Disney Teddy Bear Case Offers Tricky Tryout of Trademark Test

After the U.S. Supreme Court ruled in favor of Jack Daniel’s in Jack Daniel’s Properties Inc. v. VIP Products LLC, citing that the Rogers test didn’t apply to dog toys that used the whiskey company’s trade dress, the Ninth Circuit is examining the parameters for a similar trademark test threshold.

The Court recently revived Diece-Lisa Industries Inc.’s lawsuit against Disney where the plaintiffs claim that the Lotso bear from “Toy Story 3” infringed its trademark. According to the court, the pink, “Lots-O’-Huggin’” bear, passed the Rogers test against Diece-Lisa Industries’ “Lots of Hugs” toys trademark.

After the historic Jack Daniels case, lower courts must now grapple with how to apply the new “trademark use” threshold.

“The question at issue is going to be: If the merchandise is tied to the movie, does it come under the penumbra of the movie and become acceptable?” Finnegan partner Margaret Esquenet told Bloomberg Law. “Or is it going to be considered entirely on its own as if the movie doesn’t exist?”

She added that she’s not aware of an existing legal framework for making that determination. She wondered if the protection of the film extends to the merchandise, and “if so, completely? A little?”

Trade dress is also in question for the courts. Margaret said, “Go to a store around Valentine’s Day and see how many pink stuffed bears you see. I don’t think anyone’s thinking ‘It’s a Lots-of-Hugs Bear,’” she said. “Disney’s probably going to have to go back and attack the underlying rights.”

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