Settlement of South Butt Case Unfortunate for Trademark Owners and Parodists Alike

In a lawsuit that has grabbed the attention of the trademark community, The North Face Apparel Corp. sued The South Butt, LLC, its founder (college student Jimmy Winkelmann), and a pharmacy that sold allegedly infringing goods for using the mark THE SOUTH BUTT on clothing that resembled the style of clothing sold under the well-known mark THE NORTH FACE. According to the Complaint (PDF), South Butt repeatedly attempted to register THE SOUTH BUTT as a trademark and offered to sell its business to North Face for $1 million. The Answer (PDF) describes Jimmy Winkelmann as a “cherubic teenager, budding entrepreneur and college freshman from the heartland of America” who “founded his company with parodic respect for Plaintiff.” North Face moved for a preliminary injunction, and its motion was scheduled to be heard on April 12, 2010.

  

In a court filing (PDF) made on April 5, 2010, the pharmacy defendant advised the Court that all parties had reached a settlement of the case. While the terms of the settlement were not disclosed, it appears that SOUTH BUTT clothing continues to be sold on the South Butt website and is featured on the South Butt Facebook page.

Regardless of the settlement terms, the fact that the case was settled without a judicial decision as to the underlying parody issue represents a lost opportunity for trademark owners and parodists alike. In 2006, the Trademark Dilution Revision Act (TDRA) articulated for the first time the requirements for parody as “fair use” of a famous mark, explicitly stating that the use must be “other than as a designation of source for the person’s own goods or services.” 15 U.S.C. Section 1125(c)(3)(A).

Courts have not adopted a consistent approach to parody of famous marks under the TDRA. In one of the early parody cases construing the TDRA, the Fourth Circuit held that dog chew toys bearing the name CHEWY VUITON did not dilute the famous LOUIS VUITTON mark. Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252 (4th Cir. 2007) (PDF). While the Court acknowledged that the defendant used CHEWY VUITON as a designation of source for its dog toys, and that the statutory fair use language therefore did not apply, it proceeded to find that the defendant was engaged in a successful parody because under the dilution factors it intended to create a parody and that is how the association would be perceived. Id. at 266-67.

This stands in contrast to the recent CHARBUCKS case, in which the Second Circuit found that the use of the CHARBUCKS mark on coffee could not escape liability for diluting the famous STARBUCKS mark based on a parody defense because CHARBUCKS was used as a source identifier and was too subtle to constitute a parody. Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 588 F.3d 97 (2d Cir. 2009) (PDF).

  

The North Face v. South Butt case presented an opportunity for the Eight Circuit to address the differing approaches to parody head-on. Assuming that the settlement is consummated, that opportunity will be lost, and the case law in this area will remain inconsistent. The owners of famous brands and their parodists will have to wait until another day for the courts to further articulate the requirements for parody under the TDRA.

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