Vans, Inc. v. MSCHF Prod. Studio, Inc.

88 F.4th 125

VANS, INC., VF Outdoor, LLC., Plaintiffs-Appellees, v. MSCHF PRODUCT STUDIO, INC., Defendant-Appellant.

Docket No. 22-1006

August Term, 2022

United States Court of Appeals, Second Circuit

Argued: September 28, 2022

Decided: December 5, 2023

Appeals from the Eastern District of New York (Kuntz, J.)

David H. Bernstein (Megan K. Bannigan, Debevoise & Plimpton LLP, New York, NY; William D. Patterson, Swanson, Martin & Bell, LLP, Chicago IL, on the brief), for Defendant-Appellant.

Lucy Jewett Wheatley, McGuire Woods LLP, Richmond, VA (Philip A. Goldstein, McGuire Woods LLP, New York, NY; Tanya L. Greene, McGuire Woods LLP, Los Angeles, CA, on the brief), for Plaintiffs-Appellees.

Vivek Jayaram, Jayaram Law Group, Chicago, IL, for Amicus Curiae Daniel Arsham in Support of Defendant-Appellant.

Ronald D. Coleman, Dhillon Law Group Inc., Newark, NJ, for Amici Curiae Emmanuel

Perrotin, Jean-Paul Engelen in Support of Defendant-Appellant.

Mark A. Lemley, Lex Lumina PLLC, New York, NY, for Amici Curiae Intellectual Property Professors in Support of Plaintiffs-Appellees.

John P. O'Herron (Zachary D. Cohen, Rachel W. Adams, on the brief), ThompsonMcMullan, P.C., Richmond, VA, for Amici Curiae American Apparel & Footwear Association, Footwear Distributors & Retailers of America, Council of Fashion Designers of America, Inc., and Accessories Council in Support of Plaintiffs-Appellees.

Stanley Panikowski, DLA Piper LLP (US), San Diego, CA (Tamar Y. Duvdevani, DLA Piper LLP (US), New York, NY, on the brief), for Amicus Curiae Nike, Inc., in Support of Plaintiffs-Appellees.

Vijay K. Toke, Rimon P.C., San Francisco, CA (Martin Schwimmer, Leason Ellis LLP, White Plains, NY; David Donahue, Fross Zelnick Lehrman & Zissu, P.C., New York, NY, on the brief), for Amicus Curiae International Trademark Association in Support of neither party.

Rhett O. Millsaps II, Lex Lumina PLLC, New York, NY (Mark P. McKenna, Christopher J. Sprigman, Rebecca Tushnet, on the brief), for Amici Curiae Authors Alliance, Mason Rothschild, Alfred Steiner in Support of neither party.

Before: Jacobs, Chin, and Robinson, Circuit Judges.

Per Curiam:

In this case, defendant-appellant MSCHF Product Studio, Inc. ("MSCHF"), created a sneaker, the Wavy Baby, that purported to parody the Old Skool shoe, created and marketed by plaintiff-appellee Vans, Inc. ("Vans"), and thereby comment on the consumerism inherent in sneakerhead culture. MSCHF altered the features of an Old Skool sneaker by distorting Vans' trademarks and trade dress, resulting in a shoe that was "exceedingly wavy." After MSCHF engaged in an online marketing campaign, it sold 4,306 pairs of the Wavy Baby in one hour. Vans, unsurprisingly, was not amused.

The central issue in this case is whether and when an alleged infringer who uses another's trademarks for parodic purposes is entitled to heightened First Amendment protections, rather than the Lanham Act's traditional likelihood of confusion inquiry.

The Supreme Court recently addressed this issue in Jack Daniel's Properties, Inc. v. VIP Products LLC, 599 U.S. 140, 143 S.Ct. 1578, 216 L.Ed.2d 161 (2023). There, the Court held that, even if an alleged infringer used another's trademarks for an expressive purpose, special First Amendment protections did not apply if the trademarks were used for source identification —that is, if the alleged infringer was "trading on the good will of the trademark owner to market its own goods." Id. at 156, 143 S.Ct. 1578 (citation omitted). Applying Jack Daniel's, we conclude that no special First Amendment protections apply to insulate MSCHF against Vans' trademark infringement claim.¹ As to those trademark infringement claims, the district court did not err in concluding that Vans is likely to prevail on the merits. We further conclude that the district court did not err in requiring MSCHF to escrow its revenues from Wavy Baby sales, and that the district court was not required to make a bond determination because MSCHF never requested security. We therefore AFFIRM.

BACKGROUND²

I. Facts

A. Vans

Vans is a globally known footwear and apparel company that specializes in skate-board-friendly shoes and sneakers. The company, founded in 1966, originally catered to customers in Southern California. Vans became popular among skateboarders, celebrities, and the public. One of Vans' most recognizable products is its "Old Skool" shoe, shown below:

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Vans Old Skool Shoe

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Jt. App'x at 13, 15.

The Old Skool trade dress consists of a combination of elements, including: (1) the Vans Side Stripe Mark on the upper shoe; (2) a rubberized sidewall of uniform height around the shoe's perimeter; (3) a three-tiered or grooved sidewall; (4) a textured toe box; (5) visible stitching; and (6) the placement and proportion of each of these elements in relation to one another. Jt. App'x at 256. It also features a distinctive "waffle sole" design. Id. at 258. The Old Skool is one of Vans' most popular shoes and sold for about $60 a pair. Most Old Skool shoes are black and white, but Vans has expanded the shoes to come in a variety of colors or color arrangements.

Vans often collaborates with artists and celebrities to design and sell special edition versions of its shoes, including the Old Skools. Beyond official collaborations, many of the rich and famous have been photographed wearing the Vans Old Skool. In short, the Old Skool is an iconic Vans sneaker, easily recognizable by both "sneakerheads" and the uninitiated. Id. at 273 (explaining that sneakerheads are people who collect shoes to display them, but "rarely" to wear them).

B. MSCHF

MSCHF is a Brooklyn-based art collective "known as (and for) MSCHF." Id. at 271. MSCHF's mission is to use artwork "to start a conversation about consumer culture ... by participating in consumer culture." Id. at 486-87. MSCHF recontextualizes everyday objects as a means of commenting on contemporary society. MSCHF's work has been displayed in museums, galleries, auction houses, and art shows worldwide, including Phillips Auction House, Art Basel, the Design Museum of London, and the Perrotin gallery.

MSCHF's works are often sold with "manifestos" that explain the work's commentary and are sold in "drops," or prescribed sales periods. Recent drops have critiqued music, the political system, consumerism, digital media, standardized testing, holidays, and the legal system. And often, MSCHF's "drops" will sell out in a day.

MSCHF has recently focused its artistic expression on "sneakerhead culture." Sneakers are utilitarian objects for most, but for sneakerheads, shoes are expressive, "collect[ed], trade[d], and display[ed] as a hobby." Id. at 497. MSCHF critiques the consumerism present in sneakerhead culture, as well as sneaker companies' practice of collaborating with "anyone and everyone to make money." Id. at 352.

C. The Wavy Baby

This case is about MSCHF's sneaker drop of the "Wavy Baby" shoe, depicted below:

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MSCHF "Wavy Baby"

Jt. App'x at 14, 17.

MSCHF's co-Chief Creative Officer explained MSCHF's conception of the connection between Vans' Old Skool shoe and MSCHF's Wavy Baby in the following manner: "The Wavy Baby concept started with a Vans Old Skool sneaker" because no other shoe embodies the dichotomies between "niche and mass taste, functional and trendy, utilitarian and frivolous" as perfectly as the Old Skool. Id. at 353. The Wavy Baby design process thus started with an image of a classic Vans Old Skool skate shoe. Id. MSCHF used a digital filter tool to warp the shoe into a new image, "transform[ing] the once iconic shoe into the modern, wobbly, and unbalanced realities." Id. at 353-54. One evident feature of the parody is that the distortion destroys the original premise of the Old Skool's popularity—its utility as a skateboarding shoe due to its flat sole.

Wavy Baby incorporates and distorts the Old Skool black and white color scheme, the side stripe, the perforated sole, the logo on the heel, the logo on the footbed, and the packaging. Examples of the critical similarities, and distortions, are reflected in the graphics below.

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Jt. App'x at 171-72; 252-53.

Prior to the Wavy Baby's release, MSCHF engaged in a marketing campaign in collaboration with musical artist Michael Stevenson, also known as Tyga. Id. at 363. MSCHF advertised the Wavy Baby collaboration before releasing the sneakers for sale—garnering hype and excitement through MSCHF's website, Instagram and YouTube accounts, and sneaker-focused platforms. Tyga also released a music video in which he wore the Wavy Baby shoe. Id. at 377.

Upon learning of the impending drop of the Wavy Baby shoe, Vans sent a cease and desist letter to Tyga on April 5, 2022, and to MSCHF the following day, putting them on notice of their claim that the Wavy Baby shoes infringed their trademarks and trade dress. MSCHF, however, continued to promote the planned drop and on April 18, 2022, after this suit commenced, launched the pre-planned one-hour drop of 4,306 Wavy Baby shoes. Customers purchased the shoes only on MSCHF's proprietary app for $220.

II. District Court Proceedings

Vans filed a complaint in United States District Court for the Eastern District of New York on April 14, 2022, alleging six claims under state and federal law, including a federal claim for trademark infringement under the Lanham Act. 15 U.S.C. § 1114.

On April 15, 2022, Vans filed a motion for a temporary restraining order and preliminary injunction asking the district court to enjoin MSCHF from: (1) fulfilling orders for or otherwise releasing for sale to the public any of the "Wavy Baby" shoes, or colorful imitations or reconstructions thereof (the "Prohibited Shoes"); (2) using Vans' Old Skool trade dress or marks or...