The Federal Trademark Dilution Act: the Circuit Split Makes a Desperate Call to the Supreme Court for Uniformity

• Publication year: 2010

The Federal Trademark Dilution Act: The Circuit Split Makes a Desperate Call to the Supreme Court for Uniformity

Jacqueline R. Knapp

Introduction

Leaping energetically across the television screen, a popular commercial features a bright orange, cartoon tiger exclaiming, "They're gr-r-reat!" Immediately, the average consumer imagines a cereal bowl filled with sweet, crispy flakes, and suddenly, a trademark's distinctiveness is established. What happens when another famous company also utilizes a tiger to symbolize the strength of its product's image?

In 1995, Congress passed the Federal Trademark Dilution Act (FTDA)[1] to establish a uniform nationwide protection against trademark dilution.[2] The FTDA defines "dilution" as "the lessening of the capacity of a famous mark to identify and distinguish goods or 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."[3] Further, in 1995, the Supreme Court identified two goals of trademark law—"to protect consumers who have formed particular associations with a mark" and "to protect the investment in a mark made by the owner."[4]

At the time of the FTDA's adoption, only twenty-five states had enacted widely varying dilution statutes and no federal remedy existed.[5] Early reasoning for an anti-dilution statute was based on the fear of "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."[6] Since the adoption of the FTDA nearly eight years ago, courts have yet to agree on a standard application of the Act and have thus defied its primary goal of eliminating problems caused by inconsistent state statutes.[7] The FTDA sets forth the following criteria for determining a trademark dilution cause of action: "(1) the senior mark must be famous; (2) it must be distinctive; (3) the junior use must be a commercial use in commerce; (4) [the junior mark] must begin after the senior mark has become famous; and (5) [the junior mark] must cause dilution of the distinctive quality of the senior mark."[8]

Prior to the enactment of the FTDA, dilution protection was only available to famous trademarks on a "patch-quilt system" basis, even though the trademarks themselves were often used on a "nationwide basis."[9] However, a main challenge to the FTDA's effectiveness is that "court decisions have been inconsistent and some courts are reluctant to grant nationwide injunctions for violation of state law where half of the states have no dilution law."[10]

Contrary to the common law of trademark infringement, the FTDA does not require the plaintiff to show a likelihood of confusion between the senior and junior marks.[11] The FTDA's overriding purpose is to "‘protect[ ] the trademark owner from the erosion of the distinctiveness and prestige of a trademark . . . .'"[12] Since the adoption of the FTDA, inconsistent court decisions nationwide have enticed plaintiffs to forum-shop for the jurisdiction that may provide the most favorable result, which unnecessarily increases the amount of trademark litigation.[13]

This Note focuses on the confusion generated by inconsistent court interpretations of the FTDA. Part I examines the legislative history and purpose of the FTDA and trademark protection. Part II focuses on a recent and controversial Sixth Circuit court dilution case involving the application of the FTDA, V Secret Catalogue, Inc. v. Moseley,[14] for which the United States Supreme Court granted a writ of certiorari and shed some light on the trademark dilution confusion in its March 2003 decision.[15] Part III analyzes the circuit court splits on several elements of the FTDA, including the actual harm requirement, famousness, distinctiveness, and commercial use. Part IV addresses the retroactivity of the FTDA. Part V provides an analysis of the United States Supreme Court landmark decision on trademark dilution in Moseley v. V Secret Catalogue, Inc.[16] This Note concludes that a uniform application of the FTDA is essential to preserve fairness in the American judicial system's enforcement of trademark law. The grant of certiorari in V Secret Catalogue, Inc. v. Moseley indicates that the U.S. Supreme Court agrees; the Court heard the appeal by Victor and Cathy Moseley against the lingerie giant, Victoria's Secret, on November 12, 2002.[17] On March 4, 2003, the Supreme Court answered the proof of harm issue in Moseley v. V Secret Catalogue, Inc.

I. Historical Background of Trademark Protection and the FTDA

The "primary purpose of . . . trademark protection is to protect that which identifies a product's source."[18] Ultimately, anti-dilution statutes and the FTDA, a sub-component of trademark protection, sought "‘to fill a void left by the failure of trademark infringement law to curb the unauthorized use of marks where there is no likelihood of confusion between the original use and the infringing use.'"[19] In 1932, the first of "[t]wo earlier unsuccessful attempts [was] made to enact a federal dilution statute."[20] Courts were initially hesitant to apply the dilution statute because oftentimes "the plaintiff[s] failed to prove a likelihood of confusion"—a requirement since removed by the FTDA.[21] Compared to trademark infringement, "dilution statutes, and the FTDA in particular, protect only the trademark . . . and are not concerned with possible confusion on the part of consumers."[22]

Finally, on January 16, 1996, President Clinton signed the Federal Trademark Dilution Act of 1995.[23] The FTDA was "founded upon the premise that a gradual attenuation of the value of a famous trademark, resulting from another's unauthorized use, constitutes an invasion of the senior user's property rights."[24] The legislative history of the FTDA "indicates that Congress understood that ‘dilution' might result either from ‘uses that blur the distinctiveness of [a famous] mark or [that] tarnish or disparage it.'"[25] Also, because "famous" marks are typically used nationwide, Congress recognized the need to supplement the twenty-five state anti-dilution statutes with a federal anti-dilution statute.[26] Moreover, the FTDA seeks to protect the public, because "[p]rotection of the public against deceptive and confusing uses of non-‘unique' marks would have been left under [Schechter's thesis] to other laws than that of trademark."[27]

Congress enacted the FTDA to prevent both types of dilution, blurring and tarnishment, "‘by protect[ing] the [senior mark] from the erosion of [its] distinctiveness and prestige . . . caused by . . . a proliferation of borrowings, that while not degrading the original seller's mark, are so numerous as to deprive the mark of its distinctiveness and hence impact.'"[28] The harm to the mark's value by tarnishing and blurring can be quite different.[29] Dilution by blurring can cause a consumer no longer to think exclusively of the original product, but rather associate an unrelated product with the mark.[30] Conversely, dilution by tarnishment may be more damaging to the value of the mark because a noncompetitor then uses the mark to market an inferior, and sometimes offensive, product, which causes the consumer to associate the original mark with the inferior product.[31] The First Circuit specified the type of issue the Act is to address:

[T]his bill is designed to protect famous trademarks from subsequent uses that blur the distinctiveness of the mark or tarnish or disparage it, even in the absence of a likelihood of confusion. Thus, for example, the use of DuPont shoes, Buick aspirin, and Kodak pianos would be actionable under this bill.[32]

II. FTDA Confusion: The Recent Sixth Circuit Dilution Decision in V Secret Catalogue, Inc. v. Moseley

In a recent decision under the FTDA, the Sixth Circuit acknowledged the immediate necessity of a uniform application of the Act.[33] On July 30, 2001, the Sixth Circuit held in V Secret Catalogue, Inc. v. Moseley that the defendant's use of the name "Victor's Little Secret" diluted the "Victoria's Secret" trademark.[34] Victor and Cathy Moseley originally named their store in Elizabethtown, Kentucky, "Victor's Secret" in an effort to keep their new adult store a secret from Victor's previous employer.[35] "Victor's Secret" is a store located in a strip mall "selling a wide variety of items, including men's and women's lingerie, adult videos, sex toys and ‘adult novelties.'"[36] On February 25, 1998, the Moseleys received a cease and desist letter from Victoria's Secret, and in reaction, they altered the name of their store to "Victor's Little Secret."[37] V Secret Catalogue, Inc. was not satisfied with the addition of the "Little" in the Moseleys' store's name, and the Moseleys were ordered to change the store's name.[38] Subsequently, V Secret Catalogue, Inc. filed suit in district court against the Moseleys.[39]

Victoria's Secret had employed a registered mark since January 20, 1981, and was well-known worldwide as the "ninth most famous brand in the apparel industry."[40] Victoria's Secret distributes about 400 million copies of their catalogue each year, which includes 39,000 copies in Elizabethtown, Kentucky, where the Moseley's store is located.[41] Within a sixty-mile distance of "Victor's Little Secret," Victoria's Secret has two stores in Louisville, Kentucky; one opened in late 1982, and the other opened in 1985.[42]

In 1998, V Secret Catalogue, Inc. sued the Moseleys, and the district court, granting Moseley's motion for summary judgment on trademark infringement, found that V Secret Catalogue's complaint failed to establish a likelihood of confusion, the common law standard for trademark infringement; however, the court did find the defendant's mark "blurred and tarnished" the V Secret Catalogue trademark and thus gave merit to the plaintiff's dilution claim.[43] "Since the issuance of the...