A recent decision coming from the Southern District of New York raises important implications about the usage of trademarks without permission in artistic works.  While this case concerns the usage of unauthorized trademarks in film, the reasoning may be applied to video games as "artistic works."  Electronic Arts is engaged in a similar legal battle with Textron over its usage of helicopters in Battlefield 3.  Electronic Arts' First Amendment defense is comparable to that of Warner Brothers in a case with film as the medium instead of a video game.

In Louis Vuitton Mallatier S.A. v. Warner Brothers Entertainment Inc., the court declared that Warner Brothers did not infringe upon Louis Vuitton's trademarks when it used a knock-off Louis Vuitton bag in "The Hangover: Part II."  Warner Brothers admitted that it had used a knockoff bag from Diophy, a company that makes knock-off bags that imitate the Louis Vuitton Toile monogram, however claimed that it was protected by the First Amendment and filed for a motion to dismiss.  In the contested scene of the film, the main characters are walking through an airport.  One of the characters, Alan, carries the knock-off bag while a porter transports several luggage pieces behind him.  As the characters sit down, Alan puts the knock-off bag on a chair between him and "Stu," another main character in the film.  Stu moves the bag and Alan quips, "Careful that is ... that is a Lewis Vuitton."

As emphasized by the court's opinion, it is important to distinguish what Louis Vuitton was actually claiming in this suit.  In this case, Louis Vuitton was suing over the usage a third party's product that allegedly infringed upon its trademarks.  Unlike the Hyundai case decided in Louis Vuitton's favor earlier this year, the bag company did not claim that Warner Brothers misled the audience to believe that Louis Vuitton sponsored or was affiliated with the film.  Likewise, Louis Vuitton did not protest the usage of its trademarks in the film or the reference to its name.  Instead, the company alleged that the usage of the Diophy bag would confuse the audience into believing that the bag was a Louis Vuitton product and that Louis Vuitton "sponsored or approved of  Warner Bros.' use and misrepresentation of the infringing Diophy [b]ag as a genuine product of Louis Vuitton in The Hangover: Part II."  In its complaint, Louis Vuitton further asserted that the use of the Diophy bag "is likely to blur the distinctiveness of the LVM Marks" and "tarnish the LVM Marks by associating Louis Vuitton with the poor quality and shoddy reputation of the cheap products bearing the Knock-Off Monogram Design.”

Judge Carter cited Rogers v. Grimaldi in his analysis of Warner Bros.' claim of First Amendment protection.  Under Rogers, artistic works are given protection from the Lanham Act when they include an unauthorized use of a trademark when the usage is "(1) “artistically relevant” to the work and (2) not “explicitly misleading” as to the source or content of the work."  875 F.2d at 999. The court determined that Warner Bros.' usage of the bag was "artistically relevant" to the film since it played a role in defining Alan's personality and relationship with other characters in the movie.  According to the opinion, the usage of the bag "add[ed] to the image of Alan as a socially inept and comically misinformed character."

In the court's analysis of whether the usage of the Diophy bag was "explicitly misleading," Judge Carter brought up the purpose of the Lanham Act and in what scenarios it can be used to limit freedom of expression.  That is, the Lanham Act protects against trademark uses that “dupe[] consumers into buying a product they mistakenly believe is sponsored by the trademark owner.”  In this case, Louis Vuitton did not claim that Warner Brothers misled the audience into believing that it sponsored or was otherwise affiliated with the film.  The Judge continued that even if Louis Vuitton did establish a valid claim of confusion, it would still fail because the likelihood of confusion was "not plausible, let alone 'particularly compelling.'"  The Judge noted that it was unlikely that any person in the audience could tell that the bag in the movie was a knock-off.  Regarding Louis Vuitton's claims that the audience would believe the Diophy bag to be an authentic Louis Vuitton bag based off of what Alan said in the movie, Judge Carter held that the statements made by Alan could not be attributed to the views of the film producer.  He continued by stating that any misrepresentation made by Alan "assumes that the fictional Alan character knew that his bag was a knock-off; otherwise, he would simply be (innocently) misinformed about the origin of his bag."  Thus, Judge Carter determined that there was no likelihood of confusion when the fictional character Alan claimed that the Diophy bag was a Louis Vuitton product in the film.

Since Warner Brothers's usage of the Diophy bag was protected by the First Amendment under Rogers, Judge Carter granted the film producer's motion to dismiss.

Despite Warner Brother's victory over Louis Vuitton, using trademarks without permission in an artistic work is risky business.  For example, Louis Vuitton successfully brought Lanham charges against Hyundai for using its marks in a "luxury" themed commercial.  During the 2010 Superbowl, Hyundai aired an advertisement that included a one second shot of a basketball with a pattern resembling Louis Vuitton's trademarked toile monogram.  The court found that Louis Vuitton had established blurring of its trademark according to six factors that answer “whether an association, arising from the similarity of subject marks, ‘impairs the distinctiveness of the famous mark.’”  The court rejected Hyundai's Fair Use and First Amendment defenses and granted Louis Vuitton's motion for summary judgment.  Contrast this case to Caterpillar Inc. v. Walt Disney Co.  In this case, Caterpillar sued Disney for trademark infringement and dilution for using its bulldozers and trademarks in the movie "George of the Jungle 2."  In this suit, the judge found that Caterpillar in the film was unlikely to succeed in its trademark dilution and unfair competition claims.  In his analysis, the judge asked the question "For example, action movies frequently feature automobiles in a variety of situations. Is the mere appearance of a Ford Taurus in a garden variety car chase scene sufficient by itself to constitute unfair competition?"  He concluded that, in regards to Caterpillar, Caterpillar was unlikely to prove unfair competition because "It does not appear to the Court that an intent to free ride on the fame of Caterpillar's trademarks to spur the sales and awareness for Defendants' George 2 movie is present here."

The usage of trademarks without permission in film is analogous to the usage in video games.  Using real life products and brands in video games may be desirable for game developers to add to the realism or appeal of the digital worlds that they create.  For example, Electronic Arts is engaged in a similar legal battle with Textron over the usage of helicopters in Battlefield 3.  In this case, Textron has claimed trademark infringement and false designation of origin under the Lanham Act, unfair competition and misappropriation, and injury to trademarks.  Electronic Arts believes that its usage is expressive, and therefor protected by the 1st Amendment.  In instances like this, the video game developer's use of a trademark or product without permission opens the door to more realistic and compelling universes, however the trademark owner may wish to be compensated for its product's role in the game.  For example, Electronic Arts paid Textron for a license to use its property for the previous two Battlefield games.  After all, being able to control the trademarked helicopters will surely add to the marketing value of the game.  Will Electronic Arts be able to prevail using a similar argument to Warner Brothers or will the court consider the usage to be commercially motivated?

Given the disparity between the aforementioned decisions, it appears that cases such as these are very much fact based.  However, when using trademarks or products without asking permission, an important distinction should be made between artistic works and works where usage of the mark is commercially motivated.  According to Rogers v. Grimaldi, unauthorized use of a trademark is protected from the Lanham Act if it is artistically relevant and does not mislead the audience as to the source of the trademark.  Thus, the usage of a product in a video game may be protected under Rogers and under the First Amendment if it satisfies these two requirements.  If the usage of the trademark in a video game is deemed to be commercially motivated or "intends to associate with the mark to exploit the mark’s popularity and good will," however, protection may not be granted since the usage would fall outside of an artistic work.  It is important to note, however, that this threshold is very low according to Judge Carter, who stated in the Warner Brother's case that "The threshold for 'artistic relevance' is purposely low and will be satisfied unless the use 'has no artistic relevance to the underlying work whatsoever.'"  In describing the threshold for artistic relevance, Judge Carter quoted another video game case that used the First Amendment defense to ward off trademark infringement charges: E.S.S. Entertainment 2000, Inc. v. Rock Star Videos, Inc.  In this case, the owner of the Los Angeles strip club "Play Pen Gentlemen's Club" sued Rock Star for its inclusion of a strip club named "Pig Pen" in the Grand Theft Auto: San Andreas" game.  The court rejected ESS's trademark infringement claim, stating that the game was protected by the First Amendment.  In this case, the court decided that the inclusion of a strip club similar to "Play Pen" was artistically relevant, stating that "the level of relevance merely must be above zero."

The case law on this subject seems to indicate that the usage of trademarks without permission in a video game is allowed if certain requirements are met.  That is, the usage will be protected by the First Amendment if it is "(1) “artistically relevant” to the work and (2) not “explicitly misleading” as to the source or content of the work."  875 F.2d at 999. Fulfilling these requirements does not grant immunity from being sued, however, and the individual circumstances of the usage will be taken into account by the court.  It is also important to consider whether or not the usage is being made with commercial motivation or in a way that takes advantage of the trademark's popularity and good will. Whether or not Electronic Arts succeeds with its First Amendment claims will be highly dependent upon the above factors, and we eagerly look forward to the court's decision.