USA Trends and Developments Contributed by: Anne Shea Gaza, Adam W Poff, Pilar G Kraman and Robert M Vrana, Young Conaway Stargatt & Taylor, LLP
finding that “Orange Prince” competed with the original photograph in the market for images for use in print publications. The Court’s decision was limited to the particular commercial licens - ing to a magazine, not the creation of “Orange Prince” in the first place. Warhol thus made clear that transformativeness alone does not make a use of copyrighted material fair use. The Court wrote that “[o]therwise, ‘transformative use’ would swallow the copyright owner’s exclusive right to prepare derivative works.” In the context of generative AI, therefore, the mere fact that copyrighted works are transformed into a new work that is different to some degree does not necessarily mean the model’s input of copyright - ed works was fair use. The Supreme Court on trade mark parody The following month, the Supreme Court decided Jack Daniel’s Properties Inc. v VIP Products LLC. The Court held that a dog toy company’s crea - tion of toys mimicking the famous design of Jack Daniels’ whiskey bottles was unprotected trade mark infringement. The Court overturned a Ninth Circuit ruling that the dog toy was protected by the First Amendment, finding instead that it “falls within the heartland of trademark law”. US trade mark law has long allowed that in certain circum - stances a use of another’s trade mark is allow - able if it is a “parody” or otherwise protected free speech under the First Amendment to the United States Constitution. In this case, VIP Products sold a dog toy that appeared to be a classic par - ody – a toy shaped like a whiskey bottle, labelled “Bad Spaniels” and replacing other elements of Jack Daniel’s trade mark liquor bottle such as switching “Old No. 7 Tennessee Whiskey” with “The Old No. 2 On Your Tennessee Carpet”. Although the “Bad Spaniels” toy may have been seen as a parody protected by the First Amend - ment, the Supreme Court held that defence
does not apply if the parody is itself used as a trade mark: “Consumer confusion about source – trademark law’s cardinal sin – is most likely to arise when someone uses another’s trademark as a trademark.” VIP Products’ position had been based on a 1989 Second Circuit decision, Rog - ers, which allows trade marks to be used with - out permission if they are part of an “artistically expressive” use and do not “explicitly mislead” consumers. The Supreme Court took no position on whether the Rogers test should continue to be used, but found that parodies that do not feature source indicators, and are instead simply expres - sive, could still be protected parodies. But in the case of “Bad Spaniels” and similar products, the parody nature of the product does not automati - cally bar trade mark infringement, and the lower courts must instead engage in a traditional likeli - hood-of-confusion analysis, including consider - ing whether the product is a parody. The Jack Daniels decision also touched on trade mark dilu - tion by tarnishment, explaining that: “The Ninth Circuit’s expansive view of the noncommercial use exclusion – that parody is always exempt, regardless [of] whether it designates source – effectively nullifies Congress’s express limit on the fair-use exclusion for parody.” Litigation has begun A number of cases exploring these issues have already begun to make their way through courts across the United States. There are high-profile examples of owners who have given permission for their intellectual property to be used for train - ing of AI models. For example, in the context of print journalism, OpenAI has entered into licens - ing deals with Vox Media (New York Magazine and The Verge), News Corp. (Wall Street Journal and New York Post), The Financial Times, and The Atlantic. Many other copyright and trade mark owners, however, have not licensed AI models to use their intellectual property for train -
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