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This information is taken directly from the court opinion. It is not taken out of context nor is it altered.
From Smith v Wal-Mart Stores, 537 F.Supp.2d 1302 (ND GA 2008):

Because Smith's arguments with regard to the Safeway factors depend heavily on whether his designs are successful parodies, the Court must first consider whether the contested designs are in fact parodies of Wal-Mart's registered marks. See Dr. Seuss Enters. v. Penguin Books USA, Inc., 109 F.3d 1394, 1405 (9th Cir.1997) (noting that the claim that a secondary use is a parody is not a separate defense to a charge of trademark infringement but is instead is considered within the likelihood of confusion analysis); see also Connick v. Myers, 461 U.S. 138, 148 n. 7, 103 S.Ct. 1684, 75 L.Ed.2d 708 (1983) ("The inquiry into the protected status of speech is one of law, not fact."). For the purposes of trademark analysis, "a parody is defined as a simple form of entertainment conveyed by juxtaposing the irreverent representation of the trademark with the idealized image created by the mark's owner." Louis Vuitton Malletier v. Haute Diggity Dog, LLC, 507 F.3d 252, 260 (4th Cir.2007). To be considered successful, the alleged parody must both call to mind and differentiate itself from the original, and it must "communicate some articulable element of satire, ridicule, joking or amusement." Id.

When applying these criteria to the facts of the case, it is clear that Smith's concepts are parodies of the registered Wal-Mart marks. Smith successfully calls Wal-Mart to mind by using either "WAL" or "MART" as part of the concept; by mimicking its fonts and storefront design; by mentioning Bentonville, the location of Wal-Mart's headquarters; or by including various other icons typically associated with Wal-Mart. As Wal-Mart fervently contends, it is obvious that Smith's concepts use Wal-Mart imagery to evoke the company in the mind of his viewers.

It is equally obvious that Smith's concepts are not the "idealized image" of the registered Wal-Mart marks. "Walocaust," "Wal-Qaeda" and "Freedom-Hater-Mart" are not "Wal-Mart." The imagery on Smith's t-shirts includes portraits of Mao Zedong, a United States map with the word "DECEASED" stamped over it, and the slogan "FREEDOM HATERS ALWAYS."

Finally, the juxtaposition of the similar and dissimilar -- the satirical representation and the idealized image of Wal-Mart 1317 -- conveys a scathing parody. In the "smiley eagle" Walocaust concept, the reference to the Holocaust and the image of the Nazi eagle clutching a smiley face at once portrays and contradicts the benign image that Wal-Mart portrays to the community. In the "SUPPORT OUR TROOPS" Wal-Qaeda concept, Smith transforms all-American "Wal-Mart" into the terrorist group "Wal-Qaeda" and satirically urges the viewer to support Wal-Qaeda's troops, apparently commenting both on what Smith considers to be Wal-Mart's ruthless business tactics and its detrimental impact on the United States. Other concepts juxtapose Wal-Mart's reputation for low prices with a reference to poor store security and the company's family values imagery with the fact that it offers for sale inexpensive alcohol, tobacco and firearms -- products known better for destroying families.

The Court thus concludes that Smith's concepts adequately evoke Wal-Mart while maintaining their differentiation, and they convey Smith's satirical commentary; thus, they are successful parodies. See Louis Vuitton, 507 F.3d at 261

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