Reminder: The Parody Defense to Trademark Infringement is Tricky

02 Jan Reminder: The Parody Defense to Trademark Infringement is Tricky

Parody is a tricky defense to cannabis trademark infringement, or to any infringement allegation whatsoever. For some background on this, check out our posts here, here and here. Still, people riff off established trademarks all the time, and when pursued, they often raise the parody defense. In the cannabis context, this happened most recently in a lawsuit brought by the City of New York.

The Trademark Infringement Case

Last week, a federal court granted the City’s motion for a preliminary injunction against Robert Lopez. Mr. Lopez is a clothing designer who produces merchandise under his brand name, New York Cannabis. The City had sued Lopez claiming his copycat logos infringed the City’s own trademarks and essentially amounted to counterfeiting.

Lopez principally asserted parody as a defense. To back up, parody is a type of speech protected by the First Amendment. It is a “distorted imitation” of an original work for the purpose of commenting on it. In the right circumstances, parody can be asserted as a defense to trademark infringement. In this case, the Court didn’t agree.

The Preliminary Injunction Test

As in the Ninth Circuit, a preliminary junction can be issued in the Second Circuit if the moving party is able to show the following factors:

1. A likelihood of success on the merits,
2. It is likely to suffer irreparable harm in the absence of preliminary relief,
3. The balance of equities tips in the moving party’s favor, and
4. An injunction is in the public interest.

Likelihood of success on the merits

The Court found the City is likely to succeed on the merits of its claims because it demonstrated it owns the City Trademarks. As a reminder, a certificate of registration from the USPTO is considered prima facie evidence of a trademark’s validity.

The second part of this factor is to determine whether there is a likelihood of confusion. Courts generally rely on the eight “Polaroid factors”:

1. strength of the trademark;
2. similarity of the marks;
3. proximity of the products and their competitiveness with one another;
4. evidence that the senior user may ‘bridge the gap’ by developing a product for sale in the market of the alleged infringer’s product;
5. evidence of actual consumer confusion;
6. evidence that the imitative mark was adopted in bad faith;
7. respective quality of the products; and
8. sophistication of consumers in the relevant market.

Here, the Court found that nearly all the factors militated towards finding a likelihood of confusion.

1. Strength of the trademark: “all of the City Trademarks copied by Defendant have been registered for more than five years in one class or another and they are strong marks.”
2. Similarity of the marks: remarkably, Lopez admitted his marks copy the City Trademarks.
3. Proximity of the products and their competitiveness with one another: “Both the City and Defendant are selling the same types of apparel bearing their respective marks.”
4. Evidence that the senior user may ‘bridge the gap’ by developing a product for sale in the market of the alleged infringer’s product:
   

   “Here, the City asserts that although it does not sell cannabis-related products, it is likely to bridge the gap in one way or another because of the legalization of recreational marijuana. Many City agencies, which use the chunky block letter NYC registered mark in their departmental logos, such as the Department of Finance, the Department of Health and Mental Hygiene, the Department of Consumer Affairs, to name a few, will likely become involved in regulating, enforcing, taxing, and providing information to consumers regarding recreational marijuana.”

5. Evidence of actual consumer confusion: the City asserted it had already received inquiries relating to Lopez’s marks.
6. Evidence that the imitative mark was adopted in bad faith: “Bad faith in the adoption of the mark may be inferred in this case from Defendant’s acknowledgement of copying the City’s marks…”
7. Respective quality of the products: “[The City] is entitled to have consumers judge the quality of its products without being confused by Defendant” competing goods and services.”
8. Sophistication of consumers in the relevant market:
   

   “In this case, the parties are both selling the same types of apparel — including t-shirts, hoodies, and caps — to consumers who are relatively unsophisticated and undiscerning, given the relative price point and the nature of the goods.”

Reminder: Parody is a tricky defense to trademark infringement

The lesson here bears repeating: asserting a parody defense in a trademark case — particularly in a commercial setting — is challenging. There’s a difference between using another’s mark to make political and/or social commentary, versus using it to increase your sales.

We’ve seen many companies attempt to tread this line and end up paying a price for it, and given this preliminary injunction, New York Cannabis is the latest.