Trademark Dilution, Part 1

* This article is for non-lawyers, or attorneys practicing in areas of law other than trademark law, seeking to familiarize themselves with the basics of trademark dilution. This article is Part I of a three part series.

Introduction

Trademark law has evolved to give what is, in essence, a quasi-property right in a “word, name, symbol or device” that identifies and distinguishes one person’s goods (or services) from those of another. 15 U.S.C. § 1127. The justification for this is twofold. First, to protect the public from confusion or deception about who is the source of a given product or, in the case of a service mark, a given service. Second, to protect a business’s investment in the goodwill in the mark.

Enforcement of such “right” typically takes one of two forms: “Infringement” or “dilution.” Laws barring trademark “infringement” seek to protect the first interest. They focus on whether consumers are likely to be confused by the public use of two similar marks. Conversely, laws governing “dilution” seek to protect the second interest. In so doing, dilution jurisprudence focuses on whether the owner’s investment in a mark has been lessened or diminished when someone a third party uses a similar identifier. Put another way, it protects from a “free riding on the investment” the trademark holder has made. I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 50 (1st Cir. 1998).

Trademark Dilution is a Cause of Action in its Own Right

Trademark dilution is not a mere fallback position for an unsuccessful someone who was not able to prove infringement plaintiff. 4 McCarthy on Trademarks and Unfair Competition § 24:70 (4th ed.) (citing 15 U.S.C. § 1127, and Playboy Enterprises, Inc. v. Netscape Communications Corp., 55 F. Supp. 2d 1070 (C.D. Cal. 1999)). Rather, it is a distinct wrong and, therefore, a distinct cause of action.

The First Circuit explained this distinction rather eloquently in I.P. Lund Trading ApS v. Kohler Co.:

[I]f a cocoa maker began using the “Rolls Royce” mark to identify its hot chocolate, no consumer confusion would be likely to result. Few would assume that the car company had expanded into the cocoa making business. However, the cocoa maker would be capitalizing on the investment the car company had made in its mark. Consumers readily associate the mark with highly priced automobiles of a certain quality. By identifying the cocoa with the Rolls Royce mark, the producer would be capitalizing on consumers’ association of the mark with high quality items.

Moreover, by labeling a different product “Rolls Royce,” the cocoa company would be reducing the ability of the mark to identify the mark holder’s product. If someone said, “I’m going to get a Rolls Royce,” others could no longer be sure the person was planning on buying an expensive automobile. The person might just be planning on buying a cup of cocoa. Thus, the use of the mark to identify the hot chocolate, although not causing consumer confusion, would cause harm by diluting the mark.

I.P. Lund., 163 F.3d at 50.

The concept of dilution can be further subdivided in two categories: “Blurring” and “tarnishment.” Blurring is best described above in the I.P. Lund Trading ApS v. Kohler Co. decision—to wit, it 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. Tarnishment, occurs when a famous mark is associated with an offensive or inferior good, or is portrayed in a degrading context, thus lessening the value of the senior mark.

In short, the nature of dilution is to eat away at the value of another’s trademark. And, in precluding the otherwise competitive acts that might dilute a mark, the anti-dilution statute gives the mark-holder a much broader property right than a mere claim for infringement does. E.g., The Toro Co. v. Torohead, Inc., 2001 WL 1734485 (Trademark Tr. & App. Bd.), 61 U.S.P.Q.2d 1164. (It is a “bedrock principle of trademark law” that multiple uses of a term as a mark can co-exist when used for non-related goods. Dilution upsets this balance and enables the owner of a famous mark to prohibit the use or registration of the same or substantially similar mark even on unrelated goods.)

Dilution Cases Are Subject to a High Degree of Scrutiny

Dilution is thus deemed to be an “extraordinary remedy.” Advantage Rent-A-Car Inc. v. Enterprise Rent-A-Car Co.,

238 F.3d 378, 381 (5th Cir. 2001). As the Fourth Circuit explained:

[W]e simply cannot believe that, as a general proposition, Congress could have intended, without making its intention to do so perfectly clear, to create property rights in gross, unlimited in time (via injunction), even in ‘famous’ trademarks.

Ringling Bros.-Barnum & Bailey Combined Shows v. Utah Division of Travel Development, 170 F.3d 449, 459 (4th Cir. 1999). See also Nabisco, 191 F.3d at 224 n.6 (quotation marks omitted) (“We agree that the dilution statutes do not prohibit all use of a distinctive mark that the owners prefer not be made …. [W]e agree with the Fourth Circuit that the dilution statutes do not create a ‘property right in gross”‘); I.P. Lund, 163 F.3d at 47 (“[T]he standard for fame and distinctiveness required to obtain anti-dilution protection is more rigorous than that required to seek infringement protection”).

Thus, a plaintiff in a dilution case is likely to face an uphill battle. 4 McCarthy on Trademarks and Unfair Competition § 24:89.50 (4th ed.); e.g., The Toro Co. v. Torohead, Inc., 2001 WL 1734485 (Trademark Tr. & App. Bd.), 61 U.S.P.Q.2d 1164 (stating that unlike in trademark infringement cases, doubts are not resolved in favor of the party claiming dilution).

This article explains the elements and scope of a federal cause of action for dilution for a mark. Infringement is discussed in [Related Article].

Elements of a Federal Dilution Claim

Section 43(c) of the federal Lanham Act lays out the requirements for pleading and proving a federal dilution claim. 15 U.S.C. § 1125(c). This section, which comes from legislation called of the Federal Trademark Dilution Act (FTDA), says states that the holder of a “famous mark” may stop another from using “in commerce” an identifier that “is likely to cause dilution by blurring or dilution by tarnishment.”

That definition sets up a neat four-part test courts can follow to determine if a mark has been, or is likely to be, diluted.

To prove dilution, then, a mark holder must establish all of the following: (1) the mark is distinctive and famous; (2) the defendant is using its own mark in commerce (3) the defendant’s use begin after the plaintiff’s (4) the defendant’s use is “likely” to cause dilution by blurring or tarnishment

15 U.S.C. § 1125(c).

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