[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
COMMITTEE PRINT TO AMEND THE
FEDERAL TRADEMARK DILUTION ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, THE INTERNET,
AND INTELLECTUAL PROPERTY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
APRIL 22, 2004
__________
Serial No. 72
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://www.house.gov/judiciary
______
93-227 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
COMMITTEE ON THE JUDICIARY
F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina HOWARD L. BERMAN, California
LAMAR SMITH, Texas RICK BOUCHER, Virginia
ELTON GALLEGLY, California JERROLD NADLER, New York
BOB GOODLATTE, Virginia ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina
WILLIAM L. JENKINS, Tennessee ZOE LOFGREN, California
CHRIS CANNON, Utah SHEILA JACKSON LEE, Texas
SPENCER BACHUS, Alabama MAXINE WATERS, California
JOHN N. HOSTETTLER, Indiana MARTIN T. MEEHAN, Massachusetts
MARK GREEN, Wisconsin WILLIAM D. DELAHUNT, Massachusetts
RIC KELLER, Florida ROBERT WEXLER, Florida
MELISSA A. HART, Pennsylvania TAMMY BALDWIN, Wisconsin
JEFF FLAKE, Arizona ANTHONY D. WEINER, New York
MIKE PENCE, Indiana ADAM B. SCHIFF, California
J. RANDY FORBES, Virginia LINDA T. SANCHEZ, California
STEVE KING, Iowa
JOHN R. CARTER, Texas
TOM FEENEY, Florida
MARSHA BLACKBURN, Tennessee
Philip G. Kiko, Chief of Staff-General Counsel
Perry H. Apelbaum, Minority Chief Counsel
------
Subcommittee on Courts, the Internet, and Intellectual Property
LAMAR SMITH, Texas, Chairman
HENRY J. HYDE, Illinois HOWARD L. BERMAN, California
ELTON GALLEGLY, California JOHN CONYERS, Jr., Michigan
BOB GOODLATTE, Virginia RICK BOUCHER, Virginia
WILLIAM L. JENKINS, Tennessee ZOE LOFGREN, California
SPENCER BACHUS, Alabama MAXINE WATERS, California
MARK GREEN, Wisconsin MARTIN T. MEEHAN, Massachusetts
RIC KELLER, Florida WILLIAM D. DELAHUNT, Massachusetts
MELISSA A. HART, Pennsylvania ROBERT WEXLER, Florida
MIKE PENCE, Indiana TAMMY BALDWIN, Wisconsin
J. RANDY FORBES, Virginia ANTHONY D. WEINER, New York
JOHN R. CARTER, Texas
Blaine Merritt, Chief Counsel
David Whitney, Counsel
Joe Keeley, Counsel
Melissa L. McDonald, Full Committee Counsel
Alec French, Minority Counsel
C O N T E N T S
----------
APRIL 22, 2004
OPENING STATEMENT
Page
The Honorable Lamar Smith, a Representative in Congress From the
State of Texas, and Chairman, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 1
The Honorable Howard L. Berman, a Representative in Congress From
the State of California, and Ranking Member, Subcommittee on
Courts, the Internet, and Intellectual Property................ 3
WITNESSES
Ms. Jacqueline A. Leimer, President, International Trademark
Association
Oral Testimony................................................. 5
Prepared Statement............................................. 6
Mr. Robert W. Sacoff, Chair, Section of Intellectual Property
Law, American Bar Association
Oral Testimony................................................. 13
Prepared Statement............................................. 15
Mr. Marvin J. Johnson, Legislative Counsel, American Civil
Liberties Union
Oral Testimony................................................. 33
Prepared Statement............................................. 35
Mr. David C. Stimson, Chief Trademark Counsel, Eastman Kodak
Company
Oral Testimony................................................. 44
Prepared Statement............................................. 45
APPENDIX
Material Submitted for the Hearing Record
Letter from Michael K. Kirk, Executive Director, American
Intellectual Property Law Association to the Honorable Lamar S.
Smith, Chairman, Subcommittee on Courts, the Internet and
Intellectual Property.......................................... 56
COMMITTEE PRINT TO AMEND THE
FEDERAL TRADEMARK DILUTION ACT
----------
THURSDAY, APRIL 22, 2004
House of Representatives,
Subcommittee on Courts, the Internet,
and Intellectual Property,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:03 a.m., in
Room 2141, Rayburn House Office Building, Hon. Lamar S. Smith
(Chair of the Subcommittee) presiding.
Mr. Smith. The Subcommittee on Courts, the Internet, and
Intellectual Property will come to order. Today's hearing is on
the committee print to amend the Federal Trademark Dilution
Act. I will recognize myself for an opening statement, then the
gentleman from California, the Ranking Member.
Let me say to our witnesses and those in the audience that
we are not going to be unduly hasty this morning, but we are
going to try to expedite just because there is a Judiciary
Committee bill that will be on the House floor, I am guessing
around 11 o'clock and we would like to have time to hear all
the witnesses and ample time for Members to ask questions, as
well. And I will recognize myself, as I say, for an opening
statement.
We communicate through words and symbols on a daily basis.
The trademark for our favorite product or service immediately
broadcasts its presence to the world. The foundation of
trademark law is that certain words, images, and logos convey
meaningful information to the public, including the source,
quality, and good will of a product or a service.
Unfortunately, there are those in both commercial and non-
commercial settings who would seize upon the popularity of a
trademark for their own purposes and at the expense of the
rightful owner and public.
Dilution refers to conduct that lessens the distinctiveness
and value of a mark. This conduct can debase the value of a
famous mark and mislead the consuming public.
This Subcommittee wrote the Federal Trademark Dilution Act,
or FTDA, during the 104th Congress. The act created additional
and necessary protection for trademarks that was available for
the first time on a national scale. While I believe that most
policy makers, trademark scholars, and affected businesses
would argue that the FTDA has functioned well since its
passage, it is important for our Subcommittee to exercise its
oversight prerogative and review the act's operation.
For instance, has the recent Supreme Court ruling on the
FTDA, the Mosely decision, compromised the property rights of
trademark owners, or has the law, as one of our witnesses will
testify, conferred too much power on trademark holders at the
expense of free speech?
While review of the entire dilution statute is in order
this morning, I hope that this Subcommittee and our witnesses
will concentrate on the committee print before us. The primary
components of the print include the following.
Subject to the principles of equity, the owner of a famous
distinctive mark is entitled to an injunction against any
person who commences use in commerce of a mark that is likely
to cause dilution by blurring or tarnishment. The print
specifies that injunctive relief is appropriate, even if there
is no actual or likely confusion among the public, competition
between the owner and the person, or actual economic injury to
the owner.
A mark may only be famous if it is widely recognized by a
general consuming public in the United States as a source
designation of goods or services of the mark's owner. In
determining whether a mark is famous, a court is permitted to
consider, quote, ``all relevant factors,'' end quote, in
addition to prescribed conditions set forth in the print,
including the duration, extent, and geographic reach of
advertising and publicity of the mark.
The print defines dilution by blurring as association
arising from the similarity between a source designation and a
famous mark that impairs its distinctiveness. Again, a court is
permitted to consider all relevant factors in determining the
presence of blurring.
Specific factors that provide guidance in this regard
include the degree of similarity between the source designation
and the famous mark, the degree of inherent or acquired
distinctiveness of the famous mark, and the degree of
recognition of the famous mark.
The print further defines dilution by tarnishment as
association between a source designation and a famous mark
arising from their similarity that harms a reputation of the
famous mark.
The committee print enumerates specific defenses to a
dilution action: Fair use and comparative commercial
advertising to identify the competing goods, non-commercial use
of source designation, and all forms of news reporting and news
commentary.
Finally, the owner of a famous mark is only entitled to
injunctive relief under the committee print unless in an action
based on dilution by blurring the defendant willfully intended
to trade on the famous mark's recognition or, in an action
based on dilution by tarnishment, the defendant willfully
intended to trade on the famous mark's reputation. In either
case, the owner may also seek damages, costs, and attorneys'
fees.
Substantial portions of the committee print are based on
the existing FTDA, but there are conspicuous differences
between the texts. Under the committee print and in response to
the Mosely decision, actual harm is not a prerequisite for
injunctive relief. The definitions of blurring and tarnishment
are new. The committee print also expands the threshold of fame
and thereby denies protection for marks that are famous only in
niche markets, which represents a deviation from case law in
some circuits.
Finally, the committee print specifies that State remedies
for dilution are not preemptive.
We have a very interesting subject today and an excellent
roster of witnesses who can speak on the merits of dilution and
so we look forward to their testimony. With that, I will
recognize Mr. Berman, the Ranking Member.
Mr. Berman. Thank you, Mr. Chairman, and thank you for
scheduling this oversight hearing to discuss the committee
print to amend the Federal Trademark Dilution Act.
It has been over 8 years since the passage of that act and
sufficient time has passed to analyze the effects of the
Dilution Act on trademark law. We did a preliminary analysis 2
years ago when we held a hearing on the Dilution Act in which
we discussed proposed legislation to change the standard from
actual dilution to likelihood of dilution. A much shorter bill
than this one, its goal was to resolve the conflict between the
circuits about the standard for dilution. That bill was held up
for various reasons, including that the Supreme Court finally
took a dilution case in an attempt to resolve the conflict. We
are back here today because some believe the conflict has not
been resolved.
In 1995, the Federal Trademark Dilution Act was passed in
order to protect, quote, ``famous trademarks from subsequent
uses that blur the distinctiveness of the mark or tarnish or
disparage it,'' end of quote. As a result of varying State
dilution laws, the purpose was to bring uniformity and
consistency to the protection of famous marks. However, a
significant split developed among the courts in the
interpretation of key elements of the Dilution Act.
Last year, the Supreme Court took the step to resolve the
controversy in its decision in Mosely v. Victoria's Secret
Catalog. The Supreme Court interpreted the legislative intent
of the Dilution Act to require demonstration of actual dilution
based on the wording in the statute that the use would cause
dilution. However, they did not require proof of lost sales or
profits. The Court questioned whether dilution by tarnishment
was covered by the act, as there was no specific reference to
the theory within the language of the act.
If we were to maintain an actual dilution standard as the
Supreme Court suggests, a number of issues arise, including how
would one prove actual dilution without demonstrating lost
profits? Furthermore, the classic view of dilution by blurring
is that the injury caused by dilution is the gradual diminution
or whittling away at the value of the famous mark, or as
Professor McCarthy analogizes, it is like being stung by 100
bees where significant injury is caused by the cumulative
effect, not just one.
So then how do we determine that one small use can blur the
distinctiveness of a famous mark, and at that point, is it
already too late? The committee print before us today makes a
number of changes to the act, the most notable being the
clarification of the standard of dilution from actual to one of
likelihood of dilution. Actual harm would no longer be a
prerequisite to injunctive relief.
In addition, the amendments include a clear reference to
dilution by tarnishment. Furthermore, it elucidates the
definition of fame by providing a list of factors, and also
eliminates the protection of marks famous only in a niche
market.
I appreciate the expressed need to impose a more lenient
standard. A likelihood of dilution standard would no longer
unfairly require the senior user to, one, wait until injury
occurs before bringing suit, or secondly, face the threat that
the senior user failed to actively protect their marks. It
would also allow new companies to seek a declaratory judgment
that their mark does not dilute, which would prevent
unnecessary expenditures in the launch of their products.
However, I am not convinced that a likelihood of dilution
standard combined with the other amendments in the committee
print do not create an aura of over-protectionism.
When establishing the Federal Dilution Act, we memorialized
a doctrine that protects the property interest in a trademark,
not just the typical infringement goal which is designed to
protect the public from confusion. Are we now creating a
situation which provides a zone of exclusivity for a trademark?
One of our goals is to maintain the balance between fair
competition and free competition to keep the economy working at
a reasonable rate of efficiency and competitiveness. With
passage of a lesser standard, will we, in essence, create a
trademark protection which translates to a property right en
grosse?
Furthermore, I am concerned how, if at all, this will
affect First Amendment and Free Speech issues. Subsequent to
the hearing this Subcommittee held on the Dilution Act in
February of 2002, the ACLU voiced concerns relating to stifling
critics with the potential weapon of an injunction for a mere
likelihood of tarnishment. They are concerned with the balance
between the rights of trademark holders and the First
Amendment.
I am interested in hearing further about these issues and
why these concerns may not be addressed in the exemptions for
fair use in advertising, non-commercial use, and news reporting
provided for in the act, or in the alternative, what is
included in this legislation to specifically protect that
freedom.
I look forward to hearing from the witnesses to shed light
on why the standard needs to be changed and how the legislation
would affect balance in the economic market, trademark
litigation, and free speech forums.
I look forward to working with you, Mr. Chairman, to
further evaluate the act and the changes recommended at today's
hearing. I yield back.
Mr. Smith. Thank you, Mr. Berman.
Our first witness is Jacqueline Leimer, who is testifying
on behalf of the International Trademark Association, or INTA.
Ms. Leimer is President of INTA and also serves as Chief
Counsel, Global Trademarks for Kraft Foods Global,
Incorporated. Before joining Kraft, Ms. Leimer was a partner in
the Chicago law firm of Kirkland and Ellis. She received her
B.A. and J.D. degrees from Valpraiso University.
The next witness is Mr. Robert Sacoff, who is testifying on
behalf of the American Bar Association. Mr. Sacoff chairs the
ABA's Intellectual Property Law Section and is a partner in the
law firm of Pattishall, McAuliffe, Newbury, Hilliard, and
Geraldson. In addition to having served on the boards of the
American Intellectual Property Law Association and INTA, Mr.
Sacoff lectures extensively on trademark law. He earned his
A.B. degree from Notre Dame and his J.D. from Northwestern.
Our third witness is Marvin Johnson, who serves as
Legislative Counsel for the American Civil Liberties Union,
where he focuses on First Amendment issues. Before relocating
to Washington, Mr. Johnson worked as Executive Director of the
ACLU chapter in his native Wyoming. Mr. Johnson earned his B.S.
and J.D. degrees from the University of Wyoming.
Our final witness is David Stimson, the Chief Trademark
Counsel for Eastman Kodak, where he has worked since 1986.
Before joining Kodak, Mr. Stimson was a partner in the New York
firm of Rogers, Hoge, and Hills. He received his B.A. from
Hamilton College and his J.D. from the University of
Cincinnati.
Welcome to you all. We have your written statements, and
without objection, the entire written statements will be made a
part of the record.
Ms. Leimer, we will begin with you.
STATEMENT OF JACQUELINE A. LEIMER, PRESIDENT, INTERNATIONAL
TRADEMARK ASSOCIATION
Ms. Leimer. Good morning, Mr. Chairman. Thank you for
holding today's hearing.
Perhaps the easiest way to realize the value of trademarks
is to imagine a world without them. How would we decide what
food to buy, whose services to use, or how to differentiate the
medicines prescribed by our doctors? Trademarks tell us what we
like, what is safe, and what represents quality. They are an
important part of everyday life, and for this reason, the law
protects against trademark infringement, the use of trademarks
in a manner that confuses or deceives consumers.
Next, I ask you to think about those marks, relatively few
in number, that are so well known that they have become a
cultural icon. They come to mind without the slightest
hesitation and inspire what leading trademark scholar Jerry
Gilson has called abundant goodwill and consumer loyalty. These
are famous marks, and in 1996, the Federal Trademark Dilution
Act was enacted to provide them with additional protection.
There are two widely accepted types of dilution. The first
is blurring, a reduction in the distinctiveness of the famous
mark, its ability to identify goods or services as originating
from a particular source. The second is tarnishment of a famous
mark's reputation. In a dilution case, the court can enjoin a
junior use that blurs or tarnishes a famous mark even when
there is no infringement.
A Federal dilution remedy has played an important role in
protecting famous trademarks. It helped to stem the tide of
cyber squatting during the earliest days of online commerce and
stopped uses like ``Adults-R-Us,'' an obvious play on Toys-R-
Us, from being used as a source for sexually explicit material.
In spite of these successes, there remain a number of
dilution-related issues on which the courts are split and the
language of the statute led the Supreme Court in its Mosely
decision to rule that proof of actual harm is required in a
dilution case, a decision that does not account for the need to
prevent dilution at its incipiency before the effectiveness and
reputation of the famous mark is lost.
INTA has therefore come to the conclusion that the FTDA is
in need of revision.
Because the dilution remedy can be applied regardless of
infringement, we suggest that it be available only to a narrow
class of marks, specifically, those marks that are widely
recognized by the general consuming public of the United
States. This should be explicit in the statute. Non-exclusive
factors are a useful guide in determining whether a mark meets
the standard and the committee print sets forth what those
factors might be.
The statute should also expressly provide that famous marks
are protected from the likelihood that they will be diluted.
This standard permits a famous mark owner to prevent dilution
at its incipiency and not have to wait until the mark is
damaged beyond repair.
We further recommend that the dilution statute be revised
to make it clear that there are two distinct causes of action,
one for likelihood of dilution by blurring and one for
likelihood of dilution by tarnishment. In each case, there
should be no liability unless the famous mark owner can prove a
likely association between its mark and the junior use based on
the similarity between the two marks. With respect to
tarnishment, a plaintiff should have to demonstrate that this
likely association would harm the reputation of the famous
mark.
In a case of blurring, the plaintiff should also
demonstrate that the likely association would, over time,
impair the distinctiveness of the famous mark. Where the famous
mark and junior use are identical, this should not be difficult
to do. Not so clear, however, is what analysis should take
place when the famous mark and the junior use are not
identical. To remedy this, a revised statute should provide a
list of non-exclusive factors for a court to use in rendering a
decision. Again, the committee print details what those factors
might be.
A revised statute should also preserve the First Amendment
defenses in the current FTDA. These defenses have worked well.
To further protect free speech rights, we suggest that the
plaintiff in a dilution case be required to demonstrate that
the defendant is using the challenged mark as a designation of
source for its own goods or services. In other words, he is
using the challenged mark as his own trademark. This
requirement will protect fair uses of a famous mark and
safeguard all legitimate parody and satire, even if that parody
and satire appear in a commercial context.
This concludes my opening statement. I thank the
Subcommittee for the opportunity to testify. I would be pleased
to answer your questions.
Mr. Smith. Thank you, Ms. Leimer.
[The prepared statement of Ms. Leimer follows:]
Prepared Statement of Jacqueline A. Leimer
I. INTRODUCTION
Good morning, Mr. Chairman. My name is Jacqueline A. Leimer. I am
chief counsel, global trademarks for Kraft Foods Global, Inc. and serve
as president of the International Trademark Association (INTA). As do
all INTA officers, board members and committee members, I serve INTA on
a voluntary basis.
INTA supports revision of the Federal Trademark Dilution Act (FTDA)
\1\ and encourages Congress to enact legislation that will provide
greater clarity regarding protection afforded under the statute, better
define the standard of proof for dilution, and strengthen protection
for free speech interests. INTA's support for revising the FTDA in this
manner comes after a nine-month comprehensive study of dilution law
that was undertaken by a select committee of trademark experts. My
predecessor as INTA president, Kathryn Barrett Park, organized the
select committee after the U.S. Supreme Court decision in Moseley v. V
Secret Catalogue, Inc.,\2\ in which the court addressed a number of
dilution issues, particularly the standard of proof for a dilution
claim. I was honored to have chaired the select committee in my
capacity then as the executive vice president of INTA.
---------------------------------------------------------------------------
\1\ Pub. L. No. 104-98, 109 Stat. 505 (1995).
\2\ 123 S. Ct. 1115 (2003).
---------------------------------------------------------------------------
INTA is a 126-year-old not-for-profit organization comprised of
over 4,300 members. It is the largest organization in the world
dedicated solely to the interests of trademark owners. The membership
of INTA, which crosses all industry lines and includes both
manufacturers and retailers, values the essential role that trademarks
play in promoting effective commerce, protecting the interests of
consumers, and encouraging free and fair competition. INTA has a long
history of making recommendations to the Congress in connection with
federal trademark legislation, including: the Trademark Law Revision
Act of 1988 (TLRA),\3\ the Anticybersquatting Consumer Protection Act
of 1999,\4\ the Trademark Law Treaty,\5\ and the Madrid Protocol
Implementation Act.\6\
---------------------------------------------------------------------------
\3\ See 134 Cong. Rec. S. 16974 (daily ed. Oct. 20, 1988)
(Statement of Sen. DeConcini).
\4\ See, e.g., S. Rep. No. 106-140, 106th Cong. 1st Sess. (1999)
(relying on statements by INTA's president, made before the Senate
Judiciary Committee).
\5\ See H.R. Rep. No. 412, 106th Cong. 1st Sess. (1999).
\6\ See Cong. 126 Rec. S. 9690 (daily ed. October 1, 2002)
(Statement of Senator Leahy).
---------------------------------------------------------------------------
II. HISTORY OF THE FTDA
INTA was also a prime advocate for passage of the FTDA, which
became law on January 16, 1996.\7\ The association believed that a
federal dilution statute was needed to protect famous marks because
``[t]hey are enormously valuable but fragile assets, susceptible to
irreversible injury from promiscuous use.'' \8\
---------------------------------------------------------------------------
\7\ See H. Rep. No. 104-879, 104th Cong. 2nd Sess. (1997) (noting
use of testimony from INTA's executive vice president).
\8\ The United States Trademark Association (predecessor to the
International Trademark Association), ``The United States Trademark
Association Trademark Review Commission Report and Recommendations to
USTA President and Board of Directors,'' 77 Trademark Rep. 375, 455
(1987).
---------------------------------------------------------------------------
The FTDA affords protection that is different from trademark
infringement protection. Dilution does not rely upon the standard test
of infringement, that is, the likelihood of confusion, deception, or
mistake. Rather, the FTDA provides equitable relief to the owner of a
famous mark against another person's commercial use of a mark or trade
name that lessens the ``distinctive quality of the [famous] mark,'' \9\
``regardless of the presence or absence of (1) competition between the
owner of the famous mark and other parties, or (2) likelihood of
confusion, mistake or deception.'' \10\ The statute also sets forth
criteria that a court should consider in determining whether a mark is
famous; establishes an injunction as the primary form of relief; and
provides statutory defenses to a dilution claim.\11\ In 1999, Congress
granted holders of famous trademarks the right to oppose a trademark
application or cancel a trademark registration based on dilution of
their marks.\12\
---------------------------------------------------------------------------
\9\ 15 U.S.C. Sec. 1125(c).
\10\ 15 U.S.C. Sec. 1127.
\11\ 15 U.S.C. Sec. 1125(c).
\12\ Pub. L. No. 106-43.
---------------------------------------------------------------------------
III. THE NEED FOR REVISION OF THE FTDA
Since its adoption in 1996, the FTDA has served a valuable role in
protecting famous trademarks. For example, during the earliest days of
online commerce, before Congress passed the Anticybersquatting Consumer
Protection Act, the FTDA helped to stem the tide of the registration
and trafficking in Internet domain names with the bad-faith intent to
benefit from another's trademark. At the same time, however, after more
than eight years, there remain open questions and courts are divided on
a number of key dilution-related concepts regarding the intent of
Congress when it adopted the FTDA. For example:
1. What is a famous mark? Some courts have opted to be more
``discriminating and selective'' \13\ in terms of what is
protectable, while others have defined fame more broadly.\14\
In particular, should marks that are famous only in a ``niche''
market and, therefore, well known only to a select class or
group of purchasers, or in a limited geographic region, qualify
as ``famous'' within the meaning of the present statute? This
too is an unsettled question.\15\
---------------------------------------------------------------------------
\13\ I.P. Lund Trading ApSand Kroin Inc. v. Kohler Co and Robern,
Inc., 163 F.3d 27, 46 (1st Cir. 1998).
\14\ See, e.g., Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 215
(2d Cir. 1999) (The term ``fame'' is used in an ``ordinary English
language sense'' in the FTDA.); Gazette Newspapers, Inc. v. New Paper,
Inc., 934 F. Supp. 688, 690 (D. Md. 1996). In the Gazette case, ``the
court applied the FTDA to protect the use of `Gazette' in only two
counties in Maryland. The court failed to recognize, however, that
there are at least seven major newspapers around the country that use
`Gazette' in their titles.'' Paige Dollinger, ``The Federal Trademark
Anti-Dilution Act: How Famous is Famous?'' at http://www.kentlaw.edu/
honorsscholars/2001Students/writings/dollinger.html#--ftnref66,
citations omitted.
\15\ Cases supporting niche fame, see, e.g., Advantage Rent-A-Car,
Inc. v. Enterprise Rent-A-Car, 238 F.3d 378, 381 (5th Cir. 2001)
(``Enterprise needed only to show that its `We'll Pick You Up' mark is
famous within the car rental industry, not in a broader market.'');
Thane Int'l, Inc. v. Trek Bicycle Corp., 305 F.3d 894 (9th Cir. 2002)
(``We are bound by Avery Dennison, 189 F.3d 868 (9th Cir. 1999), to
accept and apply the niche fame concept.''). Not in support of niche
fame, see, e.g., TCPIP Holding Co. v. Haar Comms., Inc., 244 F.3d 88,
99 (2d Cir. 2001) (It is unlikely that ``Congress intended to grant
such outright exclusivity to marks that are only famous in a small area
or segment of the nation.''); I.P. Lund Trading ApSand Kroin Inc. v.
Kohler Co and Robern, Inc., 163 F.3d 27 (1st Cir. 1998).
2. Does the FTDA only protect famous marks that are inherently
distinctive, or does it also cover famous marks that have
acquired distinctiveness, i.e., gained secondary meaning over
time? \16\ In trademark parlance, ``distinctiveness'' refers to
the ability of a mark to identify goods or services as
originating from a particular source--either immediately (as in
the case of inherently distinctive marks) or only after a
significant period of time or investment (as in the case of
marks with acquired distinctiveness).
---------------------------------------------------------------------------
\16\ See, e.g., TCPIP Holding Co. v. Haar Comms., Inc., 244 F.3d
88, 95 (2d Cir. 2001) (ruling that protection under the FTDA is limited
to famous marks that are inherently distinctive); Avery Dennison Corp.
v. Sumpton, 189 F.3d 868, 877 (9th Cir. 1999) (``We reject appellant's
argument that the distinctiveness required for famousness under the
Federal Trademark Dilution Act is inherent, not merely acquired
distinctiveness.''); Times Mirror Magazine, Inc. v. Las Vegas Sporting
News LLC, 212 F.3d 157, 167 (3d Cir. 2000) (holding that marks that
have acquired distinctiveness are eligible for protection under the
FTDA).
3. Whether tarnishment is covered under the FTDA was a
question posed by the Supreme Court in dicta in the Moseley
decision. This comment was based on the statutory language
``dilution of the distinctive quality of the famous mark,''
which, in the view of the court, might not go to injury to the
reputation of a famous mark, the underlying concept of dilution
by tarnishment.\17\ Notwithstanding this question, tarnishment,
along with blurring, has long been and is still regarded by
trademark scholars as one of the ``two different dimensions''
of dilution.\18\
---------------------------------------------------------------------------
\17\ 123 S. Ct. 1115, 1124 (2003).
\18\ 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition '24:67, at 24-128 (4th ed. 2003). See also 2 Jerome Gilson,
Trademark Protection and Practice Sec. 5A.01[2], at 5A-7 (Rel. 50-
December 2003).
4. Finally, what is dilution and how does a famous trademark
owner go about proving it? In Moseley, the Supreme Court held
that the FTDA requires proof of actual harm and that consumers'
mere mental association between the famous and challenged
marks, whatever its effect on the famous mark, is generally
insufficient to establish such harm, particularly when the
marks in question are not identical.\19\ But, as I will explain
later, this holding is problematic, as it does not account for
the need to prevent dilution at its incipiency, before the
effectiveness and reputation of the mark is lost.
---------------------------------------------------------------------------
\19\ Moseley v. V Secret Catalogue, Inc., 123 S. Ct. 1115, 1124
(2003).
These and other key questions, Mr. Chairman, should be answered
through a revision of the FTDA, and not by forum shopping or waiting
for further costly litigation to provide us with a solution. Congress
should take the opportunity to better focus the application of the
federal dilution statute, while at the same time clarifying the meaning
of the harm the statute aims to prevent, as well as the manner in which
a dilution claim is proven.
IV. REVISING THE FTDA
Below are the principles underlying INTA's recommendation for a
revision of the FTDA. To help the subcommittee in its review, I have
divided these recommendations into four categories: ``Qualifications
for Protection,'' ``Blurring and Tarnishment,'' ``Safeguarding Free
Speech,'' and ``Relief and Preemption.''
A. Qualifications for Protection
INTA believes that fame should remain the critical requirement to
qualify for federal dilution protection. As Jerome Gilson, a leading
U.S. trademark law expert has stated, these marks inspire ``abundant
good will and consumer loyalty . . . and federal dilution law protects
the substantial investment necessary to advertise and promote the
mark.'' \20\
---------------------------------------------------------------------------
\20\ 2 Gilson, supra note 18, Sec. 5A.01[4][a], at 5A-10.
---------------------------------------------------------------------------
A revised dilution statute should expressly state that famous marks
with inherent or acquired distinctiveness are eligible for protection,
because at least one circuit court of appeals has found enough
ambiguity in the current statute to exclude famous marks with acquired
distinctiveness \21\ and because a designation that ``has achieved
trademark status only through the acquisition of secondary meaning is
certainly capable of acquiring a greater degree of distinctiveness and
achieving the status of `famous' mark.'' \22\
---------------------------------------------------------------------------
\21\ TCPIP Holding Co. v. Haar Comms., Inc., 244 F.3d 88, 95 (2d
Cir. 2001).
\22\ 4 McCarthy, supra note 18, Sec. 24:91.1, at 24-166 (commenting
on existing FTDA) (citation omitted).
---------------------------------------------------------------------------
While INTA believes that fame should remain the threshold needed in
order to qualify for protection under a federal dilution statute, we do
suggest that a revised statute should be more explicit as to what marks
qualify as ``famous.'' INTA recommends that Congress define the scope
of fame as being limited to marks, whether or not they are registered
with the U.S. Patent and Trademark Office, that are ``widely recognized
by the general consuming public of the United States.'' This standard
does narrow the set of marks that would qualify for federal dilution
protection. But, in our opinion, it is an appropriate step. This new
standard would help to alleviate the ``contradictory and inconclusive''
\23\ nature of the existing statutory language and legislative history
on this issue, which has led to inconsistent decision-making and
discomfort among some judges who feel compelled to render a finding of
fame even though the mark in question is well known to a limited number
of people. It will ensure that the broad protections against dilution
provided for in the statute are available only to the select class of
marks for which improper associations would be most damaging.\24\ In
addition, we believe this standard would also allow smaller companies
to use marks in their businesses without undue restriction.
---------------------------------------------------------------------------
\23\ Id., '24:112.1, at 24-273.
\24\ Dilution cases are not limited by similarities of the goods,
or confusion, or other marketplace factors. ``[A] dilution injunction .
. . will generally sweep across broad vistas of the economy.'' Mattel,
Inc. v. MCA Records, Inc., 296 F.3d 894, 905 (9th Cir. 2002).
---------------------------------------------------------------------------
Under the proposed standard, marks that are famous in a niche
product or service market or that are recognized only in a limited
geographic region will not qualify for federal dilution protection.
State dilution laws and, in appropriate cases, infringement and unfair
competition statutes, such as Sec. 43(a) of the Lanham Act, will afford
adequate protection of the senior user's mark in these cases.
INTA considers non-exclusive factors to be a useful guide to mark
owners and the judiciary in determining whether a mark is famous. The
current FTDA fame factors that a court may consider are, but are not
limited to:
(A) the degree of inherent or acquired distinctiveness of the
mark;
(B) the duration and extent of use of the mark in connection
with the goods or services with which the mark is used;
(C) the duration and extent of advertising and publicity of
the mark;
(D) the geographical extent of the trading area in which the
mark is used;
(E) the channels of trade for the goods or services with
which the mark is used;
(F) the degree of recognition of the mark in the trading
areas and channels of trade used by the marks' owner and the
person against whom the injunction is sought;
(G) the nature and extent of use of the same or similar marks
by third parties; and
(H) whether the mark was registered under the Act of March 3,
1881, or the Act of February 20, 1905, or on the principal
register.\25\
---------------------------------------------------------------------------
\25\ 15 U.S.C. Sec. 1125(c)(1).
INTA proposes that the existing fame factors be simplified and
---------------------------------------------------------------------------
replaced as follows:
(A) the duration, extent, and geographic reach of advertising
and publicity of the mark, whether advertised or publicized by
the owner or third parties;
(B) the amount, volume, and geographic extent of sales of
goods or services offered under the mark; and
(C) the extent of actual recognition of the mark.
The first and second factors reflect traditional concepts of
marketplace recognition that courts have applied for decades and
incorporate some of the existing factors. The third factor, ``the
extent of actual recognition of the mark,'' is meant to incorporate
survey evidence, market research such as brand awareness studies, and
even unsolicited media coverage.
Some of the factors contained in the current statutory test are
omitted from INTA's proposal. For the most part, their absence stems
from the fact that they are already accounted for in the definition
itself, or are, in our view, not relevant to the issue of fame. For
example, since INTA's proposed definition of fame specifies that the
mark must be ``widely recognized by the general consuming public of the
United States,'' the current factors dealing with the geographic extent
of use and recognition in the junior user's trading area and channels
of trade are no longer necessary. Because the mere existence of a
registration is really not relevant at all to the question of fame, we
suggest that it be omitted as well.
B. Blurring and Tarnishment
In INTA's opinion, famous marks should be expressly protected by
statute from the likelihood that they will be either blurred or
tarnished. A revised statute should be clear on what constitutes a
likelihood of dilution by blurring and what constitutes likelihood of
dilution by tarnishment.
1. The Incipient Nature of Dilution
First, why should likelihood of dilution be actionable as opposed
to actual dilution? This question was at the heart of the Moseley case.
In its decision, the Supreme Court ruled, ``the text [of the FTDA]
unambiguously requires a showing of actual dilution, rather than a
likelihood of dilution.'' \26\ In particular, the court cited Section
43(c)(1) of the Lanham Act, which provides that ``the owner of a famous
mark'' is entitled to injunctive relief against another person's
commercial use of a mark or trade name if that use ``causes dilution of
the distinctive quality'' of the famous mark.\27\ The court did,
however, hold that proof of actual dilution does not require a showing
of the economic consequences of dilution, such as lost sales or
revenues.\28\
---------------------------------------------------------------------------
\26\ Moseley v. V Secret Catalogue, Inc., 123 S. Ct. 1115, 1124
(2003).
\27\ Id. (emphasis added).
\28\ Id. (commenting on the ruling of the Fourth Circuit in
Ringling Bros.--Barnum & Bailey Combined Shows, Incorporated v. Utah
Division of Travel Development, 170 F.3d 449 (4th Cir.1999)).
---------------------------------------------------------------------------
INTA submits that a dilution cause of action should not require an
actual, provable change in the way consumers think about the famous
mark. This approach, which the Supreme Court adopted based on the
language of the existing FTDA, does not account for the need to prevent
dilution at its incipiency, the core concept underlying the dilution
remedy. In the opinion of INTA, the owner of a famous mark should be
able to obtain an injunction against the first offending use, even if
that use has not yet resulted in provable damage to the mark. Because
dilution is a process by which the value of a famous mark is diminished
over time, either by one or multiple users, the owner of the famous
mark should not be required to wait until the harm has advanced so far
that, in the case of blurring, the recognition of the mark, and in a
tarnishment case, the reputation of the mark, is permanently impaired.
Moreover, if the owner of a famous mark must wait years to
challenge the multiple uses that have entered the marketplace in the
interim, the defendants in those cases will be poorly served as well.
Junior users will have invested in the allegedly diluting marks over
the course of time, placing their accrued goodwill in great jeopardy.
And, given the great hardship that a junior user could suffer as a
result of delay in challenging the marks, a court could apply the
laches defense. The present FTDA, as interpreted by the Supreme Court,
thus presents the plaintiff with a Hobson's choice: sue too early and
lose because the harm is not yet provable, or sue too late and lose on
laches grounds.
Accordingly, the most practical way to express the incipient nature
of dilution in a manner a court will understand, is to expressly phrase
the cause of action as a likelihood of dilution--that is, that the
junior use is likely to cause dilution (whether by blurring or by
tarnishment) if allowed to continue unchecked.
2. Dilution by Blurring
INTA recommends a new statutory approach to addressing a claim of
likelihood of dilution by blurring. We recommend that the statute
require the owner of a famous mark to prove a likelihood of association
between its mark and the junior mark, arising from the similarity of
the marks, which would impair the distinctiveness of the famous mark.
Under this test, not just any mental association will suffice--it
must be an association that arises from the similarity (or identity) of
the two marks, as opposed to an association that arises because of
product similarities or competition between the owners of the two
marks. Moreover, it is association that is likely to impair the
distinctiveness of the senior mark.
For example, let us assume that the CLOROX mark is ``widely
recognized by the general consuming public of the United States.'' It
is a completely made up term, created only for the purpose of
functioning as a trademark, not used elsewhere in the commercial arena,
and associated only with a supplier of household cleaning products and
detergents. If another company begins to produce CLOROX sneakers, there
is little question that consumers will draw an association between the
two marks due to their identity and the high degree of distinctiveness
of the mark. This association will over time reduce the distinctiveness
of the CLOROX mark, i.e., it will make it less likely over time that
consumers will identify the goods and services bearing the name CLOROX
as originating from a particular source. In short, dilution is highly
likely, and indeed is probably already underway, although the
impairment to the senior mark may not yet be manifest.
Another situation would be one where the famous, senior mark is not
as distinctive as CLOROX or the junior mark is not identical or
virtually identical to the senior mark. In this type of situation,
courts could use the factors for dilution by blurring (addressed later)
to determine whether the requisite association and impairment are
likely. The use of the likelihood of dilution standard in INTA's
proposal would make clear that relief can be granted based on a court's
assessment of the relevant factors, without proof of actual dilution as
presently required by the Supreme Court in Moseley.
3. Blurring Factors
INTA recommends that a revised federal dilution statute contain
non-exclusive factors to assist courts in determining whether there is
a likelihood of dilution by blurring. A court will need to balance all
of these factors, as well as any others it may deem relevant in order
to make a determination as to whether there is a likelihood of dilution
by blurring. INTA proposes that Congress consider the following:
1. The degree of similarity between the junior use and the
famous mark.
2. The degree of inherent or acquired distinctiveness of the
famous mark.
3. The extent to which the owner of the famous mark is
engaging in substantially exclusive use of the mark.
4. The degree of recognition of the famous mark.
5. Whether the junior user intended to create an association
with the famous mark.
6. Any actual association between the junior use and the
famous mark.
Factor one is self-evident and refers to step one of the blurring
analysis: How similar are the two marks? The less similar the marks,
the less likely a consumer association between the marks.
The degree of inherent or acquired distinctiveness of the famous
mark considers the extent to which the public may identify the mark
with a single source. Further, this factor considers whether the mark
is sufficiently strong to allow single-source identification upon
initial use of the mark. The more distinctive and memorable the mark,
the more it is likely to be blurred by the use of other identical or
similar marks. The more common or descriptive the mark, the less likely
it is to be blurred by uses of identical or similar marks.
Factor three, the extent to which the owner of the famous mark is
engaging in substantially exclusive use of the mark, asks the court to
determine whether other trademark uses similar to the famous mark
already exist in the marketplace. If, for example, the famous mark is
in substantially exclusive use, it could indicate that the mark's
distinctiveness is more likely to be impaired by the junior use.
Conversely, where other similar marks are already in use, it may be
somewhat less likely that the junior use will have the effect of
blurring the famous mark, unless those uses have little or no
visibility to the average consumer.
The degree of recognition is another way of asking, ``just how
famous is the famous mark?'' The more famous the mark, the more likely
it will be memorable such that the association will be made, and the
more likely that the association will impair the distinctiveness of the
mark in the sense of how well it stands out in the marketplace.
If it is found that the defendant intended to trade on the
recognition of the famous mark, then the defendant presumably used the
junior mark with the expectation that consumers would associate their
mark with the famous mark. This factor operates as an admission by the
defendant that the senior mark has a sufficient degree of fame such
that the mark can be blurred, and that the defendant sought to
appropriate that fame to itself in order to direct consumers' attention
toward its own mark.
The last factor, actual association, refers to evidence found in
surveys, news items that reference both of the marks, and other
evidence that may support a finding that the requisite association
between the marks is likely to occur.
4. Dilution by Tarnishment
In light of the ambiguity created by the Supreme Court's comments
in the Moseley decision, INTA believes that it is important to
expressly state in a revised federal dilution statute that tarnishment
is within the scope of the law. Owners of famous trademarks should be
able to protect their significant investment against negative
associations, absent a protectable free speech interest, which is
discussed in more detail below. INTA suggests that a revised federal
dilution statute find liability for tarnishment if a junior use is
likely to harm the reputation of the famous mark. This standard is used
in state dilution statutes and most courts have capably adjudicated
claims of tarnishment under this standard.
C. Safeguarding Free Speech
INTA believes that it is essential when revising the federal
dilution law for Congress to confirm that the rights of famous mark
owners do not interfere with free speech protections that are
guaranteed by the First Amendment. To accomplish this goal, we
recommend that a revised dilution statute expressly provide as an
essential element of the cause of action for dilution, whether for
dilution by blurring or dilution by tarnishment, that the plaintiff
demonstrate that the defendant is using the challenged mark as a
``designation of source'' (e.g., trademark, trade name, logo, etc.) for
the defendant's own goods or services.
A requirement of defendant's use as a designation of source will
prevent any descriptive fair use \29\ or nominative fair use \30\ from
falling within the ambit of the revised statute. For example, a
defendant using a famous mark to refer to the trademark owner's goods
in comparative advertising, or a newspaper using the famous mark to
refer to the mark owner's goods for purposes of news reporting or
commentary, would not qualify as use as a designation of source for the
defendant's own goods or services, and therefore would not be covered
by the statute at all. Moreover, the requirement of use as a
designation of source for the junior user's own goods or services
should protect all legitimate parody and satire, even if that parody
and satire appears in a commercial context. It is INTA's strong belief
that this requirement is necessary to protect free speech and to ensure
that dilution protection is appropriately limited.
---------------------------------------------------------------------------
\29\ Descriptive fair use (or classic fair use) is the use of a
normal English word in its normal English meaning to describe one's own
product or service.
\30\ Nominative fair use is when the alleged infringer uses the
plaintiff's mark to refer to the plaintiff or the plaintiff's goods. It
generally applies (a) where the mark is reasonably needed to identify
the mark owner's goods or services, (b) where the use is not more than
is needed to identify the mark owner's goods or services, and (c) where
there is no implication of endorsement. See, e.g., New Kids on the
Block v. News Am. Publ'g, Inc., 971 F.2d 302 (9th Cir. 1992).
---------------------------------------------------------------------------
The ``designation of source'' requirement will serve to strengthen
the existing statutory defenses to a dilution claim:
(A) Fair use of a famous mark by another person in
comparative commercial advertising or promotion to identify the
competing goods or services of the owner of the famous mark.
(B) Noncommercial use of a mark.
(C) All forms of news reporting and news commentary.\31\
---------------------------------------------------------------------------
\31\ 15 U.S.C. Sec. 1125(c)(4).
These defenses, as interpreted and applied by the courts, have
worked well to protect parties using famous marks as a form of free
expression and should therefore remain part of a revised federal
dilution law.\32\
---------------------------------------------------------------------------
\32\ See, e.g., Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894
(9th Cir. 2002); American Family Life Insurance Co. v. Hagan, 64
U.S.P.Q.2d 1865, 1874-75. In these cases, both courts provided a broad
application of the FTDA's noncommercial exemption.
---------------------------------------------------------------------------
D. Relief and Preemption
INTA recommends that an injunction should continue to be the
principal form of relief in a federal dilution claim. The plaintiff
should continue to be entitled to remedies set forth in Sections 35(a)
(profits, damages, and cost of the action) and 36 (destruction of goods
bearing the registered mark) of the Lanham Act, subject to the
discretion of the court and the principles of equity, if willful intent
is proven. However, we suggest that a revised statute specify that in
order to recover damages, willful intent to trade on the recognition of
the famous mark must be proved for blurring claims, and willful intent
to trade on the reputation of the famous mark must be proved for
tarnishment claims.
INTA believes that a federal dilution statute should not preempt
state dilution laws because preemption would adversely affect the
ability of relief for intrastate and regional conduct to the extent
permitted under state dilution laws. A valid federal registration
should, however, be a complete bar to a state dilution claim. This is
the scenario under the FTDA and we recommend that it remain unchanged
in a revised federal dilution statute.
V. CONCLUSION
Thank you, Mr. Chairman, for the opportunity to testify before the
subcommittee. INTA looks forward to working with Congress and
interested parties in addressing issues related to the revision of the
FTDA.
Mr. Smith. Mr. Sacoff.
STATEMENT OF ROBERT W. SACOFF, CHAIR, SECTION OF INTELLECTUAL
PROPERTY LAW, AMERICAN BAR ASSOCIATION
Mr. Sacoff. Mr. Chairman, Congressman Berman, thank you for
your invitation to the ABA to appear before you today. The
views that I express today and have expressed in our written
statement advocating amendment of the Federal Trademark
Dilution Act of 1985 to change the actual dilution standard
articulated by the Supreme Court in Mosely to a likelihood of
dilution standard have been adopted as ABA policy by our Board
of Governors, therefore, represent views of the association. My
comments on the other issues represent the views of the
Intellectual Property Law Section, which I chair, as they have
not gone up to or been approved by the House of Delegates or
Board of Governors of the American Board Association.
As you know, the ABA is a volunteer association of many
lawyers. Briefly, I would just like to mention that many of its
hard-working members contributed to the work that led to the
policy statements we have submitted, the lengthy statement with
a lot of case analysis--I can't name them all, but wish to
mention my colleague, Jonathan Jennings, who chaired the
Federal Trademark Legislation Committee, and also Jonathan
Hadis, who is here this morning, who led the Subcommittee on
this very large project.
It is timely and important to revisit the Federal Trademark
Dilution statute to fix certain problems that have become
apparent through its eight-and-a-half years of experience in
the courts and its interpretation by the Supreme Court in the
Mosely case. We advocate in principle three amendments to the
statute. We advocate these principles as that is the way we
have discussed them and considered them and made them ABA
policy. We have not formulated ABA policy on the actual
specific language of the proposed draft and the committee
print. We would be happy to work with the Subcommittee,
however, in connection with language questions.
We advocate, first, creating a likelihood of dilution
standard for adjudicating dilution cases under the Federal
statute in both the courts and the Trademark Trial and Appeal
Board.
Secondly, we advocate an amendment allowing famous marks
that have acquired their distinctiveness through use and
recognition to be eligible for protection against dilution
instead of the more restrictive category of inherently
distinctive marks, as suggested by the minority view in the
Second Circuit and as suggested by possible dicta in the
Supreme Court.
And three, we recommend amending the statute to expressly
include dilution by tarnishment as being actionable under the
statute.
We believe these amendments are consistent with the intent
of the Federal Trademark Dilution Act and are necessary to
allow the statute to function properly. I will talk about them
in a little more detail and also comment on the niche market
fame issue, which we believe is not quite ripe for a
legislative solution.
First, likelihood of dilution. The Supreme Court's decision
in Mosely requiring actual dilution has created a lot of
uncertainty and unpredictability in the lower courts as they
struggle with the quantum of proof and type of trial evidence
necessary to establish actual dilution. The actual dilution
standard is unworkable in practice and essentially guts the
trademark dilution statute. We believe it should be amended to
provide that cases of trademark dilution should uniformly be
decided under the likelihood of dilution standard.
The Court in Mosely even recognized when it was making its
decision that it was creating problems of proof and stated in
the course of its opinion, ``whatever difficulties of proof may
be entailed, they are not an acceptable reason for dispensing
with proof of an essential element of a statutory violation,''
as it referred to actual dilution.
But the Mosely case has created problems of proof and a
complicated kind of bifurcated standard or system for dealing
with cases where the marks are identical or the marks are not
identical or the marks are almost identical. Unless the
parties' marks are identical, post-Mosely actual dilution
opinions almost uniformly have dismissed dilution claims due to
the absence of sufficient evidence under the Mosely standard,
although there is no uniform view as to what that type of
evidence would be.
Judge Posner in the Seventh Circuit decision of Ty, Inc. v.
Softbelly's, involving the Beanie Babies company, expressed
great skepticism even of survey evidence in providing actual
dilution, which is quite telling as to the difficulties of
proof that the Mosely standard has created, because survey
evidence is traditionally one of the most classic and most
persuasive and most informative forms of trial evidence that
trademark lawyers utilize in both prosecuting and defending
against trademark claims of various sorts.
Mosely has even divided the courts on protecting identical
marks. Its comments have been interpreted in a couple of
different ways. The court said it may be that direct evidence
of dilution, such as surveys, will not be necessary if actual
dilution can be proven through circumstantial evidence. The
obvious case is one where the junior and senior marks are
identical. Well, this has been interpreted as where the junior
and senior marks are identical, the fact that the identity is
in itself sufficient to prove dilution. In other cases, the
courts say, well, when the marks are identical, additional
evidence is still necessary, but it can be circumstantial as
well as direct.
Mosely also divides the Trademark Trial and Appeal Board
from the district courts in dealing with dilution cases under
the Federal Act. In the Trademark Board, oppositions can be
filed against intent-based applications where there is no use
of the mark yet and, therefore, by definition, the use of the
mark, the proposed use of the mark has to be deemed likely to
cause dilution if the opposition is on the dilution ground. We
believe that a uniform standard should be set to even out these
inconsistencies.
We believe a likelihood of dilution standard is consistent
with the First Amendment. We endorse the continuation of the
exceptions, the defenses that are stated for proper areas of
use. Nobody really has been using, in our view, the dilution
statute as it presently exists to stifle free speech, and
frankly, a likelihood of dilution standard has been in place
under the State dilution statutes which exist for many, many
years and we don't believe that there has been empirical
evidence of the erosion of First Amendment rights as a result
of that.
In conclusion, we believe a likelihood of dilution standard
should be adopted. If the status quo remains, the Federal
Trademark Dilution Act will not be an effective means of
protecting famous marks.
Second, briefly on acquired distinctiveness. As I mentioned
earlier, there are two kinds of----
Mr. Smith. Mr. Sacoff, maybe we can get to that during the
question and answer period, since we are out of time.
Mr. Sacoff. I will be happy to do that, and will rely upon
our written statement for the remainder of our detail.
Mr. Smith. Very good. Thank you, Mr. Sacoff.
[The prepared statement of Mr. Sacoff follows:]
Prepared Statement of Robert W. Sacoff
Mr. Chairman and members of the Subcommittee:
Thank you for the opportunity to testify on behalf of the American
Bar Association and that Association's Section of Intellectual Property
Law. My name is Robert W. Sacoff. I am a partner in the law firm of
Pattishall, McAuliffe, Newbury, Hilliard & Geraldson, and I currently
serve as Chair of the ABA Section of Intellectual Property Law. The
views that I express supporting amendment of the Federal Trademark
Dilution Act of 1995 (the ``FDTA'') to provide that questions of
trademark dilution should be resolved under the ``likelihood of
dilution'' standard have been adopted as ABA policy by our Board of
Governors, and therefore represent views of the Association. Views
expressed on other issues regarding the FDTA have not been approved by
the House of Delegates or Board of Governors of the Association. Those
views are those of the Section of Intellectual Property Law (IP Law
Section) alone.
The Federal Trademark Dilution Act of 1995 was enacted on January
16, 1996. After eight years of experience under the Act, it is
appropriate that Congress revisit the statute to identify areas of
possible amendment and improvement, and we applaud the Subcommittee for
initiating that exercise. The Subcommittee has asked the witnesses
today to consider a number of options for amendment to the FTDA. We
have done so, and offer three recommendations in this regard and
general comments on a fourth issue concerning niche market fame.
EXECUTIVE SUMMARY
The Federal Trademark Dilution Act should be amended in three ways:
(1) creating a ``likelihood of dilution'' standard; (2) providing a
specific cause of action for dilution by tarnishment; and (3) allowing
for non-inherently distinctive marks to be eligible for protection.
These three amendments are consistent with the intent of the FTDA. In
addition, they are necessary to allow for the statute to function
properly.
The Supreme Court's recent decision in Moseley requiring actual
dilution has led to uncertainty and unpredictability in the lower
courts as they struggle with the quantum of proof and type of evidence
necessary to establish actual dilution. The actual dilution standard
has proven unworkable in practice. There should be no concern about the
impact this proposed amendment will have on free speech, since
there is no conflict between the likelihood standard and the First
Amendment.
The Moseley decision cast doubt on whether the FTDA creates a cause
of action for tarnishment. The majority of courts prior to Moseley did
recognize an anti-tarnishment provision in the FTDA, based on the
legislative history. Moseley, however, called this into question.
Therefore, the call for a legislative amendment on this issue is
understandable, and the ABA IP Law Section supports clarification of
this matter by an amendment to the FTDA to expressly provide a cause of
action for dilution by tarnishment.
Finally, the Second Circuit has added an additional requirement to
the FTDA, namely that a mark must be inherently distinctive to qualify
for protection. In other words, under this minority view some of the
most famous ``supermarks'' (e.g., FORD automobiles, DELL computers)
might not be eligible for protection under the FTDA even though they
have acquired massive distinctiveness and fame. This minority position
therefore precludes the owners of some famous marks from exercising the
rights Congress intended to grant them. There is concern that this
minority position may be followed by more courts because the Moseley
decision, in dicta, made comments that could be interpreted to support
the Second Circuit's view.
Unlike the above issues, there is no consensus in the trademark law
community as to whether the FTDA currently protects marks that have
acquired niche fame or should protect such marks. Thus, a legislative
amendment is not appropriate at this time.
I. LIKELIHOOD OF DILUTION STANDARD
The Federal Trademark Dilution Act should be amended to provide
that cases of trademark dilution before the federal courts and
Trademark Trial and Appeal Board of the USPTO should be uniformly
decided under the ``likelihood of dilution'' standard. Our analysis of
the FTDA leads us to the conclusion that the likelihood of dilution
standard is not only preferable, but clearly is what Congress intended.
Nonetheless, in light of the Supreme Court's decision in Moseley v. V.
Secret Catalogue, Inc., an amendment to the FTDA is now needed to
provide ``likelihood of dilution'' as the standard.
A. Moseley v. V. Secret Catalogue, Inc.
In Moseley v. V. Secret Catalogue, Inc., 123 S. Ct. 1115 (2003),
the Supreme Court held that the text of the FTDA ``unambiguously
requires a showing of actual dilution, rather than a likelihood of
dilution.'' Id., 123 S. Ct. at 1124. The Court went on to state ``that
does not mean that the consequences of dilution, such as an actual lost
of sales or profits, must also be proved. . . . [A]t least where the
marks are not identical, the mere fact that consumers mentally
associate the junior user's mark with a famous mark is not sufficient
to establish actionable dilution.'' Id., 123 S. Ct. at 1124. Further,
the Court said, ``direct evidence of dilution such as consumer surveys
will not be necessary if actual dilution can reliably can be proven
through circumstantial evidence--the obvious case is one where the
junior and senior marks are identical. Whatever difficulties of proof
may be entailed, they are not an acceptable reason for dispensing with
proof of an essential element of a statutory violation.'' Id., 123 S.
Ct. at 1125. Illustrative cases are reviewed below.
B. Problems Of Proof Created By Moseley
The Supreme Court's ``actual dilution'' standard in Moseley has
become an incredibly difficult criterion by which to measure adequate
proof of dilution. Unless the parties' marks were identical, post-
Moseley ``actual dilution'' opinions almost uniformly have dismissed
dilution claims due to the absence of sufficient evidence under the
Moseley standard. Even in cases where the parties' marks were
identical, the Moseley decision has been interpreted by some courts as
requiring ``extra'' burdens of proof. So that otherwise qualifying
famous marks can be given the proper scope of protection intended by
Congress, the FTDA should be revised to expressly include a
``likelihood of dilution'' standard.
Ty, Inc. v. Softbelly's, Inc., No. 03-1592, 2003 WL 22994564 (7th
Cir. Dec. 22, 2003): Although the ``actual dilution'' discussion is
quite brief, this decision contains language that casts some doubt on
consumer surveys as proof of dilution. In an opinion written by Judge
Posner, the Seventh Circuit reversed judgment as a matter of law for
the manufacturer of ``Beanie Babies'' in a trademark infringement and
dilution case against the manufacturer of ``Screenie Beanies,'' small,
plush, stuffed animals sold in computer stores for use in wiping
computer screens. See Softbelly's, 2003 WL 22994564 at *1. On the
dilution claim, the Court held that the district court's ruling for Ty
``had scant grounding in the evidence.'' Id. at *6. Indeed, the Court
found that ``no evidence of any sort was presented that would have
enabled a trier of fact to infer any lessening in the capacity of
`Beanies' or `Beanie Babies' to `identify and distinguish' the plush
beanbag animals sold by Ty'' and remanded for a new trial on the issue.
Id. at *6-7, citing Moseley, 123 S. Ct. 1115 (2003).
Judge Posner noted that Moseley ``impl[ied] a need for trial-type
evidence'' to determine whether dilution had occurred. Id. at *6.
Commenting indirectly on the Supreme Court's reference to consumer
surveys as direct evidence of actual dilution Moseley, 123 S. Ct. at
1125, Judge Posner expressed his skepticism that any ``question could
be put to consumers that would elicit a meaningful answer either in
that case or this one.'' Id., (citing Jonathan Moskin, ``Victoria's Big
Secret: Whither Dilution Under the Federal Dilution Act?'', 93
Trademark Rep. 842, 853 (2003)). Regarding the suggestion that
circumstantial evidence might be sufficient to prove actual dilution
where the disputed marks were identical, Moseley, 123 S. Ct. at 1125,
Judge Posner somewhat acerbically observed that the Supreme Court ``did
not explain and no one seems to know what that `circumstantial
evidence' might be.'' \1\ Id. at *7.
---------------------------------------------------------------------------
\1\ Judge Posner's skepticism on this point notwithstanding,
several district courts have found actual dilution, on various
showings, when the marks at issue were identical. See Savin Corp. v.
The Savin Group, No. 02 Civ.9377 SAS, 2003 WL 22451731, *14-*15
(S.D.N.Y. Oct. 24, 2003); Scott Fetzer Co. v. Gehring, 288 F.Supp.2d
696, 2003 WL 22429698, *5 (E.D.Pa. Sept. 23, 2003); Nike Inc. v.
Variety Wholesalers, Inc., 274 F.Supp.2d 1352, 1372 (S.D.Ga. 2003);
Four Seasons Hotels and Resorts B.V. v. Consorcio Barr, S.A., 267
F.Supp.2d 1268 (S.D.Fla. 2003); and Pinehurst, Inc. v. Wick, 256
F.Supp.2d 424, 431-432 (M.D.N.C. 2003), discussed below. In the case at
bar, as Judge Posner noted, neither ``Beanies'' nor ``Beanie Babies''
were identical to ``Screenie Beanies.'' See Softbelly's, 2003 WL
22994564 at *7.
---------------------------------------------------------------------------
Caterpillar Inc. v. Walt Disney Co., 287 F. Supp. 2d 913, 922,
(C.D. Ill. 2003): The court began its treatment of dilution by noting
that Moseley and its actual dilution requirement pertained only to
blurring and, in the case at bar, Caterpillar did not argue blurring,
but rather tarnishment. See Caterpillar, 287 F.Supp.2d at 921-922. The
court noted Moseley left open the question of whether tarnishment fell
within the scope of the FTDA. Id. at 922. Assuming that actual dilution
must be shown for tarnishment cases, the court further observed, ``it
is unclear what type of showing Caterpillar must make,'' although it is
clear that Caterpillar need not prove loss of sales of profits nor by
direct evidence such as a consumer survey, but may rely on
circumstantial evidence. Id. (citing Moseley, 123 S. Ct. at 1124).
Because Disney's movie had not yet been released, there was nothing in
the record to suggest that Caterpillar had lost sales or profits, nor
any consumer survey evidence showing actual dilution. See, Id.
Accordingly, there was nothing in the record to show that Caterpillar
was likely to succeed on its dilution claim and therefore no basis to
support its request for a TRO. See, Id.
Although the court does not spell this out, presumably
circumstantial evidence would be sufficient because the marks that
Disney used in its movie were ``identical,'' indeed, were Caterpillar's
own mark. It may be inferred that, because the court did not hold that
the ``identity'' of the marks was sufficient in itself to prove
dilution, the court was siding with the ``identity plus'' line of post-
Moseley decisions, although the lack of any discussion or analysis on
this point makes this inference speculative at best.
Kellogg Co. v. Toucan Golf, Inc., 337 F.3d 616 (6th Cir. 2003):
This case began when Kellogg opposed registration of the word mark
``Toucan Gold'' for use in connection with golf clubs and golf putters.
(Defendant Toucan Golf was a manufacturer of golf equipment for sale
primarily to companies who used the clubs as promotional gifts at
charity events.) See Toucan Golf, 337 F.3d at 620-621. In appealing the
decision of the Trademark Trial and Appeal Board (``TTAB'') permitting
the registration to the federal district court, Kellogg claimed that
the word mark and an unregistered cartoon toucan logo used by Toucan
Golf infringed and diluted Kellogg's famous Toucan Sam design and word
marks. Id. at 622. Rejecting both claims, the district court and the
Sixth Circuit Court of Appeals affirmed the TTAB's decision.
As the Sixth Circuit interpreted Moseley, the Supreme Court held
that Plaintiff V. Secret's dilution claim failed because it ``did not
present any empirical evidence that consumers no longer clearly
understood to which products the `Victoria's Secret' mark was related,
and thus failed to demonstrate the `lessening of the capacity of the
Victoria's Secret mark to identify and distinguish goods or services
sold in Victoria's Secret stores or advertised in its catalogs.' '' Id.
at 628 (citing Moseley, 123 S.Ct. at 1125) (emphasis added). Similarly,
the Sixth Circuit found, Kellogg presented no evidence that Toucan
Golf's use of its toucan marks ``has caused consumers no longer to
recognize that Toucan Sam represents only Froot Loops'' or that ``any
segment of the population recognizes Toucan Sam as the spokesbird only
for Froot Loops in lesser numbers than it did before TGI started using
its toucan marks.'' Id. (emphases added). Indeed, the court emphasized,
Kellogg presented one survey conducted in 1991 that showed 94% of
children recognized Toucan Sam and 81% related him to Froot Loops and
another from 1997, after Toucan Golf started business, that showed 94%
recognition of Toucan Sam among adults. Id.
The Sixth Circuit's opinion is problematic on several levels, and
demonstrates a potentially far-reaching implication of the Supreme
Court's Moseley decision. Moseley nowhere articulated the ``no longer
clearly understood'' standard that the Sixth Circuit invoked, and the
Court cited no authority in case law, statute, or legislative history
in support of it. The Sixth Circuit thus gave no real parameters to the
standard. For example, what percentage showing in a consumer survey
would suffice to prove dilution? What would be the relevant universe
and the relevant time frame for such a survey? How would causation be
proven? And how would factors like market conditions and general
consumer preferences be treated in the survey analysis? (Of course, the
latter is a fundamental flaw in the actual dilution standard itself,
which the Second Circuit emphasized in Nabisco, Inc. v. PF Brands,
Inc., 191 F.3d. 208 (2nd Cir. 1999), and which the Moseley Court failed
to address.)
Practically speaking, Toucan Golf presents strategic dilemmas for
dilution claimants and litigators. The surveys that the Sixth Circuit
relied upon to reject Kellogg's dilution claim were presented as
evidence of Toucan Sam's strength and fame. Id. at 624 (noting that
Kellogg presented the 1991 survey in support of ``the strength of its
Toucan Sam marks''). The 1997 survey the Court relied upon also was
submitted to demonstrate fame; was a survey of a different universe
(adults, not children); and was conducted after Toucan Golf had begun
business but before the Toucan Gold mark was used in commerce. Id. at
624 (noting that Toucan Golf's application for ``Toucan Gold'' was an
``intent to use'' application) and 628. Nevertheless, the Sixth Circuit
apparently based its conclusion that Kellogg had failed to prove any
erosion in consumer recognition of its marks on that second survey.
While the Sixth Circuit's standard is quite amorphous, dilution
claimants seeking to rely on survey evidence in that jurisdiction may
need to have conducted a fame survey before the junior mark was
introduced and then another (using the same survey instrument?) at some
point thereafter, and the results will have to show erosion in consumer
recognition of some uncertain amount. If, for example, a senior mark
holder discovers a purportedly diluting use within the statute of
limitations, but has not conducted a pre-use survey, Toucan Golf could
be read to suggest the senior user may be unable to prove actual
dilution for lack of a pre-junior-mark benchmark survey. However, such
surveys, aside from their cost, present the danger of being used in
litigation against claimants by alleged diluters, if they do not
demonstrate erosion in consumer recognition.
C. Moseley's Divisive Impact On The Issue Of Protecting Identical Marks
In Moseley, the Supreme Court stated a dictum touching on the
situation where the disputed marks in a dilution claim are identical:
``It may be, however, that direct evidence of dilution such as consumer
surveys will not be necessary if actual dilution can reliably be proven
through circumstantial evidence--the obvious case is one where the
junior and senior marks are identical.'' Moseley, 123 S. Ct. at 1125.
The statement has given rise to several decisions and a split of
authority among the lower courts.
Savin Corp. v. The Savin Group, No. 02 Civ.9377 SAS, 2003 WL
22451731, (S.D.N.Y. Oct. 24, 2003): As Judge Scheindlin of the Southern
District of New York observed, the Moseley's Court's statement is
subject to at least two different readings: (1) When the junior and
senior marks are identical, the fact of the identity is in itself
``sufficient circumstantial evidences to prove actual dilution.'' Or,
(2) when the marks are identical, circumstantial evidence as opposed to
direct evidence may prove dilution. See Savin Group, 2003 WL 22451731
at *14, citing Nike Inc. v. Variety Wholesalers, Inc., 274 F.Supp.2d
1352, 1372 (S.D.Ga. 2003) and Pinehurst, Inc. v. Wick, 256 F.Supp.2d
424, 431-432 (M.D.N.C. 2003), respectively.
In Savin Group, a dispute over identical marks of plaintiff office
services company and defendant professional engineering consultants,
the court found the second interpretation more plausible. Id. at *1-*2,
*14-*15. Judge Scheindlin emphasized the sentence that followed the
dictum in Moseley: ``Whatever difficulties of proof may be entailed,
they are not an acceptable reason for dispensing with proof of an
essential element of a statutory violation.'' Id. at *15, quoting 123
S. Ct. at 1125. In other words, as Judge Scheindlin read the passage,
even when the marks are identical, additional proof of actual dilution
is required; the simple fact of identity does not suffice. Accordingly,
because plaintiff in the case at bar offered no proof beyond the
identity of the marks, it ``failed to raise a material issue of fact
with regard to an essential prong of the dilution test,'' warranting
summary judgment for defendant. Id.
HBP, Inc. v. American Marine Holdings, Inc., No. 6:02-CV-957-
ORL22DAB, 2003 WL 22593589, (M.D.Fla. Oct. 10, 2003): The identical
mark at issue in this case was ``Daytona,'' used by plaintiff HBP as a
trade and service mark for stock car and motorcycle races and by the
defendant boat manufacturer for a line of recreational powerboats. Id.
at *2-3. Granting summary judgment for American Marine on the dilution
claim, the court first found that HBP's mark was not famous for
dilution purposes. See American Marine, 2003 WL 22593589 at *2-*3. The
court found further that, even if HBP's mark was famous, HBP had failed
to prove actual dilution under Moseley. The court pointed, in part, to
the lack of evidence ``demonstrating that [HBP's] customers and
potential customers have, as a result of American Marine's use of the
`Daytona' mark on its boats, formed any different impression of HBP's
products and services.'' Id. at *16. (Although this resembles
``tarnishment'' language, only dilution by blurring was at issue in the
case and the court's supporting citation to Mead Data Central, Inc. v.
Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1029 (2d Cir. 1989),
suggests that blurring was what it had in mind.)
There was an interesting procedural misstep in this case. HBP
offered into evidence excerpts from a deposition transcript that it
contended showed American Marine's use of the ``Daytona'' mark had
caused loss of licensing revenue and dilution of existing royalty
value. Id. at *15. The opinion gives the deponent's name (Glenn
Padgett), but does not identify who he was or what relationship he had
to either of the parties. The court did not consider this evidence,
however, because HBP had failed to file the deposition transcript as
part of the record before the Court. Id. This is unfortunate, because
it leads to intriguing speculation of just how Mr. Padgett purportedly
demonstrated loss of licensing revenue and what the court's findings
might have been had the evidence been admitted.
Scott Fetzer C. v. Gehring, 288 F.Supp.2d 696 (E.D. Pa. 2003):
This is one of the opinions in which the court held that the identity
of the marks was, in and of itself, sufficient circumstantial evidence
to prove dilution, although it did point to other circumstantial
evidence supporting its finding. See Scott Fetzer, 288 F. Supp. 2d at
702. Plaintiff was the parent company of a vacuum cleaner business that
had used the famous Kirby trademark since 1930. Id. at 700. Defendant
ran a vacuum cleaner store and repair business that widely used the
Kirby mark in its advertisements, including in the store's name--
``Kirby Vacuum Sales & Service,'' despite not being authorized to use
the mark or to sell or service Kirby vacuum cleaners. Id.
In holding that defendant's use of the Kirby trademark ``lowered
the value and esteem of plaintiff's mark,'' the court reasoned that
``where the competing entities are using marks that are identical,
dilution may be reliably found using the circumstantial evidence of the
identical marks.'' Id. at 701-702; citing Moseley, 123 S. Ct. at 1125.
In addition to the identity of the marks, the court noted that
defendant sold second-hand Kirby vacuum cleaners without permission and
falsely advertised that these machines came with a one-year-
manufacturer's guarantee. Id. at 703 These facts taken together, the
court concluded, sufficed to prove plaintiff's dilution claim. Id. at
703.
Nike Inc. v. Variety Wholesalers, Inc., 274 F.Supp.2d 1352, 1372
(S.D.Ga. 2003): As in Scott Fetzer, the court in this case concluded
that identity of the marks was sufficient evidence to prove dilution,
albeit without any analysis or rationale beyond citing the Moseley
dictum. While otherwise a complicated case, for dilution purposes the
facts were simple: Defendant was a low-cost, ``secondary market''
clothing retail chain, which plaintiff proved was selling counterfeit
Nike products. See Variety Wholesalers, 274 F.Supp.2d at 1355, 1357.
The court concluded that Variety Wholesalers had diluted Nike's famous
trademarks ``due to the identical or virtually identical character of
the marks on the Accused Goods to the Nike trademarks.'' Id. at 1372
(citing Moseley, 123 S.Ct. at 1125) (emphasis added).
Four Seasons Hotels and Resorts B.V. v. Consorcio Barr, S.A., 267
F.Supp.2d 1268 (S.D. Fla. 2003): At issue was a complex dispute between
a licensor and licensee involving breach of contract, claims of
industrial espionage and trademark issues. Four Seasons, the famous
luxury hotel chain, had contracted with Consorcio Barr to build and
operate the Four Seasons hotel in Caracas, Venezuela, and licensed
defendant to use its brand name, trademarks, and logo for that purpose.
See Consorcio Barr, 267 F.Supp.2d at 1271-1272. However, the
relationship was plagued with problems from the beginning. Consorcio
failed to open the hotel on time; important facilities including
suites, the poolside restaurant, and the spa were not completed at the
hotel's opening; there was no sign in front of the hotel; hotel
employees lacked the required uniforms; many vital operational
functions were not in place, such as hotel bank accounts; and some
rooms were furnished with rented furniture not up to Four Seasons'
quality standards. See Id. at 1275. In addition, pertinent to the
trademark claims, Consorcio's marketing materials for the residential
apartments used Four Seasons' marks, an unauthorized use, the materials
were not approved by Four Seasons, as required by the license, and the
materials did not comply with Four Seasons' quality standards. See Id.
at 1309-1310.
These facts, the court held, provided evidence of actual dilution.
The court based this finding on the recognized duty and right of
trademark licensors to police the use of the marks it licenses and the
quality of the goods they are used on: ``The licensor owes an
affirmative duty to the public to assure that in the hands of his
licensee the trademark continues to represent that which it purports to
represent.'' Id. at 1327 (quoting Siegel v. Chicken Delight, Inc., 448
F.2d 43, 51 (9th Cir. 1971)). Accordingly, as Professor McCarthy
concludes, a trademark licensor has an affirmative duty under the
Lanham Act ``to control the quality of goods and services which reach
buyers under the licensed mark.'' Id., citing 2 McCarthy on Trademarks,
Sec. 18:50 (4th ed. 2003). Moreover, ``'[d]istribution of a product
that does not meet the trademark holder's quality control standards may
result in the devaluation of the mark by tarnishing its image.' '' Id.
at 1328 (quoting Warner-Lambert Co. v. Northside Dev. Corp., 86 F.3d 3,
6 (2d Cir. 1996)).
Consorcio did not maintain Four Seasons quality standards, leading
to a likelihood of consumer confusion ``as to Four Seasons' approval of
such use . . .'' Id. at 1330. In addition to infringement, the court
held that these facts supported a finding of dilution: ``Consorcio's
failure to comply with the quality control standards of the License
Agreement diminished the capacity of the mark to distinguish the high
quality of Plaintiffs' services.'' Id. at 1332. In addition, consumer
complaints that the Caracas hotel ``'wasn't a Four Seasons' due to its
substandard nature, incomplete construction and inferior furnishings
and finishings'' constituted ``evidence of actual harm'' sufficient to
establish dilution. Id.
Again, as in several of the post-Moseley decisions, this case
concerned identical marks, although, perhaps because the context was
that of licensor-licensee, the court made no particular note of the
identity factor. However, the Court did appear to side with the
``additional-circumstantial-evidence'' school. The ``plus'' factors
here were the licensee's failure to comply with the licensor's express
quality control standards and the use of the mark on substandard,
inferior services. In a footnote, the court suggested that the focus of
the inquiry was whether customers ``form a`different impression' of the
goods or services of the senior user.'' Id. at 1332, n. 8 (citing
Moseley, 123 S.Ct. at 1124). This was how this court seemed to
understand Moseley's rejection of the sufficiency of ``mental
association'' between the disputed marks to support a finding of
dilution under the Federal Trademark Dilution Act (``FTDA'').
Pinehurst, Inc. v. Wick, 256 F.Supp.2d 424 (M.D.N.C. 2003): This
was a classic cybersquatting case, with the court also finding actual
dilution. In 1999, defendants registered 3,000 to 4,000 domain names
that were confusingly similar to some of the most famous marks in
America, including those of about 7% of Fortune 500 company names. See
Wick, 256 F.Supp.2d at 426. Defendants then sold a number of their
registered domain names to companies that contacted them requesting to
purchase the company's domain name. Id. Plaintiff, owner of the famous
Pinehurst Golf Resort and Pinehurst No. 2 golf course, instead sued
defendants over their registration of the domain names
``PinehurstResort.com'' and ``PinehurstResorts.com'' under the
Anticybersquatting Consumer Protection Act (``ACPA''), 15 U.S.C.
section 1125(d), and the FTDA, 15 U.S.C. section 1125(c). See id. at
426-427. Pinehurst prevailed on both claims and obtained a permanent
injunction and statutory damages in the amount of $100,000, plus
attorneys' fees and costs. See id. at 433.
Although the Variety Wholesalers court relied on this decision in
support of its conclusion that identity of the disputed marks
established dilution, see 274 F.Supp.2d at 1372, Wick is better
characterized as an ``identity plus'' decision, as Judge Scheindlin
noted in Savin Group, 2003 WL 22451731 at *14. The plus factor in Wick
arose from the unique role trademarks serve in Internet domain names:
``A customer using the Internet will be unable to discern any
appreciable difference between Defendants' domain names and Plaintiff's
marks,'' id. at 432, which reduced the value of that mark in two ways:
Wick's registration of Pinehurst's marks as domain names prevented
Pinehurst from engaging in electronic commerce using its own marks. See
Wick, 256 F.Suppp.2d at 431. In addition, the economic value of
Pinehurst's marks was reduced because customers, unable to locate
Pinehurst's website and services using domain names identical to its
registered marks, ``'may fail to continue to search for [P]laintiff's
own home page due to anger, frustration, or the belief that
[P]laintiff's home page does note exist.' '' Id. (quoting PETA v.
Doughney, 263 F.3d 359, 365 (4th Cir. 2001)). The Wick court's
reasoning gives holders of famous marks battling cybersquatters
persuasive arguments in support of finding trademark dilution under the
FTDA in addition to stating claims under the ACPA. Nevertheless, the
status of these arguments is questionable at best. The Wick court
relied heavily on Panavision Int'l. L.P. v. Toeppen, 141 F.3d 1316 (9th
Cir. 1998). Thus, the uncertainty caused by the Moseley decision has
left some courts relying on questionable and outdated precedents.
Golden West Financial v. WMA Mortgage Services, No. C 02-05727 CRB,
2003 WL 1343019 (N.D.Cal. March 13, 2003): In contrast, Judge Breyer in
this case found no dilution, in part because plaintiffs could not prove
that defendants' use of nearly identical marks had or would prevent any
customers from succeeding in contacting them. See Golden West
Financial, 2003 WL 1343019 at *8. In dispute were plaintiffs' ``World
Savings and Loan,'' ``World Mortgage'' and related marks for financial
services allegedly infringed and diluted by defendants' ``World Lending
Group'' service mark for financial services. Id. at *1. Even were
plaintiffs' marks famous, which the court found they were not, there
was no evidence in the case that defendants' use of its ``World'' mark
had diluted plaintiffs' marks. See id. at *8. To the contrary, the
court noted, plaintiffs in 2002 had nearly $65 million in assets and
its profits were a record. Id. In addition, unlike in the Ninth
Circuit's seminal cybersquatting decision, Panavision Int'l, L.P. v.
Toeppen, 141 F.3d 1316, 1327 (9th Cir. 1998), ``the use of the
term`World' in defendants' company names has not decreased the value of
plaintiffs' trademark because plaintiffs' customers can easily
recognize and contact them.'' Id.
D. Divergence Between TTAB And Case Law Precedent
The Trademark Trial and Appeal Board recently held that the
likelihood of dilution standard still applies to such applications
rather than the actual-dilution standard. See The Nasdaq Stock Market,
Inc. v. Antartica, S.R.L., Opposition No. 91121204 to Application
Serial No. 75/546,122, 2003 WL 22021943, *19-*23 (TTAB June 30, 2003).
Thus, the Moseley decision has created a split in the way the FTDA is
applied. Federal courts use the actual dilution standard while the TTAB
arguably still uses the likelihood of dilution standard. Uniformity in
application is necessary for the healthy development of the law and to
allow for predictability and certainty.
E. A Likelihood Of Dilution Standard Is Consistent With The First
Amendment
Courts have been successfully accommodating First Amendment
concerns within the Lanham Act. See, e.g., Mattel, Inc., v. Walking
Mountain Productions, 2003 WL 23018285 (9th Cir. Dec. 29, 2003)
(finding defendant's expressive commercial use protected after
balancing the Lanham Act and the First Amendment). See generally
Kournikova v. General Media Communications Inc., 278 F.Supp.2d 1111,
1128 (C.D. Cal. 2003) (noting that ``Courts have placed limits on
Lanham Act lawsuits because of the potential impact on First Amendment
rights''). Thus, any concern about encroaching on free speech rights is
historically unsupported.
Moreover, the FTDA explicitly provides for several exceptions to
liability that alleviate potential tension with the First Amendment:
``(A) Fair use of a famous mark by another person in comparative
commercial advertising or promotion to identify the competing goods or
services of the owner of the famous mark; (B) Noncommercial use of a
mark; (C) All forms of news reporting and news commentary.'' 15 U.S.C.
Sec. 1125(c)(4). In applying these exceptions, courts have construed
the ``noncommercial use'' provision broadly to ensure no First
Amendment problems. See, e.g., Mattel, Inc. v. MCA Records, 293 F.3d
894 (9th Cir. 2002) (holding that a music group's song that lampooned
toy manufacturer's doll fell under non commercial use exception in
FTDA). In addition, commercial speech is protected by the First
Amendment and thus a court could not avoid a First Amendment analysis.
See, e.g., Virginia Board of Pharmacy v. Virginia Citizens Consumer
Counsel, 425 U.S. 765 (1976).
There is no reason to believe that including a likelihood standard
significantly changes the approach courts will take in balancing First
Amendment concerns, the likelihood standard has dominated state law
dilution statutes for decades. The 1964 United States Trademark
Association Model State Trademark Bill establishes liability for
``[l]ikelihood of injury to business reputation or of dilution of the
distinctive quality of the mark.'' This standard has not led to a
progressive encroachment on free speech rights. See, e.g., L.L. Bean,
Inc. v. Drake Publishers, Inc., 811 F.2d 26 (1st Cir. 1987) (holding
that the state law likelihood of dilution statute could not be applied
to prohibit a tarnishing parody because doing so would offend the First
Amendment).
F. Conclusion
Amending the FTDA to incorporate a likelihood of dilution standard
will solve a host of problems created by the Moseley decision. If the
status quo remains, the FTDA will not be an effective means of
protecting famous marks.
II. TARNISHMENT IN THE FTDA
The FTDA should be amended to include a specific cause of action
for tarnishment because the Supreme Court in Moseley cast doubt on its
existence in the FTDA even though the legislative history for the Act
indicates Congress intended for there to be one and other case law
recognized the cause of action.
A. FTDA Legislative History Refers To Tarnishment
The Supreme Court in Moseley provided the following concise summary
of the legislative effort leading to the passage of the FTDA and the
intent that the FTDA cover tarnishment:
On July 19, 1995, the Subcommittee on Courts and Intellectual
Property of the House Judiciary Committee held a 1-day hearing
on H.R. 1295. No opposition to the bill was voiced at the
hearing and, with one minor amendment that extended protection
to unregistered as well as registered marks, the subcommittee
endorsed the bill and it passed the House unanimously. The
committee's report stated that the ``purpose of H.R. 1295 is to
protect famous trademarks from subsequent uses that blur the
distinctiveness of the mark or tarnish or disparage it, even in
the absence of a likelihood of confusion.'' H.R. Rep. No. 104-
374, p. 1029 (1995). As examples of dilution, it stated that
``the use of DUPONT shoes, BUICK aspirin, and KODAK pianos
would be actionable under this legislation.'' Id. at 1030. In
the Senate an identical bill, S. 1513, 104th Cong., 1st Sess.,
was introduced on December 29, 1995, and passed on the same day
by voice vote without any hearings. In his explanation of the
bill, Senator Hatch also stated that it was intended ``to
protect famous trademarks from subsequent uses that blur the
distinctiveness of the mark or tarnish or disparage it,'' and
referred to the Dupont Shoes, Buick aspirin, and Kodak piano
examples, as well as to the Schechter law review article. 141
Cong. Rec. 38559-38561 (1995).
Moseley, 123 S. Ct. at 1123 (emphasis added).
Despite these statements that the legislation was intended to cover
tarnishment claims, the Court was not persuaded that the statutory
language accomplished this purpose because the statute did not include
specific language regarding tarnishment, such as ``injury to business
reputation.'' Thus the Court wrote:
Indeed, the contrast between the state statutes, which
expressly refer to both`injury to business reputation' and to
dilution of the distinctive quality of a trade name or
trademark,' and the federal statute which refers only to the
latter, arguably supports a narrower reading of the FTDA.
Moseley, 123 S. Ct. at 1124. In his concurrence in this case, however,
Justice Kennedy viewed the statute as encompassing both blurring and
tarnishment. See id. at 1126; See also Pattishall, Hilliard and Welch,
Trademarks and Unfair Competition Deskbook Sec. 8.01[2][b] (2d ed.
2003).
The primary legislative history of the 1995 Act is House Report
104-374. The language the Supreme Court quoted from that report is
probably the best language in support of the proposition that Congress
intended the FTDA to cover dilution by tarnishment. Additional support
is found in the ``section by section analysis'' of the proposed bill,
which states that the definition of dilution ``is designed to encompass
all forms of dilution recognized by the courts, including dilution by
blurring, by tarnishment and by disparagement.) H. R. Rep. No. 104-374
at page 8 (emphasis added).
Another potential source of legislative history is the testimony
taken by the Subcommittee on Courts and Intellectual Property on July
19, 1995. The House Report recites the fact the Committee received the
testimony and the identity of the witnesses, but the substance of that
testimony is not part of the actual Report. See Id. at p. 5. Still,
that testimony itself provides a nearly unanimous view that the
proposed law would cover both blurring and tarnishment. See, e.g.,
Testimony of Mary Ann Alford, the Executive Vice President of INTA
(``This definition [of dilution in the proposed statute] encompasses
both dilution by blurring and dilution by tarnishment. It is also
elastic enough to encompass future, currently unforeseen, factual
situations that may give rise to liability.'') But see Testimony of
Jonathan E. Moskin (``H.R. 1295 does not purport to recognize injury
from uses of a famous trademark that are likely to tarnish the
reputation of the owner of famous mark. This is one form of injury that
has been susceptible of proof under state dilution laws independent of
proof of likelihood of confusion.'')
In sum, the 1995 legislative history of the FTDA supports the
conclusion that Congress intended that statute to cover dilution by
tarnishment. The Supreme Court has raised doubts about whether the
statutory language accomplishes this purpose.
B. Case Law After The Enactment Of The FTDA Recognized The Existence Of
A Specific Cause Of Action For Tarnishment In The Act
After the enactment of the FTDA and prior to the Moseley decision,
courts ``have construed the federal dilution statute to protect against
dilution by tarnishment.'' Pattishall, Hilliard, and Welch, Trademarks
and Unfair Competition Deskbook Sec. 8.01[2][c] (2d ed. 2003); See also
Clinique Labs. v. Dep Corp., Inc., 945 F. Supp. 547, 560-62 (S.D.N.Y.
1996)(Recognizing a cause of action for tarnishment under the FTDA,
while holding that defendant's BASIQUE skin care products did not
tarnish plaintiff's CLINIQUE skin care products); Dr. Seuss, Enter. v.
Penguin Books USA, Inc., 924 F. Supp. 1559, 1573 (S.D. Cal. 1996),
aff'd, 109 F.3d 1394 (9th Cir.), cert. Dismissed, 521 U.S. 1146 (1997)
(``The legislative history supports the conclusion that Congress also
intended the Act to cover dilution through tarnishment''); Anheuser-
Busch v. Andy's Sportswear, 40 U.S.P.Q.2d 1542 (N.D. Cal.
1996)(BUTTWISER t-shirt dilutes BUDWEISER mark for beer; TRO granted in
context which makes tarnishment the basis for decision); Ringling
Bros.-Barnum & Bailey Combined Shows v. B.E. Windows Corp., 937 F.
Supp. 204, 211(S.D.N.Y. 1996)(Recognizing a cause of action for
tarnishment under the FTDA, but finding that defendant's GREATEST BAR
ON EARTH services mark for a night club did not tarnish the
``wholesome, family oriented image of [plaintiff's ] GREATEST SHOW ON
EARTH'' mark under the Dilution Act, noting alcohol was served at
venues where plaintiff's circus performed).
C. Since The Moseley Decision, At Least One Court Has Raised Doubts
About The Viability Of Tarnishment Under The FTDA
Since the Supreme Court issued its Moseley decision on March 4,
2003, no case squarely has addressed the question of whether the FTDA
covers dilution by tarnishment, but one opinion specifically notes the
doubts raised by Moseley on this point.
In Caterpillar Inc. v. Walt Disney Co., 287 F. Supp. 2d 913, 922
(C.D. Ill. 2003), the trial court denied plaintiff's request for a
temporary restraining order in connection with defendant's use of
Caterpillar bulldozers in the movie ``George of the Jungle 2'' in a
manner plaintiff found offensive. Plaintiff alleged several claims,
including a dilution by tarnishment claim under the FTDA. In connection
with its decision, the court noted the question raised by Moseley of
``whether tarnishment is within the scope of Sec. 43c.'' The
Caterpillar court, however, did not decide that issue, instead
addressing the issue of what Caterpillar was required to prove to show
``actual dilution.'' Because of the Moseley decision, courts, such as
the one in Caterpillar, will continue to raise questions about the
viability of a cause of action for tarnishment under the FTDA. Cf., The
NASDAQ Stock Market, Inc. v. Antarctica, s.r.l., 2003 TTAB LEXIS 391,
*67 (citing Moseley, noting: ``state dilution statutes provide that
tarnishment and blurring are actionable, while FTDA arguably refers
only to the latter'').
C. Conclusion
We believe that Congress intended to include dilution by
tarnishment as well as dilution by blurring in the FTDA, and the Act
effectively did so. However, dicta in the Moseley decision has raised
doubts and created uncertainty in this regard. The Section of
Intellectual Property Law of the American Bar Association supports
removal of this uncertainly by an amendment to the FTDA to expressly
include a cause of action for dilution by tarnishment.
III. FTDA AND ACQUIRED DISTINCTIVENESS
The Federal Trademark Dilution Act should be amended to state that
marks that have acquired distinctiveness from use in the marketplace
are eligible for dilution protection under the Trademark Act to the
same extent as marks that are inherently distinctive.
The FTDA provides that one of the factors for determining whether a
mark is sufficiently ``distinctive and famous'' to be covered by the
Act is ``the degree of inherent or acquired distinctiveness of the
mark.'' 15 U.S.C. Sec. 1125 (c)(i)(A). There is currently a split among
the Circuits regarding whether a mark is required to be inherently
distinctive to receive protection under the FTDA. Based on an analysis
of the case law and the intent behind the FTDA, marks which have merely
acquired distinctiveness should be eligible for dilution protection.
Some of the most famous marks in the world are famous but arguably not
inherently distinctive, such as FORD, DELL, and DUPONT. These should be
protected under the FTDA. Therefore, the FTDA should be amended to make
this clear and resolve the divergence in authority among the Circuit
courts.
A. Cases Requiring Inherent Distinctiveness
Second Circuit
In TCPIP Holding Company, Inc. v. Haar Communications, Inc., 244
F.3d 88 (2nd Cir. 2001), the Court of Appeals vacated the lower court's
ruling that preliminarily enjoined the defendant from using any
Internet domain names with the mark THE CHILDREN'S PLACE to the extent
the ruling was based on the FTDA, but affirmed it to the extent the
ruling was based on any likelihood of confusion. The court stated that
given the history of the FTDA, ``we conclude that a descriptive mark
does not come within the protection of the'' FTDA. Id. at 93. The
court, in interpreting FTDA in a harmonious way with its result, stated
that it understood the FTDA ``to invite two inquiries: (1) Has the
plaintiff's mark achieved a sufficient degree of consumer recognition
(``acquired distinctiveness'') to satisfy the Act's requirement of
fame? (2) Does the mark possess a sufficient degree of`inherent
distinctiveness' to satisfy the Act's requirement of`distinctive
quality.' The latter requirement cannot be satisfied by the mere fact
that the public has come to associate the mark with the source.'' Id.
at 98. The court reasoned that in order for a mark to be famous, it
must acquire some form of distinctiveness, therefore if the criterion
of distinctiveness was satisfied by the acquired distinctiveness of the
mark, it would render the criterion of fame meaningless. Therefore,
only inherently distinctive marks qualify for protection under the
FTDA.
In Deere & Company v. MTD Holdings Inc., No. 00 Civ. 5936(LMM),
2003 WL 22439778 (S.D.N.Y., October 28, 2003), Deere & Company sought
to amend its complaint regarding a FTDA claim after the district court
had granted MTD Holdings' motion for dismissal under the Qualitex
doctrine that color marks require secondary meaning. Deere attempted to
claim that its specific use of the color green on the body of its
products and yellow for trim was arbitrary. The court rejected this
notion and found that the use of two colors still requires proof of
secondary meaning for protection. The court dismissed the dilution
claim because the colors yellow and green are not inherently
distinctive and, citing the TCPIP case, do not qualify for protection
under the FTDA.
Malaco Leaf, AB v. Promotion In Motion, Inc., 287 F. Supp. 2d 355
(S.D.N.Y. 2003): Malaco Leaf brought suit for alleged copying of its
fish-shaped gummy candy known as the ``Swedish Fish.'' The court held
that inherent distinctiveness was required under FTDA, and since
product configuration can never be inherently distinctive under the
Sumara Bros. case, defendant was entitled to summary judgment on
plaintiff's FTDA claim.
Christopher D. Smithers Foundation, Inc. v. St. Luke's-Roosevelt
Hosp. Center, No. 00 Civ. 5502(WHP), 2003 WL 115234 (S.D.N.Y., Jan 13,
2003): The Foundation filed an action regarding its marks THE
CHRISTOPHER D. SMITHERS FOUNDATION, INC., THE CHRISTOPHER D. SMITHERS
FOUNDATION, THE SMITHERS FOUNDATION, C.D. SMITHERS FOUNDATION, and
SMITHERSFOUNDATION.ORG. The Hospital operated the Smithers Alcoholism
Treatment and Training Center. Among the Foundation's claims was one
under the FTDA. In dismissing the FTDA claim, the court noted that the
term ``foundation'' and the surname ``Smithers'' are descriptive and,
citing TCPIP, that such descriptive marks do qualify for protection
under the FTDA as such terms are not inherently distinctive. ``The FTDA
differs from traditional trademark law in that it protects a`far
narrower' class of entities. The FTDA only affords protection to
inherently distinct marks (i.e. suggestive, arbitrary, fanciful), and
does not afford protection to descriptive marks that have acquired
distinctiveness. Thus, the evidence of secondary meaning submitted by
the Foundation could not save its FTDA claim.'' Id. at *7 (citations
omitted.)
Solow Building Company, LLC v. Nine West Group, Inc., No. 01-7878,
2002 WL 31303237 (2nd Cir. October 11, 2002): In affirming the district
court's dismissal of plaintiff's complaint, the court held ``that
Solow's federal trademark dilution claims are also barred on the
alternative ground that Solow's mark lacks inherent distinctiveness.
Solow has conceded that its mark is descriptive at best, and this court
has held that such a mark lacks sufficient distinctiveness to warrant
protection under the federal trademark dilution statute.'' Id. at *1.
Plaintiff's mark was a red numeral ``9'' which was nicknamed 9 WEST and
defendant's mark was ``NINE WEST.''
New York Stock Exchange, Inc. v. New York, New York Hotel, LLC, 293
F.3d 550 (2nd Cir. 2002): The Second Circuit affirmed the lower court's
dismissal of all but one of plaintiff's claims for protection under the
FTDA because the marks, except for one, were not inherently
distinctive. Defendant had modified several of the many registered
marks of plaintiff. Examples of the modified marks include: (i) a
replica of NYSE's architectural facade that bore the words ``NEW YORK
NEW YORK SLOT EXCHANGE'' located near the Defendant's gambling floor;
(ii) the Defendant's ``NEW YORK SLOT EXCHANGE'' or ``NEW YORK-NEW YORK
SLOT EXCHANGE'' club for frequent gamblers; (iii) sweatshirts, caps,
and other souvenirs given out by the Defendant to the members of its
players club displaying the ``NEW YORK SLOT EXCHANGE'' or ``NEW YORK-
NEW YORK SLOT EXCHANGE'' slogan; and (iv) the Defendant's reference to
its players club by the ``NY'' or ``NY-NY'' abbreviation. The exception
is a registered logo consisting of Plaintiff's building's facade
bearing the words ``NEW YORK STOCK EXCHANGE.'' The court followed its
decision in TCPIP and noted that a trier of fact might find the
excepted mark inherently distinctive, which would then qualify it for
FTDA protection.
GTFM, Inc. v. Solid Clothing, Inc., 215 F. Supp. 2d 273 (S.D.N.Y.
2002): GTFM, Inc. filed an action based on its marks ``FUBU,'' ``FUBU
05'' and ``05'' for clothing. Solid Clothing, Inc. had adopted the
marks ``05'' and then ``PLAYERS 05'' on sports apparel it designed to
imitate GTFM's marks. In dismissing the FTDA claim, the district court
cited TCPIP and held that GTFM's marks were not inherently distinctive
and did not qualify for protection under the FTDA. Id. at 299-300. The
court also went on to say that the ``05'' mark was not famous either.
Cline v. 1-888-Plumbing Group, Inc. 146 F. Supp. 2d 351 (S.D.N.Y.
2001): Plaintiff claimed that its mark 1-800-PLUMBING was being diluted
by defendant's mark of 1-888-PLUMBING. The district court cited TCPIP
and denied plaintiff's motion for summary judgment regarding its FTDA
claim because plaintiff's mark was descriptive and therefore lacked the
inherent distinctiveness required for protection under the FTDA. Id. at
361.
B. Cases Not Requiring Inherent Distinctiveness
First Circuit
I.P. Lund Trading v. Kohler Co., 163 F.3d 27 (1st Cir. 1998). A
faucet manufacturer brought an action against competitors for dilution
and infringement of manufacturer's trade dress. In holding that
Plaintiff's faucet design was not so famous as to warrant protection
under the FTDA, the court noted, ``There is little to suggest that this
product design, itself unregistered and not inherently distinctive, is
so strong a mark and so well publicized and known that it has achieved
the level of fame Congress intended under the'' FTDA. Id. at 60. The
court bifurcated the analysis of a mark under the FTDA, holding a mark
must be distinctive and famous to qualify for protection under the
FTDA. The court found that a mark may be inherently distinctive or
acquire sufficient distinctiveness to satisfy the requirement of
distinctiveness. Id. at 58-60. The mark must also be famous to qualify
for protection under the FTDA, and inquiry regarding whether or not a
mark is famous is a separate inquiry.
Third Circuit
Times Mirror Magazines, Inc. v Las Vegas Sport News, LLC, 212 F.3d
157 (3rd Cir. 2000): The Third Circuit affirmed the lower court's grant
of a preliminary injunction under the FTDA to Time Mirror Magazines,
Inc. owner of the mark THE SPORTING NEWS preventing Las Vegas Sport
News, LLC from using the mark LAS VEGAS SPORTING NEWS. The court held
that the mark ``THE SPORTING NEWS'' was not inherently distinctive.
Therefore, the court must ``examine the degree to which the mark has
acquired distinctiveness by gaining secondary meaning over time in the
marketplace.'' Id. at 166. This includes the following considerations:
``(1) the length or exclusivity of use of the mark; (2) the size or
prominence of the plaintiff's enterprise; (3) the existence of
substantial advertising by the plaintiff; (4) established place in the
market and (5) proof of intentional copying.'' Id. The court found the
mark had acquired sufficient distinctiveness to warrant protection
under the FTDA.
Sixth Circuit
Libbey Glass, Inc. v. Oneida Ltd., 61 F. Supp. 2d 700 (N.D. Ohio
1999): Plaintiff filed, among other claims, a claim for violation of
FTDA based on defendants manufacture and sale of ``knock-off'' beverage
glassware. In rejecting plaintiff's motion for summary judgment, the
court stated in addressing the requirement of distinctiveness that
``Libbey's trade dress is not inherently distinctive and there is a
genuine issue of material fact about whether Libbey's trade dress has
secondary meaning.'' Id. at 716. This clearly implies that acquired
distinctiveness is sufficient.
Seventh Circuit
AM General Corp. v. DaimlerChrysler Corp. 311 F.3d 796 (7th Cir.
2002): Plaintiff asserted trademark infringement and FTDA claims based
upon an asserted family of marks in its Jeep grille designs. The court
recognized that under Traffix, product configurations must acquire
distinctiveness and secondary meaning to be protectable. The court did
not reject the FTDA claim on grounds that the alleged family of marks
was not inherently distinctive, but rather denied a preliminary
injunction on the FTDA claim because the plaintiff had failed to prove
that it had rights in the family of marks it was asserting. As a
result, the marks being asserted certainly could not be famous. Id. at
818. This suggests that the Seventh Circuit takes the position that
acquired distinctiveness is sufficient for a FTDA claim. Otherwise the
court would have stopped when it concluded that the marks were not
inherently descriptive.
Ty Inc. v. Perryman, 306 F.3d 509 (7th Cir. 2002), cert. Denied,
123 S. Ct. 1750 (2003): The mark at issue in this case was BEANIES. The
court found that the mark clearly was not inherently distinctive. See
Id. at 513. The court did not reject the FTDA claim on this basis.
Rather, the court held that an injunction was proper under the FTDA
claim but only that its scope should be much more limited than
originally ruled by the district court. Thus, in this case, the Seventh
Circuit allowed an FTDA claim with a mark that it clearly held to not
be inherently distinctive.
Ninth Circuit
Adidas-Salomon AG v. Target Corp., No. CV-01-1582-ST, 2002 WL
31971831 (D. Or. July 31, 2002): Plaintiff filed an action regarding
its three stripe mark and Original Superstar trade dress which is for a
particular style of shoe. Defendant had adopted a four stripe mark and
similar style of shoe. The magistrate's findings noted there was a
split in the Circuits regarding the whether or not a mark with acquired
distinctiveness qualifies for protection under the FTDA and, relying on
language from Avery Dennison v. Sumpton (see summary below), concluded
that, in the Ninth Circuit, acquired distinctiveness does qualify.
Under the Ninth Circuit standard, the court held that there was
sufficient evidence that the three stripe mark and Original Superstar
trade dress where distinct and famous to withstand defendant's motion
for summary judgment.
Thane International, Inc. v. TREK Bicycle Corporation, 305 F.3d 894
(9th Cir. 2001): The Ninth Circuit reversed the lower court's grant of
summary judgment to the defendant because it improperly used a
likelihood of confusion standard. The court focused on the failure of
Trek Bicycle to show its mark TREK was famous; the court mingled the
requirement of fame with the requirement of distinctiveness. In a
footnote, the court stated ``a mark must have a relatively high degree
of distinctiveness both to`be capable of being diluted' and to meet
Sec. 1125(c)(1)'s`threshold element of fame.' A party may satisfy this
burden with a showing of acquired distinctiveness, rather than inherent
distinctiveness, but in either case it must demonstrate`a degree of
distinctiveness beyond that needed to serve as a trademark.' '' Id. at
912 n.14 (citations omitted).
Cairns v. Franklin Mint Co., 24 F. Supp. 2d 1013 (C.D. Cal. 1998),
aff'd, 1999 U.S. App. LEXIS 34568 (9th Cir. 1999): The executors of the
Estate of Diana, Princess of Wales, and trustees of her memorial fund
sued sellers of Princess Diana memorabilia. In rejecting the
defendant's motion to dismiss the FTDA claim, the court noted that a
surname is not inherently distinctive. ``Thus, to state a claim under
the Federal Trademark Dilution Act for service mark infringement, a
plaintiff must allege that the personal name asserted as a mark has
acquired secondary meaning such that the name is synonymous in the
public mind with the service provided by the plaintiff.'' Id. at 1034.
Later, the court reached the same conclusion and then granted the
defendant's motion for summary judgment on the FTDA claim on the basis
that secondary meaning was not established. See, 107 F. Supp. 2d 1212,
1222 (C.D.Cal. 2000).
Avery Dennison Corp. v. Sumpton, 189 F.3d 868 (9th Cir. 1999): The
owner of the marks ``Avery'' and ``Dennison'' for office products
brought action against an Internet e-mail provider and its president,
for registering ``avery.net'' and ``dennison.net'' as Internet domain
names and licensing them as e-mail addresses. In reversing a grant of
summary judgment for the owner of the marks, the court rejected the
``argument that the distinctiveness required for famousness under the
Federal Trademark Dilution Act is inherent, not merely acquired
distinctiveness. However, because famousness requires a showing greater
than mere distinctiveness, the presumptive secondary meaning associated
with ``Avery'' and ``Dennison'' fails to persuade us that the
famousness prong is met in this case.'' Id. at 877. (citations omitted)
Star Markets, Ltd. v. Texaco, Inc., 950 F. Supp. 1030 (D.Hawaii
1996): In this case, the court granted the defendant summary judgment
on the plaintiff's FTDA claim because, while the mark had acquired
distinctiveness, it was not famous, even though a survey had showed
that 75% of the respondents associated the STAR trademark with the
plaintiff's grocery stores. The court stated: ``Acquired
distinctiveness is merely a minimum threshold for establishing
protectability of a trademark that is not suggestive, arbitrary or
fanciful. Once established, the [FTDA] compels the court to consider
the degree of that distinctiveness as one of many factors for
determining whether the mark is famous.'' Id. at 1033.
Eleventh Circuit
Carnival Corp. v. SeaEscape Casino Cruises, Inc. 74 F. Supp. 2d
1261 (S.D.Fla. 1999): Plaintiff brought claims based upon its trademark
FUN SHIP. The court clearly found that the mark was descriptive, but
had acquired secondary meaning. The court did not reject the
plaintiff's FTDA claim on this basis. Rather, the court found that
while the mark had acquired distinctiveness, it had not acquired
sufficient fame to support an FTDA claim.
C. Other Cases with Comments Relevant to the Issue
Supreme Court
Moseley v. V Secret Catalogue, Inc., 123 S. Ct. 1115 (2003):
Plaintiff is the owner of the mark VICTORIA'S SECRET. Plaintiff brought
suit against petitioners who opened a store named VICTOR'S SECRET and
then changed the name, after being contacted by Plaintiff, to VICTOR'S
LITTLE SECRET. The narrow issue on certiorari was whether objective
proof of actual injury to the economic value of a famous mark is
required for relief under the FTDA. The Supreme Court did not reach the
issue of distinctiveness, but, in a footnote, quoted Nabisco, Inc. v.
PF Brands, Inc.: ``[i]t is quite clear that the statute intends
distinctiveness, in addition to fame, as an essential element. The
operative language defining the tort requires that`the [junior]
person's . . . use . . . cause dilution of the distinctive quality of
the [senior] mark.' 15 U.S.C. Sec. 1125(c)(1). There can be no dilution
of a mark's distinctive quality unless the mark is distinctive.''
Moseley, 123 S. Ct. at 1120 n.5. Some have argued that this is an
endorsement of the notion that inherent distinctiveness is required.
Professor J. Thomas McCarthy, however, strongly disagrees with this
position. See, 4 McCarthy on Trademarks and Unfair Competition
Sec. 24:91 to 24:91.2.
Second Circuit
Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489 (2nd
Cir. 2000): In deciding whether or not the mark SPORTY'S was
distinctive for the purpose of the FTDA, the Second Circuit stated,
``Distinctiveness refers to inherent qualities of a mark and is a
completely different concept from fame. A mark may be distinctive
before it has been used--when its fame is nonexistent. By the same
token, even a famous mark may be so ordinary, or descriptive as to be
notable for its lack of distinctiveness.'' Id. at 497 (emphasis added).
Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 (2nd Cir. 1999): The
Second Circuit affirmed the lower court's order entering a preliminary
injunction against Nabisco using a mark consisting of an orange, bit-
sized, cheddar cheese flavored, fish-shaped cracker because it would
dilute Pepperidge Farm's mark for its goldfish-shaped cracker. The
court noted that ``[t]he first of [the distinctiveness and famous]
factors invites the court to consider`the degree of inherent or
acquired distinctiveness of the mark.' '' Id. at 215. The court found
the Pepperidge Farm's goldfish cracker exhibits a moderate degree of
distinctiveness and qualified it for protection under the FTDA.
BigStar Entertainment, Inc. v. Next Big Star, Inc. 105 F. Supp. 2d
185 (S.D.N.Y. 2000): Plaintiff sold motion picture videos and provided
information regarding films and stars on the Internet using the marks
BIGSTAR and BIGSTAR.COM. Plaintiff brought a trademark infringement and
dilution action, with related state law claims, against a company
conducting talent searches on the Internet using the marks NEXT BIG
STAR and NEXTBIGSTAR.COM. In rejecting plaintiff's FTDA claim, the
court noted that plaintiff's marks were composed of descriptive terms
and relatively weak. While the court did not say that inherent
distinctiveness was required under FTDA, it did conclude the marks did
not qualify for protection under the FTDA because they did not have the
requisite ``distinctiveness.''
Sixth Circuit
Ford Motor Co. v. Lloyd Design Corp., 184 F. Supp. 2d 665 (E.D.
Mich. 2002): Ford brought suit against the manufacturer of floor mats
for use with Ford's vehicles that use Ford's marks without its
authorization. In upholding the magistrate's preliminary injunction
recommendation, based in part on a claim under the FTDA, the district
court followed the Nabisco case and found:
that the marks F-150', F-250' and F-
350' are fanciful and, thus, of high distinction.
The trademark Aston Martin' is also highly
distinctive because, even though it is not purely fanciful, the
name is unlikely to signify anything in commerce but the
automobiles and accessories bearing the name. Since
Ford', Jaguar', Lincoln',
Mercury', Mustang', Bronco',
Taurus', Windstar',
Excursion', Expedition',
Navigator', Moutaineer', and
Thunderbird' are not purely fanciful, but are names
that are unrelated in everyday life to automobiles, the court
finds them to enjoy a moderate degree of distinctiveness.
Therefore, Plaintiffs have established the second element of an
FTDA claim. Hence, the only remaining factor is the fifth:
whether Defendant's use may cause dilution of the distinctive
quality of the senior mark.
Id. at 679. The court did not address whether inherent distinctiveness
was required.
AutoZone, Inc. v. Tandy Corp. 174 F. Supp. 2d 718 (M.D. Tenn.
2001): AutoZone, Inc., brought an action based on its mark AUTOZONE for
use in association with automotive parts store services against the
Tandy Corporation for its use of the mark POWERZONE in association with
electronics. In ruling that AutoZone did not have a viable FTDA claim
because the marks were not similar enough, the court noted:
distinctiveness plays a dual role in the dilution analysis.
First, as noted above, it is a statutory element; under the
statute, a mark does not receive protection unless it is
distinctive. Second, . . . the degree of distinctiveness of the
senior mark will have a considerable bearing on whether the
junior use will have a diluting effect. The more
distinctiveness the mark possesses, the greater is the interest
to be protected from dilution. For the reasons stated in the
distinctiveness analysis above, the Court concludes that, for
the purposes of dilution analysis, the AUTOZONE mark exhibits a
moderate degree of distinctiveness, entitling it to a
commensurate level of protection.
Id. at 736. The court noted (1) that the plaintiff was entitled ``to a
presumption that its registered trademark is inherently distinctive,''
(2) that ``analysis using the traditional spectrum approach would lead
to the same conclusions,'' but also (3) that the mark had acquired
secondary meaning.
NBBJ East Limited Partnership v. NBBJ Training Academy, Inc., 201
F. Supp. 2d 800 (S.D. Ohio 2001): An architectural firm brought action
against a computer training school, alleging infringement and dilution
of its mark NBBJ. In granting plaintiff an injunction against defendant
using the mark NBBJ, the court noted that distinctiveness is a required
element of dilution and quoted the following passage from the Sixth
Circuit opinion in the Moseley case (259 F.3d at 469):
Distinctiveness is a crucial trademark concept, which places
marks on a ladder reflecting their inherent strength or
weakness. The degree of distinctiveness of a mark governs in
part the breadth of protection it can command. At the low end
are generic words--words that name the species or object to
which the mark applies. These are totally without
distinctiveness and are ineligible for protection as marks
because to give them protection would be to deprive competitors
of the right to refer to their products by name. . . . Thus, no
one can claim the exclusive right to use the mark ``CAR'' for a
car. One rung up the ladder are ``descriptive'' marks--those
that describe the product or its attributes or claims. These
also have little distinctiveness and accordingly are ineligible
for protection unless they have acquired ``secondary
meaning''--this is, unless the consuming public has come to
associate the mark with the products or unless the consuming
public has come to associate the mark with the products or
services of its user. . . . The next higher rung belongs to
``suggestive'' marks; these fall in an in-between category. . .
. They are given less protection than is reserved for more
distinctive marks--those that are ``arbitrary'' or
``fanciful.''. . . A mark is arbitrary or fanciful if there is
no logical relationship whatsoever between the mark and the
product on which it is used. . . . The most distinctive are
marks that are entirely the product of the imagination and
evoke no association with the human experience that relate
intrinsically to the product. . . . The strongest protection of
the trademark laws is reserved for these most highly
distinctive marks.
NBBJ East Ltd. Partnership, 201 F. Supp. 2d at 806. The court found
that NBBJ was arbitrary or fanciful.
Ninth Circuit
Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2000):
The Ninth Circuit affirmed the lower court's ruling that MCA Records'
use of Mattel, Inc.'s mark BARBIE was a parody and nominative fair use.
In affirming the lower court's ruling that there was no claim for
dilution under the FTDA, the Ninth Circuit noted that the mark BARBIE
clearly met the requirements of fame and distinctiveness. Id. at 903.
The court also held that MCA Records' use of the mark was dilutive. Id.
However, the court determined that MCA Records' use of the mark BARBIE
fell within the scope of the noncommercial use exemption to the FTDA.
See id. at 904-07.
Eleventh Circuit
Corbitt Manufacturing Co. v. GSO America, Inc., 197 F. Supp. 2d
1368 (S.D. Ga. 2002): Corbitt brought an action based on its mark ``NO
FLOAT'' for use in association with mulch. Corbitt claimed that GSO's
mark ``NON-FLOATING'' on their packaging of mulch infringed Corbitt's
mark. The court denied the plaintiff's request for preliminary
injunction. In addressing Corbitt's dilution claim, the court held that
while ``some factors favor Corbitt, it has not shown the requisite
level of fame. As mentioned above, NO FLOAT is at best a descriptive
mark with secondary meaning. In fact, it is entitled to this
presumption only because of its incontestable status. Even after
assuming this status applies in the dilution context, there is little
evidence of the`acquired distinctiveness of the mark.' '' Id. at 1378.
Legal Treatises
In his treatise, 4 McCarthy on Trademarks and Unfair Competition
Sec. 24:91 to 24:91.2, the esteemed trademark law scholar, Professor J.
Thomas McCarthy, finds no inherent distinctiveness requirement in the
FTDA. In fact, he does not see ``distinctiveness'' as a separate
element from fame. He believes that the distinctiveness requirement in
the statute only means that the mark must properly qualify as a mark,
namely that it has inherent or acquired distinctiveness. Otherwise, the
term would not be a mark at all.
D. Conclusion
An analysis of the case law and statute indicates that marks that
have acquired distinctiveness should be protected under the FTDA. Given
the consensus by a majority of Circuits, which is supported by both the
text and purpose of the statute, the FTDA should be amended to clarify
this point.
IV. NICHE MARKET FAME
The Federal Trademark Dilution Act of 1995 should not be amended at
this time to state either that marks which are famous within limited
geographic areas or commercial market segments are eligible for
dilution protection under the Trademark Act to the same extent as marks
that are famous on a nation-wide basis, or to state that such marks are
ineligible for dilution protection under the Act.
There is no clear consensus on the issue of niche fame.\2\ No steps
should be taken at this time to address the issue. Rather, the issue
should be reevaluated after it has been defined further through the
case law. Given the controversial nature of the niche fame issue, as
shown by the divergent case law results below, and given that the issue
has not been explicitly addressed in the FTDA before, we believe the
issue of niche fame will be difficult to address through legislative
changes. It is this controversy that distinguishes the niche fame issue
from the acquired distinctiveness position noted above.
---------------------------------------------------------------------------
\2\ See, e.g., Kenemuth, Lori, ``The Niche Market Manual: A Guide
To Understanding The Niche Market Theory'', AIPLA Quarterly Journal,
Vol. 32 No. 1, pp. 123-140 (author advocates preserving and applying
the niche market theory under the FTDA).
---------------------------------------------------------------------------
A. The Niche Fame Issue Is Unresolved In The Courts
There is a split among the Circuit Courts of Appeals on the issue
of whether ``niche market'' fame satisfies the statutory requirement
that marks be famous to qualify for protection under the Federal
Trademark Dilution Act (``FTDA''). See 15 U.S.C. Sec. 1125(c)
(extending federal trademark dilution protection to ``owner(s) of a
famous mark . . .''). The Third, Fifth, Seventh and Ninth Circuits hold
that fame of a mark in a particular market segment may be sufficient to
satisfy the FTDA's fame requirement when the junior user's mark is used
in the same market segment. The First and Second Circuits reject the
``niche market'' standard, while the other Circuits have not formally
opined on the issue.
The following survey of the leading Circuit Court of Appeals
opinions begins with the Seventh Circuit's Syndicate Sales decision
because its analysis was particularly thorough and because it is widely
cited by the other Circuits in their opinions on the issue.
Syndicate Sales, Inc. v. Hampshire Paper Corp., 192 F.3d 633 (7th
Cir. 1999): This case centered on a trade dress infringement and
dilution dispute between manufacturers of competing plastic baskets
used for floral bouquets at funerals. See Syndicate Sales, 192 F.3d at
635. Finding that plaintiff's trade dress was famous, if at all, only
among wholesalers and retail florists, the trial court held that fame
in such a niche market cannot be sufficient to establish fame for
purposes of the FTDA. Id. at 640. The Seventh Circuit disagreed and
remanded for consideration of whether Syndicate Sales' trade dress was
sufficiently famous in the market of wholesale and retail florists to
qualify for federal dilution protection. Id. at 641.
A mark may be eligible for protection under the FTDA, the Seventh
Circuit concluded, even when its fame is ``limited to those engaged on
a regular basis in commercial activity involving [the mark's]
product.'' Id. at 641 fn.7.\3\ Specifically, the FTDA's fame
requirement may be satisfied when a senior mark is famous in a
particular commercial market segment and defendant is using its
allegedly diluting mark in the same market. Id. at 641.
---------------------------------------------------------------------------
\3\ In contrast to the 9th Circuit (see Avery Dennison Corp. v.
Sumpton, 189 F.3d 868, 877-878 (9th Cir. 1999)), the 7th Circuit holds
that fame within a limited geographic area is not sufficient for the
FTDA. The legislative history of the Act made clear, the 7th Circuit
noted, that, ``in order to be`famous,' a mark must be used in a
substantial segment of the United States.'' Syndicate Sales, 192 F.3d
at 641, fn. 7. While this meant that marks famous in one local area
were not entitled to federal dilution protection, fame within a limited
commercial segment was sufficient when the market within which the
commercial activity was occurring was national in scope. Id.
---------------------------------------------------------------------------
The court noted that prior decisions in which the courts held
niche-fame insufficient had generally addressed situations in which the
disputed marks were used in separate markets,\4\ while cases
recognizing niche-market fame concerned disputed marks used in the same
or related markets. Id. at 640. The court reasoned that one of the
FTDA's ``fame'' factors, i.e. 15 U.S.C. Sec. 1125(c)(1)(F) (hereafter
``Factor F''), ``may be constricted to a particular market.'' \5\ Id.
at 641. The ``narrowness of the market in which a plaintiff's mark has
fame'' must be considered, presumably against a finding of fame, but is
``less important'' when the defendant uses its mark in the same market.
Id. The court also found support for the niche fame concept in the
Restatement, which concluded that: ``A mark that is highly distinctive
only to a select class or group of purchasers may be protected from
diluting uses directed at that particular class or group. Id. at 640,
citing Restatement (Third) of Unfair Competition, Sec. 25, cmt. e
(1995).\6\
---------------------------------------------------------------------------
\4\ See Syndicate Sales, 192 F.3d at 640, fn. 5, citing, inter
alia, Michael Caruso & Co. v. Estefan Enters. Inc., 994 F.Supp 1454,
1463; Golden Bear Int'l v. Bear U.S.A., Inc., 969 F.Supp. 742, 749
(N.D.Ga. 1996); King of the Mountain Sports, Inc. v. Chrysler Corp.,
968 F.Supp. 568, 578 (D.Colo. 1999). Because the cases focus on
situations in which the two components of the niche fame doctrine are
not present--fame of the plaintiff's mark in a specific market segment
and use by defendant of its mark in the same segment--these decisions
should not be read to reject a niche fame standard per se or to favor a
``national renown'' standard.
\5\ The FTDA lists 8 non-exclusive factors that a court may
consider to determine whether the mark is distinctive and famous.'' See
Syndicate Sales, 192 F.3d at 639, citing 15 U.S.C. Sec. 1125(c)(1).
Factor F embraces ``the degree of recognition of the mark in the
trading areas and channels of trade used by the marks' owner and the
person against whom the injunction is sought.'' 15 U.S.C.
Sec. 1125(c)(1)(F).
\6\ The Court also relied on Professor McCarthy, citing 4 J. Thomas
McCarthy, McCarthy on Trademarks and Unfair Competition (``McCarthy'')
Sec. 24:112 at 24-204 to 24-205 (1999). However, Professor McCarthy no
longer supports the concept of niche fame: ``In the author's view, the
federal anti-dilution act does not require courts to recognize the
phenomenon of niche fame. . . . [Indeed,] recognition of niche fame is
an improper application of the federal act, is an unnecessary and
superfluous legal theory and improperly displaces the traditional
balance of competitive rights reflected in the likelihood of confusion
test [for trademark infringement].'' 4 McCarthy Sec. 24:112.1 at 24-273
(2003).
---------------------------------------------------------------------------
Times Mirror Magazines, Inc. v. Las Vegas Sports News, L.L.C., 212
F.3d 157 (3rd Cir. 2000), cert. denied, 531 U.S. 1071 (2001): In this
case, the Third Circuit affirmed a preliminary injunction on trademark
dilution grounds. See Times Mirror, 212 F.3d at 160, 170. Plaintiff's
publication, The Sporting News, provided information on sports such as
baseball, basketball, football and hockey and had a weekly circulation
of about 540,000 in the United States and Canada. The Sporting News was
sold at newsstands throughout the country and was advertised on
television, on radio, and in direct mail. Id. at 161-162. Defendant's
Las Vegas Sporting News focused on ``sports wagering`for the sports
gaming enthusiasts . . .' '' Id. at 161 (internal record citation
omitted). With a circulation of 42,000, the Las Vegas Sporting News was
also sold at newsstands across the country, but most copies were given
away free in gambling casinos. Id. Citing Syndicate Sales and the
Restatement, the Third Circuit endorsed the niche-fame standard: ``We
are persuaded that a mark not famous to the general public is
nevertheless entitled to protection from dilution where both the
plaintiff and defendant are operating in the same or related markets,
so long as the plaintiff's mark possesses a high degree of fame in its
niche market.'' Id. at 164. The court held that the two marks at issued
``shared a common market,'' i.e. the ``sports periodical market.''
Because ``the mark`The Sporting News' was famous in its niche,'' it was
``entitled to protection under the FTDA against [Las Vegas Sporting
News]'s used of a similar mark in the same market.'' Id. at 165.
In a sharply worded dissent, Judge Barry disagreed, although from
her opinion it is not clear whether she rejects the niche fame doctrine
entirely or as applied in this case.\7\ The problem with the niche fame
doctrine, Judge Barry argued, is that it threatens to devour
infringement law by providing a powerful trademark remedy in situations
where infringement law ought to apply, but without plaintiffs having to
prove likelihood of confusion. See id. at 174. In the case at bar,
Judge Barry stated, plaintiff ought to have shown that its mark was
``truly famous among members of the general public.'' Id. at 176. Even
as to Factor F, plaintiff failed to present evidence that its mark was
``recognized by a substantial portion of [Las Vegas Sporting News]'s
potential consumers.'' Id. at 175.
---------------------------------------------------------------------------
\7\ On the one hand, Judge Barry noted that ``the legislative
history does not mention much less embrace a so-called`niche market'
theory of fame.'' Times Mirror, 212 F.3d at 173. Moreover, ``although
Factor (F) focuses the analysis on the channels of trade in which the
parties operate, it does not dictate the conclusion that fame solely
within those channels of trade is enough for protection.'' Id. at 175.
That analysis supports the conclusion that only widely-renowned marks
deserve federal dilution protection. Or as Judge Barry states towards
the end of her dissent, ``I do not believe . . . [that] a mark not
immediately recognizable by the general public can . . . meet the fame
requirement of the FTDA. Id. at 179. But Judge Barry also worried that
``the niche market theory risks lowering the bar for trademark
protection unless it is applied prudently to cases which clearly call
for such an analysis, and this is not one.'' Id. at 173; emphasis
added. Moreover, Judge Barry urges a court inclined to rule that a mark
``famous only in its niche market . . . is entitled to protection under
the FTDA, the evidence of fame should be rigorously examined.'' Id. at
174.
---------------------------------------------------------------------------
Advantage Rent-A-Car, Inc. v. Enterprise Rent-A-Car, Co., 238 F.3d
378 (5th Circuit 2001): At issue in this case were similar slogans used
by two rental car companies--Advantage's ``We'll Even Pick You Up'' and
Enterprise's ``We'll Pick You Up'' and ``Pick Enterprise. We'll Pick
You Up.'' See Advantage, 238 F.3d at 379. In denying Enterprise relief
on its federal dilution claim, the district found that its mark was
sufficiently famous. Id. at 379-380. The Fifth Circuit affirmed this
finding, but cautioned that ``[t]o the extent that the district court's
opinion can be read to suggest that Enterprise needed to prove fame
beyond its market, we disagree.'' Id. at 380. Instead, the Court held,
the correct standard was that adopted by the Seventh Circuit in
Syndicate Sales and therefore what Enterprise needed, but failed, to
prove was that its mark was famous ``within the car rental industry,
not in a broader market.'' Id.
Thane Int'l, Inc. v. Trek Bicycle Corp., 305 F.3d 894 (9th Cir.
2002): In this action seeking declaratory relief, Trek had long used
its trademark ``TREK'' on bicycles and related products, while Thane
manufactured a stationary exercise machine under the ``OrbiTrek'' mark.
See Thane, 305 F.3d at 898. The Ninth Circuit reversed summary judgment
entered in Thane's favor on Trek's infringement claim, but affirmed on
Trek's dilution claim. Id. at 913.
Despite clear misgivings about the doctrine,\8\ the Thane court
reaffirmed its prior endorsement of the niche fame standard that
``marks famous in only a limited geographic area or a specialized
market segment can be`famous' for the purposes of the federal anti-
dilution statute.'' Id. at 908, citing Avery Dennison Corp. v. Sumpton,
189 F.3d 868, 877 (9th Cir. 1999). The court stressed that the FTDA
``protects a mark only when a mark is famous within a niche market and
the alleged diluter uses the mark within that niche.'' Id., emphasis
original; see also Avery Dennison, 189 F.3d at 877 (``[F]ame in a
localized trading area may meet the [statutory fame requirement, as
may] ``specialized market segments . . . [when] the diluting uses are
directed narrowly at the same market segment''; internal citations
omitted).
---------------------------------------------------------------------------
\8\ See Thane, 305 F.3d at 908 (noting the Avery Dennison Court's
``repeated admonition that only prominent and renowned marks deserve
[federal dilution protection]. . .''
---------------------------------------------------------------------------
A finding of fame for dilution purposes was unwarranted in the case
at bar, the court explained, because, while TREK was a famous mark in
the ``non-stationary bicycle'' market segment, its fame did not extend
to the market segment that Thane functioned in--``stationary exercise
machines.'' Id. at 910. The analysis may turn on the appropriate level
of generality; to establish niche fame, the relevant market must be
defined very precisely: ``To maintain coherence, the niche fame concept
must focus on highly specialized market segments with an identifiable
customer base.'' Id. at 909. Within such well-defined market segments,
``participants are likely to make associations between marks that the
general public will not make.'' Id. Conversely, as the level of
generality expands--for example, conceiving the market in the case at
bar as ``sporting goods''--it becomes less likely that consumers in the
various submarkets will form associations between disputed marks:
``There is no reason why participants in this broad market will have
any particular knowledge about products in submarkets in which they do
not participate.'' See id.
Further, in assessing niche fame, the extent and duration of use
within the particular market segment is crucial: ``[A] mark that is not
widely associated with a particular product within a particular niche
market is almost surely not famous in that market.'' Id. Federal
dilution law seeks to prevent junior users from appropriating the
goodwill that a famous mark has developed over time. ``Where there has
been no successful, long-term development of goodwill with respect to
particular markets, asserting fame within that specialized market is
simply inconsistent with the purpose of the antidilution protection.''
Id. Accordingly, Trek's brief sale of stationary exercise bicycles or
plans to re-enter that market did not support its dilution claim. Id.
I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27 (1st Cir. 1998):
In a trade dress dispute involving the design and appearance of water
faucets, the 1st Circuit affirmed the denial of a preliminary
injunction on I.P. Lund's infringement claim and vacated the grant of
the injunction on its federal trademark dilution claim. See, I.P. Lund,
163 F.3d at 32. In creating an ``exceptional anti-dilution remedy for
truly famous marks,'' the court explained, the FTDA imposed a
``heightened'' and ``rigorous standard for fame.'' Id. at 33, 47.
Accordingly, ``national renown is an important factor in determining
whether a mark qualifies as famous under the FTDA.'' Id. at 47. By this
standard, the fact that I.P. Lund's faucet may have been ``renowned . .
. in the world of interior design and high-end bathroom fixtures'' did
not establish that its design was ``sufficiently famous to qualify for
the FTDA's protection.'' Id. at 60.
TCPIP Holding Company, Inc. v. Haar Communications, Inc., 244 F.3d
88 (2d Cir. 2001): In this case, the operator of a chain of children's
clothing stores under the registered mark ``The Children's Place''
obtained a preliminary injunction barring defendant from using a number
of internet domain names it owned that incorporated variations on
plaintiff's mark. TCPIP, 244 F.3d at 90. While affirming the injunction
as to some of defendant's domain names on infringement grounds, the
Second Circuit vacated the injunction to the extent it was based on the
FTDA. See id.
The court emphasized the greatly ``expanded rights'' conferred by
federal dilution law over those enjoyed under traditional infringement
law and its likelihood of confusion analysis. See id. at 94-95. The
FTDA gave a trademark owner ``a far greater scope of exclusivity'' than
classic trademark infringement law and, because of that expansion,
restricted the ``class of entities for whose benefit the law was
created.'' See id. at 95. In view of the broad sweep of anti-dilution
protect and the narrow range of intended beneficiaries, the court
reasoned that Congress likely did not intend ``to confer on marks that
have enjoyed only brief fame in a small part of the country, or among a
small segment of the population, the power to enjoin all other users
throughout all realms of commerce.'' Id. at 99. Accordingly, the FTDA's
protections did not extend to marks ``that are famous in only a small
area or segment of the nation,'' but rather only to marks that carry
``a substantial degree of fame.'' Id. Plaintiff's evidence did not
amount to such a showing and, accordingly, the preliminary injunction
had to be vacated to the extent it was premised on the FTDA. See id. at
100.
B. Selected District Court Decisions from Other Circuits Show
Divergence In The Approach To Niche Fame
Fourth Circuit
Hartog & Co. AS v. SWIX.com, 136 F.Supp.2d 531, 534(E.D.Va. 2001)
\9\--In this case, a manufacturer of a line of ski waxes, marketed
under the trademark ``SWIX,'' sued an Internet services company that
operated under the trade name SWiX Internet Dienste. See Hartog, 136
F.Supp.2d at 534. Adopting the niche-fame doctrine, the court found no
dilution on the ground that the two companies operated in different
market segments. Id. at 538, citing Syndicate Sales, Inc. v. Hampshire
Paper Corp., 192 F.3d 633, 640 (7th Cir. 1999). Because of the distinct
market segments, ``the popularity of plaintiff's`SWIX' mark among
American skiers is not enough to render it ``famous'' under the Lanham
Act.'' Id.
---------------------------------------------------------------------------
\9\ Disagreed with on other grounds, Harrods Ltd. v. Sixty Internet
Domain Names, 302 F.3d 214, 228-232 (4th Cir. 2002).
---------------------------------------------------------------------------
Eighth Circuit
Ott v. Target Corp., 153 F.Supp.2d 1055 (D.Minn. 2001)--In this
action, a designer and manufacturer of collector dolls sued a store
chain and other defendants over a line of dolls that she claimed
infringed and diluted her products' trademarks and trade dress. See
Ott, 153 F.Supp.2d at 1058-1062. Rejecting the ``niche fame'' doctrine,
the court ruled that plaintiff's trademark dilution claim failed as a
matter of law. Id. at 1075.
Sharing Judge Barry's concern that trademark dilution based on
niche fame risked subsuming classic infringement law, the court
concluded that ``the niche-market theory is inconsistent with the
purposes of trademark dilution law.'' Id. at 1075 (citing Times Mirror
Magazines, Inc. v. Las Vegas Sports News, L.L.C., 212 F.3d 157, 174 (3d
Cir. 2000)). The court emphasized that dilution law was designed to
protect marks on non-competing goods and services. Id. at 1076 (citing
Viacom Inc. v. Ingram Enterprises, Inc., 141 F.3d 886, 888 (8th Cir.
1998)). The court explained: ``Because this case involves directly
competing products, application of the niche-market theory would result
in an over-extension of the protection afforded by the FDTA and would
render trademark infringement laws duplicative.'' Id.
Eleventh Circuit
Carnival Corp. v. SeaEscape Casino Cruises, Inc., 74 F.Supp.2d 1261
(S.D.Fla. 1999)--In a case involving two cruise lines, the court held
that plaintiff's mark was insufficiently famous to warrant federal
dilution protection. See Carnival, 74 F.Supp. 2d at 1261. In applying
the niche-fame doctrine, the court noted that, while the Eleventh
Circuit had yet to explicitly address the issue, it had affirmed a
previous lower court decision that had applied the doctrine. Id. at
1271 (citing Michael Caruso & Co., Inc. v. Estefan Enterprises, Inc.,
994 F.Supp. 1454, 1463 (S.D.Fla. 1998), aff'd, 166 F.3d 353 (1998)).
The court found that the two companies operated in related, but
different markets namely Carnival offered several day ``vacation''
cruises, ``while SeaEscape's product is a day or evening of
entertainment at sea.'' Id. at 1270-1271. Also finding Carnival's
survey evidence weak, the Court held that plaintiff's mark was not
``famous'' for purposes of a federal dilution claim. See id. at 1721.
C. Conclusion
Although the courts are split on the issue of niche fame which
usually suggests the need for a legislative change, the time is not
ripe to consider a such a change. There is no consensus in the
trademark community, in contrast to the case of protecting marks that
have acquired distinctiveness, as to the resolution of this issue.
There is too much disagreement over what the specific changes should
be, if any, and thus no change is warranted at this time. As the courts
continue to address the issue, a consensus may develop on the issue
that does not now exist.
Mr. Smith. Mr. Johnson.
STATEMENT OF MARVIN J. JOHNSON, LEGISLATIVE COUNSEL, AMERICAN
CIVIL LIBERTIES UNION
Mr. Johnson. Thank you, Mr. Chairman. Chairman Smith and
Ranking Member Berman, I am pleased to appear before you today
on behalf of the American Civil Liberties Union and its more
than 400,000 members across the country to discuss the
committee print to amend the Federal Trademark Dilution Act, or
FTDA.
At the outset, let me say that trademarks provide an
important tool for preventing confusion or deceptive marketing.
To the extent that legislation furthers this goal, it is
helpful and it is generally not destructive of the First
Amendment values. After all, the First Amendment does not
normally protect deceptive or misleading speech, particularly
in a commercial context.
However, there is a dynamic tension between the First
Amendment and trademark law. On the one hand, you have
trademark holders who want to be able to control what people
say using their particular trademark. On the other hand, you
have people who want to exercise their rights of free speech
which is guaranteed by the First Amendment to the Constitution
of the United States, and sometimes that free speech is going
to be abrasive and it may not be terribly complimentary to the
particular trademark holder.
Now, the First Amendment protects not only the right to
speak but the manner of speaking, as well, and so in using the
trademark, they are using the trademark, if they are using it
in a free speech context, they are using it in a perfectly
permissible manner. But increasing the rights of trademark
holders necessarily dilutes the rights of the people who want
to speak because, essentially, you are giving a monopoly to the
trademark holders of the use of that mark.
For example, if Kodak is trademarked, then Kodak has the
right to exclusive use of that mark. Minolta cannot market
cameras under the Kodak name. Now, to the extent that trademark
law prevents this confusion over who made the product, it is
helpful. However, this concept of whether it is likely to be
confused has also been an important check on the power of
trademark law to infringe upon the rights of free speech. While
a camera marketed by Minolta under the Kodak name might be
confusing to consumers, a parody or criticism of Kodak is
unlikely to be confusing about the origin of the product. Thus,
consumers are protected and free speech is preserved.
The Federal Trademark Dilution Act, however, makes the
concept of confusion irrelevant, tilting the balance of power
in favor of the trademark owners. Now, currently, there was
some balance in the sense that the Supreme Court had held that
there was supposed to be actual dilution. That, of course,
raised the standard. It did make it a little more difficult in
order to prove, and therefore, there was more protection for
free speech.
However, when you go to likelihood of dilution, that
creates some problems. This particular provision in broadening
to likelihood of dilution, basically, it allows speech critical
of a company to be enjoined even if it is true, because it is
likely to result in dilution. Now, this provision is
particularly insidious because, unlike defamation law, under
the FTDA, a preliminary injunction may be granted silencing the
speaker until after a trial. Therefore, on speculation that a
trademark may be diluted, a speaker may be muzzled.
Now, as noted in my testimony, the likelihood of dilution
standard has been used, particularly in the Second Circuit, to
try to stop free speech that is critical to the trademark
holder. When you couple that with dilution by tarnishment, it
becomes particularly problematic. This proposed bill would, for
the first time, give statutory recognition to the dilution by
tarnishment. When you couple that with likelihood of dilution,
you now end up with causes of action for the likelihood of
tarnishment.
Now, since tarnishment normally refers to comments that
portray the trademark in an unwholesome or unsavory context
likely to evoke unflattering thoughts about the owner's
product, we now have a direct conflict between trademark and
free speech. To the extent that any parody or criticism evokes
unflattering thoughts about the owner's product, it has
resulted in tarnishment and can, therefore, be enjoined.
Now, on my written testimony, I have presented some
examples, and I have some color examples here of the Joe Chemo
ad that appeared in Ad Busters, and it is clearly a parody of
the Joe Camel ad, or the trademark of Joe Camel for Camel
cigarettes And so basically what you have here is a parody of
the Joe Camel trademark, which is essentially talking about the
dangers of smoking, and you have Joe Chemo here who is
undergoing chemotherapy and has lost all of his hair and
sitting here in a hospital bed, but it is clearly a parody that
is being used to poke fun at this particular trademark.
Now, do they intend an association with that trademark?
Well, obviously. That is what you intend with a parody. So they
have intended that association. Is it going to cause some sort
of unflattering association with the trademark? That is
certainly what they hope when they are trying to discourage
smokers. So the idea here is that if you allow this tarnishment
to be coupled with likelihood of dilution, it is very likely
that the Joe Chemo ads and other ads like them could be hurt
and would be stopped simply because it may likely result in
tarnishment of the trademark.
Now, we are not saying that Congress was unmindful of this
tension between trademark and free speech. Obviously, there are
some exemptions. Those exemptions have not been as protective
of free speech as Congress had hoped. So because of that, we
have grave concerns about the proposed bill as written, but we
would be happy to work with the Committee to see if we can come
to a resolution that would be more protective of free speech
and still accomplish the goals.
Mr. Smith. Thank you, Mr. Johnson.
[The prepared statement of Mr. Johnson follows:]
Prepared Statement of Marvin J. Johnson
Chairman Smith, Ranking Member Berman and Members of the
Subcommittee:
I am pleased to appear before you today on behalf of the American
Civil Liberties Union and its more than 400,000 members, dedicated to
preserving the principles of the Constitution and the Bill of Rights,
to explain the ACLU's views on the Committee Print to Amend the Federal
Trademark Dilution Act. This bill proposes to greatly expand the
existing Act, making dilution actions easier for trademark holders
while simultaneously diluting protections for free speech. We urge you
to continue to require actual dilution in any cause of action, and to
make some other amendments that will be more protective of free speech.
Trademark law provides an important tool for preventing confusion
or deceptive marketing, but trademark laws should not be used as a
pretext to stifle criticism, parody or legitimate competition when
there is no reasonable likelihood of confusion and no actual dilution
caused by use of the trademark.
This proposed bill is a significant expansion of the current
dilution statute, and allows injunctions of speech in more instances.
Dilution causes of action are problematic under the First Amendment
because they allow commercial entities to secure injunctions
prohibiting speech that is truthful and neither misleading or
confusing. The basis of the injunction is that someone else other than
the trademark holder used a word that is identical or similar to a
trademark, and that the use might lessen the consuming public's
association of the term with the trademark. Congress initially drafted
the Federal Trademark Dilution Act (``FTDA'') somewhat narrowly,
requiring proof of actual dilution. This lessened the statute's impact
on First Amendment activity. The proposed revision, however, adopts a
``likelihood of dilution'' standard, significantly easing the burden of
proving ``dilution,'' and increasing the danger to First Amendment
activity.
We will first provide some background on the tension between
trademarks and free speech, and then discuss specific problems with the
proposed bill.
BACKGROUND
Trademark law developed primarily to protect the interests of
consumers to receive reliable information about goods and services. To
accomplish this objective, the suppliers of these goods and services
were granted limited rights to regulate the misleading use of their
brands and associated symbols. The grant of these rights, however, has
the potential to impinge upon the ability of the public to communicate
and receive information. Purposeful limitations were therefore placed
on the rights of the trademark holder to avoid this problem. One of
those limitations was the doctrine of ``confusion'': trademark rights
were only enforceable where another's use is likely to cause
confusion.\1\ This standard alleviates the tension between the
interests of consumers and the broader free speech interest of the
public in general.
---------------------------------------------------------------------------
\1\ See 2 J. Thomas McCarthy, McCARTHY ON TRADEMARKS AND UNFAIR
COMPETITION Sec. 2:32 (explaining that the limited, quasi-property
right of trademark holders has extended from tort, rather than property
law).
---------------------------------------------------------------------------
Courts and commentators have long recognized that trademark
liability implicates the First Amendment. ``Because the trademark law
regulates the use of words, pictures, and other symbols, it can
conflict with values protected by the First Amendment. The grant to one
person of the exclusive right to use a set of words or symbols in trade
can collide with the free speech of others.'' \2\ The Restatement
(Third) of Unfair Competition noted in a comment that the ``use of
another's trademark, not as a means of identifying the user's own goods
or services, but as in incident of speech directed at the trademark
owner, . . . raises serious free speech concerns.'' \3\
---------------------------------------------------------------------------
\2\ 1 Pat. L. Fundamentals Sec. 4.04 (2d ed.). Some commentators
have opined that anti-dilution statutes are inherently antithetical to
the First Amendment. See, e.g., Marla J. Kaplan, ``Antidilution
Statutes and the First Amendment,'' 21 Southwestern University Law
Review 1139 (1992) (arguing that antidilution statutes violate the
First Amendment because they prohibit commercial speech that does not
mislead or deceive and because there is no substantial government
interest to support them; also arguing that antidilution laws are not
designed to protect the public, as was trademark law's historical
purpose.)
\3\ Restatement (Third) of Unfair Competition Sec. 25 cmt. i
(1995). See, also, ACLU v. Miller, 977 F.Supp. 1228 (N.D. Ga. 1997) in
which the court granted a preliminary injunction against a statute
forbidding ``any person . . . knowingly to transmit any data through a
computer network . . . if such data uses any . . . trade name,
registered trademark, logo, legal or official seal, or copyrighted
symbol . . . which would falsely state or imply that such person . . .
has permission or is legally authorized to use [it] for such purpose
when such permission or authorization has not been obtained.'' The
court found this provision overbroad, in that it prohibited speech
protected by the First Amendment.
---------------------------------------------------------------------------
Noting the conflict between trademark law and free speech, the
Fourth Circuit Court of Appeals stated in CPC International, Inc. v.
Skippy Incorporated: \4\
---------------------------------------------------------------------------
\4\ CPC International, Inc. v. Skippy Incorporated, 214 F.3d 456
(4th Cir. 2000).
It is important that trademarks not be ``transformed from
rights against unfair competition to rights to control
language.'' . . . Such a transformation would diminish our
ability to discuss the products or criticize the conduct of
companies that may be of widespread public concern and
importance. . . . ``Much useful social and commercial discourse
would be all but impossible if speakers were under threat of an
infringement lawsuit every time they made reference to a
person, company or product by using its trademark.'' \5\
---------------------------------------------------------------------------
\5\ Id. at 462.
Despite free speech concerns, Congress passed the FTDA in 1995 to
provide protection from trademark dilution. ``Dilution'' is defined as
the ``lessening of the capacity of a famous mark to identify and
distinguish goods orservices, regardless of the presence or absence
of--(1) competition between the owner of the famous mark and other
parties, or (2) likelihood of confusion, mistake or deception.'' \6\
---------------------------------------------------------------------------
\6\ 15 U.S.C. 1127.
---------------------------------------------------------------------------
The FTDA provides, in part, that the owner of a famous mark is
entitled to relief against another's commercial use in commerce of a
mark, ``if such use begins after the mark has become famous and causes
dilution of the distinctive quality of the mark.'' [Emphasis added.]
Because of the ``causes dilution'' language, the Fourth and Fifth
Circuits required there be actual proof of dilution.\7\ The First,
Second, Sixth, and Seventh Circuits, however, adopted a ``likelihood of
dilution'' standard, as they believed actual dilution would be
impossible to prove.\8\ The Supreme Court settled the controversy in
Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003), when it held
that the statute required actual proof of dilution.\9\ The proposed
bill seeks to overturn Moseley by amending the statute to only require
``likelihood of dilution.'' While this makes it much easier for
trademark holders to bring dilution actions, it also significantly
decreases protection for activities protected under the First
Amendment.
---------------------------------------------------------------------------
\7\ Ringling Brother-Barnum & Bailey Combines Shows, Inc. v. Utah
Division of Travel Development, 170 F.3d 449 (4th Cir. 1999);
Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658 (5th Cir.
2000).
\8\ I.P. Lund Trading ApS, Inc. v. Kohler Co., 163 F.3d 27 (1st
Cir. 1998); Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 (2d Cir.
1999); V Secret Catalogue Inc. v. Moseley, 259 F.3d 464 (6th Cir.
2001); Eli Lilly & Co. v. Natural Answers Inc., 233 F.3d 456 (7th Cir.
2000).
\9\ The Supreme Court did not reach any issue of constitutionality
in the case. It was decided purely on the basis of statutory
construction.
---------------------------------------------------------------------------
The government interest in protection of trademarks arises when the
use of a trademark diminishes its distinctiveness. Trademarks are
valuable as identifiers of the source of goods. To the degree this
effect is hindered, the public is harmed. The use of a mark to identify
the source of a product is central to dilution actions. Consider the
example used in the original article in 1927 to justify dilution
statutes, and the example used during debates on the FTDA in 1995: the
use of the name Kodak on pianos. Where the use of a trademark leads to
confusion as to the source of the product, the government may have a
``substantial interest'' in preventing dilution. After all, slapping
the brand name ``Kodak'' on a piano has little expressive purpose and
could lead to consumer confusion.
Where, however, a trademark is used for parody, commentary, or
criticism of a product or service, confusion is far less likely, and
the government's interest in protecting a trademark over free speech is
minimal. As noted above, empowering trademark owners to quash criticism
merely because it involves the use of a trademark transforms the
trademark owner into a monitor of the spoken and written English
language.
BECAUSE THE BILL WOULD REQUIRE ONLY A ``LIKELIHOOD OF DILUTION,''
INSTEAD OF ACTUAL DILUTION, TRADEMARK HOLDERS WILL BE ABLE TO STIFLE
SPEECH THAT IS CRITICAL OF THEIR TRADEMARK.
To allow actions for ``likelihood of dilution'' would broaden
dilution to permit injunctive relief against speech that is not
confusing or deceptive and has not yet caused harm. Since dilution can
occur either by blurring or tarnishment,\10\ this broadening would
include the ``likelihood of tarnishment.'' Thus, under the ``likelihood
of dilution'' standard, speech critical of a company could be enjoined,
even if true, because it is likely to result in tarnishment.
---------------------------------------------------------------------------
\10\ ``Blurring'' involves the gradual whittling away or dispersion
of the identity and hold upon the public mind of the mark or name by
its use upon noncompeting goods. ``Tarnishment'' results when one party
uses another's mark in a manner that tarnishes or appropriates the
goodwill and reputation assosciated with the mark.
---------------------------------------------------------------------------
The idea that trademark owners would use the FTDA to stifle
criticism is far from a fanciful notion. It occurred in the Second
Circuit, which had interpreted the FTDA to require only a ``likelihood
of dilution.''
In WWF v. Bozell,\11\ the World Wrestling Federation (WWF) sued
individuals for defamation and dilution of the WWF mark. The defendants
had embarked on a public relations campaign claiming that the WWF was
in part responsible for the deaths of several children killed by
teenage wrestling fans who claimed to be mimicking WWF wrestling moves.
This speech clearly should have been protected speech under the First
Amendment. The court, however, held that the public relations campaign
qualified as ``commercial use in commerce'' as required by section
43(c) of the Lanham Act because defendants attempted to raise money for
their cause (``commercial use'') and posted their statements on the
Internet (``in commerce''). Thus, Bozell's actions did not fit within
the exemption for noncommercial use of a mark, and therefore received
no protection under the First Amendment. The court rejected defendants'
motion to dismiss. The court also rejected defendants' claims that the
First Amendment required dismissal.
---------------------------------------------------------------------------
\11\ WWF v. Bozell, 142 F.Supp.2d 514 (SDNY 2001).
---------------------------------------------------------------------------
It is important to note that, unlike defamation claims, a dilution
claim permits the court to order preliminary injunctive relief. The
anti-violence/anti-WWF campaign could be enjoined pending trial in
order to protect WWF from the ``likelihood'' that the campaign would
tarnish its mark.
In another case from the Second Circuit, Scholastic Inc. v.
Stouffer,\12\ the author and publisher of the hugely popular Harry
Potter books sought a declaratory judgment that it had not infringed on
Stouffer's copyrights or trademarks. Stouffer counterclaimed, alleging,
among other things, dilution and defamation. The defamation claim was
based on plaintiffs' alleged portrayal of Stouffer as a ``golddigger''
whose claims were ``absurd,'' ``ridiculous'' and ``meritless.'' \13\
The court dismissed the claim ``to the extent it asserts a claim for
defamation, but declines to dismiss this claim to the extent it
asserted a claim for dilution under federal or state law.'' \14\
Therefore, a dilution action was allowed to proceed even though the
comments should have been protected as free speech.
---------------------------------------------------------------------------
\12\ Scholastic Inc. v. Stouffer, 124 F.Supp.2d 836 (S.D.N.Y.
2000).
\13\ Id. at 849.
\14\ Id. at 852.
---------------------------------------------------------------------------
By requiring only a ``likelihood of dilution,'' trademark holders
will now have a more potent weapon to stifle speech that is critical or
a parody of their trademark. Furthermore, unlike defamation law, under
the FTDA a preliminary injunction may be granted, silencing the speaker
until after a trial. Thus, on the speculation that a trademark may be
diluted a speaker may be muzzled. In essence, trademark holders now
have a monopoly on certain words, expressions and images.
We urge you to reject the ``likelihood of dilution'' standard and
maintain the ``actual dilution'' language currently in the FTDA.
BECAUSE THE BILL WOULD MAKE DILUTION BY TARNISHMENT ACTIONABLE, THE
BILL WOULD STIFLE FREE SPEECH.
Specifically recognizing ``tarnishment'' as a cause of action opens
the door to silencing critics of a trademark,
There are two commonly recognized forms of dilution: blurring and
tarnishment.\15\ ``Blurring involves the gradual whittling away or
dispersion of the identity and hold upon public mind of the mark or
name by its use upon noncompeting goods.'' \16\ ``Tarnishment results
when one party uses another's mark in a manner that tarnishes or
appropriates the goodwill and reputation associated with the mark.''
\17\ The current FTDA applies to dilution by blurring, but does not
make dilution by tarnishment actionable (although some courts have read
it to include tarnishment). The proposed bill would explicitly make
tarnishment actionable as well.
---------------------------------------------------------------------------
\15\ Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658, fn.
12 (5th Cir. 2000).
\16\ Id.
\17\ Id.
---------------------------------------------------------------------------
``Tarnishment generally arises when the plaintiff's trademark is
linked to products of shoddy quality, or is portrayed in an unwholesome
or unsavory context likely to evoke unflattering thoughts about the
owner's product.'' \18\ Unfortunately, it also provides trademark
holders with another cause of action to silence critics. Additionally,
a broad application of tarnishment acts to chill commercial speech.\19\
For example, in Deere v. MTD, the court found dilution by tarnishment
where a competitor showed Deere's trademark, a running deer, fleeing
from the competitor's tractor.
---------------------------------------------------------------------------
\18\ Deere & Company v. MTD Products, Inc., 41 F.3d 39, 43 (2d Cir.
1994).
\19\ The Supreme Court has recognized that commercial speech is
entitled to First Amendment protection. See Va. State Bd. Of Pharmacy
v. Va. Citizen's Consumer Council, Inc., 425 U.S. 748, 761 (1976).
---------------------------------------------------------------------------
What the proposed bill fails to recognize is that trademarks have a
huge impact on our shared culture. Trademarks have become essential to
the communication about particular goods or services, often
representing the most effective means by which to state one's
position.\20\
---------------------------------------------------------------------------
\20\ See Meyer v. Grant, 486 U.S. 414 (1988) (stating that the
First Amendment not only protects the right to advocate a cause, but
also the right to select the most effective means to do so).
---------------------------------------------------------------------------
By coupling the ``likelihood of dilution'' standard along with
tarnishment, trademark holders can now argue their trademark is
``likely to be tarnished'' and possibly prevail, even though no
tarnishment has actually occurred. Furthermore, the trademark holder
can obtain an injunction against the speech long before a trial is even
held.
If tarnishment remains as a cause of action, the exemptions must
make clear that fair use and free speech are fully protected, even if
used in commercial speech. Furthermore, the definition of
``tarnishment'' in Section 2(c)(2)(C) should be changed. Currently, it
defines tarnishment as ``association between a designation of source
and a famous mark, arising from their similarity, that harms the
reputation of the famous mark.'' The definition is too vague and would
sweep into it parody and criticism. After all, if the criticism is
successful, won't it ``harm'' the mark? If the parody (in the case of
the Joe Chemo ``subvertisement'' contained in the Appendix) is
successful in reducing smoking, isn't it harming the mark? Tarnishment
has traditionally been used where the mark is associated with illegal
activity or sexual activity.\21\ ``Harm'' should be more specifically
defined to make it clear what kind of harm is contemplated.
---------------------------------------------------------------------------
\21\ Unless the material is found to be ``obscene,'' sexual
material is protected under the First Amendment. We therefore do not
recommend defining sexual activity that is not obscene as tarnishment.
---------------------------------------------------------------------------
THE BILL INAPPROPRIATELY CONTINUES TO RELY ON A DISTINCTION BETWEEN
``COMMERCIAL'' AND ``NONCOMMERCIAL'' TO DETERMINE THAT ONLY
``NONCOMMERCIAL'' SPEECH IS PROTECTED. THIS STRIPS PROTECTION FROM
COMMERCIAL SPEECH, AS WELL AS SPEECH THAT HAS ONLY INCIDENTAL
COMMERCIAL COMPONENTS.
The fact that the communication carries a commercial component
should not automatically deprive the communication of First Amendment
protection. In many cases, the commercial component is what makes the
communication viable. ``A social satire is no less effective or
communicative if sold than if given away, and the costs of printing and
distributing the message . . . can generally be recouped through sales
of the item in question.'' \22\ Furthermore, as even commercial speech
is protected under the First Amendment, it makes little sense to
deprive it of protection under the FTDA simply because it is
commercial.
---------------------------------------------------------------------------
\22\ Michael A. Albert and Robert L. Bocchino, Jr., ``Trade Libel:
Theory and Practice Under the Common Law, The Lanham Act, and the First
Amendment,'' 89 Trademark Rep. 826, 883 (1999).
---------------------------------------------------------------------------
It is not always easy to determine what is and is not
``commercial'' speech. The United States Supreme Court has held that
commercial speech is ``speech proposing a commercial transaction.''
\23\ Within those narrow confines, the definition may be sufficient.
The question of what constitutes commercial speech however is far more
nuanced, and bright lines are hard to find. For example, in Rubin v.
Coors Brewing Co., 514 U.S. 476 (1995), the Court found that a
statement of alcohol content on the label of a beer bottle constituted
commercial speech. Likewise, the Court found commercial speech in
statements on an attorney's letterhead and business cards identifying
him as a Certified Public Accountant and Certified Financial
Planner.\24\
---------------------------------------------------------------------------
\23\ Central Hudson Gas & Elec. v. Public Serv. Comm'n, 447 U.S.
557, 562 (1980), Bolger v. Youngs Drug Products Corp. 463 U.S. 60, 66
(1983).
\24\ Ibanez v. Florida Dept. of Business & Professional Regulation,
Bd. Of Accountancy, 512 U.S. 136 (1994).
---------------------------------------------------------------------------
In Bolger, the United States Supreme Court was faced with a
question of whether a federal law prohibiting the mailing of
unsolicited advertisement for contraceptives violated the federal
Constitution's free speech provision as applied to certain mailings by
a corporation that manufactured, sold, and distributed contraceptives.
One category of the mailings in question consisted of informational
pamphlets discussing the desirability and availability of prophylactics
in general or the corporation's products in particular. The Court noted
that these pamphlets did not merely propose commercial
transactions.\25\ While the parties conceded the pamphlets were
advertisements, the Court did not find that fact alone sufficient to
make them commercial speech, because paid advertisements are sometimes
used to convey political or other messages unconnected to a product or
service or commercial transaction.\26\ The Court concluded that a
combination of three factors, all present in this case, provided strong
support for characterizing the pamphlets as commercial speech. The
three factors examined by the court were: (1) advertising format; (2)
product references; and (3) commercial motivation.
---------------------------------------------------------------------------
\25\ Bolger, supra. at 62.
\26\ Id.
---------------------------------------------------------------------------
Part of the difficulty in applying Bolger is that the Court
rejected the notion that any one of the factors was sufficient by
itself, but also declined to hold all of these factors in combination,
or any one of them individually, was necessary to support
characterizing certain speech as commercial.\27\ It is no wonder the
Supreme Court in later decisions acknowledged that ``ambiguities may
exist at the margins of the category of commercial speech.'' \28\
---------------------------------------------------------------------------
\27\ Id. at 67, fn. 14, and 66, fn. 13.
\28\ Edenfield v. Fane, 507 U.S. 761, 765 (1993). See also,
Cincinnati v. Discovery Network, Inc., 507 U.S. 410, 419 (1993)
[recognizing ``the difficulty of drawing bright lines that will clearly
cabin commercial speech in a distinct category''] and Zauderer v.
Office of Disciplinary Counsel, 471 U.S. 626, 637 (1985) [stating that
``the precise bounds of the category of . . . commercial speech'' are
``subject to doubt perhaps.''].
---------------------------------------------------------------------------
When given an opportunity to more clearly define commercial speech
in Nike v. Kasky, the U.S. Supreme Court dismissed the case as having
improvidently granted certiorari. Several members of the Court
specifically noted the difficulty of the questions presented. As a
result, lower courts are left to flounder, and often take an overly
broad view of what constitutes commercial speech.
Against this backdrop, and despite the fact that the Supreme Court
has recognized that commercial speech enjoys First Amendment
protection, the FTDA continues to rely upon a supposed bright-line
distinction between fully protected and commercial speech, condemning
any speech that is not ``pure'' (meaning it is not tainted with any
commercial element).\29\
---------------------------------------------------------------------------
\29\ Previous cases have demonstrated that protected speech tainted
with magazine sales, Anheuser-Busch, Inc. v. Balducci Pub., 28 F.3d
769, 775 (8th Cir. 1994), or T-shirt sales, Mutual of Omaha Insurance
Co. v. Novak, 836 F.2d 397, 402 n.8 (8th Cir. 1987), are not deemed
``non-commercial'' speech by the courts.
---------------------------------------------------------------------------
Reliance on this supposed ``bright-line'' distinction ignores the
fact that effective speech is rarely ``pure'' in that it lacks some
commercial component. Activist groups routinely seek donations on a web
site to support their work, sell T-shirts, stickers and books, and
possibly even allow advertising on the web site. Yet, under the FTDA,
critical websites and parodies that generate incidental revenue could
still be found to be ``commercial'' and therefore subject to an
injunction. The result is a chilling of the expressive use of
trademarks in speech that mixes traditionally understood free speech
with commercial elements.
An example is Adbusters Media Foundation and its magazine,
Adbusters. This publication features advertisement parodies, called
``subvertisements,'' which use trademarks and corporate logos to
generate awareness about social and political issues. One issue
featured ``Joe Chemo,'' a parody of the ``Joe Camel'' character used by
Camel cigarettes, to raise awareness of the health issues surrounding
smoking.\30\ These ads represent a type of important civic speech that
is traditionally protected under the First Amendment. It makes critical
commentary on the trademark holder, furthering the traditional goals of
trademark law by informing the consumer about the goods and services
they purchase. While the speech is predominantly civic in nature, the
commercial element of selling the magazine could well mean that the
trademark holder under the FTDA could silence its critical speech.
---------------------------------------------------------------------------
\30\ See Appendix for examples.
---------------------------------------------------------------------------
Although Congress in adopting the FTDA, characterized the
noncommercial use exception as adequate to accommodate First Amendment
concerns, that assessment has proved to be unduly optimistic. Even
courts that reach the right result often have to strain to protect free
speech.
When faced with a trademark dilution claim for the parody song
``Barbie Girl,'' the Ninth Circuit Court of Appeals recognized that the
song was entitled to protection under the First Amendment.\31\ It did
not, however, fit neatly into the three exceptions noted in the FTDA:
It was not comparative advertising, it was being sold for a commercial
purpose, and it was not news reporting. In order to reach the correct
result and deny the injunction, the court interpreted ``noncommercial
use'' to refer to a use ``that consists entirely of noncommercial, or
fully constitutionally protected, speech.'' \32\ ``If speech is not
`purely commercial'--that is, if it does more than propose a commercial
transaction--then it is entitled to full First Amendment protection.''
\33\ While such a result is correct, and comports with the legislative
history of the FTDA indicating an intent to protect parodies, this is a
somewhat strained definition, and certainly not followed by all courts.
As noted above, in Bozell, a commercial purpose was found simply
because Bozell sought donations over the Internet for his activities.
Thus, the noncommercial use exception provides no consistent relief for
those who engage in free speech activities.
---------------------------------------------------------------------------
\31\ Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir.
2002).
\32\ Id. at 905.
\33\ Id. at 906.
---------------------------------------------------------------------------
We recommend amending the exemptions to drop the distinction
between ``commercial'' and ``noncommercial'' speech and provide an
exemption for any speech protected by the First Amendment.
INTENT OR BAD FAITH SHOULD BE AN ELEMENT OF THE BLURRING CAUSE OF
ACTION.
SECTION 2(C)(2)(B)(V)
One of the factors in determining dilution by ``blurring'' is
``whether the user of the designation of source intended to create an
association with the famous mark.'' In a parody, or criticism, the user
of the mark obviously intends to create an association with the famous
mark. The mere mental association is insufficient to support a blurring
cause of action.\34\ The lack of an element of intent or bad faith
would allow blurring to silence parody or criticism based merely on the
intended association. We recommend that this factor encompass some form
of bad faith or intent to harm (being specific about the type of harm
contemplated).
---------------------------------------------------------------------------
\34\ Moseley, supra. at 433.
---------------------------------------------------------------------------
HARM SHOULD ALSO BE INCORPORATED AS AN ELEMENT IN THE BLURRING CAUSE OF
ACTION.
Section 2(c)(2)(B)(vi) provides another factor in determining
``blurring,'' and likewise relies upon association without a
concomitant harm. [``Any actual association between the designation of
source and the famous mark.''] Once again, a parody or criticism, if
successful, would meet this criterion.
We recommend that whatever harm this is intended to prevent be
spelled out in more detail to avoid reliance on mere association as a
factor in determining harm.
SECTION 2(C)(4)(B) WOULD SWEEP IN PARODIES AND CRITICISM.
Section 2(c)(4) provides for additional remedies (beyond an
injunction) where the acts of the junior mark holder are intentional.
Subsection B allows additional remedies in a tarnishment action where
``the person against whom the injunction is sought willfully intended
to trade on the reputation of the famous mark.'' Once again, this is
exactly what a parody or criticism does--it trades on the reputation of
the famous mark. Thus, speech that should be protected under the First
Amendment could be used to justify even more damages than just an
injunction.
the fair use exemption should be expanded to encompass all fair uses.
Both the current and the proposed FTDA allow an exception for
``fair use of a famous mark by another person in comparative commercial
advertising or promotion to identify the competing goods or services of
the owner of the famous mark.'' There is no rational basis for limiting
fair use in this manner. Fair use is a much broader concept, and it
should apply to trademark dilution actions in all situations, not just
comparative advertising.
CONCLUSION
By using trademark dilution as a claim, companies would have an
additional potent weapon to silence their critics. Unlike defamation
claims, the company need not demonstrate falsity or malice--only the
``likelihood of tarnishment.'' To the extent any critic is successful,
companies may be able to establish that their trademark is ``likely to
be tarnished.'' Preliminary injunctive relief would silence the critics
pending trial, even though the company has proven no actual harm to its
trademark, and the court has made no final ruling that the critic's
speech is unprotected.
As the FTDA expands, it alters the dynamic tension between
trademark holders and free speech in favor of trademark holders. While
enriching trademark holders, it dilutes free speech without any
concomitant benefit to society. Furthermore, it places the trademark
holder in the position of holding an indefinite monopoly in expressive
subject matter, and obstructs the public's ability to freely engage in
a democratic dialogue.\35\
---------------------------------------------------------------------------
\35\ See Cohen v. California, 403 U.S. 15, 26 (1971) (recognizing
that the elimination of particular words poses a substantial risk of
suppressing ideas in the process).
---------------------------------------------------------------------------
ATTACHMENT
Mr. Smith. Mr. Stimson.
STATEMENT OF DAVID C. STIMSON, CHIEF TRADEMARK COUNSEL, EASTMAN
KODAK COMPANY
Mr. Stimson. Good morning, Mr. Chairman, Mr. Berman. Thank
you for inviting me to testify.
Kodak supports amending the Federal Trademark Dilution Act
to address two issues raised by the Supreme Court's Mosely
decision. First, the Court said that the owner of a famous mark
must wait until there is some sort of demonstrable harm before
a judge can issue an injunction in a dilution case. Second, the
Court raised the possibility that tarnishment of a famous mark
may not be actionable under the current statute.
The FTDA was designed to protect famous trademarks, like
Kodak. In the nearly 125 years since it was first coined, the
Kodak trademark has gained the loyalty and trust of hundreds of
millions of American consumers over six generations and has
been used on billions of products and has generated hundreds of
billions of dollars of revenue. As a result, the Kodak
trademark today is one of the strongest and most famous
trademarks in the United States and around the world. Surveys
of brand value have consistently confirmed this.
Just as Kodak has worked hard to establish the Kodak
trademark, my colleagues and I work hard to strengthen and
protect it. We understand its value and we are serious about
protecting our ownership rights.
The FTDA has been an important part of our strategy. Since
1996, it has been there to help protect the Kodak brand from
blurring and tarnishing uses before it is irreparably damaged.
However, in the Moseley decision, the Supreme Court said that
the text of the FTDA leads to the conclusion that a famous
trademark owner must prove actual harm before a court issues an
injunction in a dilution case. Mr. Chairman, an actual harm
standard undercuts the effectiveness of the statute.
A requirement that Kodak show actual harm would require us
to spend months litigating at the potential costs of hundreds
of thousands of dollars in legal and survey fees. But even more
importantly, in the meantime, the dilution would continue and
the value of our trademark would be constantly diminishing at a
huge cost that could not be calculated. Once the injunction was
finally issued, the damage to our trademark would already have
been done.
As an example, if Kodak were to be used as the name of a
magazine containing photographs of child pornography, the
damage to Kodak's image, reputation, and trademark would be
obvious. If we were required to prove actual dilution, the
sales of these magazines would continue and proliferate around
the country. Even after we had shown actual dilution, we would
never be able to retrieve all these magazines. Our Kodak
trademark would be forever associated with child pornography in
the minds of people who saw the magazines.
Granting relief based on a showing of likelihood of
dilution is essential for owners of famous trademarks to enable
them to quickly stop this sort of serious damage to their
reputation and good will. Therefore, Kodak believes that the
best way to assure the effectiveness of a Federal dilution
statute is to specifically incorporate a likelihood of dilution
standard into the law.
In light of the uncertainty raised by the Moseley decision,
Kodak also supports adding to the FTDA an express cause of
action for likelihood of dilution by tarnishment. To illustrate
the need for protection against tarnishment, in the Internet
world, there are unfortunately, Mr. Chairman, as you mentioned
in your opening statement, many unscrupulous people who use our
Kodak trademark as the domain names of websites that tarnish
our Kodak trademark and identity. Some recent examples are
kodak.net as the domain name for a website linked to a gambling
casino; Kodaq with a ``q''.net for a professional male escort;
and kodakcompany.com for nude and lingerie models. The FTDA
should be amended to make it clear that uses like these, which
use our trademark in connection with unsavory activities and
tarnish its value, constitute dilution.
We would also add that if the Congress were to provide a
specific cause of action for likelihood of dilution by
tarnishment, there should also be a cause of action for
likelihood of dilution by blurring, which is the other
recognized form of dilution.
Thank you, Mr. Chairman, Mr. Berman, for this opportunity
to testify. Revising the FTDA is a matter of great importance
to Eastman Kodak Company. We therefore ask for your support in
passing the appropriate legislation and your assistance to
Kodak and other U.S. companies in protecting their valuable
trademark assets. Thank you.
Mr. Smith. Thank you, Mr. Stimson.
[The prepared statement of Mr. Stimson follows:]
Prepared Statement of David C. Stimson
I. INTRODUCTION
Good morning, Mr. Chairman. Thank you for inviting me to testify.
My name is David Stimson. I am Chief Trademark Counsel for Eastman
Kodak Company in Rochester, New York where I have been employed for the
past 18 years.
My volunteer activities in the trademark community include service
on the U.S. Patent and Trademark Office Trademark Public Advisory
Committee from 2000 to 2003 and with the International Trademark
Association. I served as INTA president between May 1997 and May 1998.
My comments here today concerning revision of the FTDA, however, are
only on behalf of Kodak.
Kodak supports amending the Federal Trademark Dilution Act (FTDA)
\1\ to address issues raised by the Supreme Court's decision in Moseley
v. V Secret Catalogue, Inc.\2\ This decision will hamper the ability of
owners of famous trademarks like KODAK to protect their intellectual
property from third party uses that either blur or tarnish. Blurring
and tarnishment are the two forms that dilution can take. In Moseley,
the court said that the owner of a famous mark must wait until there is
some sort of demonstrable harm before a judge can issue an injunction
in a dilution case. The court also raised the possibility that
tarnishment of a famous mark may not be actionable under the current
statute.
---------------------------------------------------------------------------
\1\ Pub. L. No. 104-98, 109 Stat. 505 (1995).
\2\ 123 S. Ct. 1115 (2003).
---------------------------------------------------------------------------
II. THE KODAK TRADEMARK
The FTDA was designed to protect famous trademarks like KODAK. In
the nearly 125 years since it was first coined, the KODAK trademark has
been used on billions of products and has generated hundreds of
billions of dollars of revenue. During that time Kodak has employed
millions of American workers. Kodak has used the KODAK trademark on all
its products and in all its advertising, gaining the loyalty and trust
of hundreds of millions of American consumers over six generations.
As a result, the KODAK trademark today is one of the strongest and
most famous trademarks in the United States and around the world. It
was even cited by Congress as a famous mark when the FTDA was adopted
in the mid-1990s \3\ as well as by the United States Supreme Court in
its Moseley decision.\4\ Surveys of brand value consistently place the
KODAK trademark at the top of the list of the world's most valuable
trademarks. The Forrester 2003 Technology Brand Scorecard placed KODAK
number two among 58 major technology brands and number one in terms of
usage and recognition. KODAK was the number one U.S. brand in the 2002
WPP Brandz study that measured consumers' bonding with over 17,000
brands.\5\ Independent news reporters have called KODAK ``one of the
world's best known brands'' \6\ and have said that ``[f]ew American
companies have the kind of brand loyalty and history that Kodak has. .
. .'' \7\ So important is the KODAK trademark to our company that our
CEO Dan Carp has listed ``brand strength'' as the first among our five
``core competencies.''
---------------------------------------------------------------------------
\3\ Federal Trademark Dilution Act of 1995, 104 H. Rpt. 374
(referring to dilution by the introduction of KODAK pianos).
\4\ Moseley at 123 S. Ct. 1115, 1123 (2003).
\5\ ``The 2003 Tech Brand Scorecard'', Forrester Research, Inc.;
Wholeview Technologies Research Brief, October 28, 2003.
\6\ Robert Siegel, ``All Things Considered'', National Public
Radio, September 25, 2003.
\7\ Jim Zarroli, ``All Things Considered'', National Public Radio,
September 25, 2003.
---------------------------------------------------------------------------
Because the KODAK trademark is so important to our company, Mr.
Chairman, I am grateful to have the opportunity to appear here today
and share with the subcommittee the importance of the FTDA to Kodak and
to recommend ways in which the statute should be revised.
III. USING THE FTDA TO PROTECT THE KODAK MARK
Just as Kodak has worked hard to establish the KODAK trademark, my
colleagues and I work hard to strengthen and protect it. Kodak is proud
of the high quality of the products and services it offers under the
KODAK brand and we spend billions of dollars on manufacturing quality
and improvements to deliver products and services worthy of the KODAK
trademark. We also have spent millions of dollars registering KODAK as
a trademark, understand its value, and are serious about protecting our
ownership rights.
The FTDA has been an important and effective part of our strategy
in protecting the KODAK brand from blurring and tarnishing uses before
it is irreparably damaged. To insure that we are able to take action
under the FTDA before the damage has become irreparable it is important
that Kodak and other owners of famous trademarks be able to stop uses
that create a likelihood of dilution. For example, if we were faced
with KODAK Condoms, KODAK Vodka or KODAK Escort Service, we would want
to act quickly under the FTDA to obtain a preliminary injunction and
stop these diluting uses at the earliest possible moment.
IV. THE SUPREME COURT DECISION IN MOSELEY AND ITS IMPACT ON USE OF THE
FTDA
In the Moseley decision, the Supreme Court said that the statutory
text of the FTDA leads to the conclusion that a famous mark owner must
prove actual harm before a court issues an injunction in a dilution
case. Mr. Chairman, an actual harm standard seriously undercuts the
effectiveness of the statute.
A trademark embodies the goodwill and reputation of the company
that owns it and serves as the company's face to its customers and to
the world. Reputations take years to build up but can be destroyed
instantly, as we have seen all too often in the recent corporate and
accounting scandals. If a corporation such as Kodak, which has built up
its reputation over a period of a hundred years through billions of
individual transactions and interactions with its customers, has to
wait until it is able to prove actual harm before it can obtain an
injunction to stop the dilution of its trademark, it would be too late.
The damage would be irreparable.
A requirement that Kodak show actual harm would mean spending
months litigating at the potential cost of hundreds of thousands of
dollars in legal and survey fees. But even more importantly, in the
meantime the dilution would continue and the value of our trademark
would be constantly diminishing at a huge cost that could not be
calculated. Once the injunction was finally issued, the damage to our
trademark would already have been done.
In the real world, once the singularity of a famous mark has been
blurred and the sterling reputation of the mark has been tarnished, the
genie is out of the bottle and any court-ordered injunction or damages
comes much too late. Our reputation would have been taken over by
someone else and, by the time we were able to show actual harm, our
reputation would never again be ours alone.
V. KODAK SUPPORTS A LIKELIHOOD OF DILUTION STANDARD
Kodak believes that the best way to assure the effectiveness of a
federal dilution statute is to specifically incorporate a likelihood of
dilution standard into the law.
Such a standard allows the trademark owner to stop the damage to
the distinctiveness of its famous trademark before it becomes
irreparable. It insures that the singular meaning of the trademark--its
unique identification with the trademark owner alone and nobody else--
will continue.
I would like to illustrate this point with a hypothetical example
that is based on real problems that Kodak has faced over the years.
Because of the strong and positive reputation of the famous KODAK
trademark and because it is so closely identified with photography, our
KODAK brand often is used to identify photographs for which Kodak has
had no involvement or responsibility.
If Kodak were to be used as the name of a magazine containing
photographs of child pornography the damage to Kodak's image as a
family-oriented company that can be trusted with the pictures and
memories of life's special moments is obvious. Obvious too is the
damage to the KODAK trademark that would result from this misuse.
However, if we were required to prove actual dilution, the sales of
these magazines would continue and proliferate around the country. Even
after we had shown actual dilution we never would be able to retrieve
all those magazines. Our KODAK trademark would forever have been
associated by everyone who saw those magazines with child pornography,
not with our company and the products which we so proudly sell.
Granting relief based on a showing of likelihood of dilution is
essential for the owners of famous trademarks to enable them to quickly
stop this kind of serious damage to their reputation and goodwill.
VI. TARNISHMENT, BLURRING, AND THE FIRST AMENDMENT
The Moseley decision also created ambiguity as to the protection
that the FTDA offers against tarnishment. ``Tarnishment occurs when a
famous trademark is linked to products of shoddy quality, or is
portrayed in an unwholesome or unsavory context.'' \8\ The court in
Moseley said: ``Whether it [tarnishment] is embraced by the statutory
text . . . is another question.'' \9\
---------------------------------------------------------------------------
\8\ 2 Jerome Gilson, Trademark Protection and Practice
Sec. 5A.01[6], at 5A-55 (Rel. 50-December 2003).
\9\ Moseley, 123 S. Ct. at 1124.
---------------------------------------------------------------------------
To remedy this ambiguity, Kodak supports adding to the FTDA an
express cause of action for likelihood of dilution by tarnishment.
As long as the KODAK trademark has value there will be dishonest
people out there who try to take advantage of it to make a quick buck,
often in ways that disparage our valuable property. We see all too much
of this in the Internet world, where unscrupulous scam artists use our
KODAK trademark in the domain names of websites that tarnish our KODAK
trademark and identity.
Some recent examples are ``kodak.net'' as the domain name of a
website linked to a gambling casino, ``kodaq.net'' for a professional
male escort and ``kodakcompany.com'' for nude and lingerie models.
Under some court decisions it is far from certain that such misuses
would be held to be dilution by blurring, on the dubious ground that
once websurfers go to the actual website it is clear what entity they
are dealing with.
The FTDA should be amended to make it clear that uses like these,
which use our trademark in connection with unsavory activities and
tarnish its value, constitute dilution.
If there is a separate cause of action for likelihood of dilution
by tarnishment, then it is reasonable that Congress also create a cause
of action for likelihood of dilution by blurring. Whereas tarnishment
focuses on a famous mark's reputation, a likelihood of dilution by
blurring should address the loss of a famous mark's distinctiveness,
specifically the capacity of the famous mark to stand as an identifier
for a single source.
This would address situations in which there is not a direct
negative or derogatory connotation from the diluting use, but the
second use serves to place into the public's mind an entity other than
the original trademark owner. This blurs the distinctiveness of the
famous trademark so that it no longer is associated with a single
source.
We faced this situation several years ago with a company that was
using our trademark slogan ``A KODAK MOMENT'' as the punch line for
greeting cards that it was selling. There was nothing obscene or
derogatory about the cards, so they would not have been actionable
under a tarnishment standard, but they did blur the distinctiveness of
our KODAK trademark by associating it with the card manufacturer and
its joke, rather than with Kodak as the owner of the mark and the
source of all KODAK-branded products.
For these reasons, both tarnishment and blurring should be
explicitly listed as grounds for dilution in the FTDA.
VII. CONCLUSION
Thank you, Mr. Chairman, for this opportunity to testify. Revising
the FTDA is a matter of great importance to Eastman Kodak Company. We
therefore ask for your support in passing the appropriate legislation
and your assistance to Kodak and other U.S. companies in protecting
their valuable trademark assets.
Mr. Smith. Let me address my first question to all the
panelists, but I am hoping for a very brief answer. The
question is this. It is my understanding that the original
Congressional intent when FTDA was written and passed was, in
fact, to try to prevent actual damage or actual dilution, not
just the likelihood of that. Of course, the Supreme Court last
year said actual damages had to be proved rather than just the
likelihood, whereas I think the Congressional intent was
likelihood would be sufficient to trigger the statute.
Do any of the panelists have a different view of the
Congressional intent based upon their experience or based upon
their reading ? Ms. Leimer?
Ms. Leimer. No. I think that we certainly believe that from
the very roots of dilution law, well before even the Federal
Dilution Act, the concept of dilution was a whittling away of
distinctiveness, and this is by its nature an incipient kind of
harm.
Mr. Smith. To me, the committee print is a codification of
original Congressional intent, not a divergence from it.
Ms. Leimer. And we agree completely with that.
Mr. Smith. Mr. Sacoff?
Mr. Sacoff. Mr. Chairman, if I understood the way you put
it correctly, I believe you said that the intent behind the
original act was a likelihood of dilution standard----
Mr. Smith. That is correct.
Mr. Sacoff.--and we agree with that assessment. I think
that the actual reduction to a statutory text raised some
questions, and I don't know how many amicus briefs were written
in the Victoria's Secret case, but we believe this is a
codification.
Mr. Smith. The idea was to be able to act prior to the
actual damage or dilution, not have to wait for that to occur.
Mr. Johnson, that is a tough question for you, but leaving
aside the constitutional question, do you at least agree that
the original Congressional intent was a likelihood standard,
not an actual damage standard?
Mr. Johnson. I am not really sure what the Congressional
intent was with regard to those two standards. I would note,
however, that the States at that point had some that required
actual and some that required likelihood, so----
Mr. Smith. We were trying to clarify that.
Mr. Johnson.--and so it was basically clear that there were
at least two possibly competing standards. Congress put in the
language actual damages, so the only thing I can conclude at
that point is that apparently, given the language, that it was
actual damages. But I wouldn't presume to say what was in
Congress's mind at the time they enacted the statute.
Mr. Smith. All right. And Mr. Stimson?
Mr. Stimson. Mr. Chairman, I was involved in some of the
drafting of the original statute and the passage of it and I
can confirm that the intention of that statute was to cover
likelihood of dilution.
Mr. Smith. Thank you. My next question, Mr. Stimson, is for
you and Ms. Leimer. In regard to Kodak and in regard to Kraft
Foods, if we did not have FTDA, what would have happened to
your trademarks? And the second part of that is that if we
don't make the changes that we propose, what might happen in
the future to the trademarks of your two companies? Mr.
Stimson?
Mr. Stimson. Well, I think, as I said in my testimony, the
FTDA is a powerful tool for us, and that means often not that
we necessarily have brought a lawsuit, but it does help us in
cease and desist letters to stop the dilution at a very early
stage, and so it has been a very useful means for us to stop
dilution, and I can give several examples where we have been
able to stop dilution before it gets to an advanced stage. So I
think if we did not have that and if we were required to prove
actual dilution, then I think we would be harmed, and to the
extent that the dilution would continue for a much longer time,
we would be damaged and there would be much more court costs
for both parties.
Mr. Smith. Thank you. Ms. Leimer?
Ms. Leimer. We have the very same experience at Kraft that
Kodak has had. We have some very famous marks and there have
been a number of instances where third parties have tried to
take advantage of them. The one most recently where we did have
to bring a lawsuit was in a case where an individual commercial
artist was using the name ``King Velveeda'' as the trademark
for his business and his commercial art was sexually explicit.
It was available on the website. We have children that visit
our website because they like Velveeta. Their moms make their
grilled cheese sandwiches out of it. And we felt it was very
important that we preserve the very good name, and so we used
the FTDA to control that man's using that name as a trademark
for his business.
Now, if he had said that he didn't like Velveeta, if he had
had some issue with the product, the FTDA would not have
covered that kind of comment. He was using the name as a
trademark for his business.
Mr. Smith. Okay. Thank you, Ms. Leimer.
Mr. Sacoff, how would you respond to Mr. Johnson's visual
example a while ago of Joe Camel, where he would suggest that
the parody would be outlawed or punishable or contrary to law?
Do you feel that that parody would, in fact, be prohibited or
not?
Mr. Sacoff. Well, I think if I were a judge, I would
probably certainly deny a preliminary injunction if it is used
in a speech content sort of way. I don't think the likelihood
standard will impinge upon free speech in the parody area.
First of all, parodies fall within the First Amendment and any
Congressional statute obviously can't trump the First
Amendment. Courts must apply the FTDA as they must apply other
statutes in a manner to avoid constitutional issues if they
can.
We think that the exceptions and the permitted uses stated
under the FTDA are satisfactory to protect free speech
interests, and as I said before over the years, I don't think
that the problems that the ACLU contemplates have materialized.
Mr. Smith. And do you feel under the committee print that
aspect of free speech would also be protected?
Mr. Sacoff. I believe so.
Mr. Smith. Okay. Thank you, Mr. Sacoff.
Ms. Leimer. Mr. Chairman, I would like to address that,
because I think the committee print actually expressly excludes
the kind of example Mr. Johnson used, because under the
committee print, the dilution cause of action necessarily
involves a famous mark being compared against the trademark of
the other party used to sell their goods or services. In this
case, it is not being used for that. It is clearly being used
for parody and for satire and for critical comment.
Mr. Smith. And that is the intent. Thank you.
Mr. Berman is recognized for his questions.
Mr. Berman. Let us just follow up on that for a second. Mr.
Johnson, what is your response to their notions, and I believe
Ms. Leimer proposed--you proposed a suggested change, I think.
Ms. Leimer. In the committee print, the requirement for the
action to even be considered is that there be a comparison
between the famous mark and the challenged mark, but it has to
be a mark on the challenger's side being used as a trademark.
So if the challenger, if the defendant is using the trademark
to make comment, it doesn't even fall within the elements of a
cause of action.
Mr. Berman. Could you address whether or not your concern
is answered by the comments of the other witnesses who reacted
to it?
Mr. Johnson. Yes, Mr. Berman. The problem is that
currently, what you have is a non-commercial use exception,
essentially----
Mr. Berman. Yes.
Mr. Johnson.--and that has been interpreted, unfortunately,
very, very broadly, so that if any money incidentally happens
to come into the hands of the person who is using this, it
becomes a commercial use, according to the courts, or some of
the courts, and then it loses the protection under the First
Amendment that was designed under the FTDA. There is really
not----
Mr. Berman. And tell me, what did Joe Chemo--what was the
commercial--remind me what the commercial----
Mr. Johnson. They sell their magazine. They have a magazine
where they publish what they call ``subvertisements,'' which is
the Joe Chemo, and so they sell their magazine----
Mr. Berman. Oh, in other words, people who want to see
parody----
Mr. Johnson. Right.
Mr. Berman.--advertisements buy the magazine, and in the
course of their using--I get it.
Mr. Johnson. Right. So essentially, they are profiting from
the parody, and as a result, as I said, some courts have said
that because of their profiting from it, it no longer has that
non-commercial aspect. If it is brought--now, what Ms. Leimer
said, I think, does----
Mr. Berman. By the way, why isn't that fair use?
Mr. Johnson. Well, the problem is the fair use exception is
only for comparative advertising, according to the FTDA. If you
broadened to fair use----
Mr. Berman. Oh, I see. In other words, if you were knocking
Joe Camel cigarettes in your commercial, in your advertisement,
that would be fair use. If you were saying----
Mr. Johnson. Right. Under the FTDA, it has to be
comparative advertising. So if you are comparing your
cigarettes with Joe Camel, for instance, then clearly that
would be comparative advertising and it may be considered fair
use. But unfortunately, the fair use restriction that is placed
in the FTDA is far too restrictive, so it doesn't encompass all
of what most people would consider fair use.
Mr. Berman. Response?
Ms. Leimer. Mr. Johnson is correct that the courts have
struggled with the defenses in the current FTDA and there have
been a couple cases where a distinction was made between
commercial and non-commercial that perhaps may not be a correct
decision. The committee print, though, cures that problem. The
committee print does now require that the dilution action would
only apply when the other use, the second use, is used as a
trademark for that party's goods and services. So anything that
falls outside of that is not subject.
Mr. Berman. Well, this magazine wasn't using Joe Chemo as
its trademark, was it?
Mr. Johnson. No, sir. It was essentially just part of the
campaign that they were doing. It wasn't using it as their
trademark.
Ms. Leimer. So on--oh, I am sorry, Mr. Johnson.
Mr. Johnson. I was just going to say, the language in the
committee print is designation of source. Now, I wasn't clear
exactly what designation of source meant when I was reading the
committee print----
Mr. Berman. I am not, either. What does that mean?
Ms. Leimer. Well, it is a somewhat technical term in
trademark jargon to mean using that word as a trademark, as a
designation of source. But it is really just using it as a
trademark to distinguish your goods and services.
You were correct when you said, in this case, the magazine
was not using Joe Camel as the trademark for the magazine and
so it falls completely outside the realm of the dilution
statute as provided in the committee print. It would be,
frankly, a matter for summary judgment if a plaintiff--if Joe
Camel, the owner of that trademark, brought this case, because
of this change. This is an improvement that we think really
balances the interests that we have been discussing.
Mr. Berman. And do you feel it is an improvement?
Mr. Johnson. I think it is an improvement, but I think what
you need to do is spell out what you mean by designation of
source. Since I wasn't clear what it was, I actually talked to
some intellectual property law professors and said, what does
this mean to you, and they were, like, we have no idea. So
clearly, it is not something that is easily understood----
Mr. Berman. They were patent lawyers.
Mr. Johnson.--as to what we mean by designated source, so I
would make that much clearer than what it is, or at least
define it within the context of the statute.
Mr. Berman. All right. Two other subjects that I would like
to just ask about. I don't know if we are going to have a
second round or not.
Mr. Smith. Go ahead and take your time.
Mr. Berman. I didn't read the Moseley case. I read a little
summary of it. So what if some guy named Victor in Elizabeth
Town, Kentucky, opens up a store--I don't know what they were
selling and whether or not it was lingerie or sex objects or
adult magazines or what--and calls itself ``Victor's Little
Secret.'' I mean, only a moron is going to think that is
Victoria's Secret. They may sort of catch what the guy is
trying to do with his name as an attention-grabbing device, but
so what? So what if some guy named Kodak starts an adult
magazine that doesn't violate laws and has pictures in that
magazine and the magazine is called ``Kodak''?
In other words, how far do we go? There is some common
sense here. What is the big confusion going to mean? How do you
know that they went on that website because they liked Velveeta
cheese? I mean, Justice Posner's skepticism about surveys
brings to mind my skepticism about polling different aspects,
not so much which kind they do favor, but the notion of things
that go on in your mind and your associations, and when people
are asked certain questions in these surveys, the notion that
what they are saying to the survey taker is actually what
happened originally. I am somewhat skeptical about myself.
Just whoever wants to get into that, into the Jimmy Carter
principle that life is not always fair. Are you guys being
hypersensitive?
Mr. Stimson. Mr. Berman, may I respond to that, since you
used Kodak as an example?
Mr. Berman. Yes.
Mr. Stimson. I think the problem is that there is this
blurring and there is this mental association that people will
have, that they will associate, in your example, the Kodak
trademark with somebody other than Kodak so that it ceases to
become a single-source designator. When I say I am here this
morning to testify on behalf of Kodak, you know exactly who I
am here for. You are not saying, well, are you here for the
imaging company? Are you here for the porno magazine? That is
the kind of problem----
Mr. Berman. You are here on behalf of the city fathers of--
isn't there a Kodak in Alaska or something? [Laughter.]
Mr. Berman. Kodiak--confusion.
Mr. Stimson. The problem here is not a question of
confusion but it is the question of blurring and diluting the
value of the mark which does belong to the trademark owner. It
no longer signifies a single origin or source.
You also asked about, so what if there is some small store
in Kentucky? Well, dilution is designed to try to prevent this
whittling away, which does start off often in a very small
circumstance and protect marks in their incipiency before it is
too late, before things do go to the point where it is
impossible to get your reputation back.
Mr. Berman. Yes, but Victor's Little Secret is not
Victoria's Secret.
Mr. Stimson. Well, I think one of the factors to look at is
the similarity of the mark. So that is a question of fact, of
whether--to what extent Victor's Little Secret is similar to
Victoria's Secret, so that would be an issue, just as if
somebody were using ``Bokak'' as opposed to Kodak. That would
have to be something that would have to be determined.
Mr. Berman. And can one actually tarnish the image of
Victoria's Secret?
Mr. Stimson. I won't get into that.
Mr. Berman. Okay. [Laughter.]
Mr. Berman. All right.
Mr. Sacoff. From a policy standpoint, your question is a
very good one, and I think the policy answer or the
philosophical answer is there are two main areas of trademark
law, trademark infringement law, which is based upon fraud and
confusion rationales, and dilution law, which is not based upon
confusion. It is based upon quasi-property sort of right and
protecting the mark against whittling away by the death of a
thousand cuts.
In trademark infringement law, the answer to your question
of how far do we go, the limiting factor is confusion. In
trademark dilution law, the limiting factor, I think in
response to your question, is fame. That is how we limit it.
That is how we prevent it from being a runaway right. You
narrow the universe of marks that this applies to. It makes a
difference, I think, if you open up a phone book and look for
Kodak and you find one or if you find two dozen or three dozen
or four dozen. I think that difference has a consequence for
the value of the trademark.
Mr. Berman. Can I ask one last question?
Mr. Smith. Yes.
Mr. Berman. Three of you, at least, were sure you knew what
Congressional intent was in the passage of that law. Justice
Scalia doesn't even think what we think is Congressional intent
counts for anything. If that was Congressional intent, why
didn't we write ``likelihood of dilution''?
Mr. Smith. Unclear language.
Mr. Berman. What was unclear about the language? It didn't
say likelihood. It said dilution. And all of you say,
notwithstanding what we said, this was our intent. I am
wondering how you are so sure about that. I mean, other than
what--I understand you raised problems and we responded to it
and chose--and since your problems involved likelihood of
dilution, the fact that we responded by saying dilution, our
response must have been wanted to solve your problem.
Mr. Smith. I was going to direct your question to Mr.
Stimson, because it sounded like he was an eyewitness based
upon his testimony a few minutes ago.
Mr. Stimson. Well, I can't answer directly why Congress did
or did not do something in 1995. I can agree that the language
of the statute as it is now is unclear, and that is what has
led to this----
Mr. Berman. Why is it unclear? It says dilution. I mean,
yes, it says dilution, right? Causes dilution, not is likely to
cause dilution.
Mr. Stimson. Which is not consistent with my recollection
and understanding of the intent. So you have a statute that----
Mr. Berman. That doesn't mean that was our intent. It means
we screwed up, but----
Mr. Stimson. Well, I was trying to avoid saying that, but--
--[Laughter.]
Mr. Stimson.--but I think there is a problem with this
uncertainty, and that is why we are here today, to ask for
language that will be clear, to give guidance to the courts and
give guidance to parties on both sides so that they know the
standard is specifically likelihood of dilution because the
statute is not clear on that.
Mr. Berman. I guess it sounds to me, even more so after
hearing you, that what you are saying is substitute our clear
language for the clear language you used before, which is okay,
but I don't think we should shoehorn it in to fulfill our
original goal by making this little technical correction.
Mr. Stimson. I guess I would just say I would focus on
clarity and certainty of results and guidance for people rather
than language.
Ms. Leimer. Maybe I could just add something. I think INTA
has certainly been interested in this for many, many years. In
fact, way back in 1988, there was a proposal from INTA to
consider a Federal cause of action for dilution. Speaking with
individuals involved in that and others outside the
association, I think it was very clear that the doctrine was an
incipient doctrine of dilution. I think there was agreement on
that.
I think what perhaps happened was some unfortunate choice
of language. The language that probably appeared to be clear to
represent that concept at the time, turned out, clearly by the
Court's difficulty, not to be so clear.
Mr. Sacoff. Congressman, in the ABA, we had a resolution on
the eve of the Victoria's Secret case that said that, on one
hand, the existing Federal statute should be interpreted by the
Supreme Court in accordance with a likelihood of dilution
standard, and in the alternative, if it turned out that it were
not interpreted that way, that Congress should amend the
statute to provide expressly a likelihood of dilution statute.
Mr. Berman. When you pass a resolution about the Supreme
Court should do it, do they follow?
Mr. Sacoff. Well, they didn't follow it this time. The
resolution is simply a policy basis for us to file the amicus
curiae brief, which we filed, in which we urged a construction
which we got one Justice to go along with but not the others,
Justice Kennedy.
Mr. Smith. Thank you, Mr. Berman. We will hope the Supreme
Court will see the light of the new language, and that remains
to be determined.
This was very informative testimony today. Thank you all.
We appreciate your time and your attention to a subject that I
consider to be very important and we will move forward with
this committee mark, I suspect, in the near future. So thank
you all again.
We stand adjourned.
[Whereupon, at 11 a.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing Record