Louis Vuitton v. Hyundai: Deconstruction of a Bad Trademark Decision

From the ever-growing file of trademark cases that are bad for freespeech, Eric Goldman and Techdirt bring us an interesting case concerning a recent Hyundai ad. The ad is a series of briefvignettes conveying luxurious items in non-luxury settings: a yachtparked next to a small suburban ranch house, cops in a squad carsnacking on caviar, chandeliers for streetlights, lobsters and roastpigs in what looks like an office breakroom, and – most importantly forour purposes – a group of people playing basketball with a ball thatappears to have what Louis Vuitton calls its "Toile Monogram" patternon it. Baroque music plays throughout, and a sonorous voice asks theaudience, "What if we made luxury available to everyone? Would it stillbe called luxury? Or maybe we'd need a word for it. Oh, here's one:'Hyundai.' The all new Hyundai Sonata."

Get it? The ad asks us to ponder whether luxury is defined by itsexclusivity to an upper caste, or whether we can all experience thecreature comforts of "luxury" regardless of social strata, when avendor makes high-quality goods at a convenient price point. (Also, buyour car.)

As this blog noted as recently as last month, Louis Vuitton is notoriously aggressive in trademark enforcement.This was no exception. The company brought suit in the United StatesDistrict Court for the Southern District of New York, alleging avariety of trademark violations.

Last July, Louis Vuitton moved for summary judgment as to Hyundai'sliability under state and federal trademark dilution law. Trademarkdilution is different from standard trademark infringement. Dilutiongrants a superior exclusive right to owners of "famous" marks to controlits use in all commerce. This right is intended, in part, to protect the single meaning that famous marks have globally. For example, an average consumer will knowwhen they see Kodak-brand sneakers that the camera company didn't makethe sneakers, but now when the consumer hears the word "Kodak," they won't know if the speaker is referring to cameras or sneakers. That extra step is the harm that dilution law seeks to remedy. (Ifyou're unfamiliar with trademark you may want to review the CMLP legalguide posts on the topic.)

Trademark dilution as a theory is controversial, to say the least. It'sno accident that the doctrine was first proposed in the United Statesin a 1927 law review article and not enacted federally until 1995. A common worryis that giving broad protection to prevent uses of marks when there isno evidence of consumer confusion will lead to censorship of anyunauthorized communication bearing the mark of a famous company. (Goldman quite rightly borrows Lessig's term of "permissionculture" to articulate this fear in the context of this case.) ButCongress was careful when it enacted dilution federally to be sure itwould not be used as a tool to silence expressive uses of others'trademarks. The law specifically states at 15U.S.C. § 1125(c)(3) that:

That's a surprisingly direct carveout in a section of law that isnormally frustratingly silent on expressive uses. Note its openphrasing. The statute protects "anyfair use … including use inconnection with" comparison and comment or parody, adopting all of the standard free speech def