Courts not buying dilution claims by famous trademarks

An owner of a famous trademark may sue for “dilution” when an unauthorized use of the mark threatens the distinctive nature of the mark.
The underlying rationale of the dilution doctrine is that an unauthorized use can cause a gradual attenuation or whittling away of the value of a trademark. Rather than having to wait for “a death by a thousand cuts,” a trademark owner can obtain an injunction to prevent dilution of the mark.
The policy underlying traditional trademark law is to protect customers from mistake and deception. The dilution doctrine protects famous trademarks beyond that provided by the classic “likelihood of confusion” test.
Anti-dilution law, therefore, more closely resembles an absolute property right, such as patents or copyrights. Because anti-dilution law is more property-like than traditional trademark law, Congress and the courts have struggled to find the right scope of protection for famous marks.

Victoria’s Secret in court

In 1996, Congress enacted the Federal Trademark Dilution Act, or FTDA, to provide a federal claim for dilution. However, a split of authority had developed in the federal circuits as to whether the plaintiff in a dilution case had to prove an actual, present injury to its famous mark or just a likelihood of injury.
In its 2003 Victoria’s Secret decision, the Supreme Court resolved this split, holding that actual injury to the mark was required. This decision became a major factor in the move to amend the statute, which resulted in the 2006 revisions to the law.
The court in Victoria’s Secret noted that the policy of trademark law is rooted in protecting consumers as well as producers, writing, “Infringement law protects consumers from being misled by the use of infringing marks and also protects producers from unfair practices by an ‘imitating competitor.’”
The court then found these policies were absent from anti-dilution laws: “Unlike traditional infringement law, the prohibitions against trademark dilution are not the product of common-law development, and are not motivated by an interest in protecting consumers.”
The court found that the statute “unambiguously requires a showing of actual dilution, rather than a likelihood of dilution” and found further support by the definition of dilution supplied in the statute: “The term ‘dilution’ means the lessening of the capacity of a famous mark to identify and distinguish goods or services.”
Therefore, the court held that the 1996 FTDA required proof that the accused use actually “causes dilution,” not merely a “likelihood of dilution.”

Louis Vuitton in court

In response to Victoria’s Secret, Congress enacted the Trademark Dilution Revision Act, or TDRA, of 2006.
The TDRA allows injunctive relief if the unauthorized use of a famous mark “is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.”
The TDRA made a number of significant changes to the FTDA.
First and foremost, a plaintiff must merely show a “likelihood of dilution” rather than actual dilution. Second, the amended statute explicitly recognizes two types of dilution: dilution by blurring and dilution by tarnishment. Third, the amended statute defines both blurring and tarnishment, setting forth six non-exclusive factors for courts to consider in assessing the likelihood of dilution by blurring.
Despite these changes, the courts appear resistant to finding “dilution” in cases in which there is not a likelihood of confusion in the classic sense. This is especially true for dilution by blurring.
In Louis Vuitton Malletier v. Haute Diggity Dog, the 4th Circuit found neither infringement nor dilution by tarnishment or blurring.
Haute Diggity Dog sells a line of pet chew toys and beds whose names parody elegant high-end brands of products, such as perfume, cars, shoes, sparkling wine and handbags. These include Chewy Vuiton (Louis Vuitton), Chewnel No. 5 (Chanel No. 5), Furcedes (Mercedes), Jimmy Chew (Jimmy Choo), Dog Perignonn (Dom Perignon), Sniffany & Co. (Tiffany & Co.), and Dogior (Dior).
The court found that these uses were parodies of the famous marks and were not likely to cause confusion. With respect to dilution, the strength of the Louis Vuitton mark actually worked against it because the court held that “the strength of the mark makes it unlikely that a parody will dilute its distinctiveness.”
Similarly in the Charbucks case in 2008, a District Court found no dilution due to the lack of substantially similarity between “Mr. Charbucks,” a dark roast coffee, and the famous Starbucks mark. Starbucks Corp. v. Wolfe’s Borough Coffee, Inc. (S.D.N.Y. June 2, 2008).

The defendant admitted that it adopted the “Charbucks” moniker to evoke associations with the sort of dark-roasted coffee favored by Starbucks’ clientele. However, the court found that the “use of a playful dissimilar mark is not one that would be likely to dilute the Starbucks marks as unique identifiers of Starbucks’ goods and services.”

On the other hand, the 9th Circuit did find dilution by blurring when there was also a likelihood of confusion. Jada Toys, Inc. v. Mattel, Inc., (9th Cir. Feb. 21, 2008). The court found that survey evidence demonstrated consumer confusion between the alleged diluting mark, “HOT RIGZ,” and Mattel’s famous “HOT WHEELS” mark. The court found there was dilution because the “use of the HOT RIGZ mark may give the impression that Mattel either produces or allows the production of HOT RIGZ.”

While a claim of dilution by blurring may be not be successful absent confusion, dilution by tarnishment is more likely absent confusion. Dilution by tarnishment is usually found where a distinctive mark is depicted in a context of sexual activity, obscenity or illegal activity.

Five years after the Supreme Court Victoria’s Secret decision and two years after the passage of the TDRA, Victoria’s Secret finally prevailed.
In 2008, a District Court found that the use of “VICTOR’S SECRET,” for the promotion of “unwholesome, tawdry merchandise,” suggests the likelihood that the reputation and standing of the VICTORIA’S SECRET mark would be tarnished.” V Secret Catalogue, Inc. v. Moseley (W.D. Ky. May 21, 2008).

The court said that “the reputation of the famous mark would be ‘reduced’ in the eyes of consumers as ‘a wholesome identifier’ of the Victoria’s Secret brand.”

Conclusion

Congress has repeatedly attempted to strengthen the protection available to owners of famous marks by enacting and amending anti-dilution laws. The courts, however, have not been receptive to dilution claims. Presumably, the narrow interpretation of these dilution laws is due to the fact that dilution protects the property right of a mark while traditional trademark law protects consumers.

Steven M. Coyle is a partner at Cantor Colburn in Hartford, Conn., where Chad A. Dever is an associate.