One-second-long image of 'luxury' basketball in TV ad dilutes Louis Vuitton's marks

United States of America

In Louis Vuitton Malletier SA v Hyundai Motor America, the US District Court for the Southern District of New York has awarded summary judgment to Louis Vuitton Malletier SA on its federal and state dilution claims based on Hyundai Motor America’s use of a basketball featuring images that called to mind those associated with Louis Vuitton and its trademarks.

Hyundai’s commercials entitled 'Luxury' featured images designed to comment on the idea of luxury by incorporating symbols of luxury (eg, lobster, caviar and yachts) into everyday/common scenes. One second of the 30-second commercial was devoted to a basketball used in an inner-city basketball game. The ball featured symbols reminiscent of, but not identical to, Louis Vuitton’s marks, including that they were presented in gold on a brown background. 

Louis Vuitton sent a cease and desist letter five days after the commercial first aired. Hyundai continued to run the commercial three more times after receiving the letter and then one more time after Louis Vuitton filed suit.

Testimony showed that Hyundai “borrow[ed] equity from Louis Vuitton” in determining how to depict the basketball, but that the idea was to draw an association with luxury, not necessarily with Louis Vuitton.  Additionally, Hyundai’s witnesses testified that the images created on the ball were original such that they did not believe permission from Louis Vuitton was needed. Other testimony indicated that Hyundai had reached out more generally to several manufacturers of luxury products to see if they would participate in the ad. None of those contacted agreed to participate.

In evaluating the factors under the Trademark Dilution Revision Act (TDRA), the court found in Louis Vuitton’s favour on each one. It held that the respective marks were virtually identical and that Louis Vuitton’s marks were highly distinctive, well recognised and used substantially exclusively by Louis Vuitton. Interestingly, the court found that the brevity of the use heightened the similarity of the marks, because a side-by-side comparison was not feasible to allow consumers to notice the dissimilarities. As stated by the court, the one-second appearance of the basketball “renders it more difficult to assess the minor differences between the Louis Vuitton marks and Hyundai’s alterations”.

The intent factor also weighed against Hyundai, particularly given the testimony that Hyundai intended to create an association with Louis Vuitton’s marks and the luxury they convey. Hyundai acknowledged attempting to "genericise" the marks, but still evoke Louis Vuitton. The court rejected Hyundai’s arguments that its intent was to comment on luxury in an expressive manner by relying on precedent that commentary must be about the trademark or its owner in order to be permitted. Use of another’s marks for general social commentary, however, is not a fair use. Similarly, the court rejected Hyundai’s argument that the use was not to designate its own product (ie, Hyundai was not selling a basketball, but rather promoting its cars). Hyundai’s use in furtherance of its branding goals for its product was sufficient to qualify as a dilutive use under the statute.

Finally, the court relied on survey evidence and anecdotal evidence through comments on Twitter to show that an actual association with Louis Vuitton was created through the use of the symbols on the basketball. 

Having found that the use was dilutive under the TDRA, the court also held that the use was wilful (and therefore entitled Louis Vuitton to damages). The wilfulness determination was based on the deliberate alteration of the marks, with the court reasoning that no such alteration would have been required if the use was permissible. Additionally, the court relied on Hyundai’s awareness of the need for permission when it sought permission from a number of luxury goods manufacturers.

The analysis under New York state dilution law was similar.

In addition, the court denied summary judgment to Hyundai on the issue of non-infringement. Specifically, Louis Vuitton’s strong marks and the high degree of similarity between the uses along with evidence of bad faith and actual confusion were not found to be outweighed by the other factors, particularly lack of competitive proximity of the goods and the sophistication of the consumers (at least not on the record before the court on summary judgment).

The case is also notable for its discussion of the surveys and the differences between dilution and infringement surveys. Interestingly, a 19% recognition rate of Louis Vuitton by people viewing the commercial, as found in Hyundai’s own survey, was found sufficiently significant to support an association under the relevant dilution factor. On the other hand, the court would not rely on Louis Vuitton’s survey to support infringement, because the survey was a dilution survey directed to participants who recognised the Louis Vuitton marks. By contrast, an infringement survey would have been directed to Hyundai purchasers who were confused as to the source of sponsorship of the ad. 

Karin Segall, Leason Ellis LLP, White Plains

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