Who Should Decide? Judges and Juries in Trademark Dilution Actions - David S. Welkowitz

• Publication year: 2012

Who Should Decide? Judges and Juries in Trademark Dilution Actions

by David S. Welkowitz*

I. Introduction

It has been sixteen years since a powerful form of federal trademark protection became available to a select group of trademark owners-those with "famous" trademarks. This relatively new protection, a form of infringement called trademark dilution, is the result of the Federal Trademark Dilution Act of 1995 (FTDA).¹ This Act, which added a new section to the federal trademark statutes,² was later amended by the Trademark Dilution Revision Act of 2006 (TDRA).³ These statutes have resulted in a plethora ofcourt opinions, as litigants have eagerly sought to exploit the power of this statute.⁴ The major attraction of trademark

* Professor of Law, Whittier Law School. Princeton University (A.B., 1975); New York University Law School (J.D., 1979). Copyright 2011 by David S. Welkowitz.

I would like to thank my colleague, William W. Patton, who served as sounding board and helpful critic as I thought through many of these issues.

1. Pub. L. No. 104-98, 109 Stat. 985 (1996) (current version at 15 U.S.C. §§ 1125(c), 1127 (2006)).

2. Lanham Act, 15 U.S.C. §§ 1051-1141n (2006). Throughout this Article, references will be made to both the Lanham Act and its corresponding sections in the United States Code.

3. Pub. L. No. 109-312, 120 Stat. 1730 (codified as amended at 15 U.S.C. § 1125(c) (2006)). The amendments made a number of significant changes in the operation of the statute, some of which affect the discussion in this Article. Although the amendments are often referred to by the acronym TDRA, the reader should assume that references in this Article to the FTDA include the TDRA unless the context indicates otherwise.

4. See generally David S. Welkowitz, Trademark Dilution: Federal, State, and International Law (2002 & Supp. 2011) [hereinafter Welkowitz, Trademark Dilution and Welkowitz, Dilution Supp. respectively]. Whether the potential power of dilution claims has actually led to successes in court is far more questionable. See generally Clarisa

dilution is that, unlike the usual trademark infringement claim, dilution does not require any showing of confusion.⁵

But this Article is not about the main elements of a federal dilution claim; there is a plethora of scholarship discussing the merits and demerits of this cause of action.⁶ The focus of this Article is about process-the process by which the decision-making that underlies the claim is made. In particular, it is about the roles of the judge and jury in this process and about various flaws, some inherent and some artificially created, in the decision-making process. Few dilution claims reach a trial and even fewer reach a jury;⁷ thus, there are relatively few cases that discuss the problem. For the most part, there is little question that dilution cases will be decided by a judge, whether by motion to dismiss, motion for summary judgment, or motion for a preliminary injunction. Even if the case goes to trial, there normally will not be a dispute over the proper decision maker. The statute makes clear that the presumptive remedy for dilution is an injunction.⁸ Thus, the trial judge would be the decision maker, both as to fact and law, subject to appropriate appellate review. However, in limited circumstances, the federal dilution statute permits the owner of a famous trademark to obtain other remedies, such as monetary damages, where someone other than a judge might be involved in the process. If the offending user "willfully intended to trade on the recognition of the famous mark," or "willfully intended to harm the reputation of the famous mark,"⁹ then the remedies of sections 35(a) and 36 of the Lanham Act,¹⁰ which include various forms of monetary and other

Long, Dilution, 106 Colum. L. Rev. 1029 (2006).

5. Lanham Act § 43(c)(1), 15 U.S.C. § 1125(c)(1) (creating a cause of action against one whose "use of a mark or trade name in commerce ... 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").

6. I plead guilty to being responsible for a certain amount of that scholarship. See Welkowitz, Trademark Dilution and Welkowitz, Dilution Supp., supra note 4.

7. Many are disposed of on motions to dismiss. Others are decided on summary judgment motions. Still others result in a preliminary injunction ruling, which often results in an appeal, followed by a negotiated settlement if the court of appeals upholds a preliminary injunction. However, there have been several reported jury trials in dilution cases. By and large, they are part of a larger action that includes conventional trademark infringement claims. See discussion infra Part V.

8. Section 43(c)(1) begins as follows: "Subject to the principles of equity, the owner of a famous mark that is distinctive, inherently or through acquired distinctiveness, shall be entitled to an injunction against" one whose actions are likely to cause dilution of the famous mark. Lanham Act § 43(c)(1), 15 U.S.C. § 1125(c)(1) (emphasis added).

9. Id. § 43(c)(5)(B)(i), (ii), 15 U.S.C. § 1125(c)(5)(B)(i), (ii) (2006).

10. Id. §§ 35(a), 36, 15 U.S.C. §§ 1117(a), 1118 (2006).

relief, are available.¹¹ However, the TDRA states that these other remedies are "subject to the discretion of the court and the principles of equity."¹² Furthermore, section 35(a) not only reiterates that its provisions are subject to the principles of equity, it indicates that to some degree awards of damages are subject to the discretion of the court, solidifying the court's control over damage awards.¹³

Thus, it seems that Congress intended that trial judges would be in charge of conducting the trial in dilution cases, whether the plaintiff requests an injunction or damages. But, as any first-year law student can tell you, when the remedy sought is damages, the Seventh Amendment of the United States Constitution¹⁴ enters the picture and may require a jury trial, at least for some of the issues.¹⁵

But the Seventh Amendment is only a starting point when discussing the allocation of decision-making responsibility.¹⁶ For a number of reasons, regardless of how one resolves the Seventh Amendment issue, there will be jury trials in dilution cases.¹⁷ We can move beyond the binary jury trial choice (trial by jury or judge for all issues) and ask whether we can divide the roles ofjudge and jury depending on the issue to be decided. This question involves a combination ofconstitutionality and institutional competence. Yet this, too, is simply a prelude to a

11. Id. § 43(c)(5), 15 U.S.C. § 1125(c)(5) (2006).

12. Id.

13. See id. § 35(a), 15 U.S.C. § 1117(a). A portion of § 35(a) states the following: In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. If the court shall find that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case.

Id. (emphasis added).

14. U.S. Const. amend. VII.

15. Thirty-eight states have dilution laws, a majority of which mirror the original federal law (four states have statutes that are similar to the current federal law). See Welkowitz, Dilution Supp., supra note 4, at 21-24. If dilution claims are brought under state law as supplemental claims to a federal dilution claim, then the Seventh Amendment would apply to those claims as well. See Simler v. Conner, 372 U.S. 221, 222 (1963); Rivera-Flores v. Puerto Rico Tel. Co., 64 F.3d 742, 749 (1st Cir. 1995) (mandating jury trial even where commonwealth court does not provide for it). This Article does not attempt to determine whether state courts would hold jury trials; in any case, state dilution claims are most often brought as part of a federal trademark suit.

16. Even when a jury trial is not required on the dilution claim, trial judges may submit the entire case-assuming it includes other, jury-triable claims-to a jury and use the jury's findings on dilution in an advisory capacity. Fed. R. Civ. P. 39(c).

17. One clear example is when a dilution claim is joined with another claim that clearly requires a jury trial.

larger issue. In theory, juries are supposed to decide historical facts, while the judge decides issues of law. However, the line between "fact" and "law" in many trademark claims, including dilution claims, is sometimes a fuzzy one, and the demarcation between them is made even more difficult by ill-defined statutory terms. This leads to several questions. Can juries be instructed in a way that allows them to make decisions that are consistent with the policies and limitations that are central to dilution claims? To what degree can judges assert control over the decision-making process, perhaps as to certain elements or perhaps as to the entire decision? Where is the proper place to draw the line between the province ofthe judge and that ofthe jury in these cases? An examination of actual jury instructions further demonstrates flaws when giving primary decision-making authority to juries. Can these flaws be fixed? As will be seen, there is no simple answer to these questions.

Thus, this Article is a general examination of the appropriateness of using juries as fact finders and, potentially, decision makers in trademark dilution cases. In Parts II-IV, I discuss the Seventh Amendment issue in different forms. Parts II and III focus on whether the kind of monetary remedy likely to be awarded in dilution claims is properly denominated legal (in which case a jury is required) or equitable (in which case it is not). Part III ultimately concludes that many dilution cases need not be tried before a jury. Part IV discusses whether we can separate one...