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Dilution

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Historical background Edit

The court in Intermatic, Inc. v. Toeppen,[1] discussed the history of the dilution doctrine.

The concept of trademark dilution dates back to an article written by Frank I. Schechter and published in the Harvard Law Review. Schechter explained that the true function of a trademark is ‘to identify a product as satisfactory and thereby to stimulate further purchases by the consuming public.’ Schechter rejected the theory that the exclusive role of a trademark was to serve as a source identifier. * * * He argued that injury occurs to a trademark owner whenever a trademark is used by another, even when used on non-competing goods. He explained that an injury to the trademark owner occurs when there is ‘a 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. The more distinctive or unique the mark, the deeper is its impress upon the public consciousness, and the greater is its need for protection against vitiation or dissociation from the particular product in connection with which it has been used.’ This argument that the trademark laws should protect owners in connection with non-competing goods was novel. * * *

The serious push for a federal trademark dilution law began in 1987 with the publication of ‘The United States Trademark Association Review Commission Report and Recommendations to USTA President and Board of Directors.’ In that report, the Commission proposed the adoption of a new federal trademark dilution law. Trademark dilution provisions were included in S. 1883, the proposed Trademark Law Revision Act of 1987. However, while most of the bill’s provisions eventually became law, concerns — raised by the broadcast industry and rallied by Rep. Robert Kastenmeier (D. Wis.) — that dilution protection would impinge on the First Amendment resulted in the deletion of the dilution provisions from the final legislation.

In 1991, the United States Trademark Association (USTA) Board of Directors adopted a resolution supporting a federal trademark dilution provision. The American Bar Association Patent, Trademark and Copyright Law Section, in its 1991-92 Annual Report, voted overwhelmingly in favor or adding a dilution section to the Lanham Act.

On March 22, 1995, the Federal Trademark Dilution Act of 1995 was introduced in the House of Representatives as H.R. 1295. With changes largely designed to make the bill applicable to the owners of both federally registered and common law trademarks, the billwas signed into law on January 16, 1996 as Public Law 104-98, creating a new Section 43(c) to the Lanham Act.[2]

The definition is designed to encompass all forms of dilution recognized by the courts, including dilution by blurring, by tarnishment and disparagement, and by diminishment. In an effort to clarify the law on the subject, the definition also recognizes that a cause of action for dilution may exist whether or not the parties market the same or related goods or whether or not a likelihood of confusion exists. Thus, a mark protected against dilution can have acquired its fame in connection with one type of good or service and, as a result, be so famous as to be entitled to protection against dilution when used on or in connection with an unrelated good or service.[3]

Overview Edit

Under the Federal Trademark Dilution Act of 1995, the term dilution means

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.[4]

For example, a strong, distinctive famous trademark such as KODAK could be diluted if an unauthorized party marketed an unrelated and noncompeting product such as KODAK mayonnaise. Even though a consumer may not likely be confused by the mark, the concern of dilution law is that the distinctiveness, effectiveness, and advertising value of the famous mark may be eroded and “watered down” by such usage over time, potentially affecting consumer perceptions of the company and its reputation. Dilution law thus seeks to preserve the uniqueness and strength of a famous mark. The concept of trademark dilution traces its origin to a law review article written in 1927[5] and has been adopted as a cause of action by many state jurisdictions, although the state laws vary in nature and extent of protection.

Dilution can occur in two ways. It is a violation of the Act to "use in commerce . . . a mark or trade name if such use causes dilution by blurring or tarnishment of the distinctive quality of a famous trademark."[6]

Dilution by blurring Edit

Dilution by blurring is the most common dilution claim. Blurring occurs when a famous mark’s ability to identify its product has been impaired due to an association in the minds of consumers arising from similarity between another mark and the famous mark.[7] For example, a famous mark such as EXXON is uniformly and nearly automatically associated with the energy and petrochemical company. However, the name NATIONAL may evoke several different mental associations, such as NATIONAL SEMICONDUCTOR, NATIONAL CITY BANK, or NATIONAL GEOGRAPHIC.

Dilution by tarnishment Edit

Dilution by tarnishment is the second form of dilution. Tarnishment occurs when the reputation of a famous mark has been harmed by negative associations arising from the similarity between another mark and the famous mark.[8] Situations in which tarnishment could result are when a famous trademark is “linked to products of shoddy quality, or is portrayed in an unwholesome or unsavory context, with the result that the public will associate the lack of quality or lack of prestige in the defendant’s goods with the plaintiff’s unrelated goods.”[9] Unlike a claim for traditional trademark infringement, an action for dilution does not require a showing of likelihood of consumer confusion.[10]

Federal Trademark Dilution Act Edit

To bring nationwide uniformity and consistency to the protection of famous marks from dilution, and to meet the United States’ international obligations under the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS),[11] Congress in December 1995 passed the Federal Trademark Dilution Act of 1995 (FTDA),[12] amending Section 43 of the Lanham Act to create the first federal cause of action for trademark dilution.[13]

Remedies Edit

Remedies available for a violation of the Act include:

(1) Injunctions.[14] Under 15 U.S.C. §1125(c)(5), owners of famous marks may also be entitled to the following additional remedies listed below if: the mark or trade name that is likely to cause dilution by blurring or dilution by tarnishment was first used in commerce by the alleged infringer after Oct. 6, 2006; and
(A) in a dilution by blurring action, the person willfully intended to trade on the recognition of the famous mark; or
(B) in a dilution by tarnishment action, the person willfully intended to harm the reputation of the famous mark.
(2) For a willful violation, any damages sustained by the plaintiff, defendant’s profits, and the costs of the action.[15]
(3) In exceptional cases, reasonable [[attorney fees.[16]
(4) For a willful violation, the court may order that any infringing articles bearing the word, term, name, symbol, or device be destroyed.[17]

ReferencesEdit

  1. 947 F. Supp. 1227, 1236-37, 40 U.S.P.Q.2d (BNA) 1412 (N.D. Ill. 1996)(full-text).
  2. Intermatic, Inc. v. Toeppen, 947 F. Supp. 1227, 1236-37, 40 U.S.P.Q.2d (BNA) 1412 (N.D. Ill. 1996)(full-text).
  3. H.R. Rep. No. 374, 104th Cong., 1st Sess. 3 (1995).
  4. 15 U.S.C. §1127.
  5. Frank Schechter, "The Rational Basis of Trademark Protection," 40 Harv. L. Rev. 813 (1927).
  6. Id. §1125.
  7. 15 U.S.C. §1125(c)(2)(B).
  8. Compare Kraft Food Holdings, Inc. v. Helm, 205 F.Supp.2d 942 (N.D. Ill. 2002) (full-text) (injunction barring use of King Velveeda on adult web site as dilution by tarnishment of Velveeta cheese products) to Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 588 F.3d 97 (2d Cir. 2009) (full-text) (Charbucks line of high quality coffee not found to tarnish Starbucks, in fact, Charbucks may make Starbucks line more desireable).
  9. Hormel Foods Corp. v. Jim Henson Prods., 73 F.3d 497, 507, 37 U.S.P.Q.2d (BNA) 1516 (2d Cir. 1996)(full-text) (citations and internal quotations omitted). At issue in this case was Jim Henson’s wild boar puppet (one of his Muppets) called “Spa’am,” which according to the court was so named “to poke a little fun at Hormel’s famous luncheon meat by associating its processed, gelatinous block with a humorously wild beast.” Id. at 501. The court ultimately decided that the case presented no likelihood of dilution by tarnishment, on the basis that Henson’s use would not have caused negative associations, Henson was not a direct competitor, and “the parody is part of the product itself.” Id. at 508.
  10. 15 U.S.C. §1127.
  11. The TRIPS Agreement is an international agreement on intellectual property that is one component of the treaties that created the World Trade Organization (WTO) in 1995. TRIPS establishes minimum standards of protection for patents, copyrights, trademarks, and trade secrets that each WTO signatory nation must give to the intellectual property of fellow WTO members. Compliance with TRIPS is a prerequisite for WTO membership. See World Trade Organization, "Understanding the WTO — Intellectual Property: Protection and Enforcement."[1].
  12. Pub. L. No. 104-98, 109 Stat. 985 (1996).
  13. According to its legislative history, the FTDA does not preempt state anti-dilution laws. See H.R. Rep. 104-374, at 4 (“It is important to note that H.R. 1295 would not pre-empt existing state dilution statutes. State laws could continue to be applied in cases involving locally famous or distinctive marks. Unlike patent and copyright laws, federal trademark law presently coexists with state trademark law, and it is to be expected that a federal dilution statute should similarly coexist with state dilution law”). (Citation omitted.)
  14. 15 U.S.C. §§1116(a), 1125(c)(1).
  15. Id. §1117(a).
  16. Id.
  17. Id. §1118.

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