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LOS ANGELES — On March 4, the U.S. Supreme Court issued its long-awaited decision in Moseley v. V Secret Catalogue, Inc. — popularly known as the Victoria’s Secret case — in which the court considered, for the first time, the Federal Trademark Dilution Act. The court resolved one important question under the act, but by leaving other questions unanswered, the court created an atmosphere of uncertainty that may lead to efforts to amend the statute. To protect consumers, the U.S. Trademark Act, or “Lanham Act,” has long provided remedies against trademark infringement where use of a mark is likely to confuse consumers as to the source or sponsorship of goods or services. The doctrine of trademark “dilution,” made part of the Lanham Act in 1995 through the FTDA, is based upon a different policy: protecting the owners of “famous” marks from having their marks lose uniqueness through a proliferation of uses of the same or very similar marks, even in the absence of a likelihood of confusion or competition between the mark owner and others. Prior to the enactment of the FTDA, about 25 states, including California, had passed dilution statutes, with most of them stating that dilution occurred where there was a “likelihood of injury to business reputation or of the distinctive quality of a mark.” Congress considered a federal dilution statute in 1988 but did not enact one, largely out of concern for infringing on First Amendment rights. Trademark owners, led by the International Trademark Association, continued to lobby for a federal dilution act, and Congress passed the FTDA, which took effect in January 1996. The FTDA differed from state dilution statutes in several ways. The most significant difference was the FTDA’s statutory text requiring the owner of a famous mark to prove not a “likelihood of injury,” as required under the state dilution acts, but rather that the defendant’s use of a mark “ causes dilution of the distinctive quality” of the famous mark. After enactment of the FTDA, a split arose in the federal appellate courts on the issue of what was required to prove that a mark “caused dilution” of a famous mark. The Fourth and Fifth Circuits read the FTDA to require a showing of “actual dilution,” including actual economic harm to the famous mark, while the Second and Seventh Circuits read the FTDA to permit prospective relief, essentially on the basis of a showing that dilution was likely to occur in the future. The Moseley case arose in the wake of this split, and ultimately resolved it. Victoria’s Secret, the famous retailer of women’s lingerie, asked a store called “Victor’s Secret,” which sold adult novelties and products of a sexual nature, to change its name. The store changed its name to “Victor’s Little Secret,” but Victoria’s Secret filed suit, claiming that the new name infringed its famous “VICTORIA’S SECRET” mark and diluted it by “blurring” its distinctiveness, and “tarnishing” its reputation by associating it with lewd subject matter. The U.S. District Court for the Western District of Kentucky granted summary judgment on Victoria’s Secret’s dilution claim and the Sixth Circuit affirmed, adopting the more relaxed standard for liability adopted by the Second Circuit. The Supreme Court granted certiorari, and in its March 4 decision, the court unanimously reversed the Sixth Circuit and sent the case back to the lower courts for trial of the dilution claim. Justice John Paul Stevens’ opinion for the court framed the issue as “whether objective proof of actual injury to the economic value of a famous mark (as opposed to a presumption of harm arising from a subjective ‘likelihood of dilution’ standard) is a requisite for relief under the FTDA.” In resolving that question, the court essentially agreed with the position of the United States, as a friend of the court, that the FTDA requires proof of actual dilution, but not proof of what Justice Stevens called “the consequences of dilution, such as an actual loss of sales or profits.” After reviewing the procedural background and record in Moseley, and the history of the dilution doctrine and the FTDA, Justice Stevens contrasted the text of the FTDA with the text of state acts and held that the FTDA’s text unambiguously requires a showing of actual dilution, rather than a likelihood of dilution. Justice Stevens rejected the Fourth Circuit’s suggestion that a plaintiff must show actual economic harm to its mark, but agreed “with that court’s conclusion that, at least where the marks at issue are not identical, the mere fact that consumers mentally associate the junior user’s mark with a famous mark is not sufficient to establish actionable dilution.” Justice Stevens’ opinion did not specify which type of “direct” evidence might prove “actual dilution.” And his emphasis on the fact that the marks in Moseley were not identical suggests that less rigorous proof might suffice to show actual dilution where they are. Indeed, he noted that “it may well be . . . that direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proven through circumstantial evidence — the obvious case is one where the junior and senior marks are identical.” Once again, his opinion did not elaborate on exactly what such “circumstantial” evidence might be in that “obvious case,” beyond the mere identity of the marks. A short concurring opinion by Justice Anthony Kennedy only adds to the confusion. Although he joined the court’s opinion, he opined that, “when a competing mark is first adopted, there will be circumstances when the case can turn on the probable consequences its commercial use will have for the famous mark.” Noting that the FTDA provides for injunctions, Justice Kennedy concluded that a “holder of a famous mark threatened with diminishment of the mark’s capacity to serve its purpose should not be forced to wait until the damage is done and the distinctiveness of the mark has been eroded.” It is difficult to reconcile Justice Kennedy’s “probable consequences” theory — to which no other justice subscribed — with the court’s opinion that he joined. For example, in arguing that preliminary injunctions should be available, Justice Kennedy did not distinguish between identical and non-identical marks, but under the actual dilution standard that he purported to accept, it is unclear that a plaintiff could obtain a preliminary injunction against the nascent use of a non-identical mark because it is hard to see how “actual” (as opposed to prospective or likely) dilution could have already occurred. Moseley represents a failure by the court to set clear guidelines for lower courts grappling with proof of FTDA claims. Having announced the “actual dilution” standard, the court then abrogated any duty to explain how it might be met, apparently leaving that issue for lower courts to decide. At the same time, the court sent mixed signals regarding whether preliminary injunctions are available on a dilution claim and whether the sufficiency of proof of actual dilution should be assessed one way when the conflicting marks are identical and another way when they are not. Moseley leaves judges, lawyers and trademark owners certain of only one thing — the bar for relief under the FTDA has been raised. But nothing in the opinion states how high. The uncertainty caused by Moseley may encourage calls for amendment of the FTDA to resolve legislatively the questions left unanswered by the court, perhaps (somewhat ironically) by incorporation of the “likelihood of injury” standard of the state dilution acts that preceded the FTDA. Christopher Larkin is a partner in the Los Angeles office of Seyfarth Shaw, where he is a member of the intellectual property group. His practice focuses on national and international trademark and copyright litigation, counseling and prosecution.

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