VIP Products' "Bad Spaniels Silly Squeaker" toy and Jack Daniel's Old No. 7 liquor bottle.

The original version of this report was published on the biweekly IP briefing Skilled in the Art.

Jack Daniel's bark has turned out worse than its bite in a trademark case over a whimsical dog toy.

The spirits maker, whose bottle promotes "Old No. 7 Brand Tennessee Sour Mash Whiskey," had won a permanent injunction following a four-day bench trial in 2017. U.S. District Judge Stephen McNamee blocked VIP Products from making or selling any more of its "Bad Spaniels Silly Squeaker" toys, which are emblazoned with "the Old No. 2, on your Tennessee Carpet."

McNamee ruled that VIP had infringed the well-known Jack Daniel's trademark, whose chief enforcer recently was hired to run trademarks at the U.S. Patent and Trademark Office. VIP also was found to have diluted and tarnished the Jack Daniel's trade dress.

But the U.S Court of Appeals for the Ninth Circuit concluded Tuesday that Jack Daniel's Properties is taking itself a little too seriously.

Judge Andrew Hurwitz agreed with McNamee that the Jack Daniel's trade dress and bottle design are distinctive and aesthetically nonfunctional. He also agreed that McNamee properly rejected VIP's defense of nominative fair use because of the significant differences between the Jack Daniel's bottles and the squeaky toys (e.g., the image of a spaniel on the toy).

But VIP has a First Amendment fair-use defense, Hurwitz concluded. Because artistic expression is at issue, the traditional likelihood-of-confusion test isn't the end of the story for determining infringement.

"The Bad Spaniels dog toy, although surely not the equivalent of the Mona Lisa, is an expressive work," Hurwitz wrote.

Plus, there's a case right on point from the Fourth Circuit, in which doggy toys shaped like handbags and called "Chewy Vuiton" were found not to infringe the famous Louis Vuitton trademark. "No different conclusion is possible here," Hurwitz wrote.

Judges Wallace Tashima and Eric Miller concurred.

The case isn't completely over. The Ninth Circuit entered judgment for VIP on the dilution claim but remanded the infringement claim. Jack Daniel's can still win if it can prove that VIP "explicitly misleads consumers as to the source or content of the work" under the Rogers v. Grimaldi test, though if I were Jack Daniel's, I'd call off the dogs.

Dickinson Wright partner David Bray had the winning argument for VIP. D. Peter Harvey of Harvey & Co. argued the case for Jack Daniel's Properties.