Last week, the U.S. Court of Appeals for the Second Circuit issued an opinion in Vans, Inc. v. MSCHF Product Studio, Inc., No. 22-1006 (Dec. 5, 2023), affirming the district court’s grant of a temporary restraining order (TRO) and preliminary injunction enjoining MSCHF’s use of Vans’ trademark and trade dress in its Wavy Baby sneakers.
MSCHF created its Wavy Baby sneaker purportedly to parody Vans’ Old Skool sneaker, “and thereby comment on the consumerism inherent in sneakerhead culture.” Vans sued alleging six claims under state and federal law, including a federal claim for trademark infringement under the Lanham Act, and sought a TRO and a preliminary injunction. The district court granted the TRO and injunction, finding that Vans had shown a significant danger of consumer confusion and would, therefore, likely prevail on its trademark infringement claims; that Vans had shown it would suffer irreparable harm absent injunctive relief; and that the balance of hardships and public interest supported Vans’ requested relief. The district court further ordered MSCHF to escrow funds received from orders that had already been fulfilled. MSCHF appealed.
The Second Circuit affirmed. The Court first addressed MSCHF’s argument that Van’s claims were precluded by the First Amendment. Specifically, MSCHF asserted that the Wavy Baby sneaker was a parodic work of artistic expression and, therefore, merited special protection under the Rogers test rather than application of the traditional likelihood of confusion test. The Court explained that the Supreme Court’s recent decision in Jack Daniels clarified that the Rogers test does not apply “when the allegedly infringing mark is used as a source identifier—that is, ‘as a designation of source for [the alleged infringer’s] own goods.’” Because MSCHF used Vans’ trademarks in a source identifying manner, the Court held, the Supreme Court’s decision in Jack Daniels foreclosed MSCHF’s First Amendment argument. Reviewing the district court’s application of the traditional likelihood of confusion factors, the Court determined the district court correctly concluded Vans is likely to prevail on the merits and that the district court did not abuse its discretion in enjoining MSCHF’s marketing and sale of the Wavy Baby sneaker.
The Court next addressed MSCHF’s argument that the district court abused its discretion in ordering it to escrow all revenue, rather than merely profits, from completed sales of the Wavy Baby. The Court rejected the argument, concluding the district court did not abuse its discretion on the escrow.
