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SPECIAL TO THE NATIONAL LAW JOURNAL The reach of trademark law has extended in recent years from merely protecting the public from confusion to more broadly protecting the attributes and interests associated with proprietary brands. This trend was particularly evident with Congress’ 1995 passage of the Federal Trademark Dilution Act (FTDA), which provides federal protection from the commercial usage of any mark that lessens “the capacity of a famous mark to identify and distinguish goods and services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake or deception.” 15 U.S.C. 1127. As such, the FTDA reflects a growing appreciation that a trademark and its associated brand connote not just a product’s source but also the imagery, attributes and results associated with the product. The U.S. Supreme Court recently examined the FTDA for the first time in Moseley v. V Secret Catalogue Inc., 123 S. Ct. 1115 (2003). The case arose out of the operation of a retail store in Elizabethtown, Ky., named Victor’s Secret. An army colonel, offended by the store’s allegedly “unwholesome, tawdry merchandise,” particularly its adult novelties and gifts, sent a copy of the store’s advertisement to Victoria’s Secret, following which Victoria’s Secret demanded that the proprietors change the store’s name. Their change of the store’s name to Victor’s Little Secret was insufficient to satisfy Victoria’s Secret, which sued under the FTDA, claiming that the proprietors’ conduct was “likely to blur and erode the distinctiveness” and “tarnish the reputation” of the Victoria’s Secret trademark. In defending the lawsuit, the Moseleys did not challenge the claim by Victoria’s Secret that the Victoria’s Secret mark is famous so as to be entitled to protection from dilution under the FTDA. Instead, the question presented to the U.S. District Court for the Western District of Kentucky was whether use of “Victor’s Little Secret” constituted unlawful dilution of the Victoria’s Secret trademark under the FTDA. The district court entered a summary judgment finding dilution by tarnishment, as opposed to dilution by blurring, and enjoined the Moseleys from using the name Victor’s Little Secret. 54 U.S.P.Q.2d 1092 (W.D. Ky. 2000). The 6th U.S. Circuit Court of Appeals affirmed, relying on both tarnishment and blurring. 259 F.3d 464 (6th Cir. 2001). The Supreme Court used Moseley to resolve a split among the regional circuit courts regarding the nature of proof needed for the owner of a famous mark to succeed with a claim under the FTDA. The FTDA provides relief to the owner of a famous mark if another’s commercial use of a mark or trade name “causes dilution of the [mark's] distinctive quality.” The 4th Circuit, in Ringling Bros.-Barnum & Bailey Combined Shows Inc. v. Utah Division of Travel Dev., 170 F.3d 449, 464 (4th Cir. 1999), interpreted the statute to require proof of actual economic harm by lessening the selling power of the famous mark. On the other hand, in Nabisco Inc. v. PF Brands Inc., 191 F.3d 208, 216 (2d Cir. 1999), the 2d Circuit embraced a more lenient interpretation favored by owners of famous marks. The 2d Circuit seemingly required proof only of likelihood of dilution of the famous mark to establish a claim under the FTDA and considered the 4th Circuit approach an “arbitrary and unwarranted limitation on the methods of proof.” 191 F.3d at 223. Thus, the consumer’s mental association of the accused mark with the famous mark received greater weight as evidence of dilution under the 2d Circuit test than under the 4th Circuit test, the latter of which ignored mental association if the plaintiff failed to prove actual economic harm. In Moseley, the 6th Circuit embraced the less stringent approach of the 2d Circuit in affirming the district court’s finding of dilution. Court took different tack In deciding in favor of the proprietors of Victor’s Little Secret, the Supreme Court did not adopt en toto either the view of the 2d and 6th circuits or that of the 4th Circuit. The court held that the text of the FTDA “unambiguously requires a showing of actual dilution,” rather than a likelihood of dilution, but it held that a showing of actual dilution did not require a showing of actual economic harm. Further, the court held that “the mere fact that consumers mentally associate the junior user’s mark with a famous mark is not sufficient to establish actionable dilution” because “such mental association will not necessarily reduce the capacity of the famous mark to identify the goods of its owner.” 123 S. Ct. 1115, 1124. Reflecting upon the ramifications of its ruling, the Supreme Court acknowledged the “difficulties of proof” associated with attempting to demonstrate actual dilution as it required. However, in acknowledging that consumer surveys are expensive and often unreliable as direct evidence of dilution, the court suggested that, at least in disputes regarding identical marks, circumstantial evidence may suffice instead to prove actual dilution. The Supreme Court’s decision also highlights another significant issue that will provide fodder for future litigation. While state statutes typically permit dilution claims for both blurring and tarnishment of marks, and while Congress expressed its intent to protect famous trademarks from both blurring and tarnishment in the legislative history leading up to passage of the FTDA, in Moseley, the Supreme Court questioned whether the statutory text of the FTDA actually provides any protection from dilution by tarnishment. Contrasting the state statutes, which typically refer explicitly to both “injury to business reputation” (i.e., tarnishment) and “dilution of the distinctive quality of a trade name or trademark” (i.e., blurring) with the FTDA’s reference only to the latter protection, the Supreme Court stated that the FTDA “arguably supports a narrower reading of the FTDA” so as not to make dilution by tarnishment unlawful under the federal statute. Whether this statement will be viewed as dicta or as a holding of the court is unclear. However, it is noteworthy that Justice Anthony Kennedy, in a separate concurrence and perhaps aiming to minimize the effect of the court’s statement of doubt as to the unlawfulness of dilution by tarnishment under the federal statute, stated, “[t]he Court’s opinion does not foreclose injunctive relief if respondents on remand present sufficient evidence of either blurring or tarnishment.” 123 S. Ct. 1115, 1126. In the wake of Moseley, how does the trademark owner prove actual dilution? While a survey evidencing the relative strength or fame of a mark will not demonstrate actual dilution, a survey assessing the impact of the accused mark on the consumer’s perception of the famous mark or the products associated with that brand may be useful in proving actual dilution or the absence thereof. For instance, inquiring as to how consumers feel about the brand or products associated with the senior mark before and after consumers’ exposure to the accused mark, and why consumers feel that way, can be useful in demonstrating any diminution of the favorable imagery and attributes associated with the brand. Choosing a method In anticipation of the need for such evidence of predilution brand imagery and attributes, owners of famous marks may be able to rely upon their marketing departments’ periodic measurements of consumer perceptions associated with their brands. Similarly designed postdilution measurements may be used to determine whether there has been any actual impact on the perceptions associated with those brands as a result of the allegedly dilutive conduct. Alternatively, multiple surveys may be conducted in various locales subsequent to the commencement of the alleged dilution, as long as the interviewees in at least one locale have not yet been exposed to the allegedly dilutive mark. Still further, marketing and advertising experts may be deemed qualified to render opinions concerning actual dilution, basing their testimony on the relative effectiveness of advertising before and after the allegedly dilutive conduct. In any event, the Supreme Court has placed the method of proving actual dilution at the feet of skilled and creative practitioners. Whatever method is chosen, it is clear now that the essential question for parties asserting or defending dilution claims under the FTDA is whether the accused conduct lessens the power of the famous brand to assure quality and communicate the favorable attributes of the brand to consumers. Multiplicity of issues remain Though the Supreme Court has resolved the issue as to the focus of the evidence necessary to establish dilution under the FTDA, several FTDA issues remain. For instance, is the FTDA applicable to an otherwise descriptive mark that has acquired distinctiveness? In this regard, it has long been held that surnames are not inherently distinctive when used as trademarks. Can surname marks such as DuPont or Ford suffer dilution under the FTDA? The 7th Circuit, in AM General Corp. v. DaimlerChrysler Corp., 311 F.3d 796, 812 (7th Cir. 2002), and the 9th Circuit, in Avery Dennison v. Sumpton Corp., 189 F.3d 868, 876-877 (9th Cir. 1999), have held that dilution claims may be brought for marks with either acquired or inherent distinctiveness. The 2d Circuit, however, in TCPIP Holding Co. v. Haar Communications Inc., 244 F.3d 88, 98 (2d Cir. 2001), disagrees and limits application of the FTDA to inherently distinctive famous marks. Additionally, may circumstantial evidence, which the Supreme Court recognized as appropriate to prove actual dilution in cases involving identical marks, also be used to prove dilution in the vast majority of cases in which the accused marks are not identical to the famous marks? Are marks with only local or regional fame, as opposed to widespread or national fame, entitled to FTDA protection? What about marks that are famous only in niche markets-how close must the market for the products associated with the accused mark be to the market for the products associated with the famous mark? See, e.g., Thane Int’l Corp. v. Trek Bicycle Corp., 305 F.3d 894, 908-912 (9th Cir. 2002) (FTDA protects marks famous within a niche market when the alleged diluter uses the allegedly dilutive mark within that market, but protection does not extend beyond that niche market). As discussed above, what survey methodologies are appropriate to prove the famousness of a mark or its actual dilution? How similar must the accused mark be to the famous mark for dilution liability to attach-must it be identical or, at least, nearly identical? Where is the line between protected free speech/lawful parody on one hand, and unlawful dilution on the other? See, e.g., Dr. Seuss Enterprises L.P. v. Penguin Books USA Inc., 924 F. Supp. 1559, 1573-74 (S.D. Calif. 1996) (use of famous marks in published parody exempt from application of FTDA); and Mattel Inc. v. MCA Records Inc., 63 U.S.P.Q.2d 1715, 1723 (9th Cir. 2002) (use of “Barbie Girl” in song title exempted from dilution claim under FTDA’s “noncommercial use” exemption). Finally, though less important as time passes, does the FTDA have a retroactive effect on accused marks first used before the FTDA’s Jan. 16, 1996, effective date? Despite the Moseley decision, and notwithstanding the multiplicity of unresolved issues, the FTDA remains a viable tool for protecting famous marks. It is helpful that the Supreme Court has revealed the nature of the evidence required to prove a claim of dilution under the FTDA. Congress may see fit to modify the FTDA eventually to resolve some of the currently unresolved issues and perhaps to redefine the requisites of dilution differently from the Supreme Court’s recent interpretation of the statute’s present provisions. Unless and until Congress does so, however, the several remaining issues under the FTDA will continue to intrigue the courts, trademark owners and their attorneys. Larry C. Jones is a partner, and Jason M. Sneed is an associate, in the Charlotte, N.C., office of Atlanta’s Alston & Bird, where they practice trademark law and litigation. They can be reached, respectively, at

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