UNITED STATES DISTRICT COURT

This lawsuit is sparked by the prospective appearance of a new Muppet who joins Kermit, Miss Piggy and others in the movie "Muppet Treasure Island," due to be released in about four months. The creators of the Muppets, Jim Henson Productions, Inc. ("Henson"), hope to provoke laughter by naming the new Muppet (an exotic, wild boar) "Spa'am"; they believe that the association between the exotic, wild boar and the tame, familiar luncheon meat, SPAM, will cause viewers to laugh. Hormel Foods Corporation ("Hormel") which manufactures SPAM, finds nothing humorous in the association, and fears that the use of the Spa'am character will cause a drop off in the consumption of SPAM, and a drop off in the consumption of SPAM tee-shirts and other SPAM-related merchandise. Although Henson has urged Hormel, effectively, to "lighten up," and to see the parody as a positive development for Hormel (especially in light of the fact that SPAM is regularly subjected to much more negative portrayals/1), Hormel insists on its right to a legal determination of whether Henson's use of the Spa'am character and name/2 are lawful.

Specifically, Hormel alleges that Henson's proposed use of the Spa'am character and name in the motion picture and on related merchandise constitutes trademark infringement and false advertising in violation of the Lanham Act, 15 U.S.C. 1114(1), 1125(a) (1988). Additionally, Hormel raises state law claims of common law unfair competition, trademark dilution, N.Y. Gen. Bus. Law 368-d (McKinney 1984), and deceptive practices, N.Y. Gen. Bus. Law 349 (McKinney 1988). For the reasons stated below, Hormel's claims are all denied.

BACKGROUND

After a three-day bench trial, the court makes the following findings of fact. Hormel has made and marketed its popular SPAM luncheon meat since 1937. SPAM is a distinctive, well-known registered trademark. Hormel produces, distributes and licenses numerous other products bearing the SPAM mark, such as tee-shirts and golf balls, in addition to its primary, luncheon meat product. The secondary products are intended to be a source of additional revenue and to promote sales of SPAM luncheon meat. Purchasers of the secondary products are generally consumers of the luncheon meat and associate the secondary products with the luncheon meat. (Grev Dep. at 28; Krejci Test., Tr. at 15.) Hormel also employs SPAM- Man, a character dressed as a giant can of SPAM luncheon meat, to promote the sale of SPAM. SPAM has been the butt of numerous disparaging, unauthorized jokes. (Def. Ex. W.)

Henson created a group of puppets, known collectively as the Muppets, in the 1950's. Since that time, puppets have regularly been added to the Muppet cast of characters. The Muppets have been featured in numerous television programs and motion pictures, and are well-known for parodies of brand names, trademarks, television programs, fictional characters, and celebrities. Children who enjoy the Muppets are familiar with the Muppet brand of humor and are unlikely to think that the Muppets are sponsored by the products and celebrities who are the subject of their jokes.

Henson's upcoming motion picture, "Muppet Treasure Island," is scheduled for release in the United States in February, 1996. In the motion picture, familiar Muppet characters such as Kermit the Frog, Miss Piggy and Rizzo Rat, land on Treasure Island where they encounter a tribe of wild boars. The leader of the boars identifies himself as "Spa'am, High Priest of the Boars." This is the only time that the name "Spa'am" is spoken in the motion picture, and it is pronounced in two distinct syllables, with both "a"'s pronounced as the "a" in SPAM. When Spa'am first makes his appearance in the motion picture, he is threatening, though in a humorous way; he accuses Kermit and other Muppets of "violating" his island, and he has them tied to stakes. However, toward the end of the motion picture, Spa'am helps Kermit and the other Muppets escape from the clutches of the evil Long John Silver. In the final scene, Spa'am is shown sailing away with the other Muppets as good humor and camaraderie reign.

Dr. Laura A. Peracchio, an expert in consumer behavior, states in her report that Spa'am is unappealing and will lead to negative associations on the part of consumers because he has small eyes, protruding teeth, warts, a skull on his headdress, is generally untidy, and speaks in a deep voice with poor grammar and diction. I am, however, persuaded by the report and testimony of Anne Devereaux Jordan, an expert in children's literature, who notes that children (and adults) often have positive associations with characters that may not appear classically handsome. Among other examples, Ms. Jordan points to "Pumbaa," the good-natured warthog in Walt Disney's film The Lion King, and "Splinter," the aging rat who acts as teacher and father-figure to the "Teenage Mutant Ninja Turtles." Furthermore, a boar sharing some of the characteristics that Dr. Peracchio relies on has been used successfully as the image of meat products. See Def. Ex. W (label from "Boar's Head Brand" beef frankfurters showing boar with small eyes and protruding tusks). I agree with Ms. Jordan that a narrow focus on Spa'am's physical appearance is insufficient to determine whether consumers, of any age, will have positive or negative associations with Spa'am.

Hormel maintains that Spa'am appears unhygienic. Having viewed excerpts from the motion picture involving Spa'am, the court sees no evidence of lack of hygiene./3 Indeed, Hormel's expert witness, Dr. Peracchio, testified that at worst the character appears "untidy," pointing to the drooping feathers on Spa'am's headdress. Although Dr. Peracchio would draw the inference of lack of personal hygiene from the character's untidiness, the court finds that such a leap is unwarranted.

Hormel contends that Spa'am's unappealing physical appearance is reinforced by his bad behavior, all tending towards negative associations on the part of consumers. Jerrold Robinson, a licensing expert, states that Spa'am is a negative character because his tribe of wild boars captures Kermit the Frog and Rizzo Rat. Hormel submits, as additional evidence of Spa'am's negativity, scenes from the motion picture in which Spa'am's tribe ties Kermit and Rizzo to stakes and in which Spa'am flees when confronted by firearms. I agree with Ms. Jordan, however, that the Spa'am character is unlikely to be viewed as negative in the context of the motion picture as a whole. Spa'am, although initially threatening the Muppet heros, ultimately helps them to escape from the villainous Long John Silver. At the end of the film, Spa'am sails away with the other Muppets as an accepted member of their group. As Ms. Jordan notes, even when Spa'am is behaving in a threatening or cowardly manner, he seems childish rather than evil. The character's grammar reinforces its childlike qualities. I disagree with Dr. Peracchio that Spa'am's later behavior is "inconsistent" with, and hence will not dispel, his initially threatening impression. Spa'am is initially threatening, in a humorous, childish way, when he believes that the other Muppets have trespassed on his island. When Spa'am realizes that Long John Silver is the true villain, Spa'am joins the Muppet camp. The character's behavior, viewed as a whole, is consistent and unlikely to lead to negative associations.

Hormel has submitted evidence indicating some confusion about the spelling and pronunciation of the Spa'am name. A newspaper article in the London Sunday Mirror identified the leader of the wild boars in the motion picture as "Spam." (Pl. Ex. 43.) An article in the New York Times about the instant lawsuit contained the reference "SPA'AM (pronounced SPAM)." (Pl. Ex. 42.) The script from a CD-ROM game being produced by one of Henson's licensees refers to the Spa'am character as SPAM. (Pl. Ex. 55.) I note that this misspelling occurs only in the script's designation of the speaker -- it was not intended to appear on screen.

Henson has entered into promotional agreements in connection with Muppet Treasure Island with General Mills, McDonald's and Hershey Chocolate, and is negotiating promotional agreements with Dole and Baskin Robbins. Pursuant to the agreements, General Mills will use characters from the movie on "Cheerios" breakfast cereal boxes and McDonald's will use vignettes from the movie on "Happy Meals" boxes. Hershey Chocolate plans to market "Hershey's Amazin' Fruit" candies molded in shapes from the motion picture, including, tentatively, one in the shape of Spa'am./4

Henson has also entered into licensing agreements pursuant to which characters from the motion picture will appear in a CD-ROM video game, in books, on apparel, and on other items. Henson may enter into additional licensing agreements in the future. Currently, Henson has authorized licensees to use the Spa'am character's likeness, but not the name "Spa'am," on licensed merchandise. In all such uses, the title of the motion picture, Muppet Treasure Island, will appear prominently on the merchandise. Henson would like to permit licensees to use the name "Spa'am" on merchandise in the future. In all examples provided by Henson of such potential future uses, the name "Spa'am" appears next to the likeness of the character and the title of the motion picture is prominently displayed. Consumers of merchandise bearing the likeness and/or name of Spa'am will buy it because they like Spa'am, the Muppets, and/or Muppet Treasure Island -- not because they mistakenly think it is SPAM-related merchandise. An early version of the "licensing style guide," (Pl. Ex. 46), distributed to potential licensees, contained the likeness and name Spa'am (the Spa'am name has been deleted from the style guide pending the outcome of the instant case). Spa'am was described as the "noble . . . leader of the tribe of wild boars that live on Treasure Island." Another page of the licensing style guide described the wild boars in general as "proud yet grotesque" and noted that "[w]hat they lack in personal hygiene, they make up for in bravery and loud, spirited grunting." Scarves with the name and likeness of Spa'am were distributed as gifts to potential licensees. (Pl. Ex. 47.) All the pages of the licensing style guide state in small print that "character names and likenesses are trademarks of Jim Henson Productions, Inc." The symbol "TM" appears on the scarves beside the name "Spa'am."

DISCUSSION

I. Lanham Act

A. Trademark Infringement

Section 32(1) of the Lanham Act, 15 U.S.C. 1114(1) (1988), provides in pertinent part:

Any person who shall, without the consent of the registrant-- (a) use in commerce any reproduction, counterfeit, copy or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive . . . shall be liable in a civil action by the registrant for the remedies hereinafter provided.

"It is well settled that the crucial issue in an action for trademark infringement or unfair competition is whether there is any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question." Universal City Studios. Inc. v. Nintendo Co.. Ltd., 746 F.2d 112, 115 (2d Cir. 1984) (internal quotation marks omitted). Hormel notes, correctly, that the confusion need not be as to the source of the product in question. "The public's belief that the mark's owner sponsored or otherwise approved of the use of the trademark satisfies the confusion requirement." Dallas Cowboy Cheerleaders. Inc. v. Pussycat Cinema. Ltd., 604 F.2d 200, 204-05 (2d Cir. 1979).

Traditionally, courts in the Second Circuit consider the eight factors set out in Polaroid Corp. v. Polaroid Elec. Corp., 287 F.2d 492, 495 (2d Cir.), cert. denied, 368 U.S. 820 (1961), to determine likelihood of confusion for purposes of the Lanham act: (1) strength of plaintiff's mark, (2) similarity of uses, (3) proximity of the products, (4) likelihood that the prior owner will bridge the gap (this refers to one of the manufacturers expanding into the domain of the other), (5) actual confusion, (6) defendant's good or bad faith in using plaintiff's mark, (7) quality of the junior user's product, (8) sophistication of consumers. The Polaroid factors are not exclusive, and, in evaluating them, "a court should focus on the ultimate question of whether consumers are likely to be confused." Paddington Corp. v. Attiki Importers & Distributors. Inc., 996 F.2d 577, 584 (2d Cir. 1993).

The Second Circuit has held that the First Amendment provides partial protection from Lanham Act claims when artistic expression is at stake. Cliffs Notes. Inc. v. Bantam Doubleday Dell Publishing Group. Inc., 886 F.2d 490, 493-97 (2d Cir. 1989) (holding that "Spy Notes", a parody of Cliffs Notes study guides, did not violate Lanham Act). In Cliffs Notes, the court began with "the proposition that parody is a form of artistic expression, protected by the First Amendment," but noted that "trademark protection is not lost simply because the allegedly infringing use is in connection with a work of artistic expression." Id. at 493 (citations and internal quotations omitted). The court endorsed a balancing test according to which the reach of the Lanham Act would be decided by "weigh[ing] the public interest in free expression against the public interest in avoiding consumer confusion." Id. at 494.

The Cliffs Notes court did not dispense with the Polaroid factors, but stated:

The Polaroid test has its origins in cases of purely commercial exploitation, which do not raise First Amendment concerns. Thus, the Polaroid test is at best awkward in the context of parody, which must evoke the original and constitutes artistic expression. In such a situation, the Polaroid factors should be applied with proper weight given to First Amendment considerations . . .

Id. at 495, n.3. Thus, Cliffs Notes leaves the Polaroid test intact, while warning district courts to keep the First Amendment in mind and not read the Lanham Act too broadly. If a parody were very likely to confuse consumers, however, the First Amendment would not protect it:

A parody must convey two simultaneous -- and contradictory -- messages: that it is the original, but also that it is not the original and is instead a parody. To the extent that it does only the former but not the latter, it is not only a poor parody but also vulnerable under the trademark law.

Id. at 494.

I turn to the Polaroid factors:

1. Strength of Plaintiff's Mark

It is not disputed that SPAM is a strong mark. Hormel cites decisions indicating that this factor would generally be a point in its favor. E.g., MGM-Pathe Communications Co. v. Pink Panther Patrol, 774 F. Supp. 869, 874 (S.D.N.Y. 1991) ("the more distinctive the mark, the more clearly it is that confusion will result from additional entities trading under it"). However, the cases cited by Hormel are not parody cases, and, as Judge Leval has noted, "[w]here the plaintiff's mark is being used as part of a jest or commentary, the opposite can be true." Yankee Publishing Inc. v. News America Publishing Inc., 809 F. Supp. 267, 273 (S.D.N.Y. 1992). In this case, SPAM is not only a strong mark, but, as Hormel concedes, it has been the butt of numerous, disparaging, unauthorized jokes. It follows that consumers are unlikely to believe that yet another joke at SPAM's expense was sponsored by Hormel. Hormel also concedes that Henson is well- known for engaging in parody, including parodies of brand names; the Muppet "ethic" thus includes the sort of joking that is at issue in this case. As in Yankee Publishing, "[i]t is precisely because both plaintiffs' and defendants' marks are strong, well recognized and clearly associated in the consumers' mind with a particular distinct ethic that confusion is avoided." 809 F. Supp. at 273.

2. Similarity of the Marks

Obviously "Spa'am" and "SPAM" are similar (for parody to work, they need to be similar -- this is one way in which the Polaroid factors are "awkward" when applied to parody). However, they are also easily distinguishable, both when written and when spoken -- Spa'am is written in two distinct syllables and is pronounced in two distinct syllables in the motion picture. Furthermore, "an inquiry into the degree of similarity between two marks does not end with a comparison of the marks themselves . . . [T]he setting in which a designation is used affects its appearance and colors the impression conveyed by it." Spring Mills. Inc. v. Ultracashmere House Ltd., 689 F.2d 1127, 1130 (2d Cir. 1982). In this case, because Spa'am always appears in the context of a Muppet motion picture (whether in the motion picture itself or on related merchandise), and because the Muppets are known for parodying brand names and celebrities, consumers are unlikely to confuse the character Spa'am with SPAM products, or to believe that the joking reference to the luncheon meat was sponsored by Hormel.

3. Proximity of the Products and 4. Bridging the Gap

SPAM is a luncheon meat; Spa'am is the character of a wild boar in a Muppet motion picture. One might think that more need not be said. Hormel argues, however, that there is direct competition between them because Henson will license the marketing of clothing and other products bearing the Spa'am character (and proposes to add the Spa'am name to some products) and Hormel also markets clothing and other products bearing the SPAM mark. /5 Furthermore, Hormel contends that the character Spa'am is in direct competition with Hormel's own "SPAM-Man." Clearly, however, the products and characters in each case derive their associations from a primary product -- luncheon meat, in the case of SPAM, and a Muppet motion picture, in the case of Spa'am. Indeed, Hormel's own witnesses testified that SPAM luncheon meat was Hormel's primary product and that purchasers of SPAM merchandise would generally be consumers of the luncheon meat. In all planned and proposed uses of the Spa'am likeness and/or name, Spa'am looks like a Muppet-style puppet, and appears with the name of the motion picture, Muppet Treasure Island, prominently displayed, making it highly likely that consumers will associate the merchandise with the Muppets and the motion picture. The primary products that the other merchandise refer to, namely the luncheon meat and the motion picture, are sufficiently far apart that consumer confusion is unlikely. In this regard, the instant case is similar to Universal City Studios. Inc. v. Nintendo Co., 746 F.2d 112 (2d Cir. 1984), where the court, considering the marketing of items related to the allegedly infringing "Donkey Kong" videogame, took account of the strong effect of the video product in forming consumer impressions of the associated products:

[S]ince the videogame is by far the dominant source of goodwill for these characters, consumer impressions of these other items are likely to be generated by the videogame, diminishing the possibility that the items will create more confusion among consumers than the videogame itself. Finally, these items have the same "total concept and feel" as the videogame and just as obviously are unlikely to be confused with King Kong.

Id. at 117 n.7.

5. Actual Confusion

As proof of actual confusion, Hormel cites an article from the London Sunday Mirror that identified the leader of the wild boars as "Spam," and a New York Times article containing the reference "SPA'AM (pronounced SPAM)." Hormel also submits the script from the CD-ROM game being produced by one of Henson's licensees which refers to the Spa'am character as SPAM. While these are proof of some confusion as to the spelling and pronunciation of the character's name, they are not proof of any confusion over Hormel's sponsorship of, or association with, the character. Furthermore, at least as far as the New York Times article is concerned, that article was about the instant lawsuit, and thus the Times' assumption regarding the pronunciation may have been influenced by the very fact that Hormel is suing. Finally, any confusion over the pronunciation of Spa'am is likely to be lessened once the motion picture is released and more people hear the correct pronunciation.

6. Defendant's Good or Bad Faith

Hormel argues that it is clear that Henson intended to capitalize on the goodwill and reputation of its trademark and that this implies bad faith. I disagree. Henson acknowledges that it meant to invoke Hormel's trademark as a joke. This does not mean that Henson intended to cause confusion in the minds of consumers. As the Tenth Circuit has pointed out:

In one sense, a parody is an attempt to derive benefit from the reputation of the owner of the mark, if only because no parody could be made without the initial mark. The benefit to the one making the parody however. arises from the humorous association. not from public confusion as to the source of the marks. A parody relies upon a difference from the original mark, presumably a humorous difference, in order to produce its desired effect.

Jordache Enterprises. Inc. v. Hogg Wyld Ltd., 828 F. 2d 1482, 1486 (10th Cir. 1987) (citation and internal quotation marks omitted) (emphasis added).

7. Quality of Defendant's Products

Hormel argues that "[t]he Spa'am character in no way embodies the same characteristics and qualities that Hormel Foods' SPAM luncheon meat embodies." Hormel discusses at length the alleged uncleanliness and ugliness of Spa'am. In effect, Hormel attempts to inject into its Lanham Act claim its arguments with respect to the alleged "tarnishment" of its trademark, a state-law claim discussed infra. These arguments are beside the point -- trademark infringement under the Lanham Act requires a showing of likelihood of consumer confusion as to source or sponsorship. The quality factor could be relevant in one of two ways -- (1) to the injury stemming from confusion (if defendant's product is inferior, injury from confusion could be exacerbated), (2) to the likelihood of confusion (two products of equal quality could increase the likelihood of confusion). Girls Scouts v. Bantam Doubleday Dell Publishing Group Inc., 808 F. Supp. 1112, 1129 (S.D.N.Y. 1992), aff'd, 996 F.2d 1477 (2d Cir. 1993). Hormel has not made either argument.

8. Sophistication of Consumers

Hormel argues that consumers of both products are in large part children -- a particularly unsophisticated group. However, the court has found that children who enjoy the Muppets are unlikely to believe that the Muppets are sponsored by the myriad products and celebrities who are the subject of their jokes. In considering consumer sophistication, courts often look at whether the purchase of the product in question would tend to be the result of "impulse" buying or a hasty decision, making it more likely that the consumer would confuse products. Id. As the court has found, a consumer, whether child or adult, would want a Spa'am tee-shirt because he likes the Muppets, not because he mistakenly thinks that it is a SPAM tee-shirt. There is thus no likelihood that even impulse buying or hasty decision-making will result in a confused purchase decision.

Thus, all the Polaroid factors are either inapplicable or favor Henson. It follows that Hormel cannot succeed on its trademark infringement claim because it has failed to show likelihood of consumer confusion.

Hormel disagrees with this analysis. Hormel argues, in fact, that Henson's use of Spa'am is not a parody at all because Henson has not made clear that the Spa'am character is not affiliated with or approved by Hormel. Hormel points out that the parody at issue in Cliff Notes was prominently marked as a satire. This same argument was attempted by the plaintiff in Yankee Publishing, to which Judge Leval responded:

There is no requirement that a parody identify itself by a label stating, "a parody." Such a legend can, of course, be helpful in avoiding confusion. If a defendant causes too much unnecessary confusion in using another's trademark, that confusion can tip the scale of the balancing test in the plaintiff's favor. But a "parody" label is not required. 809 F. Supp. at 281.

Hormel also cites Anheuser-Busch. Inc. v. Balducci Publications, 28 F.3d 769 (8th Cir. 1994), cert. denied, 115 S. Ct. 903 (1995), in which the court found that a parody of a Michelob beer advertisement violated the Lanham Act. However, in that case, as the court pointed out, plaintiff "possessed several very strong trademarks that [defendant] displayed virtually unaltered in the ad parody." Id. at 774. Indeed, the spelling of Michelob is unchanged in the disputed advertisement, and the bottles have the shape and look of Michelob bottles. The court also pointed out that defendant "published the parody on the back cover of a magazine -- a location frequently devoted to real ads." Id. The court concluded that defendant "carefully designed the fictitious ad to appear as authentic as possible . . [and] sought to do far more than just 'conjure up' the original." Id. This is not the case here. Among the many differences are the fact that Henson does not portray fake cans of SPAM; the name of Spa'am is a clearly altered version of the original name; and the context, a Muppet motion picture and related merchandise, serves to clearly identify the name as a joke.

By its nature, a parody intends to 'conjure up' the original that is being parodied. It follows that there is inevitably the possibility that some consumers will be confused. However, when, as in this case, the trademark has been altered and placed in a context that clearly distinguishes it from the original, a Lanham Act trademark infringement claim will not succeed. Indeed, Lanham Act claims have failed in cases that raise a much greater likelihood of confusion. For example, Universal City Studios. Inc. v. Nintendo Co. Ltd., 746 F.2d 112 (2d Cir. 1984), involved a suit by the holder of the trademark "King Kong" (the court assumed arquendo that the trademark was valid) against the maker of a videogame entitled "Donkey Kong." The videogame, like the King Kong story, involved "a gorilla, a captive woman, a male rescuer and a building scenario." Id. at 117. The court upheld the district court grant of summary judgment, stating: "the fact that Donkey Kong so obviously parodies the King Kong theme strongly contributes to dispelling confusion on the part of consumers." Id. at 116; see also Jordache Enterprises v. Hogg Wyld. Ltd., 828 F.2d 1482 (lOth Cir. 1987) (rejecting Jordache's Lanham Act claim against maker of "Lardashe" blue jeans for larger women); Yankee Publishing, 809 F. Supp. 267 (rejecting Lanham Act claim concerning New York magazine cover that parodied the Old Farmer's Almanac); Universal City Studios. Inc. v. Tee-shirt Gallery Ltd., 634 F. Supp. 1468, 1477 (S.D.N.Y 1986) (refusing to issue preliminary injunction against makers of "Miami Mice" tee-shirts parodying the Miami Vice television series, in part because "[t]he strength of this parody highlights the differences between the two products and should further dispel any confusion on the part of consumers that plaintiffs manufactured, authorized sponsored, or were in any way connected with the tee-shirts."); Tetley Inc. v. Topps Chewing Gum Inc., 556 F. Supp. 785 (E.D.N.Y. 1983) (refusing to issue preliminary injunction against maker of "Petley Flea Bags" stickers that were designed to be a replica of the Tetley Tea Bags box); Girls Scouts v. Personality Posters Manufacturing Co., 304 F. Supp. 1228 (S.D.N.Y. 1969) (refusing to issue preliminary injunction against maker of poster showing obviously pregnant girl dressed in Girl Scout uniform and bearing the motto "Be Prepared").

In short, Hormel cannot use federal trademark laws to enjoin what is obviously a joke at its expense. The Tenth Circuit Court of Appeals aptly quoted Will Rogers for the following proposition:

Now everything is funny as long as it is happening to somebody Else, but when it happens to you, why it seems to lose some of its Humor, and if it keeps on happening, why the entire laughter kinder Fades out of it.

Jordache, 828 F.2d at 1486 (quoting W. Rogers, Warning to Jokers, in The Illiterate Digest, I-3 The Writings of Will Rogers 75 (1974)). The court went on to note that the same is true for trademark law:

No one likes to be the butt of a joke, not even a trademark. But the requirement of trademark law is that a likely confusion of source, sponsorship or affiliation must be proven, which is not the same thing as a "right" not to be made fun of.

Id. (quoting 2 J. McCarthy, Trademarks and Unfair Competition 31:38 at 670 (2d ed. 1984)).

B. False Advertising

Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a), bars any "false or misleading representation of fact" that "misrepresents the nature, characteristics, qualities or geographic origin of his or her or another person's goods, services or commercial activities."

Hormel claims that Henson "falsely personifies SPAM as a nasty pagan brute." (Hormel Reply Brief at 28). The only case cited by Hormel in support of this apparently novel cause of action is Coca- Cola Co. v. Tropicana Prods.. Inc., 690 F.2d 312, 318 (2d Cir. 1982). In that case, Tropicana aired a commercial that showed someone squeezing an orange and pouring the juice into a Tropicana carton. The court held that this could constitute false advertising because Tropicana orange juice is heated and sometimes frozen prior to packaging and, thus, is not produced as the commercial represented. Hormel draws the conclusion that "a false visual image of a trademark is actionable under the Lanham Act just like a false statement." While this is undoubtedly true in the context of apparently factual representations or statements, I agree with Henson that "[t]he naming and depiction of the Spa'am character is not a statement of fact, but a spoof -- the very antithesis of fact." (Henson Brief at 28.)

Hormel claims, as another example of false advertising, that Henson falsely represented that it holds valid trademark rights in the name and likeness of Spa'am -- "a mark that infringed and diluted Hormel Food's SPAM mark." (Hormel Reply Brief at 28.) This accusation is based on boilerplate on a page from an early version of a "licensing style guide" describing the Spa'am character, and on scarves that were distributed as gifts to potential licensees with a likeness of Spa'am and a "TM"/6 symbol beside the name Spa'am. Hormel's argument has as its premise that Spa'am does infringe its trademark. Because I do not accept the premise that it does infringe, Hormel's argument fails.

II. Unfair Competition and Deceptive Practices

"Under New York law, common law unfair competition claims closely resemble Lanham Act claims, except insofar as state law claims may require an additional element of bad faith or intent." Girl Scouts, 808 F. Supp. at 1131. Thus, the above analysis applies to Hormel's unfair competition claim, and the court finds no unfair competition here.

Hormel also claims that Henson has violated New York's deceptive practices statute, N.Y. Gen. Bus. Law 349, because (1) Henson's act or practice is misleading in a material respect; and (2) Hormel has been injured. (Hormel Brief at 13.) The arguments raised by Hormel in support of this claim are identical to those raised with respect to the false advertising claim, and Hormel provides no citation to any decision in which the statute has been applied to this sort of situation. I find that Henson has not been "deceptive" within the meaning of the statute.

III. Dilution

New York's anti-dilution statute provides:

Likelihood of injury to business reputation or of dilution of the distinctive quality of a mark or trade name shall be a ground for injunctive relief in cases of infringement of a mark registered or not registered or in cases of unfair competition, notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services.

N.Y. Gen. Bus. Law 368-d. Thus, unlike trademark infringement under the Lanham Act, consumer confusion is not an element of this offense. Nevertheless, as Judge Leval has noted, "w]hile dilution even without confusion, can sustain a cause of action under the New York statute, the factors are, on the whole, quite similar to those involved in a federal cause of action under the Lanham Act." Yankee Publishing, 809 F. Supp. at 282.

"In order to prevail on a section 368-d dilution claim, a plaintiff must prove, first that its trademark either is of truly distinctive quality or has acquired secondary meaning, and, second, that there is a likelihood of dilution." Deere & Co. v. MTD Prods. Inc., 41 F.3d 39, 42 (2d Cir. 1994) (internal quotation marks omitted). There is no dispute in this case that SPAM is a distinctive mark; the only question is whether Hormel can prove likelihood of dilution.

Violations of 368-d can be divided into three categories: (1) blurring, (2) tarnishment, and (3) other. In Deere, the court stated: "Traditionally this court has defined dilution under section 368-d as either the blurring of a mark's product identification or the tarnishment of the affirmative associations a mark has come to convey." Id. at 42. However, the court went on to say that "the blurring/tarnishment dichotomy does not represent the full range of uses that can dilute a mark under New York law." Id. at 44. The Deere court did not decide the parameters of this third category of dilution.

A. Blurring

"Blurring" refers to "the whittling away of an established trademark's selling power and value through its unauthorized use by others upon dissimilar products." Mead Data Central. Inc. v. Toyota Motor Sales U.S.A. Inc., 875 F.2d 1026, 1031 (2d Cir. 1989). Hormel has not cited, and the court has not found, a single decision in which a court found blurring in violation of 368-d in a parody case. This is not surprising, because, as one commentator has noted, "the use of famous marks in parodies causes no loss of distinctiveness, since the success of the use depends upon the continued association of the mark with the plaintiff." Robert C. Denicola, "Trademarks as Speech," 1982 Wis. L. Rev. 158, 188 (quoted in Yankee Pub., 809 F. Supp. at 282); see also Jordache, 828 F.2d at 1490 (quoting the district court's finding that "[b]ecause of the parody aspect of Lardashe, it is not likely that public identification of JORDACHE with the plaintiff will be eroded; indeed, parody tends to increase public identification of a plaintiff's mark with the plaintiff"). Hormel is unlikely to suffer weakening of its mark, because, as Hormel acknowledges, the joke relies on (and thus reinforces) the distinctiveness of the SPAM mark.

In Universal City Studios, the Second Circuit upheld the district court's grant of summary judgment to defendant on plaintiff's dilution claim, stating: "We find that the names and characters in dispute are so different that no reasonable question of fact was raised on the issue of blurring." 746 F.2d at 120. In that case, the names at issue were "Donkey Kong" and "King Kong," and the characters were both gorillas who had captured women and were holding them prisoner on top of buildings, although one, according to the court, was "ferocious" while the other was "farcical." Id. at 116. In this case, the names are "Spa'am" and SPAM, are quite similar, but the "characters" are a wild boar puppet and a can of luncheon meat -- significantly farther apart than two gorillas.

B. Tarnishment

"'Tarnishment' generally arises when the plaintiff's trademark is linked to products of shoddy quality, or is portrayed in an unwholesome or unsavory context." Deere, 41 F.3d at 43. Hormel does not contend that Henson's motion picture and related products are of shoddy quality, but rather maintains that its trademark will be tarnished due to negative associations stemming from Spa'am's "unsavory" likeness and behavior. Henson argues that a finding of tarnishment requires a depiction of plaintiff's mark in a context of sexual activity, obscenity, or illegality. I disagree. Although the Second Circuit Court of Appeals has stated that tarnishment is "usually" found in such contexts, id. at 44, courts have found tarnishment in other circumstances, see, e.g., Chemical Corp. v. Anheuser-Busch. Inc., 306 F.2d 433 (5th Cir. 1962) (finding unwholesome association between plaintiff's beer slogan, "Where there's life . . . there's Bud," and defendant's insecticide slogan, "Where there's life . . . there's Bugs"), cert. denied, 372 U.S. 965 (1963)./7

With respect to its claim of tarnishment, Hormel urges the court to consider the impact that association with Spa'am could have on the sales of SPAM in particular, given Spa'am's allegedly unhygienic appearance. Hormel relies on Henson's promotional statement that the boars of Treasure Island, though not Spa'am specifically, lack personal hygiene. However, I have found no evidence that Spa'am appears unhygienic in the motion picture. Hormel's allegations of lack of hygiene are insufficient to support its claim of tarnishment. See Tetley Inc., 556 F. Supp. at 794 (rejecting a tarnishment claim because "[w]hile plaintiff complains that defendant's childish humor, in choosing the rhyme word 'flea' to parody its tea, will result in images of impurity, adulteration, and contamination in the minds of its customers, it has offered absolutely no evidence to that effect.")

Hormel also argues that its trademark will tarnished by association with Spa'am as a result of the character's allegedly threatening and cowardly behavior. However, Hormel has cited no decisions, and the court has discovered none, finding tarnishment in a case involving as indirect a negative association as the one proposed by Hormel here -- that is, the association between unpleasant personality traits of a character and the quality of a food product. Even assuming that such an association could support a cause of action for tarnishment, the court has found that negative associations with Spa'am are unlikely given the character's childlike qualities and ultimately positive behavior.

Moreover, Hormel's view that its trademark is portrayed in an "unsavory context" is based on a narrow view of the context in this case, restricted to the Spa'am character and its behavior. The wider context finds the Spa'am character in a high-quality, good- humored, family-oriented motion picture. Association with such an enterprise is unlikely to tarnish Hormel's trademark. I don't believe, and Hormel has found no caselaw to suggest, that a humorous reference in such a context, suggesting little more than that SPAM is made out of pork, can constitute tarnishment.

Finally, Hormel's argument is further weakened by the evidence submitted by Henson, consisting of newspaper articles, cartoons, and excerpts from television shows, which suggest that Hormel should consider itself fortunate to be associated with a Muppet version of a wild boar -- many associations are less kind. See, e.g., supra note 1. To the extent that SPAM is popular and highly regarded by consumers as Hormel claims, that popularity exists in spite of a media barrage of highly negative humor at SPAM's expense. I find it incredible that whatever "affirmative associations" the SPAM brand has come to convey in the face of this negative humor would be tarnished by Henson's not particularly offensive joke. Indeed, in the context of parody, courts have rejected claims of tarnishment based on much more offensive jokes, directed at products that have not been the target of the sort of calumny that SPAM has suffered. See, e.g.., L.L. Bean. Inc. v. prake Publishers. Inc., 811 F.2d 26 (lst Cir.) (reversing district court finding of tarnishment in case of prurient parody of plaintiff's catalog entitled "L.L. Beam's Back-To-School-Sex- Catalog"), cert. denied, 483 U.S. 1013 (1987). Hormel has not shown that Henson's use of the Spa'am likeness or name is likely to tarnish the SPAM mark.

C. Other

In Deere, the court stated that blurring and tarnishment do not constitute the only forms of dilution prohibited by 368-d. However, the court cautioned that "we must be careful not to broaden section 368-d to prohibit all uses of a distinctive mark that the owner prefers not be made." 41 F.3d at 44. The court explicitly exempted from the reach of 368-d "[s]atirists, selling no product other than the publication that contains their expression [who] wish to parody a mark to make a point of social commentary, to entertain, or perhaps both to comment and entertain." 41 F.3d at 44 (citations omitted). Thus, the use of Spa'am in the motion picture seems safe from attack under 368-d. It is less clear that the merchandising related to the motion picture will be protected on this basis although Henson argues that the merchandise contains protected expression of its own.

The Deere court went on to consider alterations to trademarks in parodies that were being used to sell products other than the works containing the parodies themselves. Focussing on advertising spoofs, the court stated that:

[S]ome alterations have the potential to so lessen the selling power of a distinctive mark that they are appropriately proscribed by a dilution statute. Dilution of this sort is more likely to be found when the alterations are made by a competitor with both incentive to diminish the favorable attributes of the mark and an ample opportunity to promote its products in ways that make no significant alteration.

41 F.3d at 45. Hormel argues that this case falls squarely within this language because of the "competition" between Hormel and Henson in the marketing of tee-shirts and other products. I find that Hormel's reliance on Deere for the proposition that 368-d reaches the conduct at issue in this case is misplaced. In Deere, a direct competitor of John Deere's, for the sole purpose of promoting its competing lawn mower, used an altered version of John Deere's logo in a television commercial. Deere would apply to this case only if Henson had used the altered version of Hormel's trademark in comparative advertising, that is, with the intention of persuading consumers to purchase Muppet merchandise rather than SPAM merchandise. This is clearly not the case here. Henson altered Hormel's mark for entertainment purposes in a motion picture. The fact that the altered trademark may then be used on merchandise marketed in connection with the motion picture, does not bring the conduct within the third category of dilution discussed in Deere.

Thus, I find that Hormel has failed to show a likelihood of dilution. This is, by itself, fatal to Hormel's 368-d claim. However, my conclusion that the 368-d claim must be dismissed is further supported by my earlier finding that Henson acted in good faith. It follows that Henson did not have "predatory intent," that is, the intent "of either appropriating for itself the goodwill associated with the plaintiff's name and/or mark, or of capitalizing on consumer confusion between the two products." Giorgio Beverly Hills. Inc. v. Revlon Consumer Prods. Corp., 869 F. Supp. 176, 185 (S.D.N.Y. 1994). Although the New York courts have not decided whether a showing of predatory intent is required to find a violation of the anti-dilution statute, it is, at the very least, a relevant factor. Deere, 41 F.3d at 46.

CONCLUSION

For the reasons stated above, Hormel's claims are denied. I note as guidance to the parties, see supra note 2, that it follows from the reasoning of the above Opinion that the Spa'am likeness and name may be used on merchandise that clearly identifies Spa'am as a character from a Muppet motion picture, because such uses would be unlikely to cause consumer confusion or dilute Hormel's trademark.

SO ORDERED.

DATED: New York, New York

September 22, 1995

Kimba M. Wood

United States District Judge

Copies of this order have been mailed to counsel for the parties.

ENDNOTES:

FN1: Two of the dozens of examples of negative jokes involving SPAM submitted by Henson are noted below.

1) An article from the Austin American-Statesman describing "Spampers," one of the entries in Spamarama (an annual contest among cooks where the dishes must include SPAM), which "involved a mother and her 3-month old baby girl, a diaper pail and a SPAM [pate]." According to Spamarama's founder, "A lot of the judges became ill." (Def. Ex. W10, Austin American-Statesman, Mar. 30, 1995, at 61.) 2) An excerpt from the television cartoon "Duckman," in which Duckman uncovers "the secret ingredient to SPAM." What the secret ingredient may be is left to the viewer's imagination as Duckman is shown at "Murray's Incontinent Camel Farm" observing camels in diapers on a conveyor belt heading into what is, presumably, the SPAM factory. (Def. Ex. W5.)

FN2: As Henson notes, there are three issues before the court: (1) the use of Spa'am in the motion picture; (2) the use of the Spa'am likeness on merchandise; (3) the use of the Spa'am name on merchandise. With respect to the third issue, Henson has stated that it has shelved its past plans to use the Spa'am name on merchandise, pending a decision by this court as to their lawfulness. It has introduced several examples of how it would like to use the Spa'am name in the future. Hormel has objected to the court's ruling on the third issue because Henson has stated that it has no current plans to use the Spa'am name on merchandise, absent court approval. Thus, Hormel argues, if the court were to reach the issue, it would be issuing an advisory opinion in violation of the "cases or controversies" clause of the Constitution. U.S. Const. art III, 2, cl. 1. Because the alternative to opining now is to place the parties in the position of reacting hastily to last-minute decisions by Henson, I believe that the parties' interests are served by the court's considering the proffered, hypothetical plans. The court's view will, of course, be dictum.

FN3: Some consumers may associate Spa'am and/or SPAM with uncleanliness because of a common perception that pigs have bodies covered with dirt and enjoy rolling around in mud. Jeffrey Grev, Hormel's Senior Product Manager, confirms that "the general perception would be that [pigs] are not clean." (Grev. Dep. at 60.) To the extent that the public does have such a perception, Henson's portrayal of the Spa'am character does nothing to reinforce it.

FN4: I note that Henson's promotional agreements with well- known food companies, and in particular the fact that Hershey Chocolate plans to market candies in the shape of Spa'am, cast doubt on Dr. Peracchio's testimony that association with Spa'am would harm a food product in particular because consumers will see Spa'am and "[w]e are going to go 'yuck."' (Tr. at 105, 120.)

FN5: Henson argues that there can be no competition between it and Hormel because Henson's merchandise is directed primarily at children while Hormel's merchandise is intended for adults. For example, Hormel apparel is manufactured only in adult sizes. Hormel responds that it may expand into children's apparel in the future and that, in any case, children often wear oversize, adult tee-shirts. Furthermore, it is not yet clear what merchandise will be licensed in connection with Muppet Treasure Island. I do not reach this issue because, as discussed in the text, I find that, with respect to this prong of the Polaroid-test, the lack of proximity between Hormel's and Henson's primary products and the strength of each one's separate identification obviate any likelihood of confusion.

FN6: Henson states that the "TM" designation is "informal" and "non-statutory," and that Henson customarily attaches it to its characters. Henson states that it does not claim trademark rights in the name Spa'am alone based on its present use. Henson notes that such a name could theoretically become subject to protection if it achieves sufficient fame and recognition, but that this result seems unlikely given the "limited projected future use contemplated by Henson." (Pl. Ex. 48.)

FN7: I note that Hormel maintains that the SPA'AM character's conduct is both illegal and immoral in that Spa'am and his tribe capture Kermit the Frog and Rizzo Rat and tie them to stakes, and that Rizzo expresses his fear of being eaten (becoming "table scraps"). Be that as it may, negative associations resulting from the allegedly threatening behavior of the Spa'am character are discussed infra, and are found not to tarnish the SPAM mark, in part because negative associations are unlikely given Spa'am's childlike qualities and his subsequent conduct in the motion picture.

Original file name:Spa'am Legal Opinion