French luxury fashion house Louis Vuitton Malletier, SA recently filed suit against Warner Bros. Entertainment Inc., accusing the film studio of deliberately using a counterfeit Louis Vuitton handbag in a scene from the 2011 crass comedy hit The Hangover: Part II. See Louis Vuitton Malletier, S.A. v. Warner Bros. Entm’t Inc., No. 1:11-CV-09436 (SDNY Dec. 22, 2011). In asserting claims of trademark dilution, false designation of origin, and unfair competition, Louis Vuitton asserts that Warner Bros. ignored its clear instructions not to use the knock-off handbag in an airport scene that takes place early in the film. Louis Vuitton is seeking a permanent injunction preventing Warner Bros. from using its marks in any way and ordering the studio to surrender all copies of the film containing the marks. It is also requesting that the court award treble damages on all profits that Warner Bros. has made by using Louis Vuitton’s marks, as well as attorneys’ fees and court costs.

During the scene at issue, a character named “Alan” (eccentrically played by Zach Galifianakis) is seen carrying a handbag bearing the logo “LVM” through the Los Angeles airport and, when another character later attempts to move the bag out of an otherwise unoccupied bench seat, warns “Careful that is . . . that is a Louis Vuitton,” mispronouncing the brand name as “Lewis.” According to the complaint, the bag is actually a counterfeit manufactured by a Chinese-American company named Diophy, which is currently embroiled in another lawsuit filed by Louis Vuitton. In that case, Louis Vuitton is hoping to persuade the International Trade Commission to ban Diophy’s knock-offs from the United States.

Louis Vuitton claims that Alan’s “Careful, that’s a Louis Vuitton” line has become a pop-culture catchphrase and has created “well documented” consumer confusion by characterizing the knock-off as a genuine Louis Vuitton handbag. It supports this assertion by excerpting various Internet discussions and blog postings regarding the “Louis Vuitton bag” used by “Alan.” In “explicitly misleading the public about the source of the Diophy Bag,” Warner Bros. has undermined Louis Vuitton’s enforcement efforts against counterfeiting, the suit claims. According to the complaint, Warner Bros. ignored objections by Louis Vuitton shortly after the film’s opening and proceeded to release the film on DVD without digitally altering the offending footage.

There is precedent for Louis Vuitton’s assertion that such a digital alteration would be feasible. In another lawsuit brought against Warner Bros. over the alleged violation of intellectual property rights in The Hangover: Part II , the owner of a registered copyright in the tattoo adorning the face of former heavyweight champion boxer Mike Tyson sued the studio over its use of a replica of the tattoo on the face of a character named “Stu.” Whitmill v. Warner Bros. Entertainment, Inc., No. 11-CV-752 (ED Mo. 2011). Although Warner Bros. settled the suit in June, it had stated in a court filing that if settlement negotiations were to fail, it would digitally alter the tattoo in the DVD version of the film so as not to infringe on the plaintiff’s copyright.

This case illustrates the potential risks that studios face in making use of trademarks owned by others, even if for comedic purposes. Studios are therefore advised to have appropriate legal counsel review potentially troublesome scenes prior to a film’s release.

Arent Fox is continuing to monitor this case.