Anheuser-Busch, Inc. v. Balducci Publications

• Decision Date: 30 June 1994
• Docket Number: No. 93-2196,INC,ANHEUSER-BUSC,93-2196
• Citation: 28 F.3d 769
• Parties: , 31 U.S.P.Q.2d 1296, 22 Media L. Rep. 2001 , Plaintiff-Appellant, v. BALDUCCI PUBLICATIONS; Richard Balducci; Kathleen Balducci, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 769

28 F.3d 769

63 USLW 2027, 31 U.S.P.Q.2d 1296, 22

Media L. Rep. 2001

ANHEUSER-BUSCH, INC., Plaintiff-Appellant, v. BALDUCCI PUBLICATIONS; Richard Balducci; Kathleen Balducci, Defendants-Appellees.

No. 93-2196.

United States Court of Appeals Eighth Circuit.

Submitted Nov. 17, 1993.

Decided June 30, 1994.

Richard Lehv, New York City, argued (Norman S. London and Thomas J. Cotter, St. Louis, MO, on the brief), for appellant.

James E. Parrot, St. Louis, MO, argued (Richard E. Schwartz, on the brief), for appellee.

Before McMILLIAN, Circuit Judge, JOHN R. GIBSON ^*, Senior Circuit Judge, and BOWMAN, Circuit Judge.

JOHN R. GIBSON, Senior Circuit Judge.

Anheuser-Busch, Inc., appeals from the judgment of the district court dismissing its federal and state trademark infringement, trademark dilution, and unfair competition claims against Balducci Publications and its publishers, Richard and Kathleen Balducci, for the use of registered Anheuser-Busch trademarks in a fictitious advertisement for "Michelob Oily." See 15 U.S.C. Secs. 1114(1), 1125(a) (1988); Mo.Rev.Stat. Secs. 417.056, 417.061 (1986). We have carefully reviewed the record before us, and we reverse.

Anheuser-Busch operates a brewery in St. Louis. Its products include the Michelob family of beers: Michelob, Michelob Dry Michelob Light and Michelob Classic Dark. For use in its marketing of these products, Anheuser-Busch owns several federally-registered trademarks: (1) Michelob; (2) Michelob Dry; (3) A & Eagle Design; (4) Bottle and Label Configuration; (5) Bottle Configuration; (6) Vertical Stripe Design; (7) the phrase "ONE TASTE AND YOU'LL DRINK IT DRY;" and (8) Vertical Stripe and A & Eagle Design. Of these, (1) and (3) are also registered Missouri trademarks.

Balducci Publications is a publishing business owned by Richard and Kathleen Balducci, also defendants in this case. Balducci Publications has published Snicker, a humor magazine, since April 1987. The back cover of issue 5 1/2, published in April 1989, contains a mock advertisement for the fictitious product "Michelob Oily." A reduced copy of the advertisement is attached as Appendix A. The advertisement states in bold type, "ONE TASTE AND YOU'LL DRINK IT OILY" immediately above "MICHELOB OILY TM." The accompanying graphics include a partially-obscured can of Michelob Dry pouring oil onto a fish, an oil-soaked rendition of the A & Eagle design (with the eagle exclaiming "Yuck!") below a Shell Oil symbol, and various "Michelob Oily" products bearing a striking resemblance to appellants' Michelob family. This resemblance was quite intentional, as evidenced by the admitted use of actual Anheuser-Busch "clip-art" ¹ in replicating several of the protected trademarks. In smaller text the ad opines, "At the rate it's being dumped into our oceans, lakes and rivers, you'll drink it oily sooner or later, anyway." Finally, the following disclaimer is found in extremely small text running vertically along the right side of the page: "Snicker Magazine Editorial by Rich Balducci. Art by Eugene Ruble. Thank goodness someone still cares about quality (of life)." A full-size reproduction of this part of the ad is contained in Appendix B.

Balducci continues to sell back issues of Snicker--including Issue 5 1/2. Advertising for back issues of the magazine has included the words "Michelob Oily" and a blue ribbon design associated with Anheuser-Busch.

Mr. Balducci stated at trial that he used the parody to comment on: (1) the effects of environmental pollution, including a specific reference to the then-recent Shell oil spill in the Gasconade River--a source of Anheuser-Busch's water supply; (2) Anheuser-Busch's subsequent decision to temporarily close its St. Louis brewery; and (3) the proliferation of Anheuser-Busch beer brands and advertisements. The defendants concede they possessed no knowledge that any Anheuser-Busch product actually contained oil.

Anheuser-Busch, displeased with Balducci's extensive use of its trademarks and the possible implication that its products were tainted with oil, brought this suit in May 1989. It asserted five causes of action: (1) infringement of federally-registered trademarks, 15 U.S.C. Sec. 1114(1); (2) federal unfair competition, 15 U.S.C. Sec. 1125(a); (3) state trademark infringement, Mo.Rev.Stat. Sec. 417.056; (4) common law unfair competition; and (5) state law trademark dilution, Mo.Rev.Stat. Sec. 417.061. It sought one dollar in nominal damages and injunctive relief.

Other than the Balducci ad itself, the primary evidence offered by Anheuser-Busch was a study designed by Jacob Jacoby, Ph.D., and conducted under the supervision of Leon B. Kaplan, Ph.D. This survey, conducted in St. Louis shopping malls, involved 301 beer drinkers or purchasers who claimed to periodically review magazines or newspapers. The surveyors showed the Balducci ad to 200 participants and a Michelob Dry ad to the remaining 101. Of those viewing the Balducci ad, many expressed an impression of Anheuser-Busch's role in its creation. For example, fifty-eight percent felt the creators "did have to get permission to use the Michelob name." Fifty-six percent believed permission would be required for the various symbols and logos. Six percent of the classified ² responses construed the Balducci ad to be an actual Anheuser-Busch advertisement. Almost half (45%) found nothing about the parody which suggested it was an editorial, and seventy-five percent did not perceive it as satirical. Virtually none (3.5%) noticed the tiny disclaimer on the side of the ad. Fifty-five percent construed the parody as suggesting that Michelob beer is or was in some way contaminated with oil. As a result, twenty-two percent stated they were less likely to buy Michelob beer in the future.

After a bench trial, the district court ruled in favor of Balducci on each of the five theories. Although the court found that "Defendants clearly used Plaintiff's marks in their ad parody, they used some of those marks without alteration, and they did so without Plaintiff's permission," it dismissed the trademark claims because "Defendants' use of [the] marks did not create a likelihood of confusion in the marketplace." Anheuser-Busch, Inc. v. Balducci Publications, 814 F.Supp. 791, 793. In reaching this decision, the court expressed the need to give "special sensitivity" to the First Amendment aspects of the case. Id. at 796. Accordingly, the court concluded that although "Plaintiff's statistical evidence [might] well be persuasive in the context of a classic trademark infringement case,.... where the allegedly infringing use occurs in an editorial context," more persuasive evidence of confusion is required. Id. at 797. The court similarly dismissed the state law dilution claim, stating that "because Defendant's use of Plaintiff's marks occurred in an editorial context, there is no threat of tarnishment through association with shoddy or disharmonious products." Id. at 799. Finally, the court rejected the unfair competition claims because the "parody was not in any way connected with the sale of a product and because Plaintiff has failed to establish a likelihood of confusion in the marketplace." Id. at 798.

On appeal, Anheuser-Busch contends the district court gave inordinate weight to Balducci's First Amendment claims and erred in finding no likelihood of confusion. Balducci contends the court correctly found no likelihood of confusion and, furthermore, argues the ad parody is absolutely protected by the First Amendment.

I.

This case involves the tension between the protection afforded by the Lanham Act to trademark owners and the competing First Amendment rights of the parodist. Our analysis of the district court's decision encompasses two related, but distinct steps. We begin by considering whether the district court erred in finding no likelihood of confusion. Since a trademark infringement action requires a likelihood of confusion, this finding, if upheld, decides this case. If we conclude the court erred in finding no likelihood of confusion, we must consider Balducci's additional argument that the First Amendment protects it from liability.

Section 32(1) of the Lanham Act protects owners of registered trademarks from uses "likely to cause confusion, or to cause mistake, or to deceive." 15 U.S.C. Sec. 1114(1). The determination of whether "likelihood of confusion" exists is a factual determination which we review under the clearly erroneous standard. Mutual of Omaha Ins. Co. v. Novak, 836 F.2d 397, 398 (8th Cir.1987); SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir.1980). However, our review is not so limited when, as here, the district court's "conclusions are inextricably bound up in its view of the law." Calvin Klein Cosmetics Corp. v. Lenox Labs., 815 F.2d 500, 504 (8th Cir.1987). Rather than first considering whether Balducci's ad parody was likely to confuse the public and then considering the scope of First Amendment protection, the district court conflated the two. The court essentially skewed its likelihood of confusion analysis in an attempt to give "special sensitivity" to the First Amendment, holding Anheuser Busch to a higher standard than required in a "classic trademark infringement case." Balducci, 814 F.Supp. at 796-97. Since we cannot separate the court's factual finding of confusion from its legal conclusions, we conduct a de novo review of the well-developed record before us. Calvin Klein, 815 F.2d at 504.

Many courts have applied, we believe correctly, an expansive interpretation of likelihood of confusion, extending "protection against use of [plaintiff's] mark on any product or service which would reasonably be thought by the buying public to come from the same source, or thought to be affiliated with, connected with, or sponsored by, the trademark owner." McCarthy, Trademarks and Unfair Competition Sec. 24.03, at 24-13 (3d ed. 1992); Novak, 836 F.2d at 398; Nike, Inc. v. ...