Bitlaw

Trademark Dilution

Executive summary:

The Federal Trademark Dilution Act of 1995 expanded the scope of rights granted to famous and distinctive trademarks under the Lanham Act. Dilution differs from normal trademark infringement in that there is no need to prove a likelihood of confusion to protect a mark. Instead, all that is required is that use of a "famous" mark by a third party causes the dilution of the "distinctive quality" of the mark. Further clarification of the federal dilution cause of action is found in the following subsections:

Marks protected against dilution:

Under the terms of the Federal Trademark Dilution Act, only "famous" marks are protected against dilution. The determination of what constitutes a "famous" mark will probably involve a great deal of litigation in the coming years. Under the terms of the Act, courts may look at the following factors in determining whether a mark is famous:

  1. The duration and extent of use of the mark;
  2. The duration and extent of advertising for the mark;
  3. The geographic area in which the mark has been used;
  4. The degree of distinctiveness of the mark (either through the nature of the mark itself, or through acquired distinctiveness);
  5. The degree of recognition of the mark;
  6. The method by which the product was distributed and marketed (the "channels of trade");
  7. The use of the mark by third parties; and
  8. Whether the mark was federally registered.

Examples of marks which will clearly be considered "famous" would be: XEROX, KODAK, COCA-COLA, and REEBOK. It would be much harder to protect a mark like APPLE (computers) against dilution, since the term APPLE has been used in connection with other well-known products, such as the Beatles records, and has been used by numerous other business. Of course, the mark APPLE is still protected against trademark infringement when likelihood of confusion can be established.

Proving dilution of a mark:

Under the Dilution Act, famous marks are protected against the dilution of the distinctive nature of the mark. There is no need to prove a likelihood of confusion, nor is there any need to show competition between the goods of the plaintiff and the defendant. Therefore, it is possible to use a dilution cause of action against users of the same mark even when the defendant's goods and services bears no relation to the goods or services of the famous mark.

Dilution causes of action are normally brought when the defendant's use of the mark causes either

However, the Act makes clear that certain actions will not be subject to the provisions of the Act. Specifically, the Act states that fair use (such as comparative advertising), noncommercial use (such as noncommercial web pages), and all forms of news reporting and news commentary (which would apparently include reporting and commentary appearing on the Internet) would not constitute dilution under the Act.

Remedies:

In most cases, the only remedy available under the Dilution Act is an injunction against further dilution. However, if the plaintiff can show that the defendant willfully sought to "trade on the owner's reputation or to cause dilution of the mark," attorneys fees, monetary damages, and even treble damages would be available.

Relationship to state actions:

Twenty-five states had already enacted trademark dilution statutes by the time the federal Act was passed. These state statutes generally provided for similar protection for dilution as provided under the federal Act, except that the state statutes rarely included a provision for the collection of monetary damages. These state statutes may be of little consequence in the future, since the federal Act specifically states that federally registered marks may no longer be the subject of state law dilution claims. By so declaring, the federal Act effectively preempts the existing state dilution acts for most famous marks.