TRADEMARK DILUTION: The “Victoria’s Secret” Case

IVAN HOFFMAN, B.A., J.D.


        In “Beanies”: Dilution And Generic Legal Issues”, I discussed the decision in which the United States Court of Appeals for the Seventh Circuit spent considerable time defining the parameters of what might constitute dilution of trademarks under the Federal Trademark Dilution Act (“FTDA”).  Those parameters should now be read in view of the United States Supreme Court’s (“The Court” in this article) decision in this case.

        The Petitioners operated a retail store under the name “Victor’s Secret,” selling women’s lingerie and adult items.  Respondents notified the petitioners that such use of the name would likely cause confusion with the trademark of Respondents and would also “dilute the distinctiveness” of their said famous mark.  In response, petitioners changed the name of the store to “Victor’s Little Secret.”  Not being satisfied, Respondents filed suit, alleging among other causes of action (and for the purposes of this article, the one discussed) that the said use of that name was “likely to blur and erode the distinctiveness” and “tarnish the reputation” of the famous trademark.

        As stated by The Court:

In support of their motion for summary judgment, respondents submitted an affidavit by an expert in marketing who explained “the enormous value” of respondents' mark. Id., at 195-205. Neither he, nor any other witness, expressed any opinion concerning the impact, if any, of petitioners’ use of the name “Victor's Little Secret” on that value.
        The issue faced by The Court in this case was, as stated by The Court:
The question we granted certiorari to decide is whether objective proof of actual injury to the economic value of a famous mark (as opposed to a presumption of harm arising from a subjective “likelihood of dilution” standard) is a requisite for relief under the FTDA.
The Statute

        The anti-dilution statute (15 USC Section 1125 (c)) states in part:

(1) The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person’s commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection. In determining whether a mark is distinctive and famous, a court may consider factors such as, but not limited to -

(A) the degree of inherent or acquired distinctiveness of the mark;

(B) the duration and extent of use of the mark in connection with the goods or services with which the mark is used;

(C) the duration and extent of advertising and publicity of the mark;

(D) the geographical extent of the trading area in which the mark is used;

(E) the channels of trade for the goods or services with which the mark is used;

(F) the degree of recognition of the mark in the trading areas and channels of trade used by the marks’ owner and the person against whom the injunction is sought;

(G) the nature and extent of use of the same or similar marks by third parties; and

(H) whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register.

        The Court analyzed the history of dilution as a remedy as well as various state laws and prior cases interpreting the statute.  The Court stated:
The contrast between the state statutes and the federal statute, however, sheds light on the precise question that we must decide. For those state statutes, like several provisions in the federal Lanham Act, repeatedly refer to a “likelihood” of harm, rather than to a completed harm. The relevant text of the FTDA, quoted in full in note 1, supra, provides that “the owner of a famous mark” is entitled to injunctive relief against another person’s commercial use of a mark or trade name if that use “causes dilution of the distinctive quality” of the famous mark. 15 U. S. C. §1125(c)(1) (emphasis added). This text unambiguously requires a showing of actual dilution, rather than a likelihood of dilution.
        The Court cited section 1127 of the FTDA which defines dilution as:
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.

        The Court stated:
The contrast between the initial reference to an actual “lessening of the capacity” of the mark, and the later reference to a “likelihood of confusion, mistake, or deception” in the second caveat confirms the conclusion that actual dilution must be established.
        The Court further stated:
Of course, that does not mean that the consequences of dilution, such as an actual loss of sales or profits, must also be proved. To the extent that language in the Fourth Circuit’s opinion in the Ringling Bros. case suggests otherwise, see 170 F. 3d, at 460-465, we disagree. We do agree, however, with that court’s conclusion that, at least where the marks at issue are not identical, the mere fact that consumers mentally associate the junior user’s mark with a famous mark is not sufficient to establish actionable dilution. As the facts of that case demonstrate, such mental association will not necessarily reduce the capacity of the famous mark to identify the goods of its owner, the statutory requirement for dilution under the FTDA. For even though Utah drivers may be reminded of the circus when they see a license plate referring to the “greatest snow on earth,” it by no means follows that they will associate “the greatest show on earth” with skiing or snow sports, or associate it less strongly or exclusively with the circus. “Blurring” is not a necessary consequence of mental association. (Nor, for that matter, is “tarnishing.”)
        The reader should see the Beanies article above for further definitions of these terms.

        Significantly, the evidentiary record in this case did not establish such that the Victoria’s Secret trademark suffered any diminution of value.  The Court stated:

The record in this case establishes that an army officer who saw the advertisement of the opening of a store named “Victor’s Secret” did make the mental association with “Victoria’s Secret,” but it also shows that he did not therefore form any different impression of the store that his wife and daughter had patronized. There is a complete absence of evidence of any lessening of the capacity of the Victoria’s Secret mark to identify and distinguish goods or services sold in Victoria’s Secret stores or advertised in its catalogs. The officer was offended by the ad, but it did not change his conception of Victoria’s Secret. His offense was directed entirely at petitioners, not at respondents. Moreover, the expert retained by respondents had nothing to say about the impact of petitioners’ name on the strength of respondents’ mark.
New Federal Law

        As a result of the Victoria’s Secret case, trademark owners convinced the Congress to pass, and the President signed a new law, the Trademark Dilution Revision Act, (effective October 6, 2006), essentially going back to the old “likelihood of dilution” standard that existed pre-Victoria’s Secret.  The statute states, in part:

…the owner of a famous mark that is distinctive, inherently or through acquired distinctiveness, shall be entitled to an injunction against another person who, at any time after the owner’s mark has become famous, commences use of a mark or trade name in commerce that 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.
        In addition, the new federal law helps define the “blurring” and “tarnishment” standards that courts had been dealing with for many years.   Moreover, the new law helped define other issues related to dilution including issues related to “acquired distinctiveness,” the definition of “famous” and issues related to “trade dress” and “fair use.”

Conclusion

        Trademark law is still filled with potential potholes for owners and those who would infringe, dilute or otherwise use another’s mark.  Always consult an experienced trademark attorney about all these matters.

© Copyright 2003, 2006 Ivan Hoffman.  All Rights Reserved.
 
 

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This article is not intended as legal advice and is not legal advice.  This article is intended to provide only general, non-specific legal information.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  This article is based on United States law.  You should consult with an attorney familiar with the issues and the laws of your country.  This article does not create any attorney client relationship.

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