President Bush signed the Trademark Dilution Revision Act ("TDRA") of 2006 on October 6, 2006. Although the new legislation appears to broaden dilution protection, making it easier for trademark holders to prevent blurring and tarnishment of famous trademarks, the TDRA simultaneously limits the dilution cause of action for trademarks used in a niche-market or business-to-business context.

The TDRA overturns the 2003 Supreme Court decision in Moseley, which interpreted the Federal Trademark Dilution Act (FTDA) to require actual dilution. The FTDA, passed in 1995, provided, "The owner of a famous mark shall be entitled…to an injunction…if such use…causes dilution of the distinctive quality of the mark." The Supreme Court held that, because the statute explicitly required that the disputed use "causes dilution," mere likelihood of dilution was insufficient. The TDRA specifically eliminates a requirement for actual dilution by extending relief to "use of a mark…that is likely to cause dilution."

The TDRA further broadens protection for trademark holders by explicitly extending relief beyond blurring to "dilution by tarnishment." The Court in Moseley found that the plaintiff failed to establish dilution because there was no evidence of blurring, or "any lessening of the capacity of the … mark to identify and distinguish [the plaintiff’s] goods or services," despite the District Court’s finding that the disputed use "‘tarnished’ the reputation of respondents’ mark." Although the Court never specifically addressed tarnishment, it intimated that the FTDA, which failed to explicitly mention tarnishment, covered only blurring. In contrast, under the TDRA, the owner of a famous trademark can establish dilution by demonstrating either blurring or tarnishment of the mark.

The combination of expressly extending dilution to tarnishment and extending the evidentiary requirements to likelihood of dilution favors trademark holders by broadening the scope of the Act’s application and easing the burden on plaintiffs to collect evidence of actual dilution. However, the benefits of the TDRA are limited to trademark holders that primarily market to the general consuming public. Like the FTDA, the TDRA limits relief to the owner of a "famous mark." The FTDA did not specifically define a "famous mark." Instead, the FTDA allowed courts to apply a balancing test and provided eight nonexclusive factors for determining whether a mark was famous, including "the channels of trade for the goods or services with which the mark is used," the "geographical extent of the trading area" and "the degree of recognition of the mark in the trading areas." While the TDRA also provides a list of nonexclusive factors for courts to use in determining whether a mark is "famous", the TDRA specifically defines a famous mark as a mark "widely recognized by the general consuming public of the United States." Further, the non-exclusive factors of the TDRA focus on determining the extent of mass, general reach of the mark, leaving out consideration of the trading areas or type of market involved. Thus, the TDRA’s definition of a famous mark, and its non-exclusive factors for determining fame, exclude two categories of trademarks that had previously received dilution protection in some courts: marks used in connection with niche markets and marks covering business-to-business products recognized in specialized trades. Indeed, the legislative history of the TDRA explicitly confirms that the Act "eliminates fame for a niche market," emphasizing the goal "to protect only the most famous trademarks" and the "hope that dilution remedy will be used in the rare circumstances and not as the alternative pleading."

Products marketed solely to a specific group of people – for example, Chicagoans, comic book collectors, or individuals whose first language is Portuguese – may be associated with trademarks widely recognized only in those narrow communities but not by the general U.S. public. Some jurisdictions, such as the Third and Seventh Circuits, have recognized such trademarks as famous for purposes of dilution under the "niche-market theory." For example, in Times Mirror Magazines, Inc. v. Las Vegas Sporting News, the Third Circuit found the mark "The Sporting News," used in connection with a weekly sports publication, sufficiently famous to enjoin use of the title, "Las Vegas Sporting News" in connection with a gambling publication, even though the trademark was only known in a specialized sporting market. The court held that "a mark not famous to the general public is nevertheless entitled to protection from dilution where both the plaintiff and defendant are operating in the same or related markets, so long as the plaintiff’s mark possesses a high degree of fame in its niche market." In contrast, under the TDRA, a trademark with a high degree of fame in its niche market, but not "widely recognized by the general consuming public of the United States" would not be famous and therefore would be ineligible for dilution protection.

Similarly, the requirement that a mark under the TDRA be "widely recognized by the general consuming public [emphasis added]" likely fails to cover industrial products sold to wholesalers or in a business-to-business context and well-known only among specialists in a particular trade. For example, the Act may overturn the Seventh Circuit’s holding in Syndicate Sales, Inc. v. Hampshire Paper Corp., which involved trade dress in connection with plastic flower baskets marketed to florists and wholesalers for use at funerals. Although the district court held that the degree of fame was insufficient for a dilution claim, the Seventh Circuit held that "the narrowness of the market in which a plaintiff's mark has fame is a factor that must be considered in the balance" and remanded to determine whether the trade dress at issue was famous within the niche market.

In conclusion, although the TDRA generally expands protection for trademark holders under dilution law, such protection is limited to trademarks used to market to the general consuming public, leaving those companies with trademarks recognized only in niche markets and those companies that engage primarily in business-to-business transactions unable to take advantage of federal dilution protection. Fortunately these trademark owners may still look to protection under state dilution laws.

If you have further questions regarding the Trademark Dilution Revision Act or require assistance protecting you intellectual property assets, please contact Ladas & Parry LLP. Ladas & Parry LLP is a leader in the field and has protected all aspects of intellectual property rights on a worldwide basis for over 90 years, including filing, maintenance, licensing, and litigation of trademarks, patents, copyrights, and domain names as well as all aspects of technology and Internet law.

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