The trademark dilution revision act of 2006: prospective changes to dilution definition, claim analyses, and standard of harm.

• Author: Goodberlet, Kathleen

Introduction

The trademark is one of the most valuable marketing tools used today in the United States. (2) Famous, nationally renowned trademarks are often synonymous with multi-billion dollar industries. (3) Trademarks promote marketing by communicating product source, quality, and desirability to consumers. (4) Federal laws provide two primary types of trademark protection. (5) First, traditional trademark infringement laws prohibit junior use of similar trademarks on competing goods which may lead to consumer confusion. (6) Second, for only the most famous trademarks, anti-dilution law prohibits junior use of similar trademarks on competing or non competing goods, regardless of consumer confusion. (7)

Trademark dilution theory is one of the most contentious aspects of trademark law. (8) Although Congress enacted the Federal Trademark Dilution Act ("FTDA") in 1996, courts struggle to interpret the statutory language. (9) The definition of dilution is unclear, and the appropriate standard for injunctive relief is hotly contested. (10) Additionally, no uniform framework for litigating dilution claims exists. (11) The Supreme Court's 2003 edict on trademark dilution in Moseley v. V Secret Catalogue, Inc. did little to quell disputes because the Court only addressed the standard of harm necessary for injunctive relief. (12) Recently, in response to the Supreme Court's interpretation of the FTDA in Moseley, Congress proposed an overhaul of the trademark anti-dilution law. (13) Presently, Congress appears close to enacting the Trademark Dilution Revision Act of 2006 ("TDRA"). (14)

This note evaluates whether the proposed TDRA provides beneficial alternatives to the current definition of dilution, methodologies for analyzing claims, and standard of harm necessary for injunctive relief. Part I provides an overview of trademark law and historical highlights of trademark dilution, including the emergence of blurring and tarnishment theories. Part II investigates the inherent weaknesses of the FTDA definition of dilution, explores courts' various methodologies for analysis of dilution claims, and explains the interpretations of the standard of harm necessary for injunctive relief. Part III explains the Supreme Court's interpretation of the FTDA and identifies statutory language changes made by the TDRA in the three areas of dilution law explored in Part II. Part IV discusses the prospective impact of the TDRA in the three areas highlighted in Part II. Part V concludes the TDRA effectively addresses the need for a clear definition of dilution and analytical framework, and presents a pragmatic standard for injunctive relief.

1. Overview Of Trademark And Dilution Law And Evolution Of Trademark Dilution Law

   1. Overview

      Trademark laws regulate identification of goods and services. (15) A trademark is a "word name, symbol, or device" that identifies and distinguishes goods. (16) A trademark communicates the origin and ownership of goods to consumers. (17) Through personal experience or advertising, consumers associate trademarks with the quality and brand reputation of affiliated products. (18)

      Trademark infringement laws protect consumers from deceptive marketing practices and trademark owners from unfair competition. (19) The basis of a trademark infringement action is the likelihood of consumer confusion arising from use of similar trademarks on related consumer products. (20) Trademark owners may seek relief under trademark infringement laws if they can prove consumers may be confused as to the identity or source of the affiliated goods as the result of improper junior use of their trademark or a similar version of their mark.

      Federal anti-dilution law was developed to address a gap in the infringement statute, situations where unauthorized, junior trademark use exploits the goodwill of famous marks, but does not result in a likelihood of consumer confusion. (22) Anti-dilution law differs from traditional trademark infringement laws in several respects. (23) Unlike infringement laws which protect consumers and trademark owners, many commentators and courts suggest that anti-dilution law protects only trademark owners. (24) Whereas trademark infringement laws evolved out of the need to protect consumers from deception, anti-dilution law resulted from a desire to protect only "famous" trademark owners' economic investments. (25) The value of a famous trademark is its "aura" and ability to elicit feelings of goodwill from consumers, which arises from the owner's substantial economic investment in the mark. (26) Anti-dilution law protects the value of famous trademarks by preventing the diminishment of their uniqueness, singularity, and source identification power. (27)

      Since the purpose of anti-dilution law is not necessarily to protect consumers, as is the case with infringement laws, the likelihood of consumer confusion is largely immaterial to a dilution claim. (28) Absent the element of consumer confusion, dilution relief is broader and theoretically more attainable than infringement relief. (29) Therefore, dilution easily could supplant infringement protection as a cause of action by trademark owners. (30) This outcome would lead to wildly overbroad trademark protection, effectively granting trademark owners "rights in gross. " (31) Extending "rights in gross" to trademark owners would be the equivalent of granting real property interests. (32) As

      such, trademarks would represent more than source identification tools, giving trademark owners the right to regulate all other use of their trademarks or marks that are similar. (33) To prevent dilution relief from supplanting infringement relief and overprotecting trademarks, the FTDA dilution remedy is restricted to only the most famous trademarks which suffer actual trademark dilution. (34)

      Another difference between trademark infringement and trademark dilution is that trademark infringement laws prevent consumer confusion by regulating the use of similar marks only on competing goods. (35) Anti-dilution law prevents unauthorized junior trademark use on competing or non competing goods from weakening famous trademarks. (36) Two commonly recognized forms of trademark dilution are blurring and tarnishment. (37) Dilution by blurring occurs when the public sees a famous mark, and thinks of a junior mark's products. The association between the famous mark and the good is "blurred" in the mind of the consumer and the "distinctiveness" of the famous mark is weakened .39 Regardless of whether consumers are confused by the junior use, the famous mark loses its ability to uniquely and distinctively identify and distinguish one source. 40 Consequently, the change in consumers' perception reduces the marketing value or "selling power" of the famous trademark. (41)

      Trademark dilution by tarnishment occurs when the image of a famous trademark is degraded. (42) Degradation is brought about by unauthorized use of an identical or similar variation of the famous trademark on junior products of inferior quality or with unwholesome images. (43) The tarnishing use alters the singular image of the famous trademark, causing consumers to perceive the famous trademark in a less positive light. (44) The altered perception of the famous mark causes immediate injury to the commercial value of the trademark. (45)

      The federal anti-dilution statute has inherent risks that are beyond the scope of this note. (46) Whereas patents and copyrights are only protected for a limited time to encourage innovation and creativity, protection against trademark dilution--because of the evolving breadth of its application--may indefinitely shelter a trademark because dilution, as evolved, lacks the important limitations of commercial competition and consumer confusion. (47) The extension of such protection and corresponding grant of rights in gross to trademark owners may unreasonably impede freedom of speech. (48) These two issues highlight the need to tightly restrict dilution relief (49) Ultimately, the goal of anti-dilution law is to merely supplement trademark infringement law in extremely narrow circumstances in which consumers are not apt to be confused as to the source of goods, but misuse of the famous mark is unfair because its goodwill is exploited. (50)

   2. Introduction of Trademark Dilution Theory in the United States

      In 1927, Frank Schechter introduced the theory of trademark dilution. (51) He postulated that trademarks not only identified the source of pods, but also possessed the power to sell goods to consumers. He acknowledged the historic purpose of trademark law was to protect consumers from confusion and deception as to the source of goods. (53) Nevertheless, he believed trademark misuse caused famous trademark owners to suffer economic injury to their property right, as distinct from the harm of consumer confusion about the source of the goods. (54)

      Schechter premised his economic injury theory on the value of the connection between famous trademarks and consumers. (55) He believed trademarks with the utmost public awareness, such as ROLLS-ROYCE, AUNT JEMIMA'S, KODAK, and RITZ-CARLTON were preeminently unique. (56) As such, unauthorized, junior use of these famous trademarks damaged their commercial value by eroding their singular connections with consumers. (57) Schechter described the injury to the trademark owner as "the gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use upon non-competing goods." (58) Today, when the economic power of famous trademarks is "whittled away," it is commonly referred to as having been diluted. (59)

      Schechter viewed his theory as based on a fair trade principal. (60) He deflected critics concerned about monopolies by arguing the trademark dilution theory enhanced market competition by requiring goods to be marketed under their own trademarks and by their own merits. (61) He pointedly...