September 14, 2004

Trademark Dilution Law in the United States

Worldwide. For Our Clients.

Dilution in General  THE LESSENING IN VALUE OF A FAMOUS MARK • TWO TYPES  BLURRING  TARNISHMENT

Dilution in General (cont’d)  BLURRING • KODAK pianos • BUICK aspirin • TIFFANY trash cans

Dilution in General (cont’d)  TARNISHMENT

Dilution in General (cont’d)

Dilution in General (cont’d)

Development of U.S. Dilution Law  Frank Schecter (1927 law review article): “preserving uniqueness of trademarks”  Patchwork nature of state dilution laws • 36 states with dilution statutes • 1 state (Ohio) with common-law dilution

Development of U.S. Dilution Law (cont’d) • New York General Business Law § 360-l  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.

Development of U.S. Dilution Law (cont’d) • dilution by tarnishment: “injury to business reputation” •

likelihood

of dilution • courts reluctant to enforce literal terms of dilution laws  Allied Maintenance Corp. v. Allied Mechanical Trades, Inc., 42 N.Y. 2d 538 (1977): interpreted dilution statute literally • federal trademark registration preempts state dilution claims

Development of U.S. Dilution Law (cont’d)  SECTION 43(C) OF LANHAM ACT (The Federal Trademark Dilution Act [“FTDA”]) (1996) • enacted to create effective, uniform dilution law • 15 U.S.C. § 43(c)(1): “The owner of a famous mark shall be entitled . . . to an injunction against another person’s commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark . . .” • 15 U.S.C. § 45 defines dilution as “the lessening of the capacity of a famous mark to identify and distinguish goods and services . . .”

Development of U.S. Dilution Law (cont’d) • statutory fame factors (not an exclusive listing)  degree of distinctiveness  duration and extent of use  duration and extent of advertising  geographical extent of trading area  channels of trade  degree of recognition of plaintiff’s mark in defendant’s market area  third-party uses of same/similar mark  existence of a federal registration for plaintiff’s mark

Development of U.S. Dilution Law (cont’d) • remedies  injunctive relief: forward-looking  damages if willful intent  attorney fees if willful intent (exceptional cases) • defenses  fair use  noncommercial use  news reporting and commentary

Development of U.S. Dilution Law (cont’d)  COUNTERVAILING CONSIDERATIONS: THE FIRST AMENDMENT • parody and satire • noncommercial-use defense • MasterCard Int’l Inc. v. Nader, 70 U.S.P.Q. 2d 1046 (S.D.N.Y. 20004)

Supreme Court:

Moseley

v.

V Secret Catalogue, Inc.

[Plaintiff’s mark VICTORIA’S SECRET for women’s lingerie products; Defendant’s mark VICTOR’S LITTLE SECRET for adult novelty items]  ULTIMATE QUESTION PRESENTED AFTER BRIEFING: Does a dilution plaintiff need to demonstrate present economic injury?

 HOLDING: The FTDA requires proof of actual dilution.

Supreme Court:

Moseley

v.

V Secret Catalogue, Inc.

(cont’d)  WHY WAS CERT GRANTED?

• no state dilution law (Kentucky): focus only on FTDA • clean case: only dilution • no issue of fame: conceded at trial • not identical marks: so no Q of circumstantial proof

Supreme Court:

Moseley

v.

V Secret Catalogue, Inc.

(cont’d)  FULL HOLDING • need proof of actual dilution  contrast between state and federal statutes  plain statutory meaning  contrast in language of § 45  consumer surveys

Supreme Court:

Moseley

v.

V Secret Catalogue, Inc.

(cont’d) • need a

change in conception of the senior mark

 more than mental association (where marks are not identical)  must reduce the capacity of the

famous

mark (plaintiff’s mark) to identify the goods

Supreme Court in Moseley • actual loss of sales/profits need not be proven • insufficient evidence of actual dilution; remand

Supreme Court:

Moseley

v.

V Secret Catalogue, Inc.

(cont’d)  DICTA • circumstantial evidence will suffice 

i.e.

identical marks • dilution as a property right  harm to the senior user  not intended to protect consumers  not about free-riding/unjust enrichment • tarnishment “arguably” not part of § 43(c)

Open Questions Remaining / Forum-Shopping Issues  NICHE FAME: can a mark be famous in a niche market?

• the term “niche fame” really encompasses 2 distinct issues  fame in the specialized market  fame in the localized geographic area • niche fame suffices if plaintiff and defendant are in the same market • fame in niche market insufficient: need nationwide fame

Open Questions Remaining / Forum-Shopping Issues (cont’d)  ACQUIRED vs. INHERENT DISTINCTIVENESS?

• only inherently distinctive marks qualify for dilution protection • acquired distinctiveness suffices, if the mark has become famous  TARNISHMENT: part of FTDA?

 IDENTICAL MARKS: sufficient by themselves?

 TTAB: LIKELIHOOD OF DILUTION IS SUFFICIENT FOR OPPOSITION/CANCELLATION PROCEEDINGS

Proving Dilution  OPEN QUESTION AS TO THE TYPE OF PROOF NEEDED FOR DILUTION • no court has pinpointed how to prove dilution after

Moseley

 EVIDENCE OF ACTUAL DILUTION • customer complaints • consumer surveys • lost sales/profits • lost licensing revenues/weakened royalty value

Proving Dilution (cont’d)  DILUTION: EASY TO ARTICULATE, HARD TO PROVE • how to demonstrate effects of dilution?

• theory vs. practice

Trademark Dilution Law

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