Congress Passes Important Amendments To Federal Trademark Dilution Statute
- United States
- 09/28/2006
- Arent Fox PLLC
On September 25, the House of Representatives passed H.R. 683 (the Trademark Dilution Revision Act of 2006), which will alter federal trademark dilution law in several respects. Most critically, the law will overrule the Supreme Court’s decision in Moseley v. V Secret Catalogue Inc., 537 U.S. 418 (2003), which held that a federal claimant must prove “actual” dilution (rather than a mere “likelihood of dilution”) to prevail on a dilution claim. This lower burden of proof arguably should apply retroactively to conduct and litigation that began before the effective date of the new law. However, claimants prevailing in such cases will be entitled only to injunctive relief (in accordance with traditional equitable standards), not damages. The Senate passed the bill last March and the President is expected to sign it soon.
By contrast with a claim for trademark infringement, which requires a claimant to prove “likely confusion” between its trademark and a mark used by the defendant, and thus usually requires similarity between the parties’ products/services, dilution law requires no evidence of likelihood of confusion and empowers famous mark-holders to prevent use of their marks even in unrelated fields. The Moseley decision was widely criticized as imposing an unfairly high burden of proof for dilution claimants while providing no clear guidelines on how to satisfy that burden. H.R. 683 is the result of a concerted effort by industry groups, practitioners, and academics to lower the burden of proof for federal dilution claims and to clear up confusion among the courts on other issues that commonly arise in dilution litigation.
The significant aspects of the new legislation include the following:
- It clarifies that only truly famous marks are entitled to protection against dilution and permits courts to “consider all relevant factors” (including several identified in the statute) when determining whether a claimants’ mark is sufficiently famous to be protected. Accordingly, marks possessing only “niche fame” — that is, fame in a narrow cross-section of the consuming public — are not protected, contrary to some prior court decisions.
- It emphasizes that famous marks that have acquired their “distinctiveness” (by developing so-called “secondary meaning”) are entitled to the same protection against dilution as marks that are inherently distinctive, thereby overruling a line of cases out of the Second Circuit that barred dilution claims involving marks that were not inherently distinctive.
- It emphasizes that “dilution by tarnishment” (defined in the statute as an association arising from the similarity between the claimants’ famous mark and a mark used by another that harms the reputation of the famous mark) is actionable under federal law; some courts previously had held that only “dilution by blurring” (association due to similarity that “impairs the distinctiveness” of the famous mark) was actionable.
The law contains genuine safeguards against overreaching by claimants. It excludes from liability “any fair use, including 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,” and expressly permits the use of famous marks in connection with comparative advertising, parody and criticism, news reporting, and other “noncommercial” purposes. The reference to “facilitation of such fair use” appears intended to assuage concerns raised by Internet Service Providers, who feared being held vicariously liable on account of unlawful acts by their customers.
The bill also includes a new provision establishing a burden of proof for claims of trade dress dilution involving trade dress not registered on the Principal Register: the claimant must prove that (1) the claimed trade dress, taken as a whole, is not functional and is famous; and (2) if the claimed trade dress includes a mark registered on the principal register, the unregistered matter, taken as a whole, is famous separate and apart from any fame of such registered marks.
We expect that the new legislation will simultaneously restrict and broaden the dilution cause of action. On the one hand, only owners of demonstrably famous marks will be able to seek relief for dilution in federal court; this will bring the Lanham Act in harmony with the common law roots of dilution, which traditionally has been viewed as an exceptional form of protection reserved for exceptional marks. On the other hand, famous mark holders will now have the benefit of a significantly reduced burden of proof in attacking and seeking injunctive relief (and damages) for unauthorized use that threatens the special association between their marks and their products/services.
Our trademark attorneys have extensive experience evaluating, prosecuting, and defending against dilution claims. If you would like additional information about the new legislation, please let us know.
Alec Rosenberg
202.715.8536
[email protected]
