Trademark Dilution: Part II

* This article is Part II of a two part series. Prior Use by Plaintiff Timing is an important factor in the anti-dilution context. This is so because it would be unfair to hold someone liable for the use of a non-infringing, non-diluting mark while another mark gains fame in the marketplace. Hence, a plaintiff in an anti-dilution case must prove that its mark became famous prior to the constructive use date by any potential defendant of the challenged mark. To put it another way, the plaintiff must prove that the defendant first used its mark after the plaintiff’s mark became “famous and distinctive.” AM General Corp. v. DaimlerChrysler Corp., 311 F.3d 796 (7th Cir. 2002), related reference, 246 F. Supp. 2d 1030 (N.D. Ind. 2003); Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002, 1013 (9th Cir. 2004), cert. denied, 125 S. Ct. 1825, 161 L. Ed. 2d 723 (U.S. 2005) (the first commercial use of the diluting mark is what “fixes the time by which famousness is to be measured.”) As one famous commentator explained, “this requires evidence and proof of the timing of two events: when the plaintiff’s mark achieved that elevated status called “fame” and when the defendant made its first use of its mark.” 4 McCarthy on Trademarks and Unfair Competition § 24:96 (4th ed.). Likely Dilution by Blurring or Tarnishment The last, and according to some, the most complex element in an anti-dilution case is determining when the associations of two marks have been “blurred,” or when a mark’s reputation has been “tarnished.” Indeed, the Ninth Circuit has said, in these and other respects, the FTDA poses “formidable problems of interpretation.” Tahne Int’l, Inc. v. Trek Bicycle Corp., 305 F.3d 894, 905 (9th Cir. 2002). Dilution by “Blurring” Blurring occurs when the “unique and distinctive link” between the plaintiff’s mark and its goods or services is muddied and so its value is depressed. Unlike infringement, with dilution the public isn’t confused about the source of a product, but rather two products will spring to mind when one mark is encountered. Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 903 (9th Cir. 2002); Playboy Enterprises, Inc. v. Welles, 279 F.3d 796 (9th Cir. 2002). The theory of dilution by blurring “thus protects the benefits that flow from a sharp and distinct connection between one mark and one product.” Horphag Research Ltd. v. Garcia, 475 F.3d 1029, 1037 (9th Cir. 2007) (citations omitted). The Lanham Act provides that whether two marks have been blurred depends on a balancing of six factors: 1. similarity of the marks 2. the extent to which others use the mark, 3. actual association between the marks 4. predatory intent 5. distinctiveness of the senior mark 6. recognition of the senior mark 15 U.S.C. § 1125(c)(2)(B); and, e.g., Mead Data Cent., Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026 (2d Cir. 1989). According to one prominent commentator and several cases, though, the first and fifth factors are the heart of the determination of dilution. See 3 McCarthy § 24:94.1; and, e.g., Hershey Foods Corp. v. Mars, Inc., 998 F. Supp. 500, 520 (M.D. Pa. 1998) (stating that “whether the products are similar or not adds nothing to the analysis” because “dilution can apply to competitors”) The first requirement, that there be similarity between the two marks is, in practice, a foundational requirement for dilution. Indeed, mere similarity is not enough to support a dilution claim – the marks must be “identical or close thereto.” Thane Int’l, Inc. v. Trek Bicycle Corp., 305 F.3d 894, 905 (9th Cir. 2002); and see Mead Data Central, Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1029 (2d Cir. 1989); Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 227-228, (2d Cir. 1999)(“We hold … that the marks must be ‘very’ or ‘substantially’ similar and that, absent such similarity, there can be no viable claim of dilution.'”). The fifth factor, distinctiveness of the senior mark, is redundant of that addressed in the foundational “fame” inquiry. Few courts deal at any length with the remaining four factors. They are deemed less important to the inquiry and their absence will not preclude a dilution claim. See Mead Data Cent., Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1028 (2d Cir. 1989) (absence of “bad faith” not fatal). This is because, the courts say, these factors go more to the fame of the mark, which has already been decided, or to the similarity of the product or likelihood that profits will be diverted to a competitor, while dilution is expressly concerned with the impact of a mark on dissimilar and non-competing products. E.g., Federal Exp. Corp. v. Federal Espresso, Inc., 201 F.3d 168, 175 (2d Cir. 2000) (citations omitted). Dilution by “Tarnishment” Tarnishment comes into play when the reputation and value of the mark may be diminished because use of a similar mark may cause the public to associate the lack of quality in defendant’s good with the quality of plaintiff’s unrelated goods. In other words, a famous mark is tarnished when it is associated with an offensive or inferior good, or is portrayed in a degrading context. Playboy Enters. v. Netscape Communs. Corp., 354 F.3d 1020, 1033 (9th Cir. 2004). A court evaluating a tarnishment claim will ask whether the defendant’s use of a similar mark created an association in the minds of consumers that is inconsistent with the pre-existing reputation of the plaintiff’s mark. Starbucks Corp. v. Lundberg, 2005 U.S. Dist. LEXIS 32660 (D. OR. 2005). So, for example, the Starbucks mark was deemed to be diluted and tarnished by another company’s use of the identifier “Sambucks.” Consumer studies showed that the name “Sambucks” immediately brought “Starbucks” to mind. This association tarnished Starbucks because there was no evidence that the Sambucks store and products had developed the same premium reputation that the Starbucks brand enjoys. Starbucks, 2005 U.S. Dist. LEXIS 32660, *20; and see Playboy, 354 F.3d at 1033. Likewise, posters that bore the phrase “Enjoy Cocaine” using a font and color scheme identical to those used by the Coca-Cola Company were found to dilute the Coca-Cola trademark, because the posters offensively associated the plaintiff’s product with an illegal drug. Coca-Cola Co. v Gemini Rising, Inc., 346 F Supp. 1183 (E.D.N.Y. 1972). Remedies for Dilution An injunction is the standard remedy available to a plaintiff whose mark has been diluted. 15 U.S.C. § 1125(c)(1); 16 U.S.C. § 1116. And, if the defendant “willfully intended to harm the reputation of the famous mark,” and if the allegedly diluting mark was first used after the FTDA was enacted, the plaintiff may also be able to obtain money damages. 15 U.S.C. §§ 1125(c), 1117(a) and 1118. The factors that weight into the availability of these remedies are discussed in [Related Article]. Federal vs. State Law The federal dilution statutes were enacted in 1996 as part of the Lanham Act. This was the first time federal law recognized the doctrine. Until that time, protection against dilution was available only under state law. 4 McCarthy on Trademarks and Unfair Competition § 24:83 (4th ed.) To date, 27 states have enacted anti-dilution statutes (Alabama, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Iowa, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, and Washington) (“the anti-dilution states”). “Dilution of a Trademark,” 38 Am. Jur. Proof of Facts 3d 1 (Supp. 2007); e.g., Cal. Bus. & Prof. Code 14330 (West); Ill. Rev. Stat. ch. 140, §22; N.Y. Gen. Bus. L. § 368-d (McKinney); Tenn.Code Ann. 47-25-513(a). Some of those that have not adopted anti-dilution statutes recognize the doctrine under their common laws. Others have explicitly rejected the doctrine of dilution altogether. “Dilution of a Trademark,” 38 Am. Jur. Proof of Facts 3d 1 (Supp. 2007). For the most part, because the law of anti-dilution seeks to protect the same interests at both the state and the federal levels, the anti-dilution states’ statutory elements for the cause of action resemble those of the Lanham Act. Compare Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 874 (9th Cir. 1999) (noting that the dilution requirements under California law are substantially similar to the federal requirements) with California Bus & Prof. Code 14330 et seq.; and compare Tenn.Code Ann. 47-25-513(a) with AutoZone, Inc. v. Tandy Corp., 373 F.3d 786, 801 (6th Cir. 2004) (“There are no Tennessee cases that analyze this statute, and in the past we have interchangeably analyzed the Tennessee and federal antidilution statutes.”) Those similarities transcend the statutory language. Anti-dilution cases in state court are subject to just as much scrutiny as in federal court. See, Gulf Coast Bank v. GCB & Trust Co., 652 So. 2d 1306, 1312 (La. Sup. Ct. 1995); Cushman v. Multon Hollow Land Dev. Inc., 782 S.W.2d 150, 162-3 (Mo. Ct. App. 1990); Skil Corp. v. Barnet, 337 Mass. 485 (1958); Little India Stores, Inc. v. Singh, 101 A.D. 2d 727 (S.Ct. NY 1984). Toho Co., Ltd. v. Sears, Roebuck & Co., 645 F.2d 788 (9th Cir. 1981) (“Bagzilla,” for garbage bags, deemed not to lessen the Godzilla mark under state law). The concern is that dilution will swallow up all competition in the name of protection against trademark infringement. Coffee Dan’s, Inc. v. Coffee Don’s Charcoal Broiler, 305 F. Supp. 1210, 1217 (N.D. Cal. 1969). CONCLUSION The dilution doctrine provides a separate and distinct cause of action for holders of well-known trademarks, and has slowly begun to expand the protection afforded to their investment from free-riders who might eat away at the goodwill they’ve developed. But it is not simply a fall-back for a mark holder unable to prove an infringement case. The requirements for establishing dilution are strict, and it is available only for those marks that are truly famous or well-known.

Mr. Taillieu is a partner of Zuber & Taillieu LLP. He earned his J.D. with highest honors from George Washington University School of Law, where he graduated #1 in the day class and was Managing Editor of the Law Review.

One Response

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