark… for what?) The Charbucks
case concluded that a survey showing that 30.5% said that Starbucks was the
first thing that came to mind on hearing Charbucks (and 3.1% reporting
Starbucks as a possible source of Charbucks) was evidence of actual
association.
LV pointed to Hyundai’s own expert, Dr. Jerry Wind, who used
the Luxury ad and a basketball-less control.
In the test group, 19% identified LV as one of the brands shown. Ninety percent of the test group noticed the
basketball, and 30% stated it reminded them of LV, while 58% noticed a pattern
or design on the basketball. When asked to
list which brand or product was advertised, 79% mentioned Hyundai first, and 5%
mentioned LV first. No respondent
thought less favorably of LV, and only 2% believed the two were affilated. Nine percent said the basketball made them
more likely to buy a Hyundai. “Other
participants believed that the commercial advertised non-specified car
manufacturers, caviar, lobsters, basketballs, yachts, Spaulding, the police or
chandeliers.” (Did we live and fight in
vain? (reference)).
LV’s expert also did a survey, with the control group seeing
a standard orange basketball instead.
Seventy-two percent of the test group noticed the basketball design, 5%
in control, and 15% of the test group recognized the design as LV’s, while 29%
recognized it as some type of luxury mark.
That 15% was consistent with the percentage of the buying public that’s
aware of the LV mark. (This would seem
fatal to “household name” status, but no.)
Among those who recognized the design as LV’s, 62% believed that LV
authorized the use. Large percentages of
both groups thought the ad promoted Hyundai’s luxury qualities. LV also submitted unedited tapes of focus
groups on the ad, but the court wasn’t going to wade through them and LV didn’t
provide a guide for what the court should look for. LV also pointed to tweets reacting to the ad,
e.g., “I think a Louis vuitton football or basketball would be gangsta,” “Dyd
yall See tht Louis Vuitton Basketball? Lols iWant ^___^,” and “were they just
playing ball with a LV basketball lol.”
Although the survey showed only 19% unguided recognition of
LV in the ad, that was “evidence” of association in light of the Charbucks
case, and anyway LV wasn’t requried to prove actual confusion, but whether a
famous mark’s power had been whittled away by unauthorized use or its
distinctiveness blurred. LV’s expert
said that, among those who recognized the LV mark, 62% believed the ad was
approved by LV (which we conventionally call confusion); this was probative
evidence of association of LV with Hyundai and with the Luxury ad. (Adding to the roster of mathematically
confused courts, the court said that it was “statistically significant” that
19% of respondents identified LV without prompting, as was the 30% who, when
asked to focus their attention on the basketball, said it reminded them of
LV. I wish there were some sort of
Microsoft alert that would pop up and ask “are you sure you don’t mean
‘significant’?”) The tweets also
provided “substantial and unrebutted” evidence of actual association reflecting
“interest and enthusiasm about a Louis Vuitton basketball.”
Thus, weighing the statutory factors, LV was ahead on each
one, and Hyundai failed to produce evidence that would enable a reasonable jury
to find in its favor, including considerable evidence of intent to create an
association. Hyundai argued that LV’s
use wasn’t exclusive because two recording artists used LV marks in promotional
images, but LV didn’t know about those until this case, and it had a record of
aggressive enforcement against counterfeits, and the marks’ appearance in a
video for My Humps and in a use by
Tiffany led to a C&D and a royalty agreement. On similarity, the basketball design was
virtually indistinguishable from LV’s marks, and the brevity of the appearance
in the ad made it more difficult to distinguish the two.
Hyundai argued that the TDRA didn’t apply because it didn’t
use LV’s marks to designate its own
products. Unlike in Tiffany v. eBay, however, the court said, Hyundai used the LV marks
for “its own branding goals” (question: as eBay didn’t when it ran ads saying
Tiffany jewelry could be found on its site?), “and, in the minds of some
consumers, created actual association between Hyundai and Louis Vuitton.” (But the TDRA specifies how actionable
dilution must take place; we know that a number of things that might create
associations are excluded from its scope, and before relying on the creation of
association a court should first decide
whether the type of behavior at issue falls within the TDRA’s categories.)
The ad’s creators testified that the ad was “definitely
laddering and borrowing equity from Louis Vuitton.” The court thus rejected
Hyundai’s argument that the pattern wasn’t being used to designate Hyundai’s
own goods or services—dilution is not a false designation of origin claim. A blurring claim can arise even if a mark
doesn’t designate origin. (Then … is it
a mark?) LV established blurring as a
matter of law.
LV also established willfulness, given a record “replete”
with statements that Hyundai intentionally used the LV marks to promote the
Sonata and draw on LV’s image in consumers’ minds. Hyundai also believed it needed permission to
use other luxury brands in the ad: it asked 13 companies, six of whom declined
and others, including LV, never responded.
Even after LV’s C&D, Hyundai ran the ad through the NBA All–Star
Weekend and, after LV sued, the Academy Awards.
Further, the deliberate alteration of the LV pattern “demonstrates a
consciousness that Hyundai could not lawfully use the marks.” The aim was to evoke LV in particular, but
also to change the mark enough to avoid a permission requirement. This was a “conscious intent within Hyundai
to ladder and borrow from the equity of Louis Vuitton marks.” (I’m sure “ladder” is some branding jargon,
but all I can think of are stockings with runs in them.)
Hyundai argued that its intent was expressive, but that was
a matter for its fair use defense. (Why
isn’t a belief, even a wrong one, in a fair use defense sufficient to avoid
willfulness? Because it’s a commercial,
I guess.) No reasonable juror could find
for Hyundai on willfulness.
Unsurprisingly, LV also established blurring under NY law,
which does not require fame but has a “substantial” similarity requirement.
The court then turned to the fair use defense, which could
be available in a commercial context: “identifying, parodying, criticizing, or
commenting upon the famous mark owner or the goods and services of the famous
mark owner.” Charbucks found no parody where there was, at most, a subtle satire
of Starbucks. Here, the record showed
that Hyundai had no intent to parody, criticize, or comment on LV. Hyundai argued that the presence of the
design reflected a broader social commentary designed to “challenge consumers
to rethink what it means for a product to be luxurious.” But Hyundai disclaimed comment etc. on LV
specifically and thus could not, as a matter of law, invoke fair use. Individuals involved in the ad’s creation
testified in response to questions, for example, that they weren’t commenting
on LV. E.g., “It wasn't the intent to try to—the intent wasn't specific to—the
same reason why we didn't use specific brands on any of the other things we did.
It was just to convey luxury.” They
could have used other brands, and had nothing to say about LV
specifically. Hyundai argued that “The
symbols of ‘old’ luxury, including the [Louis Vuitton] Marks, were used as part
of the Commercial's humorous social commentary on the need to redefine luxury
during a recession, even though the Commercial's overall intent was not to
comment directly on [Louis Vuitton] or the other luxury symbols.” And since
some symbol had to be chosen to evoke luxury, Hyundai chose LV. The court understood this to mean that there
was no commentary on LV at all; LV and other brands were only “proxies” for a
broader observation about “old” luxury.
That wasn’t comment on the famous mark owner or its goods or services. Thus, no reasonable trier of fact could
sustain the fair use defense.
Comment: I think Barton Beebe might have interesting things
to say here about how the idea that LV, as a luxury brand, could stand in or
for luxury brands generally, and be subject to commentary on luxury brands
generally, is inherently offensive to LV’s supposedly unique status, and yet at
the same time LV does very much want to be known as a luxury brand. Why you can’t criticize or comment on a genus
by identifying some members thereof remains unclear to me (if I comment on
American presidents with examples, aren’t I commenting on the examples?, but
the court thought its conclusion was a standard application of the rule that
comment/parody must be directed to the plaintiff’s mark. It also cited Rogers v. Koons for the proposition that fair use arguments have
been rejected when the use is directed at “expansive social criticism” rather
than “targeted” comment or parody. This
is wrong on a number of levels, not least of them that Blanch v. Koons indicates a rather different subsequent view of
fair use—and Blanch has it right,
since a court has no business telling a speaker “use a better example” or “if
you target a general phenomenon, you have to make up a hypothetical example
instead of using a real one” (at least in the absence of defamation or false
advertising, not implicated here).
True, the court noted, the TDRA contemplates commercial
parody etc. But “[i]n other contexts”
(citing state law and FTDA dilution cases), promotional use weighs against fair
use. Hyundai itself cited copyright and
non-TDRA cases, but those didn’t involve “subtle” satires. Rather, they were “over-the-top, umistakable
parodies” (citing, e.g., Cliffs Notes, Inc. v. Bantam Doubleday Dell Publishing
Grp., Inc., 886 F.2d 490 (2d Cir. 1989); Tommy Hilfiger Licensing. Inc. v.
Nature Labs. LLC, 221 F. Supp. 2d 410 (S.D.N.Y.2002)). While it clearly wouldn’t make a difference
in this case, I’m fascinated by the way that precedents work here: the parody
is clear in retrospect, but the plaintiffs certainly didn’t think so, and readers
are invited to make their own assessments:
The court also denied Hyundai’s motion for summary judgment
on the TM infringement claim. Hyundai
argued that the strength of the LV mark made confusion less likely in a case
involving commentary, but the court found that the “jest or commentary” was
less apparent than in the Old Farmer’s
Almanac case on which Hyundai relied for this proposition. The court accepted that the competitive
proximity between the parties was minimal and that LV was unlikely to bridge
the gap to automobiles, but enough other factors favored LV to avoid summary
judgment.
LV argued sponsorship/approval confusion, and there was some
evidence of tweets that “misapprehended the authenticity” of the LV-like ball,
and other posts mentioning an “apparent nexus” with Hyundai. E.g., “Did I just see a Louis Vuitton
basketball in a Hyundai commercial? ? ?”; “That luxury hyndai sonata commercial
is hard body. LV basketball wit marble & gold backboard was so sick!”; “in
one of Hyundai's ad, there is a guy holding a basketball with the LV logo.” I don’t know why any of this is evidence of sponsorship confusion, but apparently it is, though tweets that mentioned the
instant litigation were not. “While
anecdotal and limited, the postings to Twitter reflect some actual confusion as
to Louis Vuitton's role in the Hyundai ad, in the same fashion as letters or
phone calls.” LV’s reliance on focus
group statements was insufficient to provide other evidence of confusion.
Hyundai’s expert testified that its survey showed net 8% of
likely Sonata consumers, the relevant group, either believed that Hyundai and
LV were affiliated or that LV granted permission to use its marks. Ten percent said they were more likely to buy
a Sonata because of the presence of the basketball. (!) LV
challenged the control group for using a ball with an “atypical” chestnut-brown
color “that mimics the Louis Vuitton marks.”
The survey also asked “In creating the commercial, do you think the
company that produces the advertised brand or product [X] got or was required
to get permission from any other company or brand?” But this is a compound question that requires
participants to draw a legal conclusion, and other cases have found similar
questions to deserve little weight. (Why
this formulation doesn’t drive up yes
responses, making LV’s case weaker, is unclear to me.)
LV’s own expert opinions weren’t directed to likely Sonata
purchasers, but instead looked at misapprehension among all consumers who
recognized the LV mark. This might be
relevant to dilution, but carries little or no weight for confusion. In the end, the Hyundai survey’s flaws were
better assessed by a jury, to be weighed against “a scattering of Twitter
postings by unknown users”; actual confusion favored neither party.
Bad faith certainly didn’t favor Hyundai as a matter of law:
intentional copying/evocation of LV; failed attempts to seek permission;
refusal to stop airing the ad.
Proving once again that, if we’re going to have a
multifactor confusion test for everything, the Second Circuit should really get
rid of “product quality” as a factor, the court also agreed that it was
irrelevant in this case because of the lack of competitive proximity, even
though LV argued that its luxury reputation was at risk.
Though both parties’ consumers were sophisticated, the close
similarity of the marks could still lead a sophisticated consumer to conclude
that the design in the ad originated with LV (which of course is exactly the
same as being confused about sponsorship … sigh), or could distinguish between
the marks.
The court also rejected Hyundai’s First Amendment arguments
as relevant to confusion, because of the “subtle” commentary in the ad and the
“broader social critique” it offered.
Such motivations are “unworthy of protection,” though I would have
thought broad commentary justified more
First Amendment protection—newsworthy topics, after all, are regularly
illustrated with examples, often of people or institutions who didn’t choose to
become examples for others.
Hyundai also moved for summary judgment on damages, because
even with willfulness no reasonable juror could conclude that even one Sonata
was sold because of the presence of the basketball. LV argued instead that damages could be
measured by the $3.2 million Hyundai spent to produce and air the ad, or
instead by the estimate of its expert, who opined that the LV designs were
“integral” to the Luxury ad (seriously?), that the ad caused a spike in visits to
Hyundai's website, and that “approximately $14.5 million” in profits could be
attributed to the ad. This was, the
court held, a dispute best submitted to the finder of fact.
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