United States: HOT RIGZ With Toy Trucks Dilutes HOT WHEELS

The U.S. Court of Appeals for the Ninth Circuit amended a decision in order to apply the new dilution standard established in the Trademark Dilution Revision Act of 2006 (TDRA) in place of the prior "actual dilution" standard arising from the 2003 Supreme Court decision, Moseley v. V. Secret Catalogue. The Ninth Circuit explained that it revisited its decision so as to adhere to its prior precedent established in Nissan Motor v. Nissan Computer, in which the Court held that application of the Federal Trademark Dilution Act (FTDA) to an alleged diluting mark that was in use before the statute's passage was not retroactive because the FTDA authorizes only prospective relief. Jada Toys v. Mattel, Inc., Case No. 05-55627 (9th Cir., Feb. 21, 2008) (Sandoval, J.).

In 2002, plaintiff Jada Toys obtained a federal trademark registration of the term HOT RIGZ for its line of toy trucks. Jada Toys used the mark on advertising material, as well as on the toys and their packaging from 2001 to 2004. Mattel, a major toy company, has marketed its HOT WHEELS brand of miniature vehicles since 1968 and has obtained many trademarks in connection with the brand. In 2004, Jada Toys brought an action against Mattel, claiming that Mattel's advertising and sale of its OLD SCHOOL and NEW SCHOOL lines of toys infringed on Jada's registered trademark OLD SKOOL. Among its various counterclaims, Mattel alleged that Jada's HOT RIGZ mark infringed and diluted Mattel's HOT WHEELS mark.

The district court dismissed both parties' claims on summary judgment. Based on the dissimilarity of the HOT RIGZ and HOT WHEELS marks alone, the district court found that no likelihood of confusion existed and dismissed Mattel's infringement counterclaims. Mattel appealed.

In its first decision in this case, the Ninth Circuit reversed the ruling of the district court, finding that the district court erred in finding no likelihood of confusion because it improperly relied on the dissimilarity of the marks alone. The Ninth Circuit stated that a finding based merely on persuasive evidence of one Sleekcraft factor does not preclude the court's need to evaluate evidence of the other factors. Because the district court neglected to evaluate the Sleekcraft factors in their entirety, the Ninth Circuit determined that a triable issue of fact existed as to whether the HOT RIGZ mark was confusingly similar to the HOT WHEELS mark, precluding the grant of summary judgment.

Approximately six months later, the Ninth Circuit issued an amended decision to replace the old "actual dilution" standard with the TDRA's new "likelihood of dilution" standard in its discussion of Mattel's dilution claim. The Ninth Circuit's first decision applied the "actual dilution" standard because the case was filed in 2004, before the TDRA became effective. In its amended decision, the Ninth Circuit adjusted its dilution analysis to recite the non-exclusive list of four factors that a court may consider under the TDRA instead of the eight factors listed in the prior federal dilution statute. The Ninth Circuit also amended its previous decision to apply the TDRA's factors for determining a likelihood of dilution by blurring or tarnishment, instead of weighing Mattel's evidence under the actual dilution standard.

Ultimately, the Ninth Circuit again reversed the district court's entry of summary judgment of Mattel's dilution claim, finding the existence of genuine issues of material fact because "a reasonable trier of fact could conclude that [Mattel's] evidence was sufficient to establish the existence of a likelihood of confusion."

Practice Note: While the current standard for proving federal dilution claims "likelihood of dilution" is relaxed in comparison with the stringent "actual dilution" standard of Moseley v. V. Secret Catalogue, trademark owners should be aware that the TDRA limits dilution claims to dilution by "blurring" or "tarnishment" and does not recognize any other type of dilution. Also, because the TDRA defines a famous mark as being "widely recognized by the general consuming public of the United States," many marks will not qualify for dilution protection that might have qualified previously. This effectively eliminates the availability of a dilution claim for marks with "niche fame," i.e., those possessing fame only within a narrow sub-community.

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