Trademark Dilution 2006

In general, trademark infringement liability occurs when a mark is used in a way to create consumer confusion. This occurs when the mark or a similar mark is used in a way that is likely to confuse the public into incorrectly believing that the trademark owner is the source or sponsor of another’s products. However, Trademark dilution liability occurs when a competitor’s mark is used in a way to dilute the value of the Trademark. Anti-dilution laws are intended to enable trademark owners to prevent the gradual weakening or whittling away of the strength of the Trademarks, through blurring or tarnishment, even if the public is not likely to be confused. Until 1996, trademark dilution laws consisted of a patchwork of non-uniform state statutes and common law. In early 1996, Congress enacted the Federal Trademark Dilution Act (FTDA) to provide nationwide injunctive relief for diluting uses of nationally famous trademarks. This law was revised in 2006 to expand the scope of liability to include not only famous marks but also widely recognized marks.

Federal Trademark Dilution Act
The Federal Trademark Dilution Act (FTDA) became law in 1995 and was revised in 2006. The newly revised statute within the Lanham Act provides a federal remedy for dilution. State law is not preempted. In fact, the laws of many states go farther in granting more protection than that provided in the federal statute. Although many states had enacted laws that prohibited trademark dilution, the FTDA was intended to provide uniform and nationwide protection for famous marks. “Dilution” may occur when a mark is used in a way that is likely to cause dilution by blurring or by tarnishment. Dilution by blurring is defined as using a mark similar to a famous mark in such a way that it impairs the distinctiveness of the famous mark. Dilution by tarnishment is defined as associating a similar mark with a famous mark in such a way that it harms the reputation of the famous mark. Dilution may occur regardless of the presence or absence of (1) actual or likely confusion, mistake or deception, (2) competition between the owner of the famous mark and other parties, or (3) actual economic injury.” The FTDA applies to famous marks which are distinctive, inherently or through acquired distinctiveness. The term “famous” is defined as marks which are widely recognized by the general consuming public.

Famous Marks
In determining whether a mark is famous a court may consider the following non-exclusive factors:
• the duration, extent and geographic reach of the mark in connection with the goods or services with which the mark is used;
• the amount, volume and geographic extent of the sales of goods or service offered under the mark;
• the extent of actual recognition of the mark;
• whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register.

“Blurring” typically refers to the “whittling away” of distinctiveness caused by the unauthorized use of a mark on dissimilar products. Dilution by blurring can occur when a trademark is used by someone other than the trademark owner on products that are very different from those normally produced by the trademark owner.

“Tarnishment” involves the unauthorized use of a mark which links it to products that are of poor quality or which are portrayed in an unwholesome or unsavory context that is likely to reflect adversely upon the owner’s product.

Remedy – Injunctive Relief
Generally, only injunctive relief is available under the FTDA. However, if the defendant willfully intended to trade on the owner’s reputation or to cause dilution of the famous mark, the owner of that mark may also be entitled to other remedies, including defendant’s profits, damages, attorneys’ fees and destruction of the infringing goods. The availability of monetary relief is a striking departure from state dilution laws, which have typically provided only for injunctive relief. Additionally, the FTDA provides that the ownership of a valid federal registration is a complete bar to the assertion of a dilution claim under state law.

The FTDA allows injunctive relief to owners of famous marks against another’s use of the mark if:
1. the use of the mark is commercial,
2. the use began after the senior mark became famous, and
3. the use dilutes the distinctive quality of the mark.

Nonactionable Use of a Famous Mark
The following are not actionable under the FTDA:
• fair use of a famous mark by another person in comparative commercial advertising or promotion to identify the competing goods or services of the owner of the famous mark
• noncommercial use of a mark
• all forms of news reporting and news commentary

State Dilution Laws
More than half of the states afford protection from trademark dilution through statutory or case law. The FTDA expressly states that the federal statute does not preempt state dilution laws. Where the federal statute provides protection for dilution of nationally famous marks, state statutes seek to protect interests of a more local nature. Courts have acknowledged that trademarks need not be nationally famous for a mark to be strong in a particular geographic region or industry segments. In addition, whereas the FTDA requires actual dilution, state laws sometimes require only a showing of likelihood of dilution to grant injunctive relief.
Dilution in the United States Patent and Trademark Office
Although the FTDA became effective in 1996, it was not until 1999 that dilution became a basis on which an application or registration of a mark could be challenged in a U.S. Patent and Trademark Office opposition or cancellation proceeding. It still is not a basis on which an examiner can reject an application during an ex parte examination