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What is Trademark Dilution?

June 5, 2024 |

What is Trademark Dilution?

Trademark dilution is the unauthorized use of a famous mark in commerce at any time that is likely to cause “dilution by blurring” or “dilution by tarnishment.” A cause of action exists regardless of the presence or absence of actual or likely confusion, of competition, or actual economic injury. See 15 U.S.C. § 1125(c)(1).

Background

The protection of intellectual property against unauthorized use that might compromise their distinctiveness or harm their reputation is a pivotal aspect of intellectual property law.

The evolution of federal trademark dilution law has certainly grown over time. Prior to federal legislation, state courts would hear cases of dilution but were reluctant to issue injunctive relief because, in the court’s view, the public was not being misled by the defendants. The Federal Trademark Dilution Act of 1995 (text available at: https://www.congress.gov/bill/104th-congress/house-bill/1295), followed by the Trademark Dilution Revision Act of 2006 (text available at: https://www.congress.gov/109/plaws/publ312/PLAW-109publ312.pdf), fundamentally transformed protection for trademark owners.

The Federal Trademark Dilution Act of 1955 set dilution on an equal legal footing with infringement, which was strengthened even further by the Trademark Dilution Revision Act of 2006. Interestingly, the act was revised in 2006 mainly in response to the Supreme Court’s ruling in Moseley v. V Secret Catalogue, 537 U.S. 418 (holding that a plaintiff must show actual dilution instead of a likelihood of dilution).

As noted above, dilution of a trademark generally falls into two categories. It involves impairing the distinctiveness of a famous mark through either "dilution by blurring" or "dilution by tarnishment." The former arises from similarity between marks that diminishes the famous mark's distinctiveness, while the latter stems from associations that harm the reputation of the renowned mark. See 15 U.S.C. § 1125(c)(5)(B)-(C).

Dilution protection under federal law now stands shoulder to shoulder with other trademark safeguards, offering a federal cause of action and access to federal courts, ensuring statutory consistency nationwide, and opening avenues for nationwide injunctive relief. In addition to equitable relief, money damages are also available. See 15. U.S.C. § 1125(c)(5).

The Elements of Dilution of a Trademark

To succeed in a federal dilution claim, the plaintiff must establish that (1) its mark is famous and distinctive; (2) defendant’s use of its mark is commercial; (3) defendant has used its mark in commerce; (4) defendant’s use began after plaintiff’s mark became famous; and (5) defendant’s mark is likely to cause dilution of the mark’s distinctive quality through blurring or tarnishment. See 15. U.S.C. § 1125(c)(1). It must be the owner of the mark and not a licensee, and significantly, unlike trademark infringement, the defendant’s use of the mark does not need to create a likelihood of confusion. See, e.g., Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., 633 F.3d 1158, 97 U.S.P.Q.2d 1947 (9th Cir. 2011)

The legislative history of federal dilution law emphasizes protection against unauthorized use that capitalizes on the goodwill and reputation of famous marks, irrespective of competition or confusion. Notably, the federal statute extends its protection beyond the narrow view of “dilution by blurring” seen in some state statutes, also prohibiting the use of the mark on non-competing goods. See Avery Dennison Corp. v. Sumpton, 189 F.3d, 869, 875 (9th Cir. 1999). Generally, the key factual element is showing that a mark is famous and distinctive.

What Does “Famous” Really Mean?

A mark is famous “if it 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.” 15. U.S.C. § 1125(c)(2). In evaluating if a mark is famous, courts look at several factors:
 

  1. The duration, extent, and geographic reach of advertising and publicity of the mark, whether advertised or publicized by the owner or third parties.
  2. The amount, volume, and geographic extent of sales of goods or services offered under the mark.
  3. The extent of actual recognition of the mark.
  4. Whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register.

See 15 U.S.C. § 1125(c)(2)(A).

A mark need not be federally registered to be eligible for protection under the Federal Trademark Dilution Act. However, one of the statutory factors for determining whether a mark possesses the requisite degree of fame is whether the mark is registered on the principal register of the USPTO. Courts are highly unlikely to hold that an unregistered mark is sufficiently famous, though a few have made it through that presumption. These include the Dallas Cowboys’ mark “AMERICA’S TEAM” and Gucci’s “GG” pattern/diamond motif trade dress. See Dallas Cowboys Football Club, Ltd. v. Am.’s Team Props., 616 F. Supp. 2d 622, 643 (N.D. Tex. 2009) (the district court said in dicta that “although their mark was not registered federally, Plaintiffs have established the long duration and geographic reach of their … mark. Plaintiffs’ survey demonstrates actual recognition among a relevant consumer base.”).

Federal Trademark Registration

Dilution of a trademark, although distinct from trademark infringement, is an outgrowth of trademark law in general. For the purposes of this article, it is worth touching on the trademark registration process and how the process relates to dilution of the trademark.

The United States Patent and Trademark Office (the “USPTO”) defines a trademark as any word, phrase, symbol, design, or a combination of these things that identifies your goods or services. It is how customers recognize you in the marketplace and distinguish you from your competitors. See “What is a trademark,” USPTO, available at: https://www.uspto.gov/trademarks/basics/what-trademark.

Common law trademark rights accrue as soon as you use the mark with your goods and services; however, by filing a trademark application with the USPTO, the mark receives national protection through its registration with the USPTO. Without a properly registered mark, your common law trademark rights are limited to the geographic region in which you operate. For example, a small, regional company that operates exclusively in California would not be able to assert rights to a company mark against in company in New York, unless the mark is federally registered with the USPTO. As a result, it is important for companies that hope to expand into different markets to register their trademarks as soon as possible with the USPTO. 

Generally, a trademark for products or services falls into one of four (4) different categories. The list below lists each of the categories in increasing order of distinctiveness (and therefore, are more likely to achieve federal trademark protection):

  1. Generic Mark—a mark or term is generic if its primary significance to the relevant public is the class or category of goods or services with which it is used. If a mark is generic or becomes generic it will generally lose its federal trademark protection. For example, the term “videotape” (once trademarked by Ampex Corporation) lost its federal protection because the term grew synonymous with the product itself (i.e., a magnetic tape used for storing video and sound).
  2. Descriptive Mark—a mark or term is descriptive if it simply describes the characteristics, quality, function, purpose, or ingredients of the goods or services being offered. If a mark is generic or descriptive it is not eligible for federal trademark protection unless it has developed “secondary meaning.” For example, “Joe’s Crab Shack,” a seafood restaurant that operates in the United States, was awarded federal protection despite the name describing the food offered at the establishment.
  3. Suggestive Mark—a mark or term is suggestive if it requires imagination, thought, or perception to link the trademark with the goods. These types of marks are eligible for federal protection. Examples include “Coppertone” sunblock, “Greyhound” buses, and “Airbus” airplanes, as each of these marks bear some relationship to the company’s products or services.
  4. Fanciful or Arbitrary Mark—a mark or term is fanciful or arbitrary if it makes no logical reference to the product or service on which they are used. Examples include “Apple” computers, “Kodak” cameras, and “Pepsi” soda.  

Although some marks are so famous that the failure to register the mark would not be a barrier to allege trademark dilution, best practices suggest that the owner of a mark should register it with the USPTO to help establish the elements of dilution. Next, we proceed to a discussion of the two forms of dilution.

Trademark Dilution by Blurring

As noted above, for a plaintiff to prevail on a claim for trademark dilution, they need to prove that a defendant’s mark is likely to cause dilution of their famous mark’s distinctive quality through blurring or tarnishment. “Blurring” is an association arising from the similarity between (i) a mark or trade name (i.e. the dilutive mark) and (ii) a famous mark, to a degree that impairs the distinctiveness of the famous mark. 15 U.S.C. § 1125(c)(2)(B). To be clear, a mere mental association between the dilutive mark and the famous mark is not sufficient. In determining whether a mark or trade name is likely to cause trademark dilution by blurring, the court may consider all relevant factors, including the following:

  1. The degree of similarity between (i) the mark or trade name and (ii) the famous mark.
  2. The degree of inherent or acquired distinctiveness of the famous mark.
  3. The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark.
  4. The degree of recognition of the famous mark.
  5. Whether the user of the mark or trade name in question intended to create an association with the famous mark.
  6. Any actual association between (i) the mark or trade name and (ii) the famous mark.

15 U.S.C. § 1125(c)(2)(B)(i)-(vi).

Relevant case law has helped provide context to these statutory provisions. With respect to the similarity between the two marks, the Ninth Circuit held that the mark in question and the famous mark do not need to be “identical or nearly identical” to be considered trademark dilution. See Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., 633 F.3d 1158 (9th Cir. 2011) (holding that the district rule applied the wrong legal standard when it found that Abercrombie’s jean stitching designs did not dilute Levi’s mark).

When the owner of the famous mark is engaging in substantially exclusive use of the mark, the federal Trademark Trial and Appeal Board (the “TTAB”) has held that evidence that the owner has policed and enforced its mark against third party use is key to showing exclusive use. See Chanel, Inc. v. Makarczyk, 110 U.S.P.Q.2d 2013 (T.T.A.B. 2014).

With respect to whether a junior user intended to create an association with the famous mark, the Second Circuit found in favor of the Starbucks Corporation against coffee maker Black Bear Micro Roastery, which had used the marks MISTER CHARBUCKS, MR. CHARBUCKS and CHARBUCKS BLEND. See Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 736 F.3d 198 (2nd Cir. 2013).

Trademark Dilution by Tarnishment 

Tarnishment is an association arising from the similarity between (i) a mark or trade name and (ii) a famous mark that harms the reputation of the famous mark. 15 U.S.C. § 1125(c)(2)(C). Generally, the owner of a famous may be harmed in two distinct ways when tarnishment is alleged. 

First, harm may result from an association between the famous mark and the junior mark (i.e. the other mark) which leads the public to believe that the famous mark is associated with shoddy or poor quality products or services. Claims showing this form of harm are rarely successful. That said, the Ninth Circuit held in favor of the Academy of Motion Pictures and Sciences, finding it had a viable claim for trademark dilution when a third party began selling the “Star Award,” which had a striking resemblance to the well-known “Oscar” award. See Academy of Motion Picture Arts and Sciences v. Creative House Promotion, Inc., 944 F.2d 1446 (9th Cir. 1991). The Ninth Circuit found dilution because “if the Star Award looks cheap or shoddy, … the Oscar’s distinctive quality as a coveted symbol of excellence … is threatened.” Id at 1457.

The second type of injury that flows from trademark dilution by tarnishment results from having a famous mark being portrayed in an unflattering or unsavory way (usually involving puns or parodies). Claims showing this form of harm are generally more successful; however, the owner of the famous mark will generally find the junior mark arguing that their use of the famous mark is protected by the First Amendment (please see a discussion of defenses to trademark dilution below). Generally, plaintiffs have found relief from courts when the junior user has used the famous mark in connection with sexually explicit material or illegal activities. 

Assuming the test for dilution is met, remedies are available through court action.

Remedies for a Trademark That is Diluted 

Injunction

The most important remedy is an injunction against the unauthorized use of the mark, i.e. the right to force the user to stop all further harmful uses of the mark in question. This remedy is clearly spelled out in the federal statute: subject to the principles of equity, the owner of a famous mark that is distinctive … shall be entitled to an injunction against another person who, at any time after the owner’s mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark  regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury. See 15 U.S.C. § 1125(c)(1).

Other Remedies

Additional remedies are available if  (A) the mark or trade name that is likely to cause dilution was first used in commerce by the person against whom the injunction is sought after October 6, 2006, and (B) if either (i) by reason of dilution by blurring, the person against whom the injunction is sought willfully intended to trade on the recognition of the famous mark, or (ii) by reason of dilution by tarnishment, the person against whom the injunction is sought willfully intended to harm the reputation of the famous mark. See 15 U.S.C. § 1125(c)(5).

These additional remedies include disgorging the defendant’s profits, recovery of any damages sustained by the plaintiff, recovery of attorney fees under 15 U.S. Code § 1117(a) and securing an order that the defendant destroy all labels, signs, prints, packages, wrappers, receptacles, and advertisements bearing the dilutive mark under 15 U.S. Code § 1118.

Trademark Dilution Defenses

Lastly, it is important to discuss the potential legal defenses that might be raised by the junior user (i.e., the defendant) in action alleging a trademark has been diluted.

Fair Use Exception

To strike a balance between the principle of free speech and the protection of intellectual property rights, federal law has established that certain uses of trademarks are not actionable. Fair use may include a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source for the person’s own goods or services.  This fair use may include (i) advertising or promotion that permits consumers to compare goods or services; or (ii) identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner. 15 U.S.C. § 1125(c)(3)(A).

Relevant case law differentiates between descriptive versus nominative fair use.

Descriptive Fair Use

Descriptive fair use is the use of another’s trademark in a manner that is descriptive of and used fairly to describe your own goods or services (i.e., the goods and services of a potential defendant). See generally Fortune Dynamic, Inc. v. Victoria Secret Stores Brand Mgmt, Inc., 618 F.3d 1025 (9th Cir. 2010) (holding that a jury is best positioned to determine whether Victoria Secret’s use of the plaintiff’s trademark “Delicious” was descriptive of their own good and services).

Nominative Fair Use

Nominative fair use is the use of another’s trademark in a manner which refers to the other party’s goods or services (i.e., the goods and services of a potential plaintiff). See Radiance Found, Inc. v. NAACP, 786 F.3d 316 (4th Cir. 2015) (holding that plaintiff’s use of the NAACP’s trademark in a news article criticizing the group was nominative fair use). Additionally, the Second Circuit held that eBay’s use of a trademark owned by Tiffany & Co., the jewelry company, was lawful because eBay used the mark to describe accurately the genuine Tiffany jewelry offered for sale on its website. See Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93 (2nd Cir. 2010). Nominative fair use is a court created doctrine but holds the same force and effect as descriptive fair use (i.e., the more traditional formulation of this affirmative defense).  

Noncommercial Use Exception

Again, to strike the correct balance between a person’s free speech rights and the intellectual property rights of another, federal law states that noncommercial use of another’s trademark may not be actionable. See 15 U.S.C. § 1125(c)(3)(C). That said, it is important to note that “the noncommercial exclusion does not shield parody or other commentary when its use of a mark is … source-identifying.” See Jack Daniel’s Props v. VIP Prods. LLC, 143 S. Ct. 1578 (2023).

News Exception

Lastly, the federal statute states that fair use of another’s trademark in connection with news reporting and new commentary is not actionable. See 15 U.S.C. § 1125(c)(3)(B).

Conclusion

Trademark dilution law has developed over many years and will continue to develop as new mediums of expression spring about in the coming years. While separate and distinct from infringement, dilution law solidifies important intellectual property rights for owners of famous trademarks. One important way to show the world that your mark is “famous” is by registering it with the USPTO. 

Whether you are already a trademark owner or have questions about the right way to go about protecting your intellectual property, the trademark lawyers at Berliner Cohen have years of experience prosecuting trademarks before the USPTO and are here to assist. Whether your mark is already “famous,” or not (yet), it is important to you understand your rights.

For questions about trademark dilution or other matters, please contact Benjamin Wohlford (benjamin.wohlford@berliner.com) or Jay Landrum (jay.landrum@berliner.com) to schedule a free consultation.

 

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