Dilution occurs when someone uses a famous mark in a manner that blurs or tarnishes the mark. In other words, dilution diminishes the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of:
- competition between the owner of the famous mark and other parties, or
- likelihood of confusion, mistake, or deception (15 United States Code, Section 1527).
Dilution is therefore different from trademark infringement, because trademark infringement always involves a probability of customer confusion, whereas dilution can occur even if customers wouldn’t be misled. For example, if a person sells sex aids named “Microsoft,” no consumer is likely to associate Fred’s products with the software company, Microsoft. However, because Microsoft has become such a strong and famous mark, the use of the word on sex aids would definitely trivialize the software company’s mark (dilute its strength by tarnishing its reputation for quality or blurring its distinctiveness).
Until the Federal Trademark Dilution Act was enacted in 1996, (15 United States Code, Section1125(c)), there was no federal law prohibiting trademark dilution and only about half the states provided some recourse—usually an injunction against further use of the mark. As with the state statutes, the federal law applies only to famous marks and provides primarily for injunctive relief (a court order requiring the infringing party to stop using the mark). However, if the famous mark’s owner can prove the infringer “willfully intended to trade on the owner’s reputation or to cause dilution of the famous mark,” the court has discretion to award the owner attorneys’ fees and defendant’s profits as well as actual damages.
In March 2003, in a case involving Victoria’s Secret, the Supreme Court confirmed what many practitioners already knew: that the federal dilution law (unlike traditional trademark law) was not intended to protect consumers but rather to protect famous trademarks. The Supreme Court determined that in order to prevail on a federal dilution claim, the owner of a famous mark must demonstrate actual dilution has occurred, not the likelihood of dilution. In other words, dilution can only be proven by evidence of actual harm to the famous mark—for example, survey evidence or other direct proof that shows that consumers perceive the famous mark less favorably. (Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003).)
Unfortunately, the Supreme Court did not provide much guidance on the type or amount of proof required to prove dilution. Since Moseley was decided, the owners of famous marks bringing dilution claims have had the best results when seeking to prevent dilution of an identical mark. In Savin Corp. v. The Savin Group, 391 F.3d 439 (2d Cir. 2004), the U.S. District Court of Appeals ruled that when the marks are identical, not merely similar, no further proof is required. Still, the issue of proof remains unresolved. In one case, for example, a district court rejected expert witness testimony based on assumptions and hypothetical consumers. (Monster Cable Products, Inc. v. Discovery Communications Inc., 2004 WL 2445348 (N.D. Cal. 2004).)
The Trademark Dilution Revision Act. Much of this turmoil was resolved in 2006, when Congress enacted the Trademark Dilution Revision Act (TDRA). That revised the Lanham Act by eliminating the need to demonstrate actual or likely confusion, competition, or actual economic injury when the owner of a famous mark seeks an injunction to stop dilution by blurring or tarnishment. Still some confusion remains as to the standards required to prove blurring and tarnishment.
EXAMPLE: In a 2010 case, the Second Circuit determined that the term “Charbucks” does not tarnish the reputation of the Starbucks mark merely based on the evidence of an association and a negative connotation. Charbucks could blur the Starbucks mark but the district court’s requirement of substantial similarity was not appropriate—all that was required was a measurement of the degree of similarity. Starbucks Corp v. Wolf’s Borough Coffee, Inc. 588 F.3d 97 (2d. Cir. 2009).
The revision defined a mark as being “famous” if it is widely recognized by the general consuming public as a designation of the source of the goods or services of the mark’s owner, and it allows the court to consider all relevant factors when determining whether a mark is famous, including: (1) the duration, extent, and geographic reach of advertising and publicity of the mark; (2) the amount, volume, and geographic extent of sales of goods or services offered under the mark; (3) the extent of actual recognition of the mark; and (4) whether the mark was registered on the principal register.
The revision defined “dilution by blurring” as an association arising from the similarity between a famous mark and a similar mark or trade name that impairs the distinctiveness of the famous mark, and allows the court to consider all relevant factors when determining whether a mark or trade name is likely to cause dilution by blurring, including: (1) the degree of similarity; (2) the degree of inherent or acquired distinctiveness of the famous mark; (3) the extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark; (4) the degree of recognition of the famous mark; (5) whether the user of the mark or trade name intended to create an association with the famous mark; and (6) any actual association between the mark or trade name and the famous mark. “Tarnishment” was defined as an association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.
The TDRA also declared that certain acts are not actionable as dilution by blurring or tarnishment, including: (1) any fair use of a famous mark by another person other than as a designation of source for the person’s own goods or services, including for advertising or promotion that permits consumers to compare goods or services, or identifying and parodying, criticizing, or commenting upon the famous mark owner or the owner’s goods or services; (2) all forms of news reporting and news commentary; and (3) any noncommercial use of a mark.
And finally, the TDRA allows the owner of a famous mark to seek additional remedies in an action if the person against whom the injunction is sought:
- first used the mark or trade name in commerce after the date of enactment of this act;
- willfully intended to trade on the recognition of the famous mark; or
- willfully intended to harm the reputation of the famous mark.
Ownership of a valid registration is a complete bar to an action under state common law or statute that seeks to prevent dilution by blurring or tarnishment, or that asserts any claim of actual or likely damage or harm to the distinctiveness or reputation of a mark, label, or form of advertisement.
In the first appellate case heard under the TDRA, the Fourth Circuit Court of Appeals held that the Louis Vuitton trademark was not diluted by the use of the term “Chewy Vuitton” for a pet chew toy that was “evocative” of a Louis Vuitton bag. The defendant produced a line of chew toys that parodied famous designers such as “Furcedes” (parodying Mercedes) and “Chewnel No. 5 (Chanel No. 5). The court determined that Chewy Vuitton was a parody and that a successful parody would not dilute the famous brand but in fact may make it even more famous. (Louis Vuitton v. Haute Diggity Dog, 507 F.3d 252 (4th Cir 2007)).
While it is still possible to sue for dilution under a state statute, most actions to stop dilution are now brought under the new federal law. One exception to this is when use of the famous mark also tarnishes its reputation. For example, in the Microsoft sex aid example, the association of “Microsoft” with sex aids may fairly be said to detract from the dignity of the Microsoft mark (there is little room for humor in the commercial world). Under state statutes, an action may be brought for tarnishment as well as dilution, whereas the federal act does not speak to tarnishment at all, although many observers believe that the courts will interpret the statute to include it as a basis for relief.
Learn more about Trademark Law.