In a win for owners of famous trademarks, the Second Circuit recently held that the 2006 Federal Trademark Dilution Act ("FTDA"), which amends portions of the federal Lanham Act, applies to pending appeals seeking injunctive relief, even if on appeal from a final judgment entered before the amendments were enacted. Starbucks Corporation v. Wolfe’s Borough Coffee, Inc., 2007 U.S. App. LEXIS 3372 (2nd Cir. 2007).
The dispute prompting this ruling centered around Starbucks’ claim that defendant’s "Mr. Charbucks" coffee brand both infringed and diluted its STARBUCKS® trademark. On December 23, 2005, following a bench trial, the District Court found that the mark was neither infringed nor diluted because there was no likelihood of confusion between the two brands and Starbucks offered no evidence of actual dilution. Starbucks appealed to the Second Circuit Court of Appeals.
On October 6, 2006, while Starbucks’ appeal was pending, Congress enacted the amended FTDA setting forth a new trademark dilution standard. The amended FTDA does not expressly include a provision for prospective relief.
The Starbucks appeal was heard on January 25, 2007. On February 17, 2007, the Second Circuit issued a decision remanding the judgment with instructions that the District Court apply the FTDA’s new standard to Starbucks’ dilution claims. The Court explained that this relief was not prospective in nature. Because Starbucks was seeking an injunction, relief was forward looking and therefore must be determined by the state of the law at the time of the hearing, rather than at the time of the judgment. Accordingly, the intervening FTDA amendments govern even though the underlying judgment was entered before they were enacted.
The Second Circuit ruling could widely impact pending dilution appeals seeking injunctive relief. Because the new FTDA requires mark owners to demonstrate a likelihood of dilution rather than actual dilution, famous mark owners facing pending appeals are likely to take advantage of this increased opportunity to apply the new statute.