Implementing the Trademark Dilution Revision Act: Trademark Owners Beware
The Federal Trademark Dilution Act (the “FTDA”) was enacted in 1995 to provide remedies for trademark dilution, that is, “the lessening of the capacity of a famous [trade]mark to identify and distinguish goods or services.” In the years following 1995, however, the interpretation and application of the FTDA differed from court to court, resulting in uncertainty regarding the rights of trademark owners. In 2003, the United States Supreme Court temporarily resolved some of this uncertainty. In Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003), the Supreme Court held that, to prevail under the FTDA, a plaintiff must present evidence of actual dilution, as distinguished from a mere likelihood of dilution.
The Trademark Dilution Revision Act of 2006 (the “TDRA”) was enacted in part to reverse statutorily the Supreme Court’s Moseley decision. Under the revised Act, a plaintiff need show only a “likelihood of dilution,” as distinguished from “actual dilution.” While the reversal of Moseley is the most dramatic effect of the TDRA, the TDRA makes a number of other significant changes in the law of dilution.
First, the TDRA changes the very manner in which courts determine whether a mark qualifies as “famous.” The FTDA previously set forth eight factors relevant to “fame,” and courts often deemed to be “famous” trademarks that were well known only in niche markets. In contrast, the TDRA provides 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.” Courts now are directed to consider four factors in analyzing whether a mark is famous: (1) the duration, extent, and geographic reach of advertising and publicity of the mark; (2) the amount, volume, and geographic extent of sales of goods or services offered under the mark; (3) the extent of actual recognition of the mark; and (4) whether the mark was registered. Thus, the TDRA’a standards generally appear to make it more difficult for a mark to qualify as “famous.”
Second, prior to the enactment of the TDRA, some courts held that the only actionable dilution was dilution by blurring; dilution by tarnishment was not actionable. The TDRA provides that both dilution by blurring and dilution by tarnishment are actionable. Dilution by blurring arises from a similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark. Dilution by tarnishment arises from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.
Third, prior to the enactment of the TDRA, some courts held that the famous mark at issue must be inherently distinctive. The TDRA clarifies that remedies for dilution are also available to the owners of marks with acquired (rather than inherent) distinctiveness.
Fourth, the FTDA stated that certain uses of famous marks, including news reporting, noncommercial use, and “fair use…in comparative commercial advertising,” were not actionable. The TDRA expands these exceptions, retaining the references to news reporting and noncommercial use, but also protecting “any” fair use of a famous mark.
Fifth, the TDRA clarifies the conditions under which monetary damages are available. Monetary damages are now available when the junior user’s first use in commerce occurred after October 6, 2006, and the user willfully intended to trade on the recognition of the famous mark (in blurring cases) or willfully intended to harm the reputation of the famous mark (in tarnishment cases).
Case law applying and interpreting the TDRA, although still sparse, has begun to emerge. In Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 477 F.3d 765 (2d Cir. 2007), the Second Circuit Court of Appeals held that the TDRA’s “likelihood of dilution” standard applies retroactively to claims for injunctive relief pending on appeal at the time of the TDRA’s enactment. However, the new standard does not apply retroactively to claims for monetary damages based on conduct occurring prior to October 6, 2006. See Malletier v. Dooney & Bourke, Inc. 2007 WL 1222589 (S.D.N.Y. April 24, 2007).
A district court in New York recently has held that courts need not consider all four of the factors set forth in the TDRA when considering whether a mark is “famous.” See Dan-Foam A/S v. Brand Named Beds, LLC, 2007 WL 1346609 (S.D.N.Y. May 4, 2007). Yet, a district court in California found that a mark was not “famous” where the holder of the mark had failed to address some of the factors set forth in the TDRA. See Jarritos, Inc. v. Los Jarritos, 2007 WL 1302506 (N.D. Cal. May 2, 2007).
Finally, a decision of a district court in Virginia illustrated that, even under the relaxed “likelihood of dilution” standard, mere speculation by the trademark owner will not suffice to carry the burden of proof. Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 464 F. Supp. 2d 495 (E.D. Va. 2006). In granting summary judgment against plaintiff Louis Vuitton’s tarnishment claim, the court rejected Vuitton’s “flimsy theory that a pet may some day choke on [defendant’s] Chewy Vuitton’s squeak toys and incite the wrath of a confused consumer against Louis Vuitton.”
Owners of any well-known trademarks should be alert to the TDRA’s significant revisions to the federal law of dilution, and the emerging and somewhat conflicting law interpreting the act.
