Lions Gate sued TD Ameritrade in 2015 over the financial services company’s advertising campaign that used the tagline “Nobody puts your old 401(k) in a corner,” a variation of a famous quote from the film “Dirty Dancing,” in conjunction with images (such as a man lifting a piggy bank over his head after the piggy bank ran into the man’s arms) that evoked a dance routine in the film. Lions Gate brought claims for, among other things, state and federal unfair competition, trademark infringement, and copyright infringement. In 2016, the district court dismissed Lions Gate’s trademark claims with prejudice, citing the Supreme Court’s holding in Dastar Corp. v. Twentieth Century Fox Film Corp., which drew a distinction between trademark claims related to “the producer of the tangible goods that are offered for sale (allowable) and the author of any idea, concept, or communication embodied in those goods (preempted).” After both sides reached a settlement, Lions Gate moved the court to vacate the dismissal of its trademark claims, citing an unpublished Ninth Circuit opinion, Mercado Latino v. Indio Products, which reversed a lower court decision that the district court had cited in its dismissal of Lions Gate’s trademark claims, and Warner Brothers Entertainment v. X One X Productions, an Eighth Circuit decision handed down in 2016.
At the outset, Lions Gate argued that vacating the order was proper because the parties’ settlement would not allow Lion Gate to appeal relevant parts of the interlocutory order dismissing its trademark claims. The court disagreed, however, noting that “several courts have held that, where the parties’ voluntary action forecloses the possibility of appeal, then [that] fact does not necessarily weigh in favor of vacatur.” In addition, the court explained that the motion to vacate was in effect a request to reconsider the merits of the prior order, as Lions Gate’s brief stated that “it would have included the Trademark Claims in its earlier motion for reconsideration” had it known of the Ninth Circuit’s reversal of Mercado
The court’s earlier ruling applied Dastar, where the Supreme Court held that Twentieth Century Fox’s trademark claims alleging Dastar falsely designated the origin of its products when it copied, modified and repackaged a television series into a videotape set were pre-empted. Following Dastar, the district court reasoned that Lions Gate’s trademark claims were barred because “TD’s advertising campaign was not likely to confuse consumers as to the actual producer of the tangible product sold in the marketplace.” In declining to vacate its previous order, the court rejected Lions Gate’s argument that whether or not it offered financial services was irrelevant to its ability to plead trademark claims, noting that Ninth Circuit precedent explains that the “type” of a non-rival’s goods or services is “one of several factors to be considered in deciding whether there is a likelihood of confusion.”
Lions Gate next argued that the order should be vacated because of the Ninth Circuit’s unpublished reversal of Mercado, holding that plaintiffs’ trade dress claims based on the design elements of candles were not pre-empted by copyright protections under Dastar. The district court disagreed, explaining that the Ninth Circuit’s unpublished holding in Mercado distinguished Dastar as an example of the “narrow instance in which a plaintiff alleges a defendant has violated the Lanham Act by falsely designating the origin of a communicative product” and that, unlike Lions Gate’s claims against TD, the Mercado plaintiff’s trade dress claims were based on allegations that the defendants’ candle design was so similar that it would cause customer confusion regarding the origin of the goods. The use of Lions Gate’s trademarked phrase in an advertising campaign, on the other hand, was a “communicative product to which Dastar’s reasoning may apply,” and therefore the unpublished reversal of Mercado had no impact on the court’s prior order.
Last, Lions Gate argued that the Eighth Circuit’s 2016 decision in Warner Brothers Entertainment v. X One X Productions — which held that “images of the film actors in character and signature phrases from the films are not communications, concepts, or ideas that the consumer goods embody as Dastar defines these terms” — should be persuasive. Noting that the Eight Circuit decision was not binding, the California district court distinguished Warner Bros., a case in which the defendants took images of famous characters from publicity materials for famous films, including “Gone with the Wind” and “The Wizard of Oz,” and licensed those images for use on products such as clothing, lunchboxes and playing cards, often adding a character’s signature phrase. The Eighth Circuit concluded that the defendants in that case were not seeking to copy the films but rather to associate the products with those films. In contrast, the use of the variants of Lions Gate’s trademarked line and other elements in TD’s advertisements were for the purpose of evoking “communications, concepts, or ideas” from the “Dirty Dancing” film. “As such, the Trademark Claims are barred under Dastar, as they do not protect rights in a communicative product that are distinct from those already protected by the Copyright Act.”
Summary prepared by Tal Dickstein and Peter Pottier