Nolo's Plain-English Law Dictionary

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Dilution: When a famous trademark or service mark is used in a context in which the mark's reputation for quality is tarnished or its distinction is blurred. For example, the use of the word Candyland for a pornographic site on the Internet diluted the reputation of the Candyland mark for the well-known children's game, even though the traditional basis for trademark infringement (probable customer confusion) wasn't an issue.