Wednesday, March 16, 2005

First impressions of the Trademark Dilution Revision Act (H.R. 683)

Big news for the world of trademark! New legislation is what we do here on the Induce Blog and trademark is fair game. Read on...

In Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 123 S.Ct. 1115 (2003) [PDF] the US Supreme Court dealt a serious blow to the usefulness of the trademark dilution statute in Section 43(c) of the Lanham Act. Typically, dilution claims are used in cases in which a consumer is not truly confused by a trademark's source signification, but they do associate a famous senior mark and a junior mark in their mind. This is a problem because it leads to the dilution of the distinctiveness of the famous mark through tarnishment (if the association harms the reputation of the famous mark somehow) or blurring (if the association impairs the distinctiveness of the famous mark).

The facts of the Moseley case are basically that the defendant opened up a sex toy shop called "Victor's Little Secret" (at first it was named "Victor's Secret," but was changed in response to Victoria's Secret complaints). Victoria's Secret eventually sued claiming the tarnishment variety of trademark dilution - they did not want their mark being associated with a novelty sex shop. The Supreme Court accepted the case in order to clear up a circuit split on the issue of what degree of proof was necessary in order to show dilution - was actual proof needed, or was likelihood of dilution enough? The Supreme Court went with an actual proof of dilution requirement, despite the apparent difficulty of producing such proof. Some commentators considered the entire dilution cause of action had been made irrelevant by the decision - it's use was certainly greatly limited.

As could be expected, owners of famous marks (the only trademarks that may take advantage of the anti-dilution statute) were very unhappy. They went to Congress to overturn the ruling and they appear to be on the verge of success via the Trademark Dilution Revision Act of 2005 (H.R. 683). The TDRA completely overturns the Moseley opinion and fixes up some lingering issues in the circuits. It is also noteworthy that it specifically protects First Amendment rights while broadening trademark protection for famous marks.

Here, I'll just go through a few of the obvious changes the TDRA makes to Section 43 of the Lanham Act, these are my first impressions upon reading it:

(1) Establishing a lower burden of proof on the plaintiff-owner of a famous mark by using a "likely to cause dilution" standard as opposed to an "actual dilution" standard. In Section 2(1)(c)(1) the TDRA would allow for injunctive relief against a defendant who uses a famous mark in such a way "that is likely to cause dilution..."

(2) The TDRA makes clear that there can be actions for both tarnishment and blurring. Whether there was a tarnishment action left after Moseley had been questioned. Section 2(1)(c)(1) of the TDRA states that a plaintiff is "entitled to an injunction against another person who, at any time after the owner's mark has become famous, commences use of a mark or trade name in commerce that 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 even defines blurring and tarnishment in their own sections - 2(1)(c)(2)(B) & (C) respectively.

(3) The TDRA overturns a quirky Second Circuit rule that a mark would only be considered "famous" for the purpose of a dilution action if it was "inherently distinctive" (arbitrary or fanciful, i.e. made up words like Xerox or Google) as opposed to a mark that has gained fame through use (but perhaps is only "merely descriptive"). See Savin Corp. v. Savin Group, 391 F.3d 439 (2d 2004) to see the Second Circuit discuss this. TDRA Section 2(1)(c)(2) states that "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 services of the mark's owner." It then lists factors to consider that do not include a determination of the classification of the mark as inherently distinctive or otherwise.

(4) The TDRA makes special exclusions to the dilution action in recognition of the basic First Amendment concerns that the dilution statute raises by broadening the classes of protected marks. This is interesting because it seems to be an acknowledgement of those concerns and could be understood by the courts to mean that Congress wants them to be fairly strict with dilution.
- TDRA Section 2(1)(c)(3)(A) provides an exclusion for comparative advertising.
- TDRA Section 2(1)(c)(3)(B) provides exclusions for brand identification for fair use purposes of parody, comment, and criticism.
- TDRA Section 2(1)(c)(3)(C) provides exclusions for news reporting and commentary.

I have yet to see much commentary on the TDRA. I hope this heats up the conversation. If anyone knows of a place to find more info drop it in the comments.

Here is a link to the House hearings on the TDRA.

For a great overview of the dilution action as it currently exists see "Federal Dilution Claims after Moseley v. V Secrets Catalogue," by Howard J. Shire and Michelle Mancino Marsh, published in the INTA Trademark Reporter.


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