Federal Trademark Dilution - The Trademark Dilution Revision Act of 2006
On October 6, 2006, President Bush signed the Trademark Dilution Revision Act of 2006 (“TDRA”) into law. The TDRA amends the Federal Trademark Dilution Act of 1995 (“FTDA”) in a number of important respects, both broadening and narrowing the dilution protection afforded to famous marks. The TDRA does not preempt state anti-dilution law.
Trademark dilution refers to the whittling away of the value of a famous trademark when it is used to identify products which are different from those sold under the famous trademark. General trademark law, whose principal purpose is to prevent misleading or confusing consumers, protects against a likelihood of consumer confusion resulting from the same or related products or services being sold under the same or similar names or other source identifying indicia such as packaging, visual material, sounds, colors or even aromas. Trademark dilution law, in contrast, protects a holders’ investment in a mark which has become a household word even absent any competition or confusion.
The FTDA was originally enacted to provide a uniform, nationwide mechanism for enforcing dilution rights which had, until 1995, been exclusively a creature of sometimes diverse state laws. However, the FTDA introduced some new elements of uncertainty, most importantly by failing to specify whether it protected only against actual dilution of a mark or, by analogy to the traditional trademark infringement test, against a likelihood of dilution. The impetus for the TDRA, which ultimately clarified or revised other aspects of the FTDA, was a Supreme Court decision which held the test for infringement under the TDRA was “actual” dilution, meaning, in other words, that the harm many thought the FTDA was supposed to prevent had already occurred.
Likelihood of Confusion. In Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003) (“Victoria’s Secret”), the Supreme Court interpreted the FTDA to provide relief against dilution only in cases of actual dilution of the distinctiveness of a mark. This standard provided a high bar for plaintiffs to surmount and raised the question whether the FTDA could practically accomplish its stated objective, particularly in light of the fact that the primary remedy was injunctive relief (rather than damages). The TDRA expressly eliminates any requirement for actual dilution by restraining the “use of a mark … that is likely to cause dilution”.
Dilution by Tarnishment. In Victoria’s Secret, the Supreme Court intimated that, unlike numerous state statutes then on the books, the FTDA only restrained dilution by blurring, and not dilution by tarnishment or disparagement. Dilution by blurring occurs when the mark is applied to other categories of goods, and dilution by tarnishment occurs when the reputation of the mark is harmed. The TDRA explicitly restrains both “dilution by blurring” and “dilution by tarnishment”, and for each type of dilution provides both a definition and a set of non-exclusive factors to consider in determining whether a mark is likely to cause that form of dilution. In enumerating these two types of dilution, however, the TDRA appears to foreclose the application of other forms of dilution, as some courts had suggested might exist under the FTDA.
Famous Marks and Markets. The FTDA had applied to “famous marks”, but did not define that term, instead providing a non-exclusive list of factors for courts to apply. These factors had led several circuit courts to afford anti-dilution protection to marks in “niche markets” and in wholesale markets. See, e.g., Times Mirror Magazines, Inc. v. Las Vegas Sporting News, 212 F.3d 157 (3rd Cir. 2000); Syndicate Sales, Inc. v. Hampshire Paper Corp., 92 F.3d 633 (7th Cir. 1999). The TDRA provides anti-dilution protection only to marks which are “widely recognized by the general consuming public of the United States”, and sets forth a non-exclusive set of factors for courts to determine whether a mark is famous. These factors exclude two notable ones which had been included in the FTDA: the trading areas and type of market involved. The legislative history also indicates that the TDRA “denies protection for marks that are famous only in ‘niche’ markets”. Accordingly, the TDRA is unlikely to provide protection against dilution for marks which are used only in niche markets or in the business-to-business context.
Fair Use. The TDRA has modified the fair use defenses to the dilution of marks. While retaining the comparative advertising and news fair use defenses included in the FTDA, the TDRA has replaced the defense of “non-commercial use” with that of “fair use …, other than as a designation of source for … goods or services, including for purposes of identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner”.
Use in Commerce. One ambiguity of the TDRA concerns the nature of activities which are restrained. The statute authorizes relief against any person who “use[s] a mark or trade name in commerce”. It is not clear whether “use in commerce” refers to the definition in Section 45 of the Lanham Act, which applies to “the bona fide use of a mark in the ordinary course of trade”, or to the much broader jurisdictional foundation of the Lanham Act in the Commerce Clause of the U.S. Constitution.
Damages. As under the FTDA, the TDRA authorizes a court to award monetary damages under Section 35(a) and to authorize the destruction of infringing articles under Section 36 of the Lanham Act in the case of a willful violation of the anti-dilution provisions. However, unlike under the FTDA, those remedies are available only if the defendant commenced use of the offending mark or trade name in commerce after the date of enactment of the TDRA.
Given the still developing body of federal dilution case law, we can now only wait and see whether further revisions or clarifications to the FTDA and TDRA may be necessary.