New England Biz Law Update
If your company owns a famous trademark and wants to prevent others from using it, or one that is close to it, to establish trademark infringement you must prove a likelihood of consumer confusion between the marks.
To establish likelihood of confusion, the marks, goods and channels of trade must be considered similar.
But what if the goods of each are very different, e.g., soda vs. high-tech devices? If no likelihood of confusion exists, the trademark has not been infringed and a trademark owner cannot stop another from using its mark.
Law of dilution
How then do owners of famous trademarks protect their brands? They have always relied on the “law of dilution.”
For many years, the old Federal Trademark Dilution statute protected owners of famous marks by preventing unauthorized commercial use of a famous mark, if such use caused dilution of the distinctive quality of the famous mark.
Dilution refers to the lessening of the capacity of a famous mark to identify and distinguish goods and services. But what did this law actually mean? As it turns out, the law was unclear and raised a variety of questions as to the kind of fame required, and whether actual dilution or likelihood of dilution was needed.
Recently, the Trademark Dilution Revision Act (TDRA) was enacted to clarify how famous mark owners can prevent others from using marks that blur their distinctiveness or tarnish their reputation.
“Dilution by blurring” arises when another mark impairs the distinctiveness of the famous mark, while “dilution by tarnishment” arises when a mark or trade name harms the reputation of the famous mark.
Highlights of the TDRA include: a clarified standard for dilution; a narrower definition of famous marks to eliminate territorial niche fame; a list of factors to be considered when determining fame; and permissible fair use provisions.
Under the TDRA, likelihood of dilution is sufficient rather than actual dilution. Also, a mark is considered “famous” if it is widely recognized by the general consuming public as a designation of the source of the goods – based on such factors as the duration, extent and geographic reach of advertising and publicity of the mark, the amount of sales of goods or services offered under the mark, and the extent of actual recognition of the mark.
Meanwhile, descriptive fair use of a famous mark by another person for use other than as a designation of source of the other person’s own goods or services has been sheltered under the First Amendment.
Such fair use includes comparative advertising, identifying and parodying, criticizing or commenting upon the famous mark owner or the goods of the famous mark owner, all forms of news reporting and commentary, and any non-commercial use of a mark.
No dilution
To date, courts in the first three cases decided under the TDRA have found no dilution. Here are synopses of each case:
In the first case, Louis Vuitton, the manufacturer of luxury goods such as luggage and handbags, brought suit against a company selling dog toys and dog beds under the mark “Chewy Vuitton.”
While the court found that the LOUIS VUITTON mark was strong and famous, they concluded that use of “Chewy Vuitton” was an obvious parody of a famous brand name and would not likely cause dilution because the mark continues to be associated with the true owner.
In this case, use of “Chewy Vuitton” was not a dilution by blurring, according to the judge, because the success of the parodic use depends upon the continued association with Louis Vuitton. Dilution by tarnishment was also not found because tarnishment is unlikely when the association is made through harmless or clean puns or parodies. Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, No. 1-06-321JCC, 2006 WL 3182468 (E.D. Va.)
In the second case, Auto Zone, an owner of automobile parts retail stores, brought suit against an operator of quick-oil-change businesses under the mark OIL ZONE and a car wash under the mark WASH ZONE.
While Auto Zone asserted they “planned” to present circumstantial evidence of dilution, the court ruled the company in fact had made no attempt to show either actual or likely dilution. Auto Zone, Inc. v. Strick, No. 03-C-8152, 2006 WL 3626770 (N.D. Ill.)
In the third case, Century 21 Real Estate claimed that use of CENTURY by another blurred use of CENTURY 21.
In this case, the court determined that CENTURY 21 is not substantially similar to CENTURY. The court said the TDRA does not eliminate the requirement that consumers mentally associate a mark used by an alleged diluter with the protected mark.
Century 21, according to the court, never registered the term CENTURY alone, they prohibit franchisees from abbreviating or shortening the name CENTURY 21, and they failed to produce survey evidence to demonstrate that consumers associate CENTURY with CENTURY 21. Century 21 Real Estate LLC v. Century Surety Co., No. 03-0053, 2007 WL 433579 (D. Ariz.)
The cases interpreting the TDRA suggest that plaintiffs alleging dilution must not only establish fame, but also prove the defendant’s mark is likely to cause significant harm.
Ed Perlman and Cheryl Clarkin are members of the trademark practice group at Wolf Greenfield, a leading intellectual property law firm in Boston. You can contact them at 617.646.8000 or www.wolfgreenfield.com.
