This March, we reported on a California federal court’s dismissal of Lions Gate Entertainment Inc.’s (“Lions Gate”) trademark and unfair competition claims against TD Ameritrade Holding Corporation, a number of its subsidiaries (“TD”) and ad agency Havas Worldwide New York, Inc. (“Havas”) in connection with the Defendants’ “Dirty Dancing”-themed ad campaign. This Monday, the Court reversed course in part, reinstating Lions Gate’s cause of action for trademark dilution.

How can sellers and ad agencies avoid legal surprises related to third-party content?

“Dirty Dancing” Ad Campaign

In 2014, TD hired Havas to create a national online, TV and print ad campaign inspired by Dirty Dancing’s famous “nobody puts baby in a corner” quote and final dance scene. The campaign stated that “nobody puts your old 401k in a corner” and encouraged consumers to enroll in TD’s IRA plans.

Some of the TD ads played the song, “(I’ve Had) the Time of My Life” (which also played during the final dance scene in Dirty Dancing) and featured a man lifting a piggy bank over his head after the piggy bank ran into the man’s arms.

Lawsuit and Partial Dismissal

After Lions Gate sued TD and Havas in the U.S. District Court for the Central District of California (Case No. 2:15-cv-05024-DDP-E), the Defendants filed a motion to dismiss Lions Gate’s action.

On March 14, 2016, among other things, the Court dismissed Lions Gate’s trademark dilution cause of action, finding that Lions Gate had failed to state a claim upon which relief could be granted. Specifically, quoting the Ninth Circuit Court of Appeals’ decision in Jada Toys, Inc. v. Mattel, Inc., the Court found that Lions Gate did not allege that TD and Havas used “a mark that is identical or nearly so to the plaintiff’s mark.”

Court Reverses Course on Lions Gate’s Trademark Dilution Claims

On August 1, 2016, in an order granting Lions Gate’s motion for reconsideration, the Court “clarified” that subsequent Ninth Circuit caselaw had eliminated the “identical or nearly identical” requirement articulated in Jada Toys. As such, “in light of the fuller briefing submitted,” the Court revised its prior order, finding that Lions Gate had alleged sufficient facts of trademark dilution to survive the Defendants’ motion to dismiss.

As the above-referenced case demonstrates, creative decisions made by a seller or its ad agency related to third-party content can proved fatal to an ad campaign. To minimize the risk of similar legal surprises, campaign scripts and footage should be carefully vetted as early as possible in the creative process by an experienced intellectual property attorney to ensure that third-party brands and creative content, both visual and spoken, are properly cleared.