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staff reporter Washington-A Supreme Court ruling under the Federal Trademark Dilution Act of 1995 has provided some guidance on what dilution isn’t but little on what it is, some disappointed litigators say. The case was a victory for the owner of Victor’s Little Secret, a lingerie and “adult toy” store in Elizabethtown, Ky. It challenged a finding of trademark dilution on a claim by the lingerie retailer Victoria’s Secret that the Kentucky store’s name threatened to erode the distinctiveness of the Victoria’s Secret trademark and to tarnish its reputation. The justices’ unanimous opinion leaves to future litigation, some experts say, just what must be shown to prove “actual dilution of a trademark”-the standard demanded by the law, according to the high court’s March 4 ruling. Moseley v. V Secret Catalogue Inc., No. 01-1015. Other experts, however, saw good news for trademark holders in the ruling, particularly its rejection of at least one federal circuit’s rule that trademark owners must show proof of economic harm. The 1995 amendment to the Trademark Act of 1946 defines “dilution” as the “lessening of the capacity of a famous mark to identify and distinguish goods or services.” Courts and litigators have been struggling ever since with how to prove “lessening of the capacity,” trademark litigator Steve Colangelo of San Francisco’s Morrison & Foerster said. The latest ruling, he and others said, was disappointing because more guidance was needed from the court. The justices were reviewing a ruling by the 6th U.S. Circuit Court of Appeals that Victoria’s Secret’s trademark was diluted though no actual harm was proved. The 6th Circuit had rejected a 4th Circuit holding that the law requires proof that a defendant has used a mark sufficiently similar to the famous one to evoke a “mental association” of the two in consumers, and that the selling power of the famous mark has been reduced. Ringling Bros. Barnum & Bailey Combined Shows Inc. v. Utah Div. Of Travel Development, 170 F.3d, 449, 461. The Supreme Court, in an opinion by Justice John Paul Stevens, agreed with Victor’s Little Secret that the federal statute requires proof of actual harm, not its mere likelihood. The statute provides relief if another’s commercial use of a mark or trade name “causes dilution” of the mark’s distinctive quality. “Actual harm” is an “objective and predictable standard,” said James R. Higgins Jr. of Louisville, Ky.’s Middleton Reutlinger, counsel to the owners of Victor’s Little Secret. “That’s good for national uniformity and for all businesses. No longer is dilution law by the famous, of the famous and for the famous.” Two guideposts In proving actual harm, and consequently trademark dilution, the high court offered two guideposts-one helpful and one not so helpful to plaintiffs: Trademark holders do not have to show economic harm. Actual harm, wrote Stevens, “does not mean that the consequences of dilution, such as an actual loss of sales or profits, must also be proved.” Where trademarks 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.” In the case of Victor’s Little Secret, the court held, there was insufficient evidence of dilution to support the summary judgment. The court sent the case back for proceedings that apply its ruling. “Although this looks on its face as something of a loss, it actually is not that bad at all for trademark owners,” said trademark scholar Hugh Hansen of Fordham University School of Law. “The really dangerous aspect of this case was the economic-harm standard of the 4th Circuit.” Also of importance to this type of litigation was a concurrence by Justice Anthony M. Kennedy on the use of preliminary injunctions to stop threatened dilution, said Mark Levy of Washington’s Howrey Simon Arnold & White, amicus counsel to Intel Corp. in the case. “The real issue in almost all cases is whether you can get an injunction to prevent the harm,” Levy said. “The law of equity is well settled that you don’t have to wait for actual injury to get an injunction. Kennedy makes clear a likelihood of violation is enough for a trademark holder to get an injunction.” Colangelo agreed. “Kennedy is saying, ‘Have heart. You don’t have to wait until your mark is destroyed,’ ” he said. Coyle’s e-mail address is [email protected].

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