United States: Dilution Revision Act: Broad Changes Make It Easier For Trademark Owners To Prove Dilution And Obtain Injunctive Relief

On October 6, 2006, President Bush signed into law the Trademark Dilution Revision Act of 2006 (TDRA). The TDRA was enacted in response to the U.S. Supreme Court’s decision in Moseley v. V Secret Catalogue, Inc., which required proof of actual dilution for dilution claims, as opposed to establishing a likelihood of dilution. The TDRA statutorily reverses this decision and makes it easier for trademark owners to prove dilution of their marks and obtain injunctive relief.

In 1995, Congress enacted the Federal Trademark Dilution Act (FTDA), amending the Trademark Act of 1946 to provide remedies for trademark dilution (i.e., the "lessening of the capacity of a famous mark to identify and distinguish goods or services"). The FTDA established eight nonexclusive factors for courts to determine whether a mark is sufficiently "distinctive and famous" to qualify for protection.

Following enactment of the FTDA, courts were split on the issue of, as the Supreme Court described it, whether the FTDA required "objective proof of actual injury to the economic value of a famous mark (as opposed to a presumption of harm arising from a subjective ‘likelihood of dilution’ standard) . . . ." Resolving the differing views, the Supreme Court concluded that a trademark holder must show actual dilution.

The Supreme Court, however, did not decide which types of dilution were sustainable under the FTDA. Specifically, noting that the FTDA embraces claims for "blurring" (i.e., linking the senior mark holder with the junior, thereby injuring the business reputation of the senior holder), the Supreme Court questioned whether the FTDA permits claims for tarnishment (i.e., associating the senior mark holder with the goods or services of the junior holder, thereby diluting the distinctiveness of the mark).

Responding to the Supreme Court’s decision, the TDRA amends the FTDA to make it clear that proof of actual dilution is no longer necessary. A trademark holder may rely on a likelihood of dilution. Additionally, the TDRA provides that a dilution claim may be based upon either blurring or tarnishment.

The TDRA also amends the FTDA in other ways unrelated to the Supreme Court’s decision in Moseley. For instance, of the eight nonexclusive factors, the TDRA eliminates those relating to distinctiveness and substantially revises those relating to fame. Accordingly, the FTDA now provides four nonexclusive factors for courts to consider in determining whether a mark is sufficiently "widely recognized by the general consuming public" so as to warrant protection, including: (1) duration, extent, and geographic reach of advertising and publicity of the mark; (2) amount, volume, and geographic extent of sales of goods or services offered under the mark; (3) extent of actual recognition of the mark; and (4) whether the mark is registered.

While maintaining the specific exceptions to dilution claims for news reporting and commentary and noncommercial use, the TDRA also revises the exception for "fair use" of another’s mark. The TDRA makes clear that "any" fair use — or "facilitation" of such fair uses — will not constitute dilution. Further, the TDRA not only expressly permits comparative advertising, but also allows for "identifying and parodying, criticizing, or commenting" upon the famous mark holder or the related goods or services.

With regard to relief, the TDRA also expounds on the circumstances in which damages and other statutory trademark remedies (beyond injunctive relief) will be available. Specifically, the TDRA makes clear that such remedies will be available where (1) the junior mark was first used in commerce after the date of the TDRA, and (2) the junior mark holder intended to trade on the recognition of the famous mark (i.e., blurring) or to harm the reputation of the famous mark (i.e., tarnishment).

The TDRA has reopened the door to claims of trademark dilution where dilution is likely, but may not have actually occurred. Because of the new subjective standard, the TDRA makes it easier for senior mark holders to prove dilution and obtain injunctive relief, and more difficult for junior mark holders to assert defenses such as anticompetitive use by the senior holder.

The broad changes of the new legislation are likely to reopen many previously-settled issues, including how famous a mark must be to qualify for protection. For instance, because of the revised definition of "fame," it is not clear whether the TDRA will provide dilution protection for marks having only limited fame, or fame in specific niche markets.

The real challenge may be establishing the quantum and sufficiency of proof of the likelihood of the claimed dilution. For example, it now may be necessary to craft a survey that measures a likelihood of dilution as well as the fame of the mark, both of which may present many challenges, and may call for credible expert reports not previously needed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.