On Friday, October 6, 2006, President George W. Bush signed into law the Trademark Dilution Revision Act of 2006 (the Act), a bill passed by Congress amending section (c) of the Lanham Act in order to reverse the Supreme Court’s decision in Moseley vs. Secret Catalogue Inc., 537 U.S. 418 (2003), relating to the Federal Trademark Dilution Act (FTDA), which introduced the concept of dilution into federal trademark law. In Moseley, the Court held that an adult novelties store called Victor’s Little Secret did not dilute the VICTORIA’S SECRET trademark in violation of the FTDA because that law requires a trademark owner to prove actual dilution, rather than a likelihood of dilution. Under this heightened standard of evidence established by the Court in Moseley, famous mark owners complained that proving actual dilution was nearly impossible until irreversible damage was done to their famous mark. Owners of famous marks, whose marks have been victims of dilution, argued that dilution occurs gradually, with each attempt by another commercial user to harnesses the famous trademark’s broad recognition for his own commercial products. Thus, the mark owners argued, infringing commercial users peel away the layers of a famous mark’s distinctiveness layer by layer.
The House of Representatives subcommittee that convened to discuss the Act referred to the diminution of a famous trademark as "death by a thousand cuts." Thus, the standard that was set by the Court in Moseley undercut the effectiveness of the FTDA to protect famous marks from dilution. For each single use of the mark by a user other than the rightful owner of the famous mark, the harm, although present, usually is imperceptible, making it impossible to prove actual damage. Nonetheless, the cumulative effect of exploiting a famous mark’s popularity over time utterly destroys the value of the mark.
Aside from adopting a likelihood of dilution (rather than an actual dilution) standard, the Act purports to resolve the many splits in interpretation of the FTDA that exist in regional circuit court rulings. In remarks on the House floor, Congressman Lamar S. Smith, a Republican who represents Texas’ 21st district) said, "H.R. 683 clarifies a muddied legal landscape and enables the Federal Trademark Dilution Act to operate as Congress intended." The Act’s revisions include:
Clarification of what constitutes a famous mark qualifying for protection under the Act: "A mark is famous if it is widely recognized by the general consuming public of the United States as a designation of source of the goods or service of the mark’s owner."
Resolution of a question that was raised but unanswered in Moseley, namely whether tarnishment is a form of dilution prohibited by federal trademark dilution law. The Act states that dilution can occur by blurring or tarnishment. Dilution by blurring is defined in the Act as "association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark." In contrast, tarnishment is defined as "association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark." Both are now actionable as dilution under federal trademark law as revised by the Act.
Clarification of the protection against dilution available for unregistered trade dress claimed to be famous. In particular, the owner must prove that "the claimed trade dress, taken as a whole, is not functional and is famous" and "if the claimed trade dress includes any mark or marks registered on the principal register, the unregistered matter, taken as a whole, is famous separate and apart from any fame of such registered marks."
The Act also sets out a list of factors for the Court to consider in determining whether a famous mark’s distinctiveness is likely to be diluted by blurring, including "[t]he degree of inherent or acquired distinctiveness of the famous mark," "[t]he degree of similarity between the mark or trade name and the famous mark," "[w]hether the user of the mark or trade name intended to create an association with the famous mark" and "[a]ny actual association between the mark or trade name and the famous mark."
Practice Note: Under the new regime, holders of famous marks can proceed with more certainty both when initiating a lawsuit and when adopting a mark. The new clarity on issues that split the circuit courts should eliminate forum shopping and help decrease unnecessary, costly lawsuits. Third parties adopting new marks are well advised to be mindful of any association that might be made between their mark and a famous mark, particularly if they are intentionally seeking to create an association with the famous mark.
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