Famous Trademarks Now Have Stronger Protection

By: Charles Kulkarni and Tom Adolph

On October 6, 2006, President Bush signed into law the Trademark Dilution Revision Act (TDRA), a law which increases protection for famous trademarks in federal “dilution” actions.

The 2006 TDRA does not create a new cause of action, but it does make the existing federal dilution action a more powerful tool.  Federal dilution actions began with the 1995 Federal Trademark Dilution Act (FTDA).  A dilution action allows the owner of a famous trademark to stop an offending use of the same or a similar mark simply because the offending use dilutes the famous mark.  For example, the owner of a famous mark may use a dilution action to stop the unauthorized use of a similar mark in a pornographic site because of the likely harm to the owner’s reputation or goodwill, even though no consumer actually thought the trademark owner was really associated with the pornographic site.

The 2006 TDRA provides stronger protection for famous marks by reducing the burden of proof in a dilution case from the higher standard of “actual dilution” to the lower standard of “likelihood of dilution,” thus making it much easier to succeed in a dilution action.

What spurred this change?

The 2006 TDRA is a response to and a reversal of the law set forth in a 2003 Supreme Court decision, Moseley v. V Secret Catalogue, Inc.1   In Moseley, the Supreme Court held that, in its dilution action to protect the famous “Victoria’s Secret” trademark against a novelty sex shop called Victor’s Little Secret, Victoria’s Secret was required to prove actual dilution (not just likelihood of dilution).

Before the Mosely decision, federal courts were split as to whether a dilution action required the higher proof of “actual dilution” or the lower proof of “likelihood of dilution.”  After the Moseley decision, trademark owners of famous marks essentially had to watch and wait until the damage was already done to their famous trademark before asking a court to stop an offending use of their trademark.  Adding to the dissatisfaction of trademark owners, proving actual dilution proved to be quite difficult.

Displeased with the Moseley decision, trademark owners sought relief from Congress, and that effort resulted in the 2006 TDRA.

What is a famous mark?

Trademark owners did not win in every aspect of the TDRA.  The new statute narrows the concept of a famous mark – making a dilution action available to fewer trademark owners.  The 1995 FTDA omitted any definition of “famous mark,” and that omission led to conflict among the courts as to whether a “famous mark” must be famous everywhere or whether a mark could qualify as “famous” if it were well known only in an industry or in a small geographic area.  The 2006 TDRA resolves this issue by requiring the mark to be famous to the “consuming public of the United States.”2  Thus, the statute eliminates the concept of “niche fame” and eliminates a broad class of plaintiffs.

What is dilution, and what is not dilution?

A certain source of future appeals is the attempt in the 2006 TDRA to define what is dilution and what is not dilution.  The statute defines two types of dilution – “dilution by blurring” and “dilution by tarnishment.”  “Dilution by blurring” is an offending use that “impairs the distinctiveness of the famous mark.”3 “Dilution by tarnishment” is an offending use that “harms the reputation of the famous mark.”4  The statute also provides several examples of conduct that is not dilution.5  Dilution is not comparative advertising, parody, news reporting, or noncommercial use.  It is certain that many future decisions will focus on these definitions and defenses.

Conclusion

While fewer trademarks owners may qualify for protection under the TDRA because of the narrow definition of famous marks, those who do qualify under the act are now armed with a stronger tool to fend off dilution of their trademarks.  With the lower burden of proof (likelihood of dilution), trademark owners no longer have to wait until actual economic injury has occurred before seeking to stop others from diluting their famous trademarks.

If you have any questions or comments concerning this article, please contact  Charles Kulkarni at ckulkarni@jw.com or 713.752.4517 or Tom Adolph at tadolph@jw.com or 713.752.4208.

1 537 U.S. 418, 123 S. Ct. 1115 (2003).

2 The TDRA defines a “famous mark” as a mark that is “widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark's owner.”  Trademark Dilution Revision Act of 2006, Public Law No: 109-312 (codified as 15 U.S.C. § 1125(c)) (2006).

3 15 U.S.C. § 1125(c)(2)(B).

4 15 U.S.C. § 1125(c)(2)(C).

5 15 U.S.C. § 1125(c)(3).

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