What is Trademark Dilution?

You might see the term "trademark dilution" in the news about a lawsuit involving a famous brand such as Barbie or Louis Vuitton. Companies with famous trademarks often tack on the concept of dilution to their list of reasons for suing another business that's using a brand name similar to their own.

But how do you dilute a trademark and why's trademark dilution usually associated with famous brands?

Elements of Trademark Dilution

Trademark dilution happens when someone uses a famous trademark or a mark similar to the famous trademark in a way that harms or weakens the trademark. There are two types of trademark dilution:

• dilution by blurring, and
• dilution by tarnishment.

To prove trademark dilution, you have to:

• prove that your mark is famous, and
• show that your mark has been blurred or tarnished (or both) by someone else's use of your mark or a similar mark.

Proving a Trademark Is Famous

A famous trademark is one that's widely recognized by the general public to be a source of particular goods or services. Think Disney for amusement parks, Apple for computers, and FedEx for package delivery. But there are less obvious trademarks that can be considered famous.

To determine whether a mark is famous, a court will consider four factors:

• how much, for how long, and how far and wide the mark was advertised and publicized
• how much, for how long, and how far and wide sales of goods or services were offered under the mark
• how much people actually recognize the mark, and
• whether the mark was registered on the principal register.

(15 U.S.C. §1125(c) (2023).)

If a trademark is famous and someone else has used it or something close to it, then the famous mark's owner can sue for trademark dilution by blurring and trademark dilution by tarnishment.

Trademark Dilution by Blurring

"Blurring" is when the use of a similar or identical trademark impairs (or diminishes) the distinctiveness of the famous mark. To be protected as a trademark, a mark must be distinctive—that is, it must uniquely identify a particular set of goods or services.

When another's use of a famous mark (or a similar mark) hurts the famous mark's ability to identify and distinguish its associated goods and services, that mark is at risk of losing its trademark protections. So, trademark owners want (and need) to protect the distinctiveness of their trademark against dilution by blurring.

Why Famous Marks Need Protection from Dilution by Blurring

Dilution by blurring is reserved for famous marks because people are more likely to copy or imitate them than they are other trademarks. While one person or company copying a trademark might not seem notable, these unauthorized uses can pile up and meaningfully weaken the trademark.

Additionally, famous marks tend to be associated with a wide range of goods or services. So it's important that consumers know which products and services are under a particular brand and which aren't. If consumers don't know which brands produce which goods and services, then the purpose behind a trademark—its ability to uniquely identify a source of goods and services—becomes meaningless.

For example, the Amazon brand is associated with a variety of products and services, including home security, advertising, furniture, and computer games. Now suppose Rodney started selling baby food under the Amazon logo. Seeing the Amazon logo and knowing the Amazon brand is associated with various products, you might not think twice about this baby food being an Amazon product. You might even buy the product because you think Amazon manufactures it and you trust Amazon as a brand. In this case, Rodney is benefiting from Amazon's goodwill, and Amazon's unique identifier is being diluted because it's being associated with non-Amazon products.

Dilution by Blurring Factors

When determining whether a trademark is likely to cause dilution by blurring, a court will consider six factors:

• how similar the mark is to the famous mark
• how distinctive the famous mark is
• how much the owner of the famous mark is exclusively using the mark
• how much people recognize the famous mark
• whether the user of the mark meant to create a connection to the famous mark, and
• any actual association between the mark and the famous mark.

(15 U.S.C. §1125(c) (2023).)

For example, suppose Barney Rubble sells shampoo, and he places a label that has an almost exact copy of the Starbucks logo on each shampoo container. Barney doesn't have Starbucks's permission to use their logo. By using the Starbucks look-alike logo on non-Starbucks products, a court could find that Barney's use impairs the distinctiveness of the Starbucks logo. Considering the factors, Barney used an almost exact copy (first factor) of a very unique (second factor) and identifiable mark (fourth factor). Moreover, a court could say that Barney's use of the Starbucks logo could make it more difficult for consumers to know which products are under the Starbucks brand.

Trademark Dilution by Tarnishment

Tarnishment is generally simpler than blurring. Blurring involves the distinctiveness of a mark—a complex concept—and its distinctiveness exists on a spectrum. Unsurprisingly, the courts weigh multiple factors to decide whether a mark's ability to identify and distinguish its goods or services has been affected. In contrast, tarnishment is much more direct.

"Tarnishment" is when the use of a similar or identical trademark harms the reputation of the famous mark. Tarnishment usually happens when someone links the famous trademark to poor-quality products or services or depicts the mark or its owner in a scandalous or unflattering way.

For example, suppose Wilma Flintstone sells shirts with offensive words and images under the Gerber logo. Gerber could likely argue that Wilma's offensive shirts harm their brand's family-friendly reputation.

Trademark Dilution vs. Trademark Infringement

You might be familiar with trademark infringement. Infringement happens when someone uses a mark that's similar to yours in a way that's likely to cause confusion amongst consumers as to the source of the goods or services.

For example, suppose you sell shoes under the name "Nikei." Because your brand name is so similar to the Nike trademark, the law would say that customers would probably confuse your product with Nike shoes and they'd be unable to tell if your shoes are associated with Nike.

Larger companies will often sue for trademark infringement and dilution together. While both claims involve the unauthorized use of a similar or identical trademark and can apply to many of the same situations, there are important differences between infringement and dilution.

Trademark dilution requires the mark to be famous. Only owners of famous marks can sue for trademark dilution, whereas any owner can sue for trademark infringement.

Trademark infringement requires a likelihood of confusion. If you want to sue for trademark infringement, then you have to prove that consumers will likely confuse the other mark with yours. With dilution, you don't have to prove any actual or likely consumer confusion.

Trademark infringement usually involves marks that are associated with related goods or services. Normally, you only infringe on another person's trademark if:

• the marks themselves are similar, and
• the marks are associated with related goods or services.

For example, suppose you sell car tires under the name "Taco Bell." In that case, you probably wouldn't infringe on the Taco Bell trademark because consumers wouldn't think that the restaurant Taco Bell would sell car tires. But you still could be diluting the Taco Bell trademark by using the name at all.

The Trademark Dilution Revision Act

Until the Federal Trademark Dilution Act (FTDA) was enacted in 1996, there was no federal law prohibiting trademark dilution. (Pub. L. 104-98.) At that time, only about half the states provided some relief against dilution—usually an injunction (a court order) against further use of the mark.

As is the case with many new laws, there were confusion and disagreement among the courts about how to apply the law. For example, the courts disagreed about how much proof was required to prove dilution, including whether proof of actual dilution and actual harm was needed.

Much of this turmoil was resolved in 2006 when Congress passed the Trademark Dilution Revision Act (TDRA). (Pub. L. 109-312.) That Act amended the Lanham Act—the primary federal law governing trademarks—and largely replaced the FTDA. (15 U.S.C. §§ 1051 and following.)

Clarification on the Burden of Proof for Dilution

The TDRA cleared up the confusion over what an owner needed to prove to obtain an injunction to stop dilution by blurring or tarnishment. Specifically, the TDRA eliminated the need for the owner of the famous mark to demonstrate:

• actual or likely confusion
• competition, or
• actual economic harm.

When Dilution Can't Be Claimed

The TDRA also says that certain acts aren't don't count as dilution by blurring or tarnishment. In other words, there are specific cases where you can't sue for dilution, including each of the following situations. (15 U.S.C. §§ 1125(c) (2023).)

Fair use. The owner of a famous mark can't argue there's been trademark dilution when someone else uses their mark for:

• advertising or promotion that lets consumers compare goods or services, or
• identifying and parodying, criticizing, or commenting upon the famous mark owner or their goods or services.

These types of uses are protected under trademark law's fair use doctrine.

News reporting and commentary. All forms of news reporting and news commentary aren't considered dilution. For example, if a news reporter says in their environmental report that BP's oil spill has harmed the ecosystem, then BP can't sue them for dilution. The reporter is just relaying news and commentary about the BP brand.

Noncommercial use. Any use of a mark that's not for the purpose of making money doesn't qualify as dilution. For instance, a research paper about the negative health effects of the Paleo diet would probably be safe from a dilution lawsuit.

Example: In the first appellate case under the TDRA, the Fourth Circuit Court of Appeals said that the Louis Vuitton trademark wasn't diluted by the use of the term "Chewy Vuitton" for a pet chew toy that was "evocative" of a Louis Vuitton bag. The defendant showed the court 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 wouldn't dilute the famous brand. It said a successful parody could actually make the brand even more famous. (Louis Vuitton v. Haute Diggity Dog, 507 F.3d 252 (2007).)

Damages and Other Remedies for Dilution

The TDRA offers the owners of famous marks money damages—such as the defendant's profits and the plaintiff's costs and attorneys' fees—in addition to an injunction in certain cases. An owner of a famous mark can be awarded money damages and an injunction as long as the TDRA was in effect when the person unlawfully used the mark.

In addition to using the mark after the TDRA took effect, the person who unlawfully used the mark either had to have:

• willfully intended to trade on the recognition of the famous mark, or
• willfully intended to harm the reputation of the famous mark.

If a court finds that the person (or business) unlawfully used the mark to take advantage of the name recognition of the famous mark or to harm the reputation of the famous mark, then the court could order them to stop using the mark and to pay money damages to the famous mark's owner.

Consulting a Trademark Attorney

Being sued for trademark dilution can be a scary prospect. Big companies are eager to protect their brands, and they have the resources to enforce their rights.

If you're considering using a name or logo for your business that's similar to a famous brand, you should talk to a trademark attorney before you start investing resources into developing your brand. A short conversation with a lawyer now can save you lots of time and money down the road.

If you've gotten a cease-and-desist letter from a company, you should consider reaching out to an attorney. If you plan to stop using the company's trademark and don't want to fight over it, you might be able to handle the matter on your own. But if you want to discuss your options or aren't familiar with intellectual property rights, talking to a trademark lawyer can be helpful. An attorney can advise you on whether to fight the company and help you draft a response to the company's demand letter.