Trademark Dilution

If a glass of lemonade is too bitter you can dilute it by adding water. This makes the lemonade less potent. In the land of trademarks, a similar concept applies whereby someone’s valuable property, i.e., the mark, is diminished in strength. §1127 defines dilution for us 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.

Note that this goes beyond the §1114 (and §1125) protection against infringement, as that section requires a showing of likelihood of confusion while one need not prove likelihood of confusion in order to make out a claim of dilution.

But unlike §1114, which applies to any registered mark, dilution protection requires an initial showing that the plaintiff has a “famous mark.” This protection was added only recently, by the Federal Trademark Dilution Act of 1995 (FTDA), but its origins go back to 1927.

About 80 years ago, Frank Schechter, an attorney in New York, wrote The Rational Basis of Trademark Protection, 40 H. L. Rev 813 (1927) in which he discussed the need to preserve the uniqueness of an owner’s mark even in the absence of customer confusion.

EXAMPLE: The mark “Koce” is famous around the globe. A large variety of drinks are marketed using this mark. If another company is allowed to use the mark on bicycles, the uniqueness of the “Koce” mark may be diluted.

Today, companies are no longer bound to one category of goods, and it is common for a mark to be used on a wide variety of products. For example:

• The “Jeep” mark is used most famously on automobiles, but now is also used on bicycles, radios, and other goods.
• “Coca-Cola” and the various versions of that mark are used on soft drinks but also on clocks, Christmas ornaments, stuffed animals, and a host of other products.
• “Yamaha” is used on everything from musical instruments to electronics to motorcycles.

This is a very short list, and it is easy to come up with dozens of other examples. If a new user takes an existing, famous, mark, and applies it to non-competing, unrelated goods, consumers today are likely to identify that product with those bearing the owner’s mark. The effect of this is to dilute the identity of the mark and might affect the owner’s reputation.

EXAMPLE: Mark decides to manufacture and sell sunglasses under the name “Yamaha.” The sunglasses are very expensive, but they are also poorly made. The impression these sunglasses make in the market will affect the public’s impression of all other products bearing the “Yamaha” name, thus devaluing/diluting the owner’s mark.

Within a few years of Schechter’s law review article, federal legislation was in the works. In 1947, Massachusetts passed the first anti-dilution act, and in the fifty or so years that followed prior to the FTDA, about half of the states passed similar acts.

The 1995 federal act, however, does not preempt state laws protecting mark owners against dilution. Further, there are some areas left unclear by the new FTDA, and some authors believe that the act offers only the weakest protection to mark owners. See e.g., Intellectual Property: The Law of Copyrights, Patents, and Trademarks, at 697, Roger Schechter et. al, West Group (2003) (some unsettled areas, but some clear points), Advertising and the Public Interest: Legal Protection of Trade Symbols, Ralph Brown, 108 Yale L.J. 1619 (1999).

In the Yamaha sunglasses example above we see only one of the ways in which a mark may be diluted: the so-called “tarnishment” theory of dilution. Under this theory, a mark owner should be protected against the unauthorized use of a famous mark because that use might tend to

“tarnish affirmative associations engendered by”

Regardless of the theory, and regardless of whether state or federal law is to be applied, every successful dilution claim must meet two important criteria:

• The plaintiff’s mark must be strong enough, famous enough, distinct enough, etc., such that it is capable of dilution, and
• There must be a blurring or tarnishment of the mark due to the defendant’s use (although some courts have indicated that there might be some third way to satisfy this element).

One might think that the question of a mark’s fame is easily answered. After all, either it’s famous or it’s not. While this is generally true, issues can arise regarding this first criterion. One issue concerns the question of whether or not “niche fame” is adequate to overcome the initial hurdle. What do we do about a mark which is famous as regards some segment of the population, but not the public at large? For example, the mark “CF Martin” is quite famous among guitar players, but to anyone else it’s just a guy’s name. In Roger Schechter, et. al at 705 we are provided with an excellent discussion of this issue. Ultimately, the consensus seems to be that niche fame will not give rise to a claim of dilution; before a plaintiff can prevail on a dilution claim, the mark must be famous with the population at large. See also Mead Data where LEXIS, though famous among those involved in law, was not famous with the public at large and therefore there was no famous mark to be diluted by the defendant’s use of Lexus for automobiles.

In Revlon, the defendant, Jennifer Leather, used the phrase “only Revlon has more colors” in an ad for its leather furniture. Revlon sued under theories of infringement and dilution (New York has its own anti-dilution statute similar to the FTDA which was passed after this case), and lost on both.

Regarding dilution, the Revlon court found that while

“Revlon 'is an extremely strong mark' capable of being diluted"

(the first criterion), the defendant did not try to get a free ride on Revlon’s mark.

“To the contrary, defendant's advertisements appear to bolster plaintiff's claim that it offers more colors than any other cosmetics manufacturer.”

The court then went on to note that the New York anti-dilution statute might apply if the defendant were to market “Revlon couches,” but that this was not the case here. Revlon at 1277-1278.

EXAMPLE: In an ill-advised marketing campaign, Norton’s Steakhouse begins using the following slogans: Norton’s Steaks…Not Nearly as Tough as a Jeep! Not only does the slogan fail to increase business, but it results in a lawsuit from DaimlerChrysler, which owns the Jeep mark. As with Revlon, Norton’s use here would not violate the prohibition against dilution of a famous mark.

Consider also that a mark which is already famous might later be put to a variety of different uses. For example, the Jeep mark was likely already quite famous before someone thought to attach the mark to a radio. If an unauthorized user were permitted to use the mark on a radio prior to Jeep having the idea, there would later arise the potential for customer confusion if Jeep chose to enter the radio market. Although this form of diminished value is not usually discussed as a principle underlying anti-dilution statutes, one could make a strong case for it. Basically, the potential future value of the mark’s applicability to new products is diminished by another’s use of that mark on such products. Goods which do not today compete against the mark owner’s goods might compete against goods which the mark owner might choose to market in the future.