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The Supreme Court came down on the little guy’s side. The U.S. Supreme Court just made it harder for companies to protect their famous trademarks against dilution by other businesses. In a surprising unanimous decision, the high court ruled in early March against Victoria’s Secret in its trademark battle with an Elizabethtown, Kentucky, adult store, Victor’s Little Secret. The lingerie retailer had claimed that the store’s fanciful name was likely to “blur and erode the distinctiveness” of the widely recognized Victoria’s Secret trademark. Actual Dilution Justice John Paul Stevens, writing for the Court in Moseley v. V Secret Catalogue Inc., said the Federal Trademark Dilution Act of 1995 required Victoria’s Secret to show “actual dilution,” not just likely harm. Stevens also said that mere “mental association” between the two trademarks in consumers’ minds was not dilution. But the Court also said trademark holders do not have to go so far as to prove they actually lost sales or profits. Within these boundaries, the Court left a wide gray area, which will probably prompt new litigation over what, exactly, famous trademark holders have to prove to prevail. The Court suggested that “circumstantial evidence” of dilution could suffice, and extensive consumer surveys were not necessary. “They’ve identified the next generation of issues,” says Mark Levy, a partner at Washington, D.C.’s Howrey Simon Arnold & White who filed an amicus brief in the case on behalf of Intel Corp. “But they did not say exactly what it will take to prove actual dilution.” Levy says that, overall, the ruling was a victory for trademark holders even though, strictly speaking, Victoria’s Secret lost. Justice Stevens specifically distanced the Court from a 1999 ruling by the U.S. Court of Appeals for the Fourth Circuit that requires proof of actual economic harm for trademark holders to show dilution. “While dismissing the ‘likelihood of dilution’ standard, the Court has left famous mark owners with a higher burden of proof yet unfortunately little guidance as to how to meet that burden,” says Jonathan Hudis, a partner in Alexandria, Virginia’s Oblon, Spivak, McLelland, Maier & Neustadt. He filed a brief in the case on behalf of the American Intellectual Property Law Association. Splitting the Baby The lack of specificity and relative brevity of the opinion � just 16 pages � left some Court-watchers speculating that in order to hold the majority together, Stevens had to excise major parts of the ruling and send the case back to lower courts to sort out. “They basically split the baby in half,” says Ethan Horwitz, a partner at New York’s Goodwin Procter. For holders of the top tier of recognizable trademarks, such as Coca-Cola or Buick, the ruling makes it “harder, but not dramatically harder,” to make a dilution claim, Horwitz says. Victoria’s Secret itself could still prevail on remand, he says. But Horwitz says that defense of a trademark will be significantly harder for a lesser-known mark such as Shoney’s, Inc., the restaurant chain. If another company began marketing food-related products under the Shoney’s name, says Horwitz, dilution would still be easy to prove: “But if a bicycle tire named Shoney’s came along, it would be harder to show dilution” because of the decision. Another feature of the ruling that gave trademark holders hope was a concurring opinion by Justice Anthony Kennedy. It emphasized that injunctive relief was still available to prevent harm by dilution. Holders “threatened with diminishment of the mark’s capacity to serve its purpose should not be forced to wait until the damage is done,” Kennedy wrote. Victoria’s Secret could obtain an injunction on remand, Kennedy said, if it can present “sufficient evidence of either blurring or tarnishment.” A version of this story originally appeared in Legal Times, a sibling publication of Corporate Counsel and a part of American Lawyer Media.

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